U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the transition period from_______ to________
                          Commission File No. 01-13112

                               DHB INDUSTRIES INC.
                         (Name of issuer in its charter)

        DELAWARE                                         11-3129361
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation)

                555 WESTBURY AVENUE, CARLE PLACE, NEW YORK 11514
                    (Address of principal executive offices)

                    Issuer's telephone number: (516) 997-1155
         Securities registered under Section 12(b) of the Exchange Act:
                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of Class)
       Securities registered under Section 12(g) of the Exchange Act: None


Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by  section 13 or 15(d) of the  Exchange  Act during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [ X ] No [ ]

Indicate by check mark if disclosure  of  delinquent  filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the  registrant's  knowledge,  in the  definitive  proxy or  information
statements  incorporated  by  Reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K [ ].


Aggregate  market value of the voting stock held by  non-affiliates  computed by
reference  to the price at which the stock  sold,  or the  average bid and asked
price of such stock, as of March 18 2002: $129,013,921.

Number of shares outstanding of the issuer's common equity, as of March 18, 2002
      (Exclusive of securities convertible into common equity): 31,515,247

DOCUMENTS INCORPORATED BY REFERENCE:   None

                                       1
<PAGE>


ITEM1. BUSINESS

         GENERAL.

         DHB Industries,  Inc., a Delaware  corporation  organized in 1992, is a
holding  company that has two  divisions:  DHB Armor Group and DHB Sports Group.
DHB Armor Group consists of Protective Apparel  Corporation of America ("PACA"),
Point Blank Body Armor Inc. ("Point Blank"),  and Point Blank International S.A.
("PB Int'l"). DHB Armor Group develops,  manufactures and distributes bullet and
projectile  resistant garments,  bullet resistant and fragmentation  vests, bomb
projectile blankets, and related ballistic accessories.  DHB Sports Group, which
consists of NDL Products,  Inc. ("NDL") manufactures and distributes  protective
athletic apparel and equipment,  such as elbow,  breast,  hip, groin, knee, shin
and ankle supports and braces, as well as a line of therapy products.

         The  Company's  executive  offices are located at 555 Westbury  Avenue,
Carle Place, New York 11514. Its telephone number is 516-997-1155. The Company's
website is www.DHBT.com.  It has manufacturing facilities in Florida,  Tennessee
and Belgium.

         DHB  reincorporated  in  Delaware  in 1995 and  changed its name to DHB
Industries from DHB Capital Group Inc. in July 2001. Its shares began trading on
the American Stock Exchange on February 1, 2002 under the symbol DHB.

DHB ARMOR GROUP.

         The DHB Armor Group  principally  manufactures two types of body armor:
concealable armor, which is designed to be worn beneath the user's clothing, and
tactical armor, which is worn externally and is designed to protect against more
serious  ballistic  threats.   Both  the  concealable  and  tactical  vests  are
manufactured  using  multiple  layers  and/or a combination  of other  ballistic
fabrics, covered and fully enclosed in an outer carrier.

         Concealable  vests are  contoured to closely fit the user's body shape.
Vests are  manufactured  in standard and  custom-fitted  male and female  sizes.
Vests  are  fastened  using   Velcro(TM),   webbing,   elastic  and/or  buckles.
Concealable  vests may be supplemented  for additional  protection with an armor
plate,  which  consists  of either  metal or  certain  composite  materials,  to
provide additional trauma protection.

         In late 2000, the National Institute of Justice ("NIJ"), which operates
under the auspices of the U.S. Department of Justice, introduced a new voluntary
ballistic standard,  NIJ STD 0101.04.  This was the first update of the standard
for certifying  performance of vests since 1987.  Since the  introduction of the
new standard,  the Armor Group has certified  more  than 75 ballistic  products,
including the LEGACY Series,  that exceeds the requirements of the new standard.
The LEGACY Series has reduced  weight and thickness  from earlier  models,  with
increased  ballistic  resistance.  All levels of protection in the "LEGACY" line
are believed by the Company to be the lightest and thinnest certified to the NIJ
Standard. The Company believes the LEGACY line provides law enforcement officers
with the highest level of ballistic protection and comfort in all NIJ threat


                                       2

<PAGE>


levels available in the body armor industry today.

The Armor Group has also  upgraded its other law  enforcement  product  lines to
meet the new NIJ 04  Regulation.  During 2001,  the Armor Group  introduced  the
PEGASUS  Series of armor.  This series  features  three  levels of  performance,
(Flash, Thunder and Lightning),  with the Lightning Series showcasing 100% Zylon
construction,  making it one of the highest  performing,  lightest  weight,  and
technologically advanced designs on the market.

         DHB Armor's  Corrections  Division markets  protective  apparel that is
certified to NIJ Standard 0115.00,  a new certification  initiative from NIJ, as
well as NIJ Stab Level 1-3  standards.  In total,  the Armor Group has certified
more than thirty new stab/ballistic resistant panels that are used independently
or in tandem to provide  previously  unavailable soft armor  protection  against
both stab and ballistic  threats.  DHB Armor  Group's full line of  correctional
vests for stab  protection,  marketed  principally  under the BLOCK 10 label, is
derived from extensive  research and the realization that  corrections  officers
have specific needs unique to law  enforcement.  The Armor Group's  Correction's
Division  provides  complete  solutions for the specialized  needs of correction
officials,  including, for example, a cell extraction suit, providing both upper
and lower torso stab/slash protection.

         The Armor Groups  "Interceptor,"  contract with the U.S.  Department of
Defense is an integral and expanding Company program. The Interceptor program is
designed as a continually upgradeable modular, soft body armor system. The Outer
Tactical Vest consists of a base vest,  collar  assembly,  throat  protector and
groin protector.  The Interceptor  Outer Tactical Vest has been in use by the US
Marines for several years and by the U.S. Army since 2000. In the second quarter
of 2001 the Armor Group initiated an engineering  change proposal  upgrading the
ballistic system,  reducing weight and increasing  flexibility.  The U.S. Marine
Corps approved the upgrade during third quarter 2001 and the first deliveries of
the  upgraded  unit were made in late  fourth  quarter.  Various  U.S.  military
entities,  including the U.S. Air Force SFS, have made the Interceptor  required
protective equipment. Orders received to date for the Interceptor now total more
than $140 million.  The Company estimates that all deliveries,  including future
delivers,  makes the Interceptor's  contract value in excess of $350 million. In
2001, the Company  quadrupled  its  manufacturing  capacity to meet  anticipated
delivery requirements. The Armor Group's research and development team continues
to seek additional options for increasing the performance,  reducing the weight,
and maximizing the protective capabilities of the Interceptor vest.

         In addition to the Interceptor,  the Armor Group  manufactures a number
of other protective armor systems for military uses. Recognizing that the single
most important  factor in  individuals  not wearing body armor is excessive body
heat build-up, the Armor Group recently introduced its Armor Ice(TM) system. The
Armor Ice(TM) is an active cooling system proven to work under armor utilizing a
licensed patented open-cell foam technology that incorporates  microencapsulated
phase change  materials into the structure of the foam. The Company licenses the
patented  Comfortemp(TM)  technology from Frisby Technology.  In 2001, the Armor
Group began  extending  the use of the Armor  Ice(TM)  technology  to  tactical,
correctional, and military armor products.

         In 2001,  the Company  introduced its  side-opening  tactical vest, the
"Storm", and increased promotion of the "Spider" (Stealth Protection  Integrated
Design Equipment Resource),  a front-opening  tactical vest. Tactical vests come
in a variety of styles,  including tactical assault vests,  high-coverage armor,
and flak  jackets,  each of which is  manufactured  to protect  against  varying
degrees of  ballistic  threats and  fragmentation.  They are designed to provide
additional protection against high power rifle fire.


                                       3

<PAGE>


         The Armor Group's  extensive lines of body-armor  products also include
tactical  police  jackets,   military  field  jackets,   executive   vests,  K-9
protection,  fragmentation and close-quarter-battle systems. Fragmentation armor
is  designed  to U.S.  government  military  specification  and offer full torso
protection against materials and velocities associated with the fragmentation of
explosive  devices such as grenades,  mortars,  artillery  shells and  ballistic
projectiles. In general,  concealable vests sold to law enforcement agencies and
distributors  are designed to resist bullets from handguns.  Fragmentation  gear
utilizes  a  variety  of  designs,   materials  and  patterns   differing   from
bullet-resistant   vests.  The  Armor  Group  also  manufactures  a  variety  of
accessories for use with its body armor products.

         RAW MATERIALS AND  MANUFACTURING.  The Armor Group  manufactures all of
its respective  bullet,  fragmentation  and  projectile-resistant  devices.  The
primary  raw  material  used by the  Armor  Group  in the  manufacturing  of the
ballistic-resistant products is Kevlar(TM) a patented product of E.I. Du Pont de
Nemours  &  Company.   Approximately   one-quarter  of  all  ballistic-resistant
components are manufactured utilizing patented products of Honeywell.  The Armor
Group continues to be one of the largest  consumers and manufacturers of ZylonTM
based armor,  which is utilized in many of the company's  vests.  ZylonTM enable
the Armor Group to supply lighter, more flexible, higher performance body armor.
The Armor Group  purchases  cloth woven from these  materials  from  independent
weaving companies.  The woven fabric is placed on tables,  layered over patterns
for a particular  component of a garment  (for  example,  the front or back of a
vest), cut using computerized cutting machines and electric knives, and then are
stitched together.  The Armor Group utilizes several hundred patterns based upon
size,  shape and  style  (depending  upon  whether  the  garment  is a  bullet-,
fragmentation-,  or stab-resistant garment). Each of the patented materials used
by the Armor Group differ in their pliability,  strength and cost.  Research and
Development  efforts  ensure that the materials are combined to suit  particular
applications.  In the  opinion  of  management,  the Armor  Group  enjoys a good
relationship with its suppliers. However, if supplies from Dupont, Honeywell, or
Toyobo of their patented fibers were, for any reason, disrupted, the Armor Group
would be required to utilize other materials,  and the specifications of some of
the Armor  Group's  products  would have to be  modified.  Until the Armor Group
selected an alternative material and appropriate ballistic tests were performed,
its  operations  would be severely  curtailed  and the Armor  Group's  financial
condition and results of operations would be adversely affected.

         The Armor Group purchases other raw materials used in the manufacturing
of their products from a variety of sources and believes  additional  sources of
supply for these materials are readily available.

         RESEARCH AND DEVELOPMENT.  DHB Armor Group's internal employee research
and development team has combined 75 years of ballistic research and development
experience,   including  24  years  of  experience   in  an  NIJ   certification
environment.  Many of its research and  development  personnel  previously  held
positions of  responsibility  within the industry.  The Armor Group  maintains a
state-of-the-art ballistic laboratory test facility similar to the NIJ Certified
Test Facilities.


                                       4

<PAGE>


In addition to upgrades of existing  products,  the Armor  Group's  research and
development   team  are  developing   systems  to  integrate   water   flotation
capabilities into its tactical units, front-opening, tactical style correctional
armor and other futuristic designs.

         PATENTS  AND  TRADEMARKS.   The  Company  holds  numerous  patents  and
trademarks  registered  in the United States for various  products.  A number of
these  patents  are of  considerable  value and  believed  to be critical to its
business.  No  challenges  to its  patents  and  trademarks  have arisen and the
Company  has no reason to  believe  that any such  challenge  will  arise in the
future.  The  Company  has  numerous  patents  pending  for  unique,  futuristic
protective armor designs and integrated technologies.

         CUSTOMERS.  The Armor Group's products are sold  domestically to United
States law enforcement agencies,  corrections  facilities and the U.S. Military;
and internationally to governments and distributors.  Sales to the United States
Armed Forces directly or as a subcontractor  accounted for 62%, 57%, and 19%, of
the Armor Group's  revenues for the years ended December 31, 2001,  2000,  1999,
respectively.  Sales  directly and  indirectly  to domestic  state and local law
enforcement agencies,  security and intelligence agencies, and federal and state
correctional facilities,  accounted for 22%, 30%, and 55%, respectively,  of the
Armor Group's  revenues in each of the years ended December 31, 2001,  2000, and
1999.

         Certain sales by the Armor Group to federal  agencies are made pursuant
to standard purchasing  contracts issued by the General Services  Administration
of  the  Federal  Government,  commonly  referred  to as a "GSA  Schedule".  GSA
Schedule contracts accounted for approximately 14%, 12%, and 19%,  respectively,
of the Armor Group's sales for the year ended December 31, 2001, 2000, and 1999.
PACA and Point Blank, as GSA Schedule  Contract  vendors,  are obligated to make
all sales pursuant to such contracts at its lowest unit price. Their current GSA
Contracts expire July 31, 2006.

         With the exception of the U.S. Government,  no other customer accounted
for 10% or more of the Company's revenues in 2001.

         MARKETING AND  DISTRIBUTION.  The Armor Group employs  twelve  customer
support  representatives  and eight regional sales  managers.  In addition,  the
Armor Group has twenty-six independent sales representatives who are paid solely
on a commission  basis.  These personnel are responsible for marketing the Armor
Group's products to law enforcement agencies in the United States. Sales to such
law  enforcement  agencies  are made  primarily  through the  independent  sales
representatives.  However, in areas in which there are no suitable distributors,
the Armor Group will fill orders directly.

         GOVERNMENT  AND  INDUSTRY   REGULATIONS   AND  STANDARDS.   Bullet  and
fragmentation garments and accessories  manufactured and sold by the Armor Group
are  not  currently  the  subject  of  government   regulations.   However,  law
enforcement  agencies and the military specify certain standards of performance.
As  previously  noted,  NIJ has issued a revised  voluntary  ballistic  standard
(NIJ0101.04) for bullet-resistant vests in several categories.  In addition, the

                                       5

<PAGE>


NIJ has established a voluntary standard for testing  stab-resistant  armor. The
Armor Group regularly submits its vests to independent  laboratories for testing
under these  standards and all of its products have, at the time of manufacture,
met or exceeded such standards in their respective categories.

         The  Armor  Group  regularly  submits  bullet-resistant   garments  and
hard-armor  inserts for rating by independent  laboratories in accordance with a
test commonly referred to as V50. This test involves exposing the tested item to
a series of ballistic or  fragmentation  projectiles  of  increasing  velocities
until 50% of the projectiles  penetrate the armor. The tested item is then given
a V-50 rating  which may be used by  prospective  purchasers  in  assessing  the
suitability  of the Armor  Group's  products  for a particular  application.  In
addition,   PACA,  Point  Blank  and  PB  International  perform  similar  tests
internally.

         COMPETITION.   The  ballistic-resistant   garment  business  is  highly
competitive  and  fragmented.  The  number of  United  States  manufacturers  is
estimated  to be  approximately  twenty.  Management  is not aware of  published
reports   concerning  the  market,   and  most  companies  are  privately  held.
Nevertheless,  the  Company  believes  that  the  Armor  Group  is  the  largest
manufacturer  of  ballistic-resistant  garments  in the  United  States.  In the
future,  the Company may face other and  unknown  competitors,  some of whom may
have substantially  greater financial,  marketing and other resources than those
possessed by the Company.

         The Armor Group believes that the principal  elements of competition in
the sale of  ballistic-resistant  garments  are  innovative  design,  price  and
quality. The Company believes that the Armor Group enjoys a favorable reputation
in the industry with over twenty years of supplying federal, state and municipal
governments and agencies.

         BACKLOG.  As of  December  31,  2001,  the Armor Group had a backlog of
approximately  $61  million  as  compared  to  approximately  $42  million as of
December 31, 2000. Backlog at any one date is not a reliable indicator of future
sales.

         In addition to its backlog,  from time to time the Armor Group receives
contract awards for municipal orders that may be extended over a period of time.
The actual  dollar  amount of  products  to be  delivered  pursuant to these and
similar contracts cannot be accurately  predicted and is generally excluded from
reported backlog.

         POTENTIAL PRODUCT LIABILITY.  The products  manufactured or distributed
by the Armor  Group are used as  protective  devices  in  situations  that could
result in serious injuries or death, including injuries that may result from the
failure of such products.  The Armor Group maintains product liability insurance
for PACA and Point Blank in the amount of $21,000,000  each per occurrence,  and
$22,000,000 in the aggregate, less a deductible of $100,000 for each company. PB
International  maintains product liability insurance in the amount of $2,000,000
for each occurrence, with a $5,000 deductible.  There is no assurance that these
amounts  would be sufficient  to cover the payment of any  potential  claim.  In
addition,  there is no assurance that this or any other insurance  coverage will
continue to be  available,  or, if  available,  that Point Blank,  PACA,  and PB
International  would be able to obtain such insurance at a reasonable  cost. Any
substantial  uninsured  loss  would  have to be paid  out of the  Armor  Group's
assets,  as applicable,  and may have a material adverse effect on the Company's
financial  condition  and results of  operations on a  consolidated  basis.  The
inability to

                                       6

<PAGE>


obtain  product  liability  coverage  may  prohibit  Point  Blank,  PACA,  or PB
International  in the future from bidding for orders from  certain  governmental
customers. Currently many governmental agencies require such insurance coverage,
and any such  inability  to bid  would  have a  material  adverse  effect on the
Company's financial condition and results of operations on a consolidated basis.


         EMPLOYEES.   As  of  December  31  2001,  the  Armor  Group's  employed
approximately  four hundred sixty employees.  There was one officer of the Armor
Group,  eleven  persons  employed in  supervisory  capacities,  376  employed in
manufacturing,  shipping and  warehousing,  twenty-seven in customer service and
sales,  six  technical/research  development  personnel and  thirty-nine  office
personnel.  In the  opinion of  management,  the Armor  Group  maintains  a good
relationship with its employees.


DHB SPORTS GROUP

NDL sells a collection of sports medicine,  protective gear, health supports and
magnetic  therapy  products.  The Sport  Group's  primary  products  consists of
protective  athletic apparel and equipment,  such as elbow,  heart,  hip, groin,
knee shin and ankle  support  braces.  The Sports  Group also  markets  magnetic
therapy products,  but sales of these products have declined on an industry-wide
basis over the prior two years.

         Currently, the Sports Group manufactures and markets products under the
brands NDL(TM),  FLEX-AID(TM),  and other brands, as well as under private label
programs for both mass merchandisers and several  wholesalers.  The Sports Group
markets  its  product to a variety of  distribution  points  with an emphasis on
major retailers,  such as mass  merchandisers,  chain drug stores,  food chains,
independent sporting goods and pharmacy retailers.  Two customers,  Wal-Mart and
Target,  accounted  for 61 % and 54% of the Sports  Group  revenue for the years
ended December 31, 2001 and 2000, respectively

         The   Sports   Group   also  have  more  than  50   independent   sales
representatives  who are responsible for sales  throughout the United States and
internationally.  The Sports Group sales manager oversees the performance of the
independent sales  representatives and provide customer support,  when needed. A
portion of the Sports Group sales,  including  certain house accounts,  are made
directly by Company  personnel.  The Sports Group has in-house sales support and
state of the art electronic data entry order and invoicing capabilities.

         The Sports Group is a member of NACDS  (National  Association  of Chain
Drug Stores), PLMA (Private Label Manufacturers Association), and SGMA (Sporting
Goods Manufacturers Association).

As of December 31,  2001,  there were  approximately  30 employees of the Sports
Group, including 21 employed in manufacturing,  shipping and warehousing. In the
opinion of  management,  the Sports Group's  relationship  with its employees is
good.

                                       7

<PAGE>



SEGMENT INFORMATION

As described in detail above,  the Company  operates in two principal  segments:
Ballistic-resistant  equipment  and  Protective  athletic/sports  products.  The
Company  disposed of its  Electronics  Group in March 2000,  and closed its hard
armor company,  LAP in October 1999. These two divestitures are accounted for as
discontinued  operations.   Financial  information  on  the  Company's  business
segments was as follows:

<TABLE>
<CAPTION>

NET SALES                                                        2001               2000               1999
---------                                                     ------------        -----------        -----------
<S>                                                           <C>                 <C>                <C>
Ballistic-resistant equipment                                 $ 94,558,410        $64,720,773        $30,358,537
Electronic components/LAP                                               --            401,299          8,441,393
Protective athletic & sports products                            4,520,172          5,296,799          6,236,438
                                                              ------------        -----------        -----------
                                                                99,078,582         70,418,871         45,036,368
Less inter-segment sales                                        (1,062,900)                --         (2,381,099)
Less discontinued operations (3)                                 --                 (401,299)         (7,514,541)
                                                              ------------        -----------        -----------

Consolidated Net Sales                                         $98,015,682        $70,017,572        $35,140,728
                                                               ===========        ===========        ===========

INCOME FROM OPERATIONS
Ballistic-resistant equipment                                  $14,999,114        $10,591,126       $ (9,629,504)
Electronic components                                                   --           (517,288)        (1,835,137)
Protective athletic & sports products                               93,819           (166,114)        (2,390,834)
Corporate and Other (1)                                         (2,343,435)        (2,225,757)        (2,824,826)
                                                              ------------        -----------        -----------

     Sub-total                                                  12,749,498          7,681,967        (16,680,301)
Income (Loss) from discontinued
       operations (3)                                              --    .            517,288         (6,809,082)
                                                              ------------        -----------        -----------

Consolidated Operating Income                                  $12,749,498         $8,199,255      $ ( 9,871,219)
                                                              ============        ===========     ==============

IDENTIFIABLE ASSETS (2)
Ballistic-resistant equipment                                  $36,426,397        $22,383,129        $14,283,739
Electronic components                                                  ---                ---          6,177,019
Protective athletic & sports products                            2,767,905          3,517,194          3,335,253
                                                              ------------        -----------        -----------
                                                                39,194,302         25,900,323         23,796,011
Corporate and Other                                              1,701,814          2,155,948            400,038
                                                              ------------        -----------        -----------

                                       8

<PAGE>
<CAPTION>

<S>                                                            <C>                <C>                <C>
Consolidated Net Assets                                         40,896,116         28,056,271         24,196,049
Discontinued operations (3)                                                                           (4,825,532)
Assets held for sale                                                    --                 --          3,928,980
                                                              ------------        -----------        -----------
Adjusted Net Assets                                            $40,896,116        $28,056,271        $23,299,497
                                                               ===========        ===========        ===========

</TABLE>

         Foreign  sales  accounted  for  2%, 2% and 17% of  the  total  revenues
         for the years ended  December  31, 2001,  2000 and 1999,  respectively.
         Foreign  identifiable assets accounted for 1%, 1%, and 13% of the total
         assets at December 31, 2001, 2000 and 1999, respectively.

         (1)  Corporate and Other includes corporate general and administrative
              expenses.
         (2)  Corporate assets are principally cash, marketable securities, and
              deferred charges.
         (3)  Discontinued  operations included the Electronics Group sold on
              March 10, 2000, as well as the loss from the shutdown of the LAP
              plant in 1999.

ITEM 2.  PROPERTIES

         CORPORATE  HEADQUARTERS.   The  Company's  corporate  headquarters  are
in a 3,750  square foot leased  office  located at 555  Westbury  Avenue,  Carle
Place,  NY 11514.  The lease  expires in December  31,  2002,  with an option to
extend for an additional two years.

         PACA.  The Company leases a 60,060 square foot  manufacturing  facility
with  administrative  offices  at 149 Mine  Lane  Jacsboro,  Tennessee,  for its
subsidiary, PACA. The lease expires April 15, 2006.

         NDL/POINT  BLANK  FACILITY.  Point  Blank  leases a 67,000  square foot
office and manufacturing  facility (the "Oakland Park Facility") located at 4031
N.E.  12th  Terrace,  Oakland  Park,  Florida  33334,  from  V.A.E.  Enterprises
("V.A.E."),  a partnership controlled by Mrs. Terry Brooks, wife of Mr. David H.
Brooks,  and  beneficially  owned by Mr. and Mrs.  Brooks' minor  children.  NDL
Products occupies a portion of the space in the Oakland Park facility. The lease
expires on December 31, 2010.  Management  believes  that the terms of the lease
are no less  favorable  to the Company  than terms  available  from an unrelated
third party.  In April 1997, the Company  entered a five-year lease for a 60,000
square foot  warehouse  adjacent to the Oakland Park,  Florida  facility from an
unrelated third party.  This warehouse is located at 1201 NE 38th Street Oakland
Park, Florida. The Company has entered into negotiations to extend this lease.

         POINT BLANK INTERNATIONAL FACILITY. PB Int'l leases a 5,700 square foot
office and  warehouse  facility  located at Rue Leon  Frederiq,  14, 4020 Liege,
Belgium. This space is occupied pursuant to a three-year lease expiring in March
2003 with options to renew for an additional six years.


 ITEM 3.  PENDING LITIGATION

          The Company has filed a lawsuit in Nassau County Supreme Court against
its insurance  carrier as well as the insurance agent, for negligence and breach
of  fiduciary  duties as a result of the  damages the  Company  incurred  during
Hurricane Irene in October 1999. The Company claims damages of $9.4 million. The
Company is vigorously pursuing this action.


                                       9


<PAGE>

         Robert  Bruno,  the former  Vice-president  and General  Counsel of DHB
Capital Group Inc., has initiated  arbitration  against the Company  seeking two
years ($306,250) unearned  compensation under a three-year  employment.  In July
2001, the  arbitrators  awarded Bruno the full amount sought,  less offsets plus
legal fees. The Company is seeking  vacation of the Award, on multiple  grounds.
The Company  intends to  aggressively  defend its position,  but has  adequately
reserved against the Award.

On or about June 21, 2001,  American Body Armor and Equipment Inc.  commenced an
action  against the Companies  subsidiary,  PACA, in the United States  District
Court  of  the  Middle  District  of  Florida.   The  Plaintiff   claims  patent
infringement  and is seeking and damages.  PACA  believes the claimed  patent is
invalid  and  that its  product  does  not  infringe.  The  Company  intends  to
vigorously defend this action.

         The  Company  is  involved  in  other  litigation,  none  of  which  is
considered  by  management  to be  material  to its  business  or, if  adversely
determined,  would have a material  adverse  effect on the  Company's  financial
condition.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:  None


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Common Stock of the Company  began  trading on the  American  Stock
Exchange on February 1, 2002 under the symbol DHB.  Previously,  the Company was
trading on the OTC Bulletin  Board under the symbol DHBT.  The  following  table
shows the high and low bid prices of the Company's Common Stock for each quarter
in the two-year period ended December 31, 2001.

                                    Low High

2000        1st Quarter                                 .75             1.75
            2nd Quarter                                 .96             1.75
            3rd Quarter                                1.06             1.81
            4th Quarter                                1.50             2.50

2001        1st Quarter                                1.69             3.09
            2nd Quarter                                1.95             2.79
            3rd Quarter                                1.95             3.00
            4th Quarter                                3.00             6.03


         The Company pays no cash  dividends  and  presently  retains all of its
earnings and  anticipates  that its future  earnings will be retained to finance
the expansion of its business.  Any  determination  to pay cash dividends in the
future will be at the  discretion  of the Board of  Directors  after taking into

                                       10

<PAGE>


account various factors,  including financial condition,  results of operations,
current  and  anticipated  cash  needs,  and  restrictions,  if any,  under  the
Company's credit agreements.

         The number of holders of record of the Company's  Common Stock on March
18, 2002 was 130. However,  the number of holders of record includes brokers and
other  depositories for the accounts of others. The Company estimates that there
are approximately 1,400 beneficial owners of Common Stock.


RECENT SALES/ISSUANCE OF UNREGISTERED SECURITIES

         In 2001 the Company  issued 111,000 shares of Common Stock for services
to attorneys,  consultants and other service  providers.  The aggregate value of
the services rendered for these issuances  totaled $355,230.  The Company relied
on the exemption to registration  provided by Section 4(2) of the Securities Act
of 1933, as amended.

         In September 2001, the Company sold 225,000 shares of common stock in a
private  placement to companies  (accredited  investors)  affiliated with Morton
Cohen, a director of the Company for proceeds of $506,250.

         In December  2001, a private  investor  exercised a warrant for 150,000
shares of unregistered common stock for $3.00 per share for a total of $450,000.

ITEM 6.  SELECTED FINANCIAL INFORMATION

         The selected  consolidated  financial data set forth below for the year
ended  December 31, 2001,  2000,  1999,  1998,  and 1997,  were derived from the
audited  consolidated  financial  statements of the Company.  The data set forth
below should be read in conjunction with  "Management's  Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements and related Notes appearing elsewhere in this Form 10-K.

<TABLE>
<CAPTION>

INCOME STATEMENT DATA                   2001              2000                1999              1998             1997
---------------------                   ----              ----                ----              ----             ----

<S>                                    <C>                <C>                 <C>              <C>              <C>
Net Sales                              $98,015,682        $70,017,572         $35,140,728      $33,073,418      $33,271,607
Cost of Sales                           71,639,394         49,358,476          27,566,278       20,441,663       22,153,925
                                        ----------         ----------          ----------       ----------       ----------
Gross Profit                            26,376,288         20,659,096           7,574,450       12,631,755       11,117,682
Selling, General and
    Administrative                      13,626,790         12,459,841          17,445,669        9,778,336        9,641,655
                                        ----------         ----------          ----------        ---------        ---------
expenses
Operating income                        12,749,498          8,199,255         (9,871,219)        2,853,419        1,476,027
(loss)
Interest expense                        (2,483,795)        (2,743,132)        (2,908,495)       (1,095,553)        (339,754)
Other income (expense)                      42,199            340,655         (9,560,523)           21,957          801,126
                                        ----------         ----------          ----------        ---------        ---------

                                       11

<PAGE>

<CAPTION>
<S>                                     <C>                <C>               <C>               <C>               <C>
Income (loss) before
discontinued operations                 10,307,902          5,796,778        (22,340,237)        1,779,823        1,937,399
Discontinued operations                  ---                  340,572         (9,714,291)       (1,628,371)              --
                                        ----------         ----------          ----------        ---------        ---------
Income (loss) before
    Income taxes                        10,307,902          6,137,350         (32,054,528)         151,452        1,937,399
Income taxes                               174,886            129,999              67,385           21,650          396,509
                                        ----------         ----------          ----------        ---------        ---------
Net income (loss)                      $10,133,016         $6,007,351        $(32,121,913)        $129,802       $1,540,890
                                       ===========         ==========       =============         ========       ==========

Earnings per share
    Basic                                    $0.32              $0.18             $(1.24)           $0.005            $0.06
    Diluted                                  $0.28              $0.17             $(1.09)           $0.005            $0.05

BALANCE SHEET DATA                        2001            2000              1999              1998              1997
------------------                        ----            ----              ----              ----              ----

Working capital                         $20,796,294       $7,496,588        $2,047,312       $21,634,389       $13,621,014
Total Assets                             40,896,116       28,056,271        23,299,497        41,363,810        27,674,629
Short-term debt                          16,735,630       16,949,494         5,152,815         4,334,607         2,740,192
Long-term debt                           19,304,914       16,061,825        16,280,051        11,915,116         1,411,258
Stockholders' equity deficit              5,005,572       (4,955,048)      (10,186,322)       18,172,267        17,741,619

</TABLE>

 ITEM7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

         The following analysis of the Company's financial condition and results
of  operations  should be read in  conjunction  with the  financial  statements,
including the notes thereto, contained elsewhere in this document.

GENERAL

         The Company is a holding  company,  which currently  conducts  business
through its wholly owned subsidiaries organized in two divisions,  the DHB Armor
Group and DHB Sports Group. The Company's  products are sold both nationally and
internationally.   The  Armor  Group's  sales  are  directed  primarily  to  law
enforcement agencies and military services.  Sales to the U.S. military comprise
the largest portion of the Armor Group's business, followed by sales to federal,
state and local law enforcement  agencies,  including  correctional  facilities.
Accordingly,  any substantial increase or reduction in governmental  spending or
change in emphasis in defense and law enforcement programs could have a material
effect on the Armor Group's business.  The Sports Group manufactures and markets
a variety of sports  medicine,  protective  gear,  health  supports and magnetic
therapy products under its own labels, private labels and house brands for major
retailers.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

           Consolidated net sales for the Company were  $98,015,682  million for

                                       12

<PAGE>


the year ended  December 31, 2001, a 40% increase over the 2000 annual net sales
of $70,017,572 million. This increase is primarily attributable to the increased
volumes from the Military,  and, to a lesser  extent,  domestic law  enforcement
customers. The gross margin decreased 2.5% to 26.9% primarily as a result of the
plant shutdown and  relocation of the PACA facility  during the first quarter of
2001.  However,  operating  margins  expanded to 13% of revenues or  $12,749,498
million for the year ended December 31, 2001 as compared to 11.7% of revenues or
$8,199,255  million for the year ended  December  31, 2000.  This  increase is a
result of the manufacturing  operating  efficiencies resulting from higher sales
volumes, volume discounts from our vendors, and management control of expenses.

         The Company's selling general and administrative  expenses for the year
ended December 31, 2001 as a percentage of revenues  improved to 14% as compared
to 18% of 2000 revenues.

         Interest expense for the year 2001 decreased by approximately  $259,000
to $2.48 million as a result of lower interest rates under the Company's  credit
facility with LaSalle Business Credit. Other income declined by $300,000, as the
2000 figure included gain on the sale of the previous corporate headquarters.

         The  effective  tax rate for  2001  and  2000  was  nominal  due to the
utilization  of net  operating  loss  carryforwards.  The Company  generated  an
estimated loss carryfoward of $26 million as of 2000, of which $10.1 million was
utilized in 2001 and the balance of  approximately  $15 Million is  available in
subsequent years to offset taxable income in those years through 2019.

         As a result of the foregoing,  net income reached a record  $10,133,016
for the year 2001 as compared to  $6,007,351  for the year 2000, a 69% increase.
Earnings  per share for the year ended  December  31,  2001 were $0.28 per share
with 36,775,909  fully diluted shares versus $0.18 per share on 34,086,963 fully
diluted shares for 2000.

         YEAR ENDED  DECEMBER  31, 2000 AS COMPARED TO YEAR ENDED  DECEMBER  31,
1999.  Consolidated  net sales for the Company nearly doubled for the year ended
December 31, 2000 to $70,017,572  as compared to $35,140,728  for the year ended
December 31, 1999. This increase was  attributable to the increase  volumes from
the  Military  as well as  domestic  law  enforcement  customers.  Gross  profit
increased to $20,659,096 or 29% as compared to $7,574,450 or 21.5% This increase
is a result of the manufacturing  operating  efficiencies  resulting from higher
sales volumes, volume discounts from our vendors as a result of the increases in
our purchasing volumes, and management control of expenses.

         Selling,  general and administrative expenses decreased  to $12,459,841
as compared to $17,445,669 in 1999. The decrease was primarily attributable to a
sharp decline in 2000 in  advertising,  legal and other  professional  fees. The
Company was involved in several  significant  lawsuits in the prior year,  which
were concluded in 1999 or early 2000.

         Other  income  (Expense) in 2000  totaled  ($2,402,477)  as compared to
($12,469,018).   Included  in  the  1999  figures  was  a  $9.38   million  loss
attributable to damages caused by Hurricane Irene and a write down of investment
in  subsidiaries  and  equity  investments,  and  $118,136  loss  on  marketable
securities. Interest expense declined $165,000 to $2,743,132 in 2000, reflecting
a decrease in the amount of borrowed indebtedness. Also included in other income

                                       13

<PAGE>


for  2000  was a gain on the  sale of the  previous  corporate  headquarters  of
$235,694.

         Discontinued  operations  contributed  $340,555 to income in 2000, as a
result of the $858,000 gain on the sale of the Electronics Group,  compared to a
loss in 1999 of $9,714,291  attributable  both to operations of the discontinued
business and the write-down of the investment in the closed operations.

         The effective tax rate for 2000 was nominal due to the  utilization  of
net operating loss carryforwards.

         As a result of the  foregoing,  net income  increased to  $6,007,351 or
$0.18  per share  for 2000  reversing  a net loss of  $32,121,913  for 1999,  or
($1.09) per share.


LIQUIDITY AND CAPITAL RESOURCES.

         The Company's primary capital  requirements over the next twelve months
are to assist the subsidiaries in financing their working capital  requirements.
Its operating  subsidiaries  sell the majority of their  products on 60 - 90 day
terms.  Working  capital is needed to  finance  the  receivables,  manufacturing
process and  inventory.  Working  capital at December  31, 2001 was  $20,796,294
compared to working  capital of  $7,496,588  at the end of 2000.  This  increase
reflects  primarily a $3.1 million and $10.2 million increase in receivables and
inventory  with  current  liabilities  decreasing  approximately  $200,000.  The
Company  used  in its  operations  approximately  $2.9  million  from  operating
activities  to fund the  increases in accounts  receivable as well as inventory.
The  Company  increased  its  inventory  level both to support  increased  sales
volumes and to stockpile  raw  materials  required for  production  beginning in
March 2002. The "additional" inventory at December 31, 2001 was approximately $9
million dollars. The Company expects this material to be used in production from
March  through July 2002.  By adding the extra  inventory  buildup of $9 million
dollars  of raw  materials  back to the cash used by  operating  activities  the
actual  number used by  operations  would be cash  generated of a positive  $6.1
million.

         In September  2001, the Company  entered into an agreement with LaSalle
Business  Credit,  Inc.  (an ABN AMRO  Bank,  N.V.  affiliate)  whereby  LaSalle
Business Credit provided an $18.8 million credit facility to DHB Industries. The
$18.8 million  facility is comprised of a $15.5  million  asset based  revolving
credit  loan,  $1.8  million  term loan drawn down at closing and a $1.5 million
capital expenditure line, which has not been utilized. Interest is either at the
prime rate or LIBOR plus 2 1/2. A portion of these  funds was used to  partially
refinance higher interest debt. The remaining funds have been, and will be used,
to meet increased demands for capital generated during a period of rapid growth,
which has accelerated in response our growing markets.

         During 2001, the Company  repurchased and retired 678,063 shares in the
open market for an aggregate price of approximately $1,738,000.  Previously, the
Board has  authorized  the repurchase of up to 4 million shares of the Company's
common stock in the open market. To date, the Company has repurchased  2,735,605
shares for a total cost of $8,099,004 which leaves a balance of 1,264,395 shares
available for repurchase.


                                       14

<PAGE>


         The Company's capital expenditures for 2001 were $553,673,  an increase
of  approximately  $124,000  from 2000 capital  expenditures  of $429,319.  This
increase is a result of the addition of certain production equipment to increase
capacity.


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


This Annual Report contains certain  forward-looking  statements and information
relating to the Company that is based on the beliefs of the Company's management
as well  as  assumptions  made by and  information  currently  available  to the
Company's  management.  When  used in this  document,  the  words  "anticipate,"
"believe," "estimate",  "expect",  "going forward", and the similar expressions,
as they relate to the Company or Company  management,  are  intended to identify
forward-looking  statements.  Such  statements  reflect the current views of the
Company  with  respect  to future  events  and are  subject  to  certain  risks,
uncertainties and assumptions,  including,  but not limited to: general business
and economic  conditions,  the  maintenance  of the  Company's  military  supply
contacts,  the level of governmental  expenditures on law enforcement equipment,
continued  supplies  of  materials  from  critical  vendors,  and the  continued
availability  of insurance  for the  Company's  products.  Should one or more of
these risks or uncertainties  materialize,  or should the underlying assumptions
prove incorrect,  actual results may vary materially from those described herein
as anticipated,  believed,  estimated or expected.  Readers are cautioned not to
place undue reliance on these  forward-looking  statements that speak only as of
the date  hereof.  The  Company  undertakes  no  obligation  to publish  revised
forward-looking  statements to reflect the occurrence of unanticipated events or
circumstances after the date hereof.


ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

         INTEREST RATE RISK: The Company's  exposure to market risk for interest
rate changes relates  primarily to its variable rate borrowings under the credit
facility.

         FOREIGN  CURRENCY  EXCHANGE  RISK:  The Company  transacts  business in
various  foreign  countries.  Its  primary  foreign  currency  cash flows are in
Eastern Europe.  Currently, the Company does not employ a foreign currency hedge
program utilizing  foreign currency  exchange  contracts as the foreign currency
transactions and risks to date have not been significant.



ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA:
SEE INDEX TO CONSOLIDATED  FINANCIAL  STATEMENTS  APPEARING IN THE  CONSOLIDATED
FINANCIAL STATEMENT ANNEXED HERETO.


                                       15

<PAGE>
<TABLE>
<CAPTION>

                SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)

                                                   FIRST           SECOND              THIRD               FOURTH
FISCAL 2001                                       QUARTER          QUARTER            QUARTER             QUARTER
                                                -----------      -----------        -----------          -----------
<S>                                             <C>              <C>                <C>                  <C>
Net Sales                                       $20,174,944      $23,513,811        $24,009,436          $30,317,491

Cost of sales                                    15,223,433       17,308,556         17,280,550           21,826,855
                                                -----------      -----------        -----------          -----------
Gross profit                                      4,951,511        6,205,255          6,728,886            8,490,636

Selling, general and admin expense                3,333,258        3,090,487          3,281,775            3,921,270
                                                -----------      -----------        -----------          -----------

Operating income                                  1,618,253        3,114,768          3,447,111            4,569,366

Other income (expense)                            (589,685)        (678,006)          (626,594)            (547,311)
                                                -----------      -----------        -----------          -----------

Income before income taxes                        1,028,568        2,436,762          2,820,517            4,022,055
Income taxes                                          5,901          134,199             27,473                7,313
                                                      -----          -------             ------                -----

Net income                                      $ 1,022,667      $ 2,302,563        $ 2,793,044          $ 4,014,742
                                                ===========      ===========        ===========          ===========
Earnings per share

Basic                                                 $0.03            $0.07              $0.09                $0.13
                                                      =====            =====              =====                =====
Diluted                                               $0.03            $0.07              $0.08                $0.11
                                                      =====            =====              =====                =====

Weighted average shares outstanding
Basic shares                                     31,230,898       31,316,940         31,411,180           31,168,088
                                                 ==========       ==========         ==========           ==========

Diluted shares                                   36,760,623       35,923,088         35,666,896           36,567,864
                                                 ==========       ==========         ==========           ==========

                                                   FIRST           SECOND               THIRD               FOURTH
FISCAL 2000                                       QUARTER          QUARTER             QUARTER              QUARTER
-----------                                       -------          -------             -------              -------
Net Sales                                       $13,575,648      $16,128,373         $18,591,351          $21,722,200
Cost of sales                                     9,594,341       11,516,371          13,033,727           15,214,037
                                                  ---------       ----------          ----------           ----------
Gross profit                                      3,981,307        4,612,002           5,557,624            6,508,163
Selling, general and admin expenses               2,886,689        2,814,800           3,062,033            3,696,319
                                                  ---------        ---------           ---------            ---------
Operating income                                  1,094,618        1,797,202           2,495,591            2,811,844
Other income (expense)                            (785,034)        (762,998)           (391,451)            (462,994)
                                                  ---------        --------            ---------            ---------
Income before discontinued operations
                                                    309,584        1,034,204           2,104,140            2,348,850
Discontinued operations                             340,572         --                  --                   --
                                                    -------  ---    --------  ---       --------  ---        --
Income before income taxes                          650,156        1,034,204           2,104,140            2,348,850
Income taxes                                         27,773           22,878              93,408             (14,060)
                                                     ------           ------              ------             --------
Net income                                         $622,383       $1,011,326          $2,010,732          $ 2,362,910
                                                   ========       ==========          ==========          ===========
Earnings per share
Basic                                                 0.019            0.032               0.065                0.074
                                                      =====            =====               =====                =====
Diluted                                               0.019            0.032               0.064                0.068
                                                      =====            =====               =====                =====

Weighted average shares outstanding
Basic shares                                     32,332,181       32,343,941          32,237,463           31,964,196
                                                 ==========       ==========          ==========           ==========
Diluted shares                                   32,332,181       32,343,941          32,751,423           34,969,533
                                                 ==========       ==========          ==========           ==========
</TABLE>

                                       16

<PAGE>
<TABLE>
<CAPTION>


                                                    FIRST           SECOND              THIRD               FOURTH
                                                   QUARTER          QUARTER            QUARTER              QUARTER
FISCAL 1999                                      ----------       ----------         -----------          -----------

<S>                                              <C>              <C>                <C>                 <C>
Net Sales                                        $7,370,132       $8,347,387         $11,993,788           $7,429,421
Cost of sales                                     4,697,820        4,667,251           7,552,182           10,649,025
                                                  ---------        ---------           ---------           ----------
Gross profit                                      2,672,312        3,680,136           4,441,606          (3,219,604)
Selling, general and admin expenses               1,941,518        2,605,673           3,023,836            9,874,642
                                                  ---------        ---------           ---------            ---------
Operating income                                    730,794        1,074,463           1,417,770         (13,094,246)
Other income (expense)                            (322,546)        (323,392)           (478,194)         (11,344,886)
                                                  ---------        --------            ---------         ------------
Income before discontinued operations
                                                    408,248          751,071             939,576         (24,439,132)
Discontinued operations                           (333,871)        (612,597)           (619,765)          (8,148,058)
                                                  ---------        --------            ---------          -----------
Income before income taxes                           74,377          138,474             319,811         (32,587,190)
Income taxes                                         42,967            9,410              10,523                4,485
                                                     ------            -----              ------                -----
Net income                                           31,410          129,064             309,288         (32,591,675)
                                                     ======          =======             =======         ============
Earnings per share
Basic                                                 0.001            0.005               0.012              (1.242)
                                                      =====            =====               =====              =======

Diluted                                               0.001            0.004               0.010              (1.199)
                                                      =====            =====               =====              =======

Weighted average shares outstanding
Basic shares                                     25,555,440       25,660,833          26,013,541           26,244,905
                                                 ==========       ==========          ==========           ==========
Diluted shares                                   30,074,496       30,135,176          30,319,931           27,175,515
                                                 ==========       ==========          ==========           ==========
</TABLE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE:  NONE


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

         The Directors  serve for a term of one year following their election at
the Annual Meeting of Stockholders, and until their successors have been elected
and  qualified.  The officers serve at the discretion of the Board of Directors.
Set forth below is certain information regarding the Company's current directors
and officers:

         DAVID H. BROOKS,  age 47, has served as the Chairman or  Co-Chairman of
the Company  since its  inception  in 1992.  Mr.  Brooks has served as the Chief
Executive  Officer of the Company since July 2000,  having  previously served in
that capacity prior to September 1998. Mr. Brooks also serves as Chairman of the
Board,  President and a Director of Brooks Industries of L.I., Inc., a privately
held venture capital firm.

         MORTON A. COHEN, age 66, has been a director of the Company since 1996.
Mr. Cohen has been Chairman,  President and Chief  Executive  Officer of Clarion
Capital Corp., a private,  small business  investment company for more than five
years.  He  is  also  a  director  of  Cohesant   Technologies  Inc.  and  Zemex
Corporation.  He  presently  serves as the Chairman of the  Company's  audit and
compensation committees.


                                       17

<PAGE>


         SANDRA  HATFIELD,  age 48,  has been  Chief  Operating  Officer  of the
Company since December  2000.  From October 1996 until December 2000, she served
as President of Point Blank.  For more than five years prior thereto she was the
Vice President of Production at PACA.

         JEROME  KRANTZ,  age 46, has been a director of the Company  since July
2000.  He has over  twenty  years  experience  in the  insurance  and  financial
industry.  Mr. Krantz is a chartered life underwriter and a chartered  financial
consultant.  In addition he is a  registered  investment  advisor.  He currently
serves on the audit and compensation committees.

         DAWN M.  SCHLEGEL,  age  32,  is the  Chief  Financial  Officer  of the
Company.  She has also served as Treasurer  and  Secretary of the Company  since
September  1999,  and was elected a Director as of July 2000. She has functioned
in various  positions  within the Company's  operations and finances since 1996.
Prior to joining the Company, Mrs. Schlegel worked for Israeloff, Trattner & Co.
CPA's P.C., a certified public accounting firm, for more than five years.

         GARY  NADLEMAN,  age 49, has been a director  of the  Company  since
July 2001.  He has over twenty years  experience  in the apparel  industry.  Mr.
Nadleman is a private investor and the President of Synari, Inc., a manufacturer
of women's sportswear and other apparel.

ITEM 11. EXECUTIVE COMPENSATION

         SUMMARY  COMPENSATION  TABLE.  The  following  table sets forth certain
summary  information  regarding the compensation of the executive officers whose
total salary and bonus for the year ended  December 31,  2001,  2000,  and 1999,
exceeded $100,000:

          Name and Principal                                       Annual
             Position                            Year             Salary(1)
          David Brooks,(2)                       2001             $525,000
          Chairman and CEO                       2000              413,542
                                                 1999              143,750
          Sandra Hatfield                        2001             $163,497
          Chief Operating Officer                2000              152,098
                                                 1999              149,196
          Dawn Schlegel                          2001             $103,718
          Chief Financial Officer                2000              100,000
                                                 1999               65,000
          ---------------------------------- -------------- ---------------

1.       Although certain officers receive certain benefits, such as auto
         allowances and expense allowances, the value of such perquisites
         did not exceed  the  lesser of $50,000 or 10% of the  respective
         officers' salary and bonus.

         EMPLOYMENT  AGREEMENTS.  In July  2000,  Mr.  Brooks  and the  Company
entered into a new five-year employment agreement. Pursuant to the agreement Mr.

                                       18

<PAGE>


Brooks  receives an annual  salary of $500,000  through  July 2001,  with annual
increases of $50,000  thereafter.  Under the  Agreement,  Mr.  Brooks'  received
3,750,000  warrants  exercisable at $1.00 and vesting 20% immediately and in 20%
annual increments thereafter. These warrants expire in July 2010.

         STOCK  WARRANTS.  During 2001, the then current four Board Members were
awarded 25,000 warrants exercisable at $2.00 for five years for serving as board
members.  Mrs.  Schlegel was awarded 100,000  warrants  exercisable at $2.00 per
share,  which  expire in January  2006.  In December  2000 in  conjunction  with
becoming  the Chief  Operating  Officer,  Sandra  Hatfield  was awarded  400,000
warrants vesting 100,000 per year exercisable at $2.00 per share which expire in
December 2006. During the year, no additional stock options, warrants or similar
securities, rights or interests were granted to any of the executive officers of
the Company listed in the Summary Compensation Table above. No options, warrants
or similar securities,  rights or interests were exercised by any such executive
officers in 2001.

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent of a registered  class of the Company's  equity  securities to file with
the Securities and Exchange  Commission initial reports of ownership and reports
of changes of  ownership  of Common  Stock and other  equity  securities  of the
Company.  To the  Company's  knowledge,  based solely on review of the copies of
such reports furnished to the Company and written  representations that no other
reports  were  required  during the fiscal year ended  December  31,  2001,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater-than-ten-percent   beneficial   owners  were  complied  with,  with  the
exception of the following, the warrant reports of the grants to Mr. Brooks, Mr.
Krantz and Mrs. Schlegel,  late form 3S for Mr. Nadelman and Mrs. Hatfield and a
late filing of a purchase by Mr. Cohen

The following table summarizes option/warrant grants (excluding director grants)
of the named officers' stock option activity during 2001.

<TABLE>
<CAPTION>
                                      WARRANTS GRANTED IN LAST FISCAL YEAR
                          NUMBER OF                                                          POTENTIAL GAIN AT ASSUMED ANNUAL
                          SECURITIES        % OF TOTAL                                             RATES OF STOCK PRICE
                          UNDERLYING       OPTIONS/SARS                                       APPRECIATION FOR OPTION TERM(1):
                          OPTIONS /         GRANTED TO        EXERCISE OR
                            SAR'S          EMPLOYEES IN        BASE PRICE      EXPIRATION
         NAME              GRANTED(2)       FISCAL YEAR        ($/SHARE)          DATE              5%            10%
         ----              -------          -----------        ---------          ----              --            ---
<S>                             <C>             <C>              <C>             <C> <C>        <C>              <C>
David Brooks                    25,000          5%               $2.00           7/1/10         $132,250       $169,500

Sandra Hatfield                      0          0%

Dawn Schlegel                   25,000          5%               $2.00          5/31/06          132,250        169,500
                               100,000          20%              $2.00          12/31/06         529,000        678,000

</TABLE>

1 - These amounts assume hypothetical  appreciation rates of 5% and 10% over the
term of the option, as required by the SEC, and are not intended to forecast the
appreciation  of the stock price. No gain to the name officers will occur unless
the price of DHB's common shares exceeds the options' exercise price.

2 - The Company has no SARS.


                                       19

<PAGE>


                   AGGREGATED WARRANT OPTION / WARRANT VALUES

         The  following  table sets forth  information  regarding the number and
value  of  unexercised  warrants/options  held by each  of the  Named  Executive
Officers at December 31, 2001. The table does not include  warrants  provided to
Mr. Brooks in capacities other than as a director or officer of the Company.

<TABLE>
<CAPTION>

                                   NUMBER OF SECURITIES
                                   UNDERLYING UNEXERCISED                      VALUE OF UNEXERCISED IN-THE MONEY
                                   OPTIONS / SAR AT FY-END                        OPTIONS / SAR AT FY-END
                                   -----------------------                        -----------------------

         NAME                         EXERCISABLE      UNEXERCISABLE            EXERCISABLE              UNEXERCISABLE
         ----                         -----------      -------------            -----------              -------------
<S>                                    <C>                 <C>                  <C>                        <C>
David H. Brooks                        5,300,000           2,250,000            $21,167,500                $11,137,500

Dawn Schlegel                            130,000               -0-                  513,500                        -0-

Sandra Hatfield                          100,000             300,000                395,000                  1,185,000

</TABLE>


                        COMPENSATION OF COMMITTEE REPORT

         The Compensation  Committee is responsible for developing the Company's
executive  compensation  policies and determining the  compensation  paid to the
Company's Chief Executive Officer and its other executive officers.

         The Compensation Committee discharged its repsonsibility throughout the
year through informal,  personal meetings and other  communications.  In 2000, a
new employment  agreement  with the Chief  Executive  Officer was executed.  The
Committee determined that no changes to the agreement were required in 2001.

         The  Committee is reviewing  the current  compensation  packages of its
officers,  including the lack of a bonus plan. The Committee's goal is to create
a system that appropriately aligns the interest of executive officers with those
of the Company's  shareholders in increasing  shareholder  value.  The Committee
expects to make recommendations to the Board with respect to such a system later
this year.

                                Morton Cohen, Chairman
                                Jerome Krantz
                                Gary Nadelman


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table  sets  forth  the  beneficial  ownership  of  the
Company's  Common  Stock as of March 18 2002,  for (i) each person  known by the
Company to beneficially  own more than five percent of the shares of outstanding
Common  Stock,  (ii)  each  of the  executive  officers  listed  in the  Summary
Compensation  Table in "Executive  Compensation"  and (iii) all of the Company's
executive officers and directors as a group. Except as otherwise indicated,  all
shares  are  beneficially  owned,  and the  persons  named  as the  owners  hold
investment and voting power.

<TABLE>
<CAPTION>

                                            NUMBER OF SHARES                PERCENT OWNED(1)
NAME                                       BENEFICIALLY OWNED(2)          * - LESS THAN ONE (1%)
----                                       ------------------
<S>                                            <C>                                   <C>
David Brooks(3),                               22,075,6003                           53%

Morton Cohen                                    1,636,5004                            4%

Jerome Krantz                                      79,0005                            *

Sandra Hatfield                                   125,0006                            *

Dawn Schlegel                                     155,5007                            *

Gary Nadelman                                     169,0008                            *

All officers and Directors as a group
(6 people)                                     24,240,6009                           58%(9)
</TABLE>

1.       Based upon  31,515,427  shares  outstanding  as of March 18,  2002.  In
         calculating  the  percentage  owned  by  any  individual,  officer,  or
         director, the number of currently exercisable warrants and options have

                                       20

<PAGE>

         been included in calculation of percentage owned. Currently exercisable
         options or warrants  are those,  which are  exercisable  within 60 days
         after March 18, 2002.
2.       Includes  currently  exercisable  options or warrants are those,  which
         are exercisable within 60 days after the date of this form 10-K.
3.       Consists of 7,500,600  common shares owned and 500,000 shares issueable
         upon  conversion  of preferred  stock owned by Mr. Brooks and 4,500,000
         owned  by his  wife as  custodian  for his  minor  children  as well as
         9,575,000  shares  acquirable under currently  exercisable  warrants as
         described below.  Mrs. Brooks may acquire 3,750,000 shares at $1.33 per
         share and  500,000  shares at $3.50 per share upon the  exercise of her
         currently  exercisable  warrants for. Mr. Brooks may acquire  3,750,000
         shares at $2.33 per share,  25,000  shares at $3.25 per  share,  25,000
         shares  at $2.00  per  share,  25,000  shares  at $7.11  per  share and
         1,500,000  shares at $1.00 per share  upon  exercise  of his  currently
         exercisable warrants. As the only person with more than 5% ownership of
         the Company,  Mr. Brooks address is 555 Westbury Avenue, Carle Place NY
         11514.
4.       Includes  931,500 shares owned by various  private equity funds managed
         by  Mr.  Cohen  and  125,000  shares   purchasable   upon  exercise  of
         outstanding options at prices ranging from $2.00 to $7.11.
5.       Includes 50,000  shares,  which  may  be  acquired  upon exercise  of a
         currently exercisable warrants at prices between $2.00 and $7.11.
6.       Includes  125,000,  which may be acquired under  currently  exercisable
         warrants at prices between $2.00 and $7.11.
7.       Includes 155,000,  which  may  be acquired  under currently exercisable
         warrants at prices between $2.00 and $7.11.
8.       Includes  50,000  shares,  which  may  be  acquired  upon exercise of a
         currently exercisable warrants at prices between $2.00 and $7.11.
9.       Includes 10,030,000 currently exercisable warrants of common stock held
         by directors and officers


ITEM 13.  CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS

         The  Company  has funded  certain of its  acquisitions  and  operations
through the use of term loans from Mr. David H. Brooks, Chairman of the Board of
the Company,  and Mrs. Terry Brooks,  his wife.  The balance of the  shareholder
loans at December 31, 2001 is $10,000,000.  These  shareholders  loans mature in
November 2004 and bear interest at 12% per annum.

         Point  Blank  leases a 67,000  square  foot  office  and  manufacturing
facility  (the  "Oakland  Park  Facility")  located at 4031 N.E.  12th  Terrace,
Oakland Park, Florida 33334, from V.A.E.  Enterprises ("V.A.E."),  a partnership
controlled by Terry Brooks,  wife of Mr. David H. Brooks, and beneficially owned
by Mr.  and Mrs.  Brooks'  minor  children.  Annual  aggregate  base  rental was
$607,353 in 2001 and expires in December 31, 2010.  Management believes that the
terms of the lease are at the current  market price that would be obtained  from
an unrelated party.


ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8K

                                       21

<PAGE>


       A.     (1)  FINANCIAL STATEMENTS
              (2)  FINANCIAL STATEMENT SCHEDULES
              (3)  EXHIBITS.  THE EXHIBITS FILED HEREWITH ARE SET FORTH ON THE
                   INDEX TO EXHIBITS FILED AS PART OF THIS REPORT.

       B.  FORM 8-K:  NO REPORTS ON FORM 8-K WERE FILED DURING THE QUARTER ENDED
           DECEMBER 31, 2001.
















                                       22
<PAGE>

<TABLE>
<CAPTION>

                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED FINANCIAL STATEMENTS INDEX






                                    CONTENTS

                                                                                 PAGE


<S>                                                                       <C>
INDEPENDENT AUDITORS' REPORT                                                     F-1


Consolidated Balance Sheets as of December 31, 2001 and 2000                      F-2


Consolidated Statements of Operations for the years ended
         December 31, 2001, 2000 and 1999                                        F-3


Consolidated Statements of Stockholders' Equity for the years ended
         December 31, 2001, 2000 and 1999                                        F-4


Consolidated Statements of Cash Flows for the years ended December 31,
         2001, 2000 and 1999                                                     F-5


Consolidated Statements of Comprehensive Income for the years ended
         December 31, 2001, 2000 and 1999                                        F-6


Notes to the Consolidated Financial Statements                            F-7 - F-18

Schedule II Valuation and Qualifying Accounts                                   F-19
</TABLE>


                                       23

<PAGE>



INDEPENDENT AUDITORS' REPORT



The Board of Directors of
DHB Industries Inc.

We have audited the accompanying  consolidated  balance sheets of DHB Industries
Inc.  and  Subsidiaries  as of  December  31,  2001  and  2000  and the  related
consolidated statements of operations,  stockholders' equity (deficit) and other
comprehensive  income and cash flows for each of the  three-years  in the period
ended  December  31, 2001.  Our audits also  included  the  financial  statement
schedule.  These consolidated financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by management,  as well as evaluating  the overall  consolidated
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of DHB
Industries  Inc.  and  Subsidiaries  as of  December  31,  2001 and 2000 and the
consolidated  results of its operations and its cash flows for each of the three
years in the  period  ended  December  31,  2001 in  conformity  with  generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.




Paritz and Company P.A.
Hackensack, New Jersey
March 5, 2002




                                      F-1

<PAGE>
<TABLE>
<CAPTION>


                      DHB INDUSTRIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  DECEMBER 31,

                        ASSETS                               2001           2000
                        ------                               ----           ----

<S>                                                       <C>            <C>
CURRENT ASSETS
Cash and cash equivalents                                    $145,384      $ 566,887
Marketable securities                                            --          368,996
Accounts receivable, less allowance for doubtful
   accounts of $792,451 and $653,384                       11,252,577      8,121,188
Inventories                                                24,582,313     14,297,059
Prepaid expenses and other current assets                   1,401,650      1,091,952
                                                            ---------      ---------

Total Current Assets                                       37,381,924     24,446,082
                                                           ----------     ----------

PROPERTY AND EQUIPMENT                                      2,017,012      1,940,326
                                                            ---------      ---------

OTHER ASSETS
Investments in non-marketable securities                      941,750        941,750
Deferred tax assets                                           259,300        429,300
Deposits and other assets                                     296,130        298,813
                                                              -------        -------

Total Other Assets                                          1,497,180      1,669,863
                                                            ---------      ---------

TOTAL ASSETS                                              $40,896,116    $28,056,271
                                                          ===========    ===========
              LIABILITIES AND STOCKHOLDERS' EQUITY
                           (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable                                          $13,298,185    $11,257,987
Accrued expenses and other current liabilities              2,515,127      5,547,759
Current maturities of long term debt                          772,318        143,748
                                                              -------        -------

Total Current Liabilities                                  16,585,630     16,949,494
                                                           ----------     ----------

LONG TERM LIABILITIES
Notes payable-bank                                          8,442,414           --
Long term debt, net of current maturities                     862,500         15,356
Note payable - stockholder                                 10,000,000     16,046,469
                                                           ----------     ----------

Total Long Term Debt                                       19,304,914     16,061,825
                                                           ----------     ----------

Total Liabilities                                          35,890,544     33,011,319

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIENCY)                           5,005,572     (4,955,048)
                                                            ---------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS'    EQUITY
(DEFICIENCY)                                              $40,896,116    $28,056,271
                                                          ===========    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,

                                                                  2001              2000               1999
                                                                  ----              ----               ----
<S>                                                              <C>                <C>                <C>
Net sales                                                        $98,015,682        $70,017,572        $35,140,728

Cost of goods sold                                                71,639,394         49,358,476         27,566,278
                                                                  ----------         ----------         ----------

Gross profit                                                      26,376,288         20,659,096          7,574,450

Selling, general & administrative expenses                        13,626,790         12,459,841         17,445,669
                                                                  ----------         ----------         ----------

Income (loss) before other income (expense)                       12,749,498          8,199,255         (9,871,219)
                                                                  ----------          ---------        -----------

Other income (expense)
Interest expense, net of interest income                          (2,483,795)        (2,743,132)        (2,908,495)
Hurricane loss                                                         --                --             (7,740,231)
Settlement of employment contract                                      --                --               (270,000)
Loss on holding of equity investments                                  --                --               (688,000)
Write down of investment in subsidiary                                 --                --             (1,000,000)
Realized gain (loss) marketable securities                           (71,030)           (26,676)           (16,050)
Unrealized gain (loss) on marketable securities                                              -            (102,086)
Other income                                                         113,229            367,331            255,844
                                                                     -------            -------            -------
Total other income (expense)                                      (2,441,596)        (2,402,477)       (12,469,018)
                                                                 -----------        -----------       ------------

Income (loss) from continuing operations before income taxes      10,307,902          5,796,778        (22,340,237)

Income taxes                                                         174,886            129,999             67,385
                                                                     -------            -------             ------

Income (loss) from continuing operations                          10,133,016          5,666,779        (22,407,622)

Discontinued operations
Loss from discontinued operations                                      --              (517,288)        (4,238,800)
Gain (loss) on disposal of discontinued operations                     --               857,860         (5,475,491)
                                                                                      ---------        -----------
Total discontinued operations                                          --               340,572         (9,714,291)
                                                                    --------            -------        -----------



Net income (loss)                                                $10,133,016         $6,007,351       $(32,121,913)
                                                                 ===========         ==========      =============


Earnings (loss) per common share (Note 8)
   Continuing operations                                               $0.28             $ 0.18            $ (0.86)
   Discontinued operations                                              0.00               0.00              (0.38)
                                                                        ----               ----             ------
    Net earnings (loss) per common share                               $0.28              $0.18             $(1.24)
                                                                       =====              =====            =======

</TABLE>

                 See accompanying notes to financial statements.


                                      F-3


<PAGE>
<TABLE>
<CAPTION>


                      DHB INDUSTRIES INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                                                                 COMMON      ACCUMULATED
                                            NUMBER OF             ADDITIONAL     STOCK          OTHER      RETAINED
                                             COMMON      PAR       PAID-IN     SUBSCRIPTION COMPREHENSIVE  EARNINGS
                                             SHARES     VALUE      CAPITAL      RECEIVABLE      INCOME     (DEFICIT)       TOTAL
                                           ----------  --------  ------------   ---------     --------   -----------   -------------
<S>                                        <C>         <C>       <C>           <C>           <C>         <C>            <C>
Balance December 31, 1998                  25,447,440  $ 25,447  $ 21,215,849       0         $ 31,869   $(3,100,898)   $18,172,267

Net loss                                                                                                 (32,121,913)   (32,121,913)
Effect of foreign currency translation                                                         (19,461)                     (19,461)
                                                                                                                            --------
     Total comprehensive income                                                                                         (32,141,374)
Sale of common stock                        6,645,700     6,646     4,241,609    (700,025)                                3,548,299
Stock issued for services                     273,214       273       390,777                                               390,981
Exercise of warrants                           40,977        41        83,709                                                83,750
Purchase of treasury stock                    (75,150)      (75)     (240,170)          -            -             -       (240,245)
                                             --------      ----     ---------   ---------    ---------      ---------     ---------
Balance December 31, 1999                  32,332,181   $32,332   $25,691,774  $ (700,025)     $12,408  $(35,222,811)  $(10,186,322)

Net income                                                                                                 6,007,351      6,007,351
Effect of foreign currency translation                                                         (35,959)                     (35,959)
Effect of valuation allowance marketable
  securities                                                                                  (283,211)                    (283,211)
                                                                                             ---------                    ---------
     Total comprehensive income                                                                                           5,688,181
Sale of common stock                                                   (8,900)    700,025                                   691,125
Stock issued for services                      22,607        22        35,828                                                35,850
Stock issued in settlement of a lawsuit        16,727        17        22,983                                                23,000
Purchase of treasury stock                   (697,538)     (697)   (1,206,184)          -            -             -     (1,206,882)
                                            ---------     -----   -----------   ---------    ---------      ---------   -----------
Balance December 31, 2000                  31,673,977  $ 31,674  $ 24,535,501     $ --      $ (306,762) $(29,215,460)   $(4,955,048)

Net income                                                                                                10,133,016     10,133,016
Effect of foreign currency translation                                                         (29,179)                     (29,179)
Effect of valuation allowance marketable
  securities                                                                                   283,211                      283,211
                                                                                                                            -------
     Total comprehensive income                                                                                          10,387,048
Sale of common stock                          225,000       225       506,025                                               506,250
Stock issued for services                     111,000       111       355,119                                               355,230
Stock issued - exercise of a warrant          150,000       150       449,850                                               450,000
Purchase of treasury stock                   (678,063)     (678)   (1,737,231)          -            -             -     (1,737,909)
                                            ---------     -----   -----------    ---------    --------- -------------    ----------
Balance December 31, 2001                  31,481,914  $ 31,482  $ 24,109,264    $  --      $  (52,730) $(19,082,444)    $5,005,572
                                           ==========    ======    ==========    ========     ========  =============    ==========
</TABLE>

                 See accompanying notes to financial statements.

                                      F-4

<PAGE>

<TABLE>
<CAPTION>

                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES                                2001            2000             1999
                                                                    ----            ----             ----

<S>                                                               <C>              <C>             <C>
Net Income (loss)                                                 $10,133,017      $6,007,351      $(32,121,913)

Adjustments to reconcile net income to net cash provided by
  operating activities:
Depreciation and amortization                                         478,070         324,161           592,213
Valuation allowances/reserves                                         283,211        (283,211)        4,017,806
Stock issued for services                                             355,230          35,850           200,981
Stock issued in settlement of a lawsuit                                   --           23,000           190,000
Unrealized gain on transfers from non-marketable securities               --           58,250              --
Deferred income taxes                                                 170,000          14,700          (110,000)
Changes in assets and liabilities
Accounts receivable                                                (3,131,389)     (2,912,823)        2,705,402
Marketable securities                                                 368,996        (368,996)          529,328
Inventories                                                       (10,285,254)     (5,251,206)        9,017,763
Assets held for sale                                                      --             --              23,717
Prepaid expenses and other current assets                            (309,698)       (495,511)        1,335,850
Deposits and other assets                                               1,600          41,195           217,601
Accounts payable                                                    2,040,198       1,762,324         4,366,516
Accrued expenses and other current liabilities                     (3,032,632)      2,990,469           744,616
                                                                  -----------      ----------        ----------

Net cash provided (used) by operating activities                   (2,928,651)      1,945,553       (8,290,120)
                                                                  -----------       ---------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Sale (payments for purchase) of assets of subsidiary, net
  of cash acquired                                                       --         3,933,980              --
Sale of property and equipment                                           --           422,241              --
Payments made for property and equipment                             (553,673)       (429,319)         (311,043)
                                                                    ---------       ---------         ---------

Net cash provided (used) by investing activities                     (553,673)      3,926,902          (311,043)
                                                                    ---------       ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank                         8,442,414      (5,000,000)          825,000
Proceeds of note payable- shareholder                              (6,046,469)           -            4,518,865
Proceeds from the issuance of long term debt                        1,800,000            -                   -
Principal payments on long-term debt                                 (324,286)       (227,293)         (160,722)
Proceeds from the exercise of warrants - common stock                 450,000           -                83,750
Foreign currency translation                                          (29,179)        (35,959)          (19,461)
Purchase of treasury stock                                         (1,737,909)     (1,206,882)         (240,245)
Net proceeds from sale of common stock                                506,250         691,125         3,548,300
                                                                      -------       ---------         ---------

Net cash provided (used) by financing activities                    3,060,821      (5,779,009)        8,555,487
                                                                    ---------    ------------         ---------

NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS                                                          (421,503)         93,446           (45,676)

CASH AND CASH EQUIVALENTS - BEGINNING                                 566,887         473,441           519,117
                                                                      -------        --------           -------

CASH AND CASH EQUIVALENTS - END                                      $145,384        $566,887          $473,441
                                                                     ========       =========          ========
</TABLE>

                 See accompanying notes to financial statements.

                                      F-5

<PAGE>

                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                      Principles of consolidation

                      The consolidated financial statements include the accounts
            of DHB Industries Inc. and its  subsidiaries  ("DHB"),  all of which
            are wholly owned. DHB has two major  divisions,  DHB Armor Group and
            DHB Sports Group.

                      Business description

                      DHB Armor Group  develops,  manufactures,  and distributes
            bullet and  projectile  resistant  garments,  bullet  resistant  and
            fragmentation  vests,  bomb  projectile  blankets,  aircraft  armor,
            bullet   resistant   plates  and  shields   and  related   ballistic
            accessories.   DHB  Sports  Group   manufactures   and   distributes
            specialized protective athletic apparel and equipment and orthopedic
            products

                      Uses  of  estimates  in  the   preparation   of  financial
            statements

                      The preparation of financial statements in conformity with
            generally accepted accounting principles requires management to make
            estimates and assumptions that affect the reported amounts of assets
            and liabilities and disclosure of contingent  assets and liabilities
            at the date of the financial  statements and the reported amounts of
            net  revenue  and  expenses  during each  reporting  period.  Actual
            results could differ from those estimates.

                      Revenue recognition

                      Revenue from product  sales is  recognized at the time the
            product is shipped.

                      Inventories

                      Inventories are valued at the lower of cost (determined on
            the first-in, first-out basis), or market.

                      Property, plant and equipment and depreciation

                      Property,  plant and equipment  are stated at cost.  Major
            additions,  improvements, and renewals, which substantially increase
            the useful lives of assets, are capitalized.  Maintenance,  repairs,
            and  minor  renewals  are  expensed  as  incurred.  Depreciation  is
            provided for both financial  reporting and income tax purposes using
            the straight-line and accelerated methods. Marketable/Non-Marketable
            Securities

                      Investments  in  marketable  securities  are accounted for
            according to the  provisions  of  Statement of Financial  Accounting
            Standards No. 115,  "Accounting for Certain  Investments in Debt and
            Equity Securities" (SFAS 115).  Management of DHB classified all its
            marketable  securities  as held  for  investment  and,  accordingly,
            unrealized  gains and losses are reflected in the equity  section of
            the balance sheet.

                                      F-6

<PAGE>


Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

            Non-marketable securities are valued at historical cost.

            Income taxes

                      DHB  and its  domestic  subsidiaries  file a  consolidated
            Federal income tax return and separate state income tax returns.

                      DHB accounts for deferred  income taxes in accordance with
            SFAS  Statement No. 109 which  requires that deferred tax assets and
            liabilities   be   recognized   for  the  future   tax   consequence
            attributable to differences  between  financial  statement  carrying
            amounts of existing assets and liabilities and their  respective tax
            bases. In addition,  SFAS No. 109 requires recognition of future tax
            benefits,  such as net operating loss  carryforwards,  to the extent
            that realization of such benefits is more likely than not and that a
            valuation allowance be provided when it is more likely than not that
            some portion of the deferred tax asset will not be realized.

            Research and development expenses

                      Research   and   development   expenses  are  expensed  as
            incurred.  The Company  incurred  approximately  $2.3 million,  $1.3
            million,  and $825,000,  of research and development  costs in 2001,
            2000, and 1999 respectively.

            Advertising expenses

                      The cost of  advertising  is  expensed  as  incurred.  The
            Company incurred approximately $742,000,  $728,000, and $1,062,000of
            advertising costs in 2001, 2000, and 1999 respectively.

            Earnings per share

                      The Company  adopted  SFAS No. 128,  "Earnings  Per Share"
            which  simplifies the computation of earnings per share and required
            the  presentation  of basic and diluted  earnings  per share.  Basic
            income per share amounts are based on the weighted average number of
            shares of common stock outstanding. Diluted income per share amounts
            are based on the weighted  average  number of shares of common stock
            and stock options outstanding during the years presented.

            Comprehensive income (loss)

                      The Company  adopted the  provision of statement  No. 130,
            Reporting   comprehensive   income  that   modifies  the   financial
            presentation  of  comprehensive   income  and  its  components.   In
            accordance  with  this  Statement,   a  Consolidated   Statement  of
            Comprehensive  Income  is  included  in the  Consolidated  financial
            statements  to present  all changes in  Stockholders'  equity in the
            periods  presented  other than changes  resulting from  transactions
            relating to the Company's stock.

                                      F-7

<PAGE>



Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued


            Stock based compensation

                      Statement  of  Financial  Accounting  Standards  No.  123,
            "Accounting for Stock Based Compensation" (SFAS 123) encourages, but
            does  not  require   companies  to  record   compensation  cost  for
            stock-based employee  compensation at fair value. DHB has chosen not
            to  adopt  SFAS  123 and to  continue  to  account  for  stock-based
            compensation   using  the  intrinsic  value  method   prescribed  in
            Accounting  Principles  Board Opinion No. 25,  "Accounting for Stock
            Issued to  Employees,"  and  related  interpretations.  Accordingly,
            compensation  cost for stock  options is measured as the excess,  if
            any, of the quoted market price of the  Company's  stock at the date
            of the grant over the  amount an  employee  must pay to acquire  the
            stock.

            Impairment of long-lived assets

                      DHB accounts for the  impairment of  long-lived  assets in
            accordance with SFAS No. 121 which requires that  long-lived  assets
            and identifiable  intangibles held and used by a company be reviewed
            for possible  impairment whenever events or changes in circumstances
            indicate   that  the  carrying   amount  of  an  asset  may  not  be
            recoverable.

Note 2      SUPPPLEMENTAL CASH FLOW INFORMATION

                Cash paid for:          2001            2000            1999
                                        ----            ----            ----
                     Interest      2,364,455         124,757         355,160
                     Taxes            12,817          29,131          63,933

            On  March  10,  2000,  the  Company  sold  LEC and DHB KK for a cash
            payment of approximately $4.234 million.


Note 3      MARKETABLE SECURITIES/NON-MARKETABLE SECURITIES

                      The following is a comparison of the cost and market value
            of marketable securities included in current assets:

                                             2001          2000          1999
                                             ----          ----          ----

                Cost                           $0       $652,207           $0
                Unrealized loss                --      (283,211)           --
                                               --      ---------           --
                Market Value                   $0       $368,996           $0
                                               ==       ========           ==


              Long Term Investments

                      The fair values of some investments are estimated based on
            quoted  market  prices for those or similar  investments.  For other
            investments  for  which  there  are  no  quoted  market  prices,   a
            reasonable  estimate  of  fair  value  could  not  be  made  without
            incurring excessive costs.  Additional  information pertinent to the
            value of an unquoted investment is provided below.


Note 3      MARKETABLE SECURITIES/NON-MARKETABLE SECURITIES -(Continued)

                      It was not  practicable  to estimate  the fair value of an
            investment of the issued common stock of an untraded  company;  that
            investment  is  carried  at its  original  cost of  $941,750  in the
            statement  of  financial  position.  At  year-end,  the total assets
            reported by the  untraded  company  were  $2,220,494  and the common
            stockholders'  equity was  $1,264,999,  revenues  for the year ended
            December 31, 2001 were $7,914,249 with a net loss of $(3,108,989).

                                      F-9

<PAGE>


Note 4      INVENTORIES
<TABLE>
<CAPTION>

            Inventories consist of the following:

                                               2001            2000             1999
                                               ----            ----             ----
            <S>                             <C>              <C>             <C>
            Finished goods                  $5,041,516       $2,225,136      $3,376,747
            Work in process                  6,917,229        5,365,685       1,889,701
            Raw materials and supplies      12,623,568        6,706,238       5,001,428
                                            ----------        ---------       ---------
                 Sub-total                  24,582,313       14,297,059      10,267,876
            Discontinued Operations           -      -        -      -       (1,222,023)
                                           -----------      -----------     -----------
                                           $24,582,313      $14,297,059     $ 9,045,853
                                           ===========      ===========     ===========
</TABLE>

Note 5      PROPERTY, PLANT AND EQUIPMENT

                      A  summary  of  property,  plant  and  equipment  and  the
            estimated  lives  used  in the  computation  of  depreciation  is as
            follows:

<TABLE>
<CAPTION>
                                                                                      ESTIMATED
                                                         2001            2000        USEFUL LIFE
                                                         ----            ----        -----------
            <S>                                        <C>              <C>          <C>
            Buildings                                     --              --            39 years
            Machinery and equipment                    1,990,884        1,767,158     5-30 years
            Furniture, fixtures and
            Computer equipment                         1,073,910        1,173,909      5-7 years
            Transportation equipment                     601,596          391,016      3-5 years
            Leasehold improvements                       715,673          751,062   5-31.5 years
                                                         -------          -------
                                                       4,382,062        4,083,145
            Less accumulated depreciation and
            amortization                               2,365,051        2,142,812
                                                       ---------        ---------

                                                      $2,017,012       $1,940,326
                                                      ==========       ==========
</TABLE>


Note 6      NOTES PAYABLE STOCKHOLDER

            These notes bear interest at 12% per annum and are due, as extended,
            in November 2004. See Note 17, subsequent events


                                      F-9

<PAGE>
<TABLE>
<CAPTION>


Note 7      LONG-TERM DEBT
                                                                               2001          2000
                                                                               ----          ----
<S>                                                                        <C>              <C>
Note payable bank (a)(c)                                                   $8,442,414         $ --
                                                                           ==========          ====

Long-term debt consists of the following:

Term Loan - payable in 24 monthly installments of $62,500                  $1,612,500
plus interest and 11 installments of $8,333 plus interest(b),(c)

Other                                                                          22,318       159,104
                                                                               ------       -------
                                                                            1,634,818       159,104
Less current portion                                                          772,318       143,748
                                                                              -------       -------

Total long term debt                                                        $ 862,500      $ 15,356
                                                                            =========      ========
</TABLE>

a - Pursuant to a Loan and Security  Agreement  dated  September  24, 2001 ("the
agreement"),  which  expires  September  2004,  the Company may borrow up to the
lesser of $15,500,00 or eighty five percent of its eligible accounts  receivable
plus the lesser of $10,000,000 or certain percentages of eligible inventory,  as
defined Borrowings under this agreement bear interest,  at the Company's option,
at the bank's prime rate or LIBOR; plus 2 1/2 % per annum.

       The Company has classified the entire outstanding balance under this part
of the agreement as long-term since the Company  projects that these  borrowings
will not go below this amount  during the year ending  December  31,  2002.

b - These borrowings bear interest, at the Company's option, at the bank's prime
rate  plus  1/2% or LIBOR  plus 3%.  In  addition  to the  principal  repayments
referred to above, commencing with the year ended December 31, 2002, the Company
must make mandatory prepayments based upon its excess cash flow as defined.

c  --  The  borrowings  are  collateralized  by a  first  security  interest  in
substantially  all assets of the Company.  The  agreement,  among other  things,
requires the Company to maintain a minimum (i)  tangible net worth,  as defined,
(ii) fixed charge  coverage ratio and (iii)  earnings  before  interest,  taxes,
depreciation  and  amortization.  The  agreement  further  limits  the amount of
capital expenditures the Company may incur in any fiscal year.

d - The agreement  also  provides that the lender will make capital  expenditure
loans to the  company  of up to 75% of the net  invoice  cost,  as  defined,  of
certain  equipment up to a maximum loan of  $1,500,000.  Zero had been  borrowed
under this portion of the loan as of December 31, 2001.

                              Long-term debt matures as follows:
                        2002                            $772,318
                        2003                             750,000
                        2004                             112,500
                        2005                                 -
                                                      ----------
                            Total                     $1,634,818
                                                      ==========


                                      F-10

<PAGE>


Note 8      STOCKHOLDERS' EQUITY

            Common and preferred stock

            DHB has 100,000,000 shares authorized of its $.001 par value Common.
            In addition,  DHB is authorized to issue 1,500,000 shares of Class A
            10%  convertible  Preferred  Stock,  none of which  was  issued  and
            outstanding  at December 31, 2001 and 2000.  On December 1, 2000 the
            Board  of  Directors  announced  the  directive  to the  Company  to
            purchase  up to two million  shares of its common  stock in the open
            market,  from time to time,  at its  discretion.  As of December 31,
            2001, the Company still has  authorization to purchase an additional
            1,264,395 shares.

            Earnings Per share

                      Earnings  per common share  calculations  are based on the
            weighted  average  number of common shares  outstanding  during each
            period: 31,455,406 , 32,219,376,  and 25,866,880 for the years ended
            December 31, 2001,  2000, and 1999,  respectively.  Calculations for
            diluted  earnings per share are based on the weighted average number
            of outstanding common shares and common share equivalents during the
            periods: 36,775,910,  34,086,963, and 25,866,880 for the years ended
            December 31, 2001, 2000 and 1999, respectively.

<TABLE>
<CAPTION>
                                                                  INCOME (LOSS)         SHARES            PER SHARE
            Basic EPS                                              (NUMERATOR)       (DENOMINATOR)          AMOUNT
                                                                  -----------       -------------          ------
            <S>                                                   <C>                 <C>                    <C>
            Income From continuing operations-2001                $10,133,016          31,455,406            $ 0.32
                                                            ------------------ ------------------- -----------------
            Diluted EPS                                           $10,133,016          36,775,910            $ 0.28
                                                                  ===========          ==========            ======

            Basic EPS
            Income From continuing operations-2000                $ 5,796,778          32,219,376            $ 0.18
                                                            ------------------ ------------------- -----------------
            Diluted EPS                                           $ 5,796,778          34,086,963            $ 0.17
                                                                  ===========          ==========            ======

            Basic EPS
            Loss from continuing operations-1999                 $(22,340,237)         25,866,880           $ (1.24)
                                                            ------------------ ------------------- -----------------
            Diluted EPS                                          $(22,340,237)         25,866,880           $ (1.24)
                                                                =============          ==========          ========
</TABLE>

            Stock option plan

                      The Company  adopted a 1995 Stock Option Plan  pursuant to
            which the Board of  Directors  was  authorized  to award  options to
            purchase  up  to  3,500,000  shares  of  Common  Stock  to  selected
            officers,  employees,  agents,  consultants  and other  persons  who
            render services to the Company.

            Stock warrants

                      During 2001,  the four Board Members were each awarded 25,
            000 warrants  exercisable at $2.00 for five years. Also during 2001,
            the Board of  Directors  awarded  a key  employee  100,000  warrants
            exercisable at $1.70, which expire in January 2006.

                      All of the above  mentioned  warrants  were granted in the
            year ended December 31, 2001 and there were no options  exercised or
            canceled during the same period.

                      The  per  share  weighted  average  fair  value  of  stock
            warrants  granted during the fiscal year ended December 31, 2001 was
            $2.00.  The fair value of these  warrants was determined at the date
            of grant  using the  Black-Scholes  warrant  pricing  model with the
            following  assumptions;

                        Risk-free interest rate                 4.92%
                        Expected volatility of common stock   100.67%
                        Dividend yield                          0.00%
                        Expected option term                    5.14 years

                      The  Company  applies APB 25 in  accounting  for its stock
            plans and,  accordingly,  no compensation costs have been recognized
            in the Company's  financial  statements  for warrants  granted.  If,
            under SFAS 123, the Company  determined  compensation costs based on
            the  fair  value  at the  grant  date for its  stock  warrants,  net
            earnings and earnings per share for the year ended December 31, 2001
            would have been reduced to the pro forma amounts as follows:

              Net Earnings
                 As reported                                      $10,133,016
                 Pro forma                                          7,907,651
              Basic Earnings Per Share
                 As reported                                            $0.32
                 Pro forma                                               0.25
              Diluted Earnings Per Share
                 As reported                                            $0.28
                 Pro forma                                               0.21

                      The following table summarizes information regarding stock
            warrants outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                                        Weighted
                                                         Average       Weighted       Number of         Weighted
                                      Number of         Remaining       Average        Shares           Average
                Exercise Price         Warrants        Contractual     Exercise      Exercisable     Exercise Price
                     Range           Outstanding          Life           Price          Price
              -------------------- ----------------- ---------------- ------------ ---------------- -----------------
<S>            <C>                        <C>                   <C>         <C>          <C>                   <C>
                  0 to $1.00              3,750,000             8.51        $1.00        1,500,000             $1.00
                $1.01 to $1.50            3,883,000             2.92        $1.33        3,872,000             $1.33
                $1.51 to $2.00              913,000             4.52        $2.00          525,333             $2.00
                $2.01 to $2.50            3,795,000             4.25        $2.33        3,765,000             $2.33
                $2.51 to $3.00              364,600             0.91        $3.00          359,000             $3.00
                $3.01 to above              600,000             2.78        $3.49          600,000             $3.49

</TABLE>


              In 2000, the board of directors awarded two key employees warrants
              which  vest over four to five years and are  exercisable  at $2.00
              per share.  Pursuant to employment  agreements  (See Note 14), the
              Company has 3,750,000  stock warrants  outstanding  exercisable at
              $2.33 per share and expiring in 2006 and 3,750,000  stock warrants
              at $1.00 and vesting 20% immediately and in 20% annual  increments
              thereafter and expire in July 2010.




                                      F-11

<PAGE>


Note 9      DISCONTINUED OPERATIONS.

            In October 1999,  the Company  announced  its strategic  decision to
            discontinue the operations of its LAP and the Electronics Group (LEC
            and DHB KK).  LAP  operations  where shut down in October 1999 while
            the  Electronics  Group was sold on March 10, 2000 for a sales price
            of $4.234 million,  less the outstanding long-term debt. The results
            of the closure of LAP and the  Electronics  Group have been reported
            separately  as   discontinued   operations.   Prior  year  financial
            statements  have been  restated to present  LAP and the  Electronics
            Group as a discontinued  operation.  The components of net assets of
            the  discontinued  operations  included in the  balance  sheet as of
            December 31, 1999 are as follows:

<TABLE>
<CAPTION>

                                                                                                     1999
                                                                                                     ----
             <S>                                                                                <C>
             Current assets (mainly trade receivables and inventory)                            $1,865,454
             Accounts payable and accrued expenses                                                 896,552
                                                                                                   -------
             Net current assets                                                                   $968,902
                                                                                                  --------

             Property, plant and equipment, net                                                 $2,866,471
             Other non-current assets                                                               93,607
                                                                                                    ------
             Net Long-term assets                                                               $2,960,078
                                                                                                ----------
</TABLE>


             The condensed statements of operations relating to the discontinued
              operations are presented below:
<TABLE>
<CAPTION>
                                                                                   2000             1999
             <S>                                                                 <C>            <C>
             Net sales                                                           $401,299       $7,514,541
             Cost and expenses                                                   (918,587)      11,753,341
                                                                                ---------      -----------
             Loss before income taxes                                            (517,288)      (4,238,800)
             Gain (loss) on disposal                                              857,860       (5,475,491)
                                                                                ---------      -----------
             Net Income (loss)                                                   $340,572      $(9,714,291)
                                                                                =========      ===========
</TABLE>


Note 10     RELATED PARTY TRANSACTIONS


            A summary of related party transactions for the years ended December
            31, 2001, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
                                                                      2001           2000           1999
                                                                      ----           ----           ----
              <S>                                                <C>            <C>            <C>
              Interest, rental, professional and other
              expenses paid or accrued to DHB's majority
              stockholder                                        2,962,198      3,528,995      5,064,765
</TABLE>



            The Company  leases a warehouse  and  manufacturing  facility from a
            partnership  indirectly  owned by the  majority  stockholder  of DHB
            pursuant to a lease expiring  December 31, 2010 at a annual rental
            of approximately $607,000.


                                      F-12

<PAGE>


Note 11     RISKS AND UNCERTAINTIES

                      The Company  maintains cash balances at various  financial
            institutions.  Accounts  at  each  institution  are  insured  by the
            Federal Deposit Insurance Corporation up to $100,000.  The Company's
            accounts at these  institutions may, at times,  exceed the federally
            insured  limits.  The Company has not experienced any losses in such
            accounts.

                      Approximately  75% , 64%,  and 35%  for  the  years  ended
            December 31, 2001, 2000 and 1999, respectively,  of DHB's sales were
            made to the United States Government or its agencies.

                      Certain  factors  relating to the  industries in which DHB
            operates and the Company's business should be carefully  considered.
            A  substantial  portion  of the  products  sold by DHB  are  used in
            situations which could result in serious personal injuries or death,
            whether on account of the failure of such  products,  or  otherwise.
            Although DHB maintains  substantial amounts of insurance coverage to
            cover such risks,  there is no assurance that these amounts would be
            sufficient  to  cover  the  payment  of  any  potential  claims.  In
            addition,  there is no  assurance  that this or any other  insurance
            coverage will remain  available or, if available,  that DHB would be
            able to obtain such insurance at a reasonable cost. The inability to
            obtain such  insurance  coverage would prohibit DHB from bidding for
            certain   orders  for  bullet   resistant   products   from  certain
            governmental customers.

                      Substantially  all  of  the  raw  materials  used  in  the
            manufacturing of ballistic-resistant  garments are made from fabrics
            which are  patented by major  corporations  and which are  purchased
            from three independent weaving companies.  Although,  in the opinion
            of  management  of DHB,  DHB enjoys a good  relationship  with these
            vendors,  should any of the  manufacturers  cease to  produce  these
            products for any reason, DHB would be required to use other fabrics.
            In such an event,  an  alternative  fabric would have to be selected
            and ballistic test would have to be performed.  Until this was done,
            DHB's  sale  of  ballistic  resistant  products  would  be  severely
            curtailed  and  DHB's   financial   condition  would  be  materially
            adversely affected.


Note 12     FAIR VALUES OF FINANCIAL INSTRUMENTS

            The  Company's   financial   instruments   include  cash,   accounts
            receivable, accounts payable and long-term debt. The carrying values
            of cash,  accounts  receivable,  accounts payable and long-term debt
            approximate their fair values.


Note 13     SEGMENT INFORMATION:

            As described in detail above,  the Company operates in two principal
            segments:     Ballistic-resistant     equipment    and    Protective
            athletic/sports product. The Company disposed of the Electronics
            Group in March  2000,  and  closed its hard  armor  company,  LAP in
            October  1999.   These  two   divestitures   are  accounted  for  as
            discontinued  operations.  Financial  information  on the  Company's
            business segments was as follows:


                                      F-13

<PAGE>
<TABLE>
<CAPTION>


NET SALES                                                         2001              2000               1999
---------                                                     ------------        -----------       ------------
<S>                                                           <C>                 <C>                <C>
Ballistic-resistant equipment                                 $ 94,558,410        $64,720,773        $30,358,537
Electronic components/LAP                                          --                 401,299          8,441,393
Protective athletic & sports product                             4,520,172          5,296,799          6,236,438
                                                                 ---------          ---------          ---------
                                                                99,078,582         70,418,871         45,036,368
Less inter-segment sales                                        (1,062,900)                --         (2,381,099)
Less discontinued operations (3)                                   --                (401,299)        (7,514,541)
                                                               -----------        -----------        -----------
Consolidated Net Sales                                         $98,015,682        $70,017,572        $35,140,728
                                                               ===========        ===========        ===========

INCOME FROM OPERATIONS
Ballistic-resistant equipment                                  $14,999,114        $10,591,126       $(9,629,504)
Electronic components                                                   --           (517,288)        (1,835,137)
Protective athletic & sports product                                93,819           (166,114)        (2,390,834)
Corporate and Other (1)                                         (2,343,435)        (2,225,757)        (2,824,826)
                                                               -----------        -----------        -----------
     Sub-total                                                  12,749,498          7,681,967        (16,680,301)
Income (Loss) from discontinued operations(3)                        --               517,288         (6,809,082)
                                                              ------------        -----------      -------------
Consolidated Operating Income                                 $12,749,498         $8,199,255        $( 9,871,219)
                                                              ============        ===========      =============

IDENTIFIABLE ASSETS (2)
Ballistic-resistant equipment                                  $36,426,397        $22,383,129        $14,283,739
Electronic components                                                  ---                ---          6,177,019
Protective athletic & sports product                             2,767,905          3,517,194          3,335,253
                                                                 ---------          ---------          ---------
                                                                39,194,302         25,900,323         23,796,011
Corporate and Other                                              1,701,814          2,155,948            400,038
                                                                 ---------          ---------            -------
Consolidated Net Assets                                         40,896,116         28,056,271         24,196,049
Discontinued operations (3)                                                                           (4,825,532)
Assets held for sale                                                    --                 --          3,928,980
                                                              ------------        -----------       ------------
Adjusted Net Assets                                            $40,896,116        $28,056,271        $23,299,497
                                                               ===========        ===========        ===========
</TABLE>

            Foreign sales  accounted  for 2%, 2% and 17%, of the total  revenues
            for the years ended December 31, 2001, 2000 and 1999,  respectively.
            Foreign  identifiable  assets  accounted  for 1%, 1%, and 13% of the
            total assets at December 31, 2001, 2000 and 1999, respectively.
            (1)   Corporate and Other includes corporate general and
                  administrative expenses.
            (2)   Corporate assets are principally cash, marketable  securities,
                  and deferred charges.
            (3)   Discontinued operations included the Electronics Group sold on
                  March 10, 2000, as well as the loss from the shutdown of the
                  LAP plant in 1999.

Note 14       COMMITMENTS AND CONTINGENCIES

            Leases

                      The company has  non-cancelable  operating  leases,  which
            expire through 2010. These leases  generally  require the Company to
            pay certain costs, such as real estate taxes.

                      Future  minimum  lease  commitments   (excluding   renewal
            options) under non-cancelable leases are approximately:

                             Years Ending

                                 2002                    $  862,145
                                 2003                       739,157
                                 2004                       739,157
                                 2005                       739,157
                                 2006                       649,063
                                 Thereafter               2,476,128
                                                          ---------
                                                         $6,204,807
                                                          =========


                                      F-14

<PAGE>



                      Rent and real estate tax expense on  operating  leases for
            the  years  ended  December  31,  2001,  2000  and  1999  aggregated
            approximately $1,106,035, $1,417,000 and $1,417,000, respectively.

            Employment agreements

                      The Company is  committed  under an  employment  agreement
            with  its  majority  stockholder,  which  expires  in July  2006 and
            provides for an annual  salary of $500,000  and annual  increases of
            $50,000 thereafter. In addition, the contract provides for 3,750,000
            stock  warrants  at $1.00,  which  vest 20%  immediately  and in 20%
            annual increments thereafter. The warrants expire in July 2010.

            Litigation

                      The  Company  has filed a lawsuit  against  its  insurance
            carrier,  as well as, the insurance agent, for negligence and breach
            of  fiduciary  duties as a result  of the  damages  incurred  during
            Hurricane Irene in October 1999.

                      In June 2001,  the Company was served a lawsuit  regarding
            patent  infringement.  The Company  filed an answer and believes the
            patent is invalid and does not infringe.

                      The former  Vice  President  and  General  Counsel  won an
            arbitration  proceeding  against the company for two years  unearned
            compensation  plus legal fees.  The Company is seeking a vacation of
            the award.

                      The  Company  is subject to other  legal  proceedings  and
            claims,  which have risen in the ordinary course of its business and
            have not been finally  adjudicated.  These  actions when  ultimately
            concluded  and  determined  will not, in the opinion of  management,
            have a material  adverse  effect on the results of operations or the
            financial condition of the Company.

Note 15     INCOME TAXES

              Components of income taxes are as follows:

                                                2001      2000           1999
                                                ----      ----           ----
              Federal
                 Current                         $ 0         $ 0           $ 0
                 Deferred                          0           0             0
                                       -------------------------- -------------
                       Total federal               0           0             0

              State
                 Current                     174,886     129,999        67,385
                 Deferred                          0           0             0
                                       -------------------------- -------------
                                             174,886     129,999        67,385

                       Total state          $174,886   $ 129,999       $67,385
                                            ========   =========       =======


            A  reconciliation  of the statutory  federal income tax rates to the
            Company's  effective tax rate for the years ended  December 31 is as
            follows:
<TABLE>
<CAPTION>

                                                                             2001       2000       1999
                                                                             ----       ----       ----

            <S>                                                             <C>       <C>         <C>
            Statutory U.S. income tax rate                                    34%       34%        -34%

            Decrease resulting from:
                 Utilization of net operating loss carryforwards             -34%       -34%

            Increase resulting from:
                 State and local income taxes, net of federal benefits       1.67%     2.10%
                 Non-availability of net operating loss carryforwards         0%         0%        34%
                                                                              --         --        ---

            Effective tax rate                                               2.10%     2.10%        0%
                                                                             =====     =====        ==

</TABLE>

                                      F-15

<PAGE>


The significant components of deferred tax assets and liabilities as of December
31, were as follows:

<TABLE>
<CAPTION>

                                                 2001          2000           1999
                                                 ----          ----           ----

  <S>                                         <C>            <C>           <C>
  Net operating loss carryforwards            $ 5,440,000    $8,840,000    $10,920,000
  Accounts receivable reserve                     270,000       222,000         85,000
  Write down of marketable securities              95,000       520,000        212,000
  Write down of non-marketable securities         448,000       448,000        234,000
  Write down of investment in                     520,000       520,000        340,000
                                                  -------       -------        -------
                                                6,773,000    10,550,000     11,791,000

Less valuation allowance                        6,513,700    10,120,700     11,347,000
                                               ----------    ----------     ----------

Net deferred tax asset                          $ 259,300     $ 429,300      $ 444,000
                                                =========     =========      =========

</TABLE>


Note 16  SUBSEQUENT EVENTS

On January 14, 2002, David H. Brooks,  the principal  stockholder of the company
exchanged $3 million of the  approximately  $10 million of indebtedness  due him
for 500,000 shares of the newly authorized Series A Convertible Preferred Stock.
The Preferred  Stock has a dividend rate of $.72 per share per annum,  an amount
equal to the  exchanged  amount  that  would have been paid as  interest  on the
exchanged  indebtedness.  Shares of the Preferred  Stock are  convertible,  on a
one-to-one basis, at the option of the holder, into shares of Common Stock. The
shares of  Preferred  Stock are  redeemable  at the  option  of the  Company  on
December 15, 2002 and on each December 15th thereafter.





                                      F-16


<PAGE>



                     DHB INDUSTRIES INC. AND SUBSIDIARIES
                     SCHEDULE II TO THE FINANCIAL STATEMENTS
                        VALUATION AND QUALIFYING ACCOUNTS
                        DECEMBER 31, 2001, 2000 AND 1999




Allowances deducted from related balance sheet accounts:
<TABLE>
<CAPTION>

                                                                              INVESTMENT IN    NET WRITE DOWN OF
                                                                              NON-MARKETABLE     INVESTMENT IN
                                               ACCOUNTS                         SECURITIES        SUBSIDIARIES
                                                                                ----------        ------------
                                              RECEIVABLE       INVENTORY

<S>                                                <C>            <C>             <C>                 <C>
Balance at December 31, 1998                       $507,739             $ 0         $ 628,000            $529,579

Additions charged to
     costs and expenses                             250,002         624,898           688,750           1,000,000

Deductions/writeoffs                                      -               -                 -                   -
                                                   --------         -------         ---------           ---------

Balance at December 31, 1999                       $757,741       $ 624,898       $ 1,316,750          $1,529,579

Additions charged to
     costs and expenses                              36,000           -----             -----               -----

Deductions/writeoffs                                140,357               -                 -                   -
                                                   --------         -------         ---------           ---------

Balance at December 31, 2000                       $653,384       $ 624,898       $ 1,316,750          $1,529,579

Additions charged to
     costs and expenses                             139,067           -----             -----               -----

Deductions/writeoffs                                      -               -                 -                   -
                                                   --------         -------         ---------           ---------

Balance at December 31, 2001                       $792,451       $ 624,898       $ 1,316,750          $1,529,579
                                                   ========       =========       ===========          ==========
</TABLE>




                                      F-17


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(D) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto  duly  authorized on this the 28th day of
March 2002.

                                                     DHB Industries Inc.

                                                     /s/ DAVID BROOKS
                                                     ----------------
                                                     David H. Brooks
                                                     Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.


SIGNATURE                     CAPACITY                             DATE

/s/ DAVID H. BROOKS
-------------------           Chairman of the Board,            March 28, 2002
    David H. Brooks           and Director


/s/ DAWN SCHLEGEL
-----------------             Treasurer                         March 28, 2002
    Dawn Schlegel             Principal Financial Officer
                              Principal Accounting Officer

/s/ MORTON COHEN
----------------              Director                          March 28, 2002
    Morton Cohen





                                      F-18


<PAGE>

<TABLE>
<CAPTION>

Item 13 (a) Exhibits.

EXHIBIT       DESCRIPTION
<S>           <C>                                                                                                <C>
3.1           Certificate of Incorporation of DHB Capital Group Inc., a Delaware corporation (hereinafter,
              "DHB".)                                                                                            1

3.2           Certificate of Amendment to Certificate of Incorporation of DHB filed December 31, 1996            2

3.3           Certificate of Amendment to Certificate of Incorporated filed July 24, 2001

3.4           By-laws of DHB                                                                                     1

4.3           Form of Warrant Agreement with respect to all Outstanding Warrant together                         3

10.1          Employment Agreement dated July 1, 2000 between DHB and David Brooks

10.2          Promissory Note between the Company and David Brooks dated November 6, 2000                        1

10.3          1995 Stock Option Plan                                                                             4

10.6          Sale agreement date March 10, 2000 with DHB and DMC2 Electronic Components - incorporated by
              reference in the Company's filing of Form 8-K                                                      6

10.7          Lease agreement dated January 1, 2001 between Point Blank Body Armor and VAE Enterprises.

10.8          Lease agreement dated April 15, 2001 between DHB Capital Group and A&B Holdings, Inc.
25            List of Subsidiaries

<FN>
              Notes to Exhibit Table:

1             Incorporated by reference to the Company's Definitive Proxy Material filed with the Commission in
              connection with the Special Meeting in Lieu of Annual Meeting of Shareholders of the Company held
              on February 15, 1995.

2             Incorporated by reference to Post-Effective Amendment No.#2 to Registration Statement 33-59764, on
              Form SB-2, File # filed on Jan 31, 1997.

3             Incorporated by reference to the Company's Annual report for December 31, 2000.

4             Incorporated by reference to Registration Statement on Form S-8 filed on or about October 1, 1995.

5             Incorporated by reference to the Current Report on Form 8-K dated March 23, 2000.
</FN>
</TABLE>

                                      F-19

<PAGE>

Exhibit 21:  List of Subsidiaries

                                                        STATE           DATE
                CORPORATION NAME           % OWNED     OF INC.      INCORPORATED

DHB Armor Group Inc.                          100 %       DE          08/14/95
DHB Sports Group Inc.                         100 %       DE          05/02/97
NDL Products Inc.                             100 %       FL          12/16/94
Point Blank Body Armor Inc.                   100 %       DE          09/06/95
Protective Apparel Corporation of America     100 %       NY          05/02/75


--------

















                                      F-20