U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                         FORM 10-K/A PURSUANT TO 12b-25

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2003

             [ ] 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                                  (I.R.S. Employer
     of incorporation)                                       Identification No.)

                400 POST AVE SUITE 303, WESTBURY, NEW YORK 11590
                ________________________________________________
                    (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/A or any
amendment to this Form 10-K/A.

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes [ X]No [ ] .

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 1, 2004: $198,055,855.


 Number of shares outstanding of the issuer's common equity, as of March 1, 2004
      (Exclusive of securities convertible into common equity): 40,742,136

DOCUMENTS INCORPORATED BY REFERENCE:  None


                                        1


<PAGE>


                                     PART I

ITEM 1.    BUSINESS

GENERAL

         DHB  Industries,  Inc., a Delaware  corporation,  was organized in 1992
("DHB" or the "Company") and, is a holding  company  comprised of two divisions:
DHB Armor Group ("Armor Group") and DHB Sports Group ("Sports Group"). The Armor
Group consists of Point Blank Body Armor,  Inc.  ("Point  Blank") and Protective
Apparel Corporation of America ("PACA"). DHB Armor Group develops,  manufactures
and distributes bullet and projectile-resistant  garments,  bullet-resistant and
fragmentation vests, and related ballistic accessories.  The Sports Group, which
consists of NDL Products, Inc. ("NDL"),  manufactures and distributes protective
athletic apparel and equipment,  including elbow, breast, hip, groin, knee, shin
and ankle supports and braces, as well as a line of therapy products.  The Armor
Group represented approximately 97%, 96% and 95% of consolidated revenues of the
Company during 2003, 2002 and 2001, respectively.

         The Company's  executive offices are located at 400 Post Avenue,  Suite
303,  Westbury,  New York 11590 and its telephone  number is  516-997-1155.  The
Company's  website  is   www.dhbindustries.com.   The  Company's   manufacturing
facilities  are  located  in  Oakland  Park and  Deerfield  Beach,  Florida  and
Jacksboro,  Tennessee. As announced in December 2003, the Company plans to add a
new 104,000 square foot manufacturing  facility in Pompano Beach, Florida during
the second  quarter of 2004.  The Company also has a sales office in Alexandria,
Virginia.

         The  Company  reincorporated  in  Delaware in 1995 and changed its name
from DHB Capital Group Inc. to DHB Industries,  Inc. in July 2001. The Company's
common stock trades on the American  Stock  Exchange  where it began  trading on
February 1, 2002 under the ticker symbol "DHB".

DHB ARMOR GROUP

OVERVIEW

         In 2003, DHB recorded the most  successful  year in the 11-year history
of the Company. DHB posted record operating results, as operating income in 2003
increased  88% to a record  $26,016,000  as  compared to  $13,823,000  for 2002.
Additionally,  when comparing income  available to common  stockholders for 2003
with 2002, it is worth noting that income  available to common  stockholders  in
2003  was  fully  taxed  at  42%,   whereas  2002  income  available  to  common
stockholders actually was increased due to a $3.7 million tax benefit.

         DHB's Armor Group continues to expand upon its position as the dominant
leader in the US protective body armor industry. Point Blank and PACA brands are
considered by many to be among the finest body armor products in the world.  The
market  for its  products  domestically  continues  to grow and the  Company  is
encountering  a greater  demand for its products in the  international  markets.

         Sales to the United  States  Department of Defense more than doubled in
2003 while sales to state and local law  enforcement  agencies  grew by 61%. The
Company is currently  providing the majority of Outer Tactical Vests ("OTVs") to
the US military.  Its Interceptor OTV has been credited with saving the lives of
numerous US soldiers that have served in Iraq and Afghanistan. In November 2003,
the Company  announced  that it received a $60 million  purchase  order from the
U.S.  Department of Defense for Point Blank's  "Interceptor" Outer Tactical Vest
(OTV). The Company believes this is the largest single order for body armor ever
issued by the U.S. Department of Defense.

         The  Company's   backlog  of  firm  orders  as  of  March  1,  2004  is
approximately $132 million,  up from approximately $57 million at the same point
last year.

         PRODUCTS AND MARKETS.  The Armor Group principally  manufactures  three
types of body  armor:  concealable  armor,  which  is worn  beneath  the  user's
clothing  and is designed to protect  against less  serious  ballistic  threats;
tactical armor, which is worn externally and is designed to protect against more


                                        2


<PAGE>


and modular  concealable / tactical armor,  which allows the wearer to customize
the armor for either  concealed or tactical use. The Armor Group's  products are
sold  to  state  and  local   agencies   predominantly   through  a  network  of
distributors.  Products are also sold directly by the Armor Group to federal and
military. All Armor Group products are manufactured and tested to the applicable
National Institute of Justice ("NIJ") standards and/or military specifications.


         The Armor  Group's  contract  with the U.S.  Department  of  Defense to
manufacture and supply "Interceptor" OTVs continues to expand and is integral to
the Company's  continued  growth and success.  The Interceptor was designed as a
continually  upgradeable modular,  soft body armor system for the U.S. military.
The Armor Group has now delivered over 550,000  Interceptors  to the U.S. Marine
Corps,  U.S.  Army,  and U.S. Air Force.  The  Interceptor  was worn by American
service men and women in both Operations  Iraqi Freedom and Enduring Freedom and
is credited with saving the lives of U.S. military personnel in both operations.
The Armor Group has  developed and received  military  approval for a total of 5
ballistic  models of the Interceptor and provides  different models to different
branches of the U.S. military.  Through this  diversification of the Interceptor
ballistic  armor  packages,  the  Armor  Group  has  been  able to  deliver  the
Interceptor  at a much higher rate of production  and overcome  ballistic  fiber
shortages.

         In addition to the Interceptor,  the Armor Group  manufactures a number
of other protective armor systems for military use. Fragmentation armor, such as
the Combat  Vehicle  Crewman from Point Blank and the  Warfighter  from PACA, is
designed to military  specifications and offers protection against materials and
velocities  associated  with the  fragmentation  of  explosive  devices  such as
grenades, mortars, artillery shells and ballistic projectiles.  During 2003, the
Armor  Group  delivered  the  P3ICE  Countermine  Ensemble  for  the  U.S.  Army
Countermine  program.  During the fourth  quarter of 2003,  the Armor Group also
completed  first article  requirements  for the Combat Vehicle  Crewman  ("CVC")
Program and began to deliver the first quantities to the military depots.

         During 2003, the Armor Group  increased the sales of its tactical body
armor to law enforcement and federal government  communities throughout the U.S.
It  also  continued  to  offer  department-specific  modifications  to  standard
products,  resulting in the development of the BAT Vest, the Light Assault Vest,
and the Warfighter.  By providing customized tactical armor, the Armor Group was
able to increase its market share  specifically  in the tactical  market in both
the law enforcement and the federal government communities.

         The Armor Group developed in 2003 an extensive ballistic  fragmentation
blanket program to address the need for protection against  fragmentation during
military troop movements in convoys and during  ambushes.  This enabled the U.S.
military  to respond  quickly to these  threats  and provide its service men and
women with additional  protection.  This product has been well received, and the
volume of sales has  increased  during the fourth  quarter of 2003 and the first
quarter of 2004.

         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.

         During 2003,  the Armor Group's  government and  international  liaison
office  located in the Crystal  City  complex,  within  close  proximity  to the
Pentagon  in  Washington,  D.C.,  developed  special  accounts  with  customized
products  available  for  immediate  delivery  for the  military,  domestic  and


                                        3


<PAGE>


international  law  enforcement  communities.  This  office  provides an optimal
support  for  our  efforts  to grow  our  sales  in the  federal,  military  and
international   markets.   In  addition,   the  Armor  Group's   government  and
international   office  is  working   to  build   relationships   with   various
international and government customers.

         RAW MATERIALS AND  MANUFACTURING.  The Armor Group  manufactures all of
its  bullet,  fragmentation  and  projectile-resistant  products.  Research  and
development  efforts are designed to ensure that the raw  materials are combined
to  suit  particular  applications.  The  primary  woven  fabrics  used  in  the
manufacture of the ballistic-resistant products include Kevlar(TM),  Twaron(TM),
Zylon(TM). Primary shield products include GoldFlex(TM), Dyneema(TM) and Spectra
Flex(TM).  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  purchased  from four  independent  weaving  or  manufacturing
companies.  If any of the manufacturers ceases to produce these products for any
reason,  an  alternative  fabric would have to be selected and  ballistic  tests
would need to be performed. Until this was done, the Company's sale of ballistic
resistant  products  would be severely  curtailed  and the  Company's  financial
condition would be materially adversely affected.  If any of these manufacturers
cease to produce these fabrics,  there can be no assurance that the Company will
be able to identify alternate fabrics with comparable performance. In an attempt
to  neutralize  the  possibility  that the  Company  will be  unable  to  obtain
sufficient raw materials to produce its products in the  quantities  demanded by
its customers,  the Armor Group has cross-certified  several product lines using
competitive raw materials. This has given the Armor Group the ability to largely
overcome the shortfall of raw materials and continue to meet all customer needs.

         RESEARCH AND DEVELOPMENT.  The Armor Group's internal employee research
and  development  team  has  combined  100+  years  of  ballistic  research  and
development  experience,  including  more than 40 years of  experience in an NIJ
certification  environment.  Many  of the  Company's  research  and  development
personnel  previously  held  positions of  responsibility  with other  companies
within the industry.  Research and development expenses are included in selling,
general and administrative expenses as incurred and for the years ended December
31,  2003,  2002 and 2001 were $10.8  million,  $4.2  million and $2.3  million,
respectively.

         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 are believed to be critical to the
Company's  business.  During 2003, no  challenges to our 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,  and was issued
eight additional trademarks during 2003. Two of the patents pending were granted
full patent  status  during the fourth  quarter of 2003 and the first quarter of
2004.

         CUSTOMERS.  The Armor Group's  products are sold  domestically  to U.S.
military,   to  United  States  law   enforcement   agencies,   corrections  and
distributors and are sold internationally to governments and distributors. Sales
to the U.S. military  directly or as a subcontractor  accounted for 63%, 57% and
62% of the Armor Group's  revenues for the years ended  December 31, 2003,  2002
and 2001,  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%, 22% and 22%, of the Armor
Group's  revenues  in  the  years  ended  December  31,  2003,  2002  and  2001,
respectively.


                                        4


<PAGE>


         Certain sales by the Armor Group to federal  agencies are made pursuant
to  standard  purchasing  contracts  of a type  issued by the  General  Services
Administration  ("GSA") that is commonly  referred to as a "GSA  Schedule".  GSA
Schedule  contracts  accounted for approximately  60%, 16%, and 14% of the Armor
Group's  sales  for  the  years  ended   December  31,  2003,   2002  and  2001,
respectively. The Armor Group's current GSA contracts expire on July 31, 2006.

         With the exception of the U.S.  Government,  no customer  accounted for
10% or more of the Company's revenues in 2003, 2002 and 2001.

         MARKETING AND DISTRIBUTION. The Armor Group employs 20 customer support
representatives  and 15 sales  representatives  under the  direction  of 5 sales
managers.  These  personnel  are  responsible  for  marketing  the Armor Group's
products  to  federal,  state and local law  enforcement  agencies in the United
States.  Sales to such law  enforcement  agencies  are  made  primarily  through
distributorships established by the sales team. However, in areas in which there
are no suitable distributors, the Armor Group fills 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,
such as NIJ  standards  for  bullet-resistant  vests in several  categories.  In
addition,   the  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.

         COMPETITION.   The  ballistic-resistant   garment  business  is  highly
competitive  and fragmented.  The Company  estimates the number of United States
manufacturers  are  approximately  20.  Since  there  are no  published  reports
concerning  the market,  and most  companies are privately  held,  management is
unable to estimate the size of the market.  Nevertheless,  the Company  believes
that the Armor Group is the largest manufacturer of ballistic-resistant garments
in the United States.

          The Armor Group believes that the principal elements of competition in
the sale of ballistic-resistant  garments are on time delivery, quality products
and  customer  service.  The  Company  believes  that the Armor  Group  enjoys a
favorable  reputation in the industry  with over 30 years of supplying  federal,
state and municipal governments and agencies.

         BACKLOG.  As of March  1,  2004,  the  Armor  Group  had a  backlog  of
approximately $132 million.  Backlog at any one date is not a reliable indicator
of future  sales.  In addition to its  backlog,  the Armor Group often  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.
Point Blank  International,  the Company's foreign sales arm,  maintains product


                                        5


<PAGE>


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 Point Blank International would be able to
obtain such insurance at a reasonable cost. Any substantial uninsured loss would
have to be paid out of the subject subsidiary'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 obtain product liability
coverage may  prohibit  Point Blank,  PACA or Point Blank  International  in the
future  from  bidding  for orders  from  certain  governmental  customers.  Many
governmental  agencies currently require such insurance  coverage,  and any such
inability to bid for government contracts as a result of insufficient  insurance
coverage  would have a  materially  adverse  effect on the  Company's  financial
condition and results of operations on a consolidated basis.

         EMPLOYEES.  As of March 1, 2004, the Armor Group employed approximately
675  full-time  employees.  There was one  operating  officer,  32  employees in
supervisory   capacities,   541   employees  in   manufacturing,   shipping  and
warehousing,  13 employees in quality control,  38 employees in customer service
and sales, 6 employees in  technical/research  development,  and 44 employees in
office  and  administration.  In the  opinion  of  management,  the Armor  Group
maintains a satisfactory relationship with its employees.

DHB SPORTS GROUP

         PRODUCTS AND MARKETS. The Sports Group, which consists of NDL Products,
Inc.("NDL")  manufactures  and  distributes  protective  apparel and  equipment,
including elbow,  breast,  hip, groin, knee, shin and ankle supports and braces,
as well as line of therapy products.  The Sports Group also offers private label
or house brand  programs to major  retailers  and large  wholesalers  along with
specific OEM programs to outside brands that service the same markets.

         Currently, the Sports Group manufactures and markets products under the
brands  NDL(TM),  GRID(TM),  MagneSystems(TM),  FLEX-AID(TM),  and  Doctor  Bone
Savers(TM).  The Sports Group  markets its products to a variety of distribution
points with an emphasis on major  retailers.  The Sports Group's  various brands
are  offered to the  customer by mass  merchandisers,  chain drug  stores,  food
chains,  independent  sporting goods and pharmacy  retailers,  catalog  sellers,
wholesalers  and  e-commerce  websites.  The Sports Group customer list includes
retail and wholesale  establishments such as Wal-Mart,  Target, Meijer and Longs
Drug Stores. Two customers, Wal-Mart and Target, collectively accounted for 68%,
61% and 61% of the Sports  Group's  revenues  for the years ended  December  31,
2003, 2002 and 2001, respectively.

         The Sports Group has  negotiated  private label  programs with three of
the major  wholesalers  to the retail trade:  Amerisource,  Cardinal  Health and
CDMA. These wholesalers currently service their 10,000 store networks with their
Brite  Life(TM),  Leader(TM)  and Quality  Choice  Brands(TM) of health  support
products.

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

         POTENTIAL PRODUCT LIABILITY.  The products  manufactured or distributed
by the Sports  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 Sports Group maintains product liability insurance


                                        6


<PAGE>


in the amount of $21,000,000 per  occurrence,  and $22,000,000 in the aggregate,
less a deductible of $100,000. 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 the Sports Group would be able to obtain such
insurance at a reasonable cost. Any substantial  uninsured loss would have to be
paid out of the Sports Group's assets and may have a material  adverse effect on
the Company's  financial  condition and results of operations on a  consolidated
basis.

         EMPLOYEES.   As  of  December  31,  2003  the  Sports  Group   employed
approximately  105 full-time  employees.  There was one officer,  4 employees in
supervisory capacities, 92 employees in manufacturing, shipping and warehousing,
2 employees in sales and customer  service,  and 6 employees in office  support.
All of the Sports Group's  employees are employed  full-time.  In the opinion of
management,  the Sports Group's relationship with its employees is satisfactory.
The Sports Group also has more than 50 independent  sales  representatives  who,
together with the sales  executives,  are responsible  for sales  throughout the
United States,  Western  Europe,  Asia,  the Middle East and Latin America.  The
Sports  Group has  in-house  sales  support and  state-of-the-art  EDI order and
invoicing capabilities.

SEGMENT INFORMATION

         As described in detail  above,  the Company  operates in two  principal
segments:  ballistic-resistant  equipment  and  protective  athletic  and sports
products.   Financial   information  on  the  Company's  business  segments  (in
thousands) is as follows:

<TABLE>
<CAPTION>

                                                     2003         2002         2001
                                                   ________     ________     _______
<S>                                                <C>          <C>          <C>

NET SALES
Ballistic-resistant equipment                      $224,152     $124,860     $93,506
Protective athletic & sports products                 5,859        5,492       4,520
                                                   ________     ________     _______
                                                    230,011      130,352      98,026
Less inter-segment sales                                 --           (5)        (11)
                                                   ________     ________     _______
Consolidated net sales                             $230,011     $130,347     $98,015
                                                   ========     ========     =======


INCOME FROM OPERATIONS
Ballistic-resistant equipment                      $ 33,618     $ 17,534     $15,029
Protective athletic & sports products                   426          563          94
Corporate and other (1)                              (8,028)      (4,274)     (2,344)
                                                   ________     ________     _______
Consolidated operating from operations             $ 26,016     $ 13,823     $12,779
                                                   ========     ========     =======

DEPRECIATION AND AMORTIZATION EXPENSE
Ballistic-resistant equipment                      $    350     $    289     $   223
Protective athletic & sports products                    64           86         157
                                                   ________     ________     _______
                                                        414          375         380
Corporate and other                                     150           88          98
                                                   ________     ________     _______
Consolidated depreciation and amortization
  expense                                          $    564     $    463     $   478
                                                   ========     ========     =======


                                        7


<PAGE>


                                                     2003         2002         2001
                                                   ________     ________     _______
INTEREST EXPENSE
Ballistic-resistant equipment                      $  1,238     $    935     $   463
Protective athletic & sports products                    --           --          77
                                                   ________     ________     _______
                                                      1,238          935         540
Corporate and other (2)                                 106          710       1,973
                                                   ________     ________     _______
Consolidated interest expense                      $  1,344     $  1,645     $ 2,513
                                                   ========     ========     =======


INCOME TAXES (BENEFIT)
Ballistic-resistant equipment                      $ 14,341     $     22     $   143
Protective athletic & sports products                   182            2          --
                                                   ________     ________     _______
                                                     14,523           24         143
Corporate and other (2)                              (3,425)      (3,696)         32
                                                   ________     ________     _______
Consolidated tax (benefit) expense                 $ 11,098     $ (3,672)    $   175
                                                   ========     ========     =======

IDENTIFIABLE ASSETS
Ballistic-resistant equipment                      $ 88,503     $ 56,471
Protective athletic & sports products                 3,186        2,907
                                                   ________     ________
                                                     91,689       59,378
Corporate and other (2)                               1,739        5,993
                                                   ________     ________
Consolidated assets                                $ 93,428     $ 65,371
                                                   ========     ========

<FN>


Foreign sales  accounted  for 1%, 2% and 2% of the total  revenues for the years
ended  December  31, 2003,  2002 and 2001,  respectively.  Foreign  identifiable
assets  accounted  for 0%, 1% and 1% of the total  assets at December  31, 2003,
2002 and 2001, respectively.

(1) Corporate and other includes corporate general,  administrative expenses and
    other investments.

(2) Corporate  assets  are  principally   deferred  income  tax  assets,  other
    investment and property and equipment.

</FN>
</TABLE>


AVAILABLE INFORMATION


         The Company's Internet address/website is www.dhbindustries.com.  As of
the date of this Annual Report on Form 10-K/A,  the Company makes available free
of charge on its website  materials  filed or furnished by the Company under the
Securities  Exchange Act of 1934 as soon as  reasonably  practicable  after such
materials are filed with or furnished to the Securities and Exchange Commission.
The Company will voluntarily  provide  electronic copies (or a reasonable number
of paper copies) of its filings free of charge upon request.


ITEM 2.  PROPERTIES

         CORPORATE  HEADQUARTERS.  In February 2004,  the Company  relocated its
corporate  headquarters to a 3,952 square foot leased office located at 400 Post
Avenue Suite 303, Westbury, New York. The lease expires on February 28, 2010.


                                        8


<PAGE>


         PACA.  The Company leases a 60,060 square foot  manufacturing  facility
with administrative  offices at 179 Mine Lane,  Jacksboro,  Tennessee 37757, for
its subsidiary, PACA. The lease expires on 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  LLC
("V.A.E."), a limited liability company 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 that would
have been obtained at the time of the lease from an unrelated third party.

         POINT  BLANK-MILITARY  FACILITY.  In January 2003, the Company leased a
51,246  square  foot  manufacturing  facility  with  administrative  offices  in
Deerfield Beach, Florida, to expand Point Blank's military production. The lease
expires on April 30, 2008.

         POINT BLANK-ADDITIONAL FACILITY. In December 2003, the Company leased a
new 104,000 square foot manufacturing  facility with  administrative  offices in
Pompano Beach, Florida, to expand Point Blank's production. The lease expires on
April 30, 2014.

         NDL WAREHOUSE.  On October 1, 2002, the Company entered into a two-year
lease for a 31,500 square foot  warehouse  adjacent to the Oakland Park Facility
from an unrelated third party. This warehouse is located at 1201 NE 38th Street,
Oakland Park, Florida.

         DC  OFFICE.  In May  2002,  the  Company  opened  a 2,192  square  foot
government  and  international  liaison  sales  office at 1215  Jefferson  Davis
Highway, Arlington, Virginia. The lease expires on April 30, 2006.

         POINT BLANK INTERNATIONAL FACILITY.  Point Blank International leases a
5,700 square foot office and warehouse  facility  located at Rue Leon  Frederiq,
14, 4020 Liege, Belgium. This space is rented on a month-to-month basis.

ITEM 3.  LEGAL PROCEEDINGS

         The Company  filed a lawsuit in the  Supreme  Court of the State of New
York,  County of Nassau,  against its insurance  carrier and an insurance agent,
for  negligence  and breach of  fiduciary  duties as a result of the damages the
Company  incurred  during  Hurricane  Irene in October  1999.  During 2003,  the
Company  entered  into  settlement  agreements  with  its  insurance  agent  and
insurance carrier for a total payment of $1,009,000 to the Company, net of legal
fees, which is included in the financial  statements for the year ended December
31, 2003 in other income.

         On October 1, 2002, a shareholders'  derivative action was commenced in
the  Supreme  Court of the State of New  York,  County of  Nassau,  against  the
directors and officers of the Company and the Company as a nominal defendant, by
Plumbers & Pipefitters Local 112 Pension Fund,  derivatively on behalf of itself
and all others similarly situated for breach of fiduciary duty, abuse of control
and  constructive  fraud and is seeking an unspecified  amount in damages.  This
case was dismissed  with prejudice on March 13, 2003,  without  liability to the
Company or its  officers  or  directors.  The  Company is seeking  dismissal  of
another suit brought on behalf of a second


                                        9


<PAGE>


shareholder on similar grounds.  The Company  maintains $10 million of directors
and officers' liability insurance covering this type of claim.

         On or about October 30, 2002, the Company filed a lawsuit in the United
States District Court for the Southern District of Florida against certain union
leaders,  claiming  defamation,  conspiracy to defame and tortious  interference
with  contractual and ongoing business  relationships.  The case is still in its
preliminary stages.

         The  Company  is  currently  the  subject  of an  investigation  by the
Securities  and  Exchange  Commission  with  respect  to certain  related  party
transactions  between  the Company and  affiliates  of Mr.  David H. Brooks (the
Company's  Chief  Executive  Officer) (See Item 13 - Certain  Relationships  and
Related  Transactions").  The  Company  is  cooperating  with  the  SEC in  this
investigation,  and the Audit  Committee of the Company's Board of Directors has
retained  an  independent  forensic  accounting  firm to conduct an  independent
investigation  with respect to these matters.  In addition,  the Audit Committee
expects to continue  periodically  to monitor the status and  performance of the
related party transactions,  to assess the relative benefits to the Company, and
the related party's compliance with its contractual obligations.

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


ITEM 4.  SUBMISSION  OF MATTERS  TO A VOTE OF  SECURITY  HOLDERS:  No matter was
submitted during the fourth quarter of the fiscal year covered by this Report to
a vote of security  holders  which is required to be  disclosed  pursuant to the
instructions contained in the form for this Report.


                                     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 prices of the Company's  common stock for each quarter in
the two-year period ended December 31, 2003.

                                                   LOW                HIGH

     2003               4th Quarter               $3.87               $8.25
                        3rd Quarter                3.80                4.95
                        2nd Quarter                2.18                4.60
                        1st Quarter                1.35                2.70

     2002               4th Quarter                1.27                2.33
                        3rd Quarter                1.69                4.69
                        2nd Quarter                4.05                7.24
                        1st Quarter                5.50                8.10

         The  Company  pays cash  dividends  on its  Series  A, 12%  convertible
preferred stock (the "Preferred Stock"). The Preferred Stock has a dividend rate
of $0.72 per share per annum,  an amount equal to the  interest  that would have
been payable on the shareholder  indebtedness from which the Preferred Stock was
converted  (See  "Certain  Transactions"  below).  The  Company has not paid any
dividends on its common stock in the last three fiscal years.


                                       10


<PAGE>


         The Company  presently retains its income from earnings and anticipates
that its future  earnings  will be  retained  to finance  the  expansion  of its
business.  Any determination to pay cash dividends on the Company's common stock
in the future will be at the  discretion of the Board of Directors  after taking
into  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 Company's current credit facility prohibits
the payment of dividends  on the  Company's  common  stock  without the lender's
prior written consent.

         On March 1,  2004,  there were 117  holders of record of the  Company's
common  stock.  However,  the number of holders of record  includes  brokers and
other  depositories for the accounts of others. The Company estimates that as of
that date, there were approximately 5,300 beneficial owners of its common stock.

         In 2003, the Company issued 248,390 unregistered shares of common stock
pursuant to the exercise of warrants,  for which the Company received  aggregate
proceeds of  approximately  $426,555.  The Company also issued  80,000 shares of
unregistered common stock for services.  In addition,  the Company issued to the
then current  directors a total of 250,000  unregistered  five-year common stock
purchase  warrants  exercisable  at $1.41 per share.  In May 2003,  the  Company
issued 15,000 shares of unregistered  common stock to a salesman pursuant to his
employment  contract.  In July 2003,  the  Company  issued  50,000  unregistered
five-year common stock purchase  warrants  exercisable at $4.33 per share to the
newest  independent  board member.  Also during 2003,  the Company issued to key
employees  35,000  and  33,000  unregistered  five-year  common  stock  purchase
warrants exercisable at $2.01 and $3.85 per share, respectively.  See "Executive
Compensation-Stock  Warrants"  below.  Also during 2003,  the Company issued and
subsequently canceled 10,000 warrants to an employee.

         On January 14, 2002, the principal stockholder of the Company exchanged
$3  million  of the  indebtedness  due him for  500,000  shares of Series A, 12%
Convertible Preferred Stock. The Series A, 12% Convertible Preferred Stock has a
dividend rate of $0.72 per share per annum, an amount equal to the interest that
would have been payable on the exchanged  indebtedness.  Shares of the Series A,
12% Convertible  Preferred Stock are convertible,  on a one-to-one basis, at the
option of the holder,  into shares of common stock.  The shares of Series A, 12%
Convertible  Preferred  Stock are  redeemable  at the  option of the  Company on
December 15 of each year.

         In 2002, the Company  issued  8,931,832  unregistered  shares of common
stock  pursuant to the  exercise  of  warrants,  for which the Company  received
aggregate  proceeds of approximately  $6,324,000;  5,593,751 of such shares were
issued to Mr. and Mrs.  David H. Brooks  pursuant to "cashless  exercises".  The
Company also issued 275,000  unregistered  common stock purchase warrants to its
investor  relations  firm;  these  warrants have an exercise  price of $4.95 per
share and expire on June 4, 2006. In addition,  the Company  issued to directors
and executive  officers a total of 200,000  unregistered  five-year common stock
purchase warrants  exercisable at $7.11 per share. Also during 2002, the Company
issued and canceled 150,000 warrants to an employee.

         In 2001, the Company issued 111,000 unregistered shares of common stock
for  services  to  attorneys,  consultants  and  other  service  providers;  the
aggregate value of the services  rendered for these  issuances was $355,230.  In
September 2001, the Company sold 225,000 shares of unregistered  common stock in
a private placement to companies  (accredited  investors) affiliated with Morton
Cohen,  then 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 at $3.00 per share, for total proceeds to the Company of $450,000.

         All of the  aforementioned  issuances of  unregistered  securities were
made  by the  Company  pursuant  to and in  reliance  upon  Section  4(2) of the
Securities  Act of  1933,  relating  to  transactions  not  involving  a  public
offering,  and,  in the  case  of  the  2001  private  placement,  Regulation  D
promulgated under the Securities Act of 1933.


                                       11


<PAGE>


         As of December 31, 2003, the Company had outstanding  options/warrants,
and shares  available  for future  grants of  options/warrants  under its equity
plan, as follows:

<TABLE>
<CAPTION>


                                           Equity Compensation Plan Information

                                                                                          Number of securities remaining
                                  Number of securities to be     Weighted-average         available for future issuance
                                   issued upon exercise of       exercise price of          under equity compensation
                                     outstanding options,        outstanding options,      plans (excluding securities
Plan category                        warrants and rights         warrants and rights         reflected in column (a))
_____________                     __________________________     ____________________     ______________________________
                                             (a)                          (b)                            (c)
<S>                                     <C>                            <C>                           <C>

Equity compensation plans
    approved by security
    holders                             5,123,000                      $1.51                             -0-
Equity compensation plans not
    approved by security
    holders                                   -0-                         --                             -0-
                                        _________                                                    __________
              Total                     5,123,000                                                        -0-

</TABLE>


ITEM 6.  SELECTED FINANCIAL DATA

         The selected consolidated  financial data set forth below for the years
ended  December  31,  2003,  2002,  2001,  2000 and 1999,  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/A.

<TABLE>
<CAPTION>

INCOME STATEMENT DATA (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

                                                   2003         2002         2001         2000         1999
                                                 ________     ________     ________     ________     ________
<S>                                               <C>         <C>          <C>          <C>          <C>

Net sales                                        $230,011     $130,347     $ 98,015     $ 70,018     $ 35,141
Cost of goods sold                                166,670       92,621       71,639       49,359       27,566
                                                 ________     ________     ________     ________     ________
Gross profit                                       63,341       37,726       26,376       20,659        7,575
Selling, general and administrative expenses       37,325       23,903       13,597       12,460       17,446
                                                 ________     ________     ________     ________     ________
Income (loss) before other income (expense)        26,016       13,823       12,779        8,199       (9,871)
Interest expense                                   (1,344)      (1,645)      (2,513)      (2,743)      (2,908)
Other income (expense)                              1,605          130           42          341       (9,561)
                                                 ________     ________     ________     ________     ________
Income (loss) before discontinued operations       26,277       12,308       10,308        5,797      (22,340)
Discontinued operations                                --           --           --          340       (9,714)
                                                 ________     ________     ________     ________     ________
Income (loss) before income taxes                  26,277       12,308       10,308        6,137      (32,054)
Income tax (benefit) expense                       11,098       (3,672)         175          130           67
                                                 ________     ________     ________     ________     ________
Income (loss) before minority interest             15,179       15,980       10,133        6,007      (32,121)
Minority interest                                      (7)          --           --           --           --
                                                 ________     ________     ________     ________     ________
Net income (loss)                                  15,172       15,980       10,133        6,007      (32,121)

Dividend - preferred stock                           (360)        (345)          --           --           --
                                                 ________     ________     ________     ________     ________
Income available to common stockholders          $ 14,812     $ 15,635     $ 10,133     $  6,007     $(32,121)
                                                 ========     ========     ========     ========     ========


                                       12


<PAGE>


Earnings per share
Basic                                            $   0.36     $   0.42     $   0.32     $   0.19     $  (1.24)
Diluted                                          $   0.34     $   0.37     $   0.28     $   0.18     $  (1.09)

BALANCE SHEET DATA (IN THOUSANDS)                  2003         2002         2001         2000         1999
                                                 ________     ________     ________     ________     ________

Working capital                                  $ 66,822     $ 53,125     $ 20,472     $  7,497     $  2,047

Total assets                                       93,428       65,371       40,896       28,056       23,300
Total current liabilities                          23,969        7,822       16,585       16,949        5,153
Long-term liabilities                              22,514       26,204       19,305       16,062       16,280
Stockholders' equity (deficit)                     46,738       31,345        5,006       (4,955)     (10,186)

</TABLE>


ITEM 7. 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 Form 10-K/A.

GENERAL

         The Company is a holding  company,  which currently  conducts  business
through its wholly-owned subsidiaries through two divisions, the DHB Armor Group
and the DHB Sports Group. The Armor Group represented approximately 97%, 96% and
95% of  consolidated  revenues  of the  Company  during  2003,  2002  and  2001,
respectively.   The   Company's   products   are  sold   both   nationally   and
internationally.  The  Armor  Group's  sales  are  derived  primarily  from  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 government  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.

         The Company derives substantially all of its revenues from sales of its
products. As indicated in the financial information included in this report, the
Company  has  experienced  substantial  increases  in its  revenues  in the past
several years, which has been attributable  primarily to product demand from the
U.S.  military  and  federal,  state and local law  enforcement.  The  Company's
ability to maintain these revenue  levels will be highly  dependent on continued
demand  for body  armor and  projectile-resistant  clothing;  and  although  the
Company does not foresee an immediate material  reduction in such demand,  there
is no assurance that governmental  agencies will not refocus their  expenditures
based on changed circumstances or otherwise.

         Due to its growth,  the Company has out grown its small business status
under  government  procurement  regulations.  The Company is now  recognized  as
having the  ability  to manage  larger  contracts.  This  allows the  Company to
competively bid on large  procurements  and maintain support of small businesses
as subcontractors.


                                       13


<PAGE>


         The Company's  market share is highly dependent upon the quality of its
products,  and its  ability  to  deliver  its  products  in a prompt  and timely
fashion.  To meet  projected  demand,  and to  maintain  its  ability to deliver
quality  products in a timely  manner,  the Company has recently  entered into a
long-term  lease for a new,  expanded  production  facility  in  Pompano  Beach,
Florida.  However,  there is no assurance that, in the long term, demand for the
Company's  products  will remain at recent  levels,  or that the Company will be
able to diversify into alternate markets or alternate  products,  or to increase
its market share through acquisitions of other businesses.  Management's current
strategic focus is on quality and delivery,  which  management  believes are the
key elements in obtaining  additional  and repeat  orders under to the Company's
existing  procurement  contracts with the U.S.  military and other  governmental
agencies.


         RESULTS OF OPERATIONS

         YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002.

         Consolidated  net sales for the year ended  December 31, 2003 increased
76.5% to $230.0 million as compared to a $130.3 million for the prior comparable
periods.  The Armor Group's  revenues  increased 79.5% to $224.2 million for the
year ended  December  31, 2003 from  approximately  $124.9  million for the year
ended December 31, 2002. This increase was  attributable to a 103.3% increase in
orders from the military as well as a 61.2% increase in sales to state and local
law  enforcement  agencies.  In recognition  of the increased  focus on homeland
security  and the war on  terrorism,  the  number of  officers  and  agents  has
increased over the past two years and there has been  increased  funding to help
equip these  officers  and  agents,  which has led to  increased  demand for our
products.  The Sports  Group's  revenues  for the year ended  December  31, 2003
increased 7.2% to approximately  $5.9 million as compared to approximately  $5.5
million for the year ended December 31, 2002. The increase in the Sports Group's
revenues was  attributable  to the addition of Wal-Mart  stores in Canada to its
customer base,  the addition of Long Drugs stores as a distribution  network and
an expanded  number of products in Target stores during 2003.  The  consolidated
gross  profit  percentage  for the year  ended  December  31,  2003 was 27.5% as
compared  to 28.9% for the year ended  December 31, 2002.  This  decrease in the
gross  profit  percentage  reflects a change in the  product  mix as well as the
additional  costs  associated with increasing and expediting the Company's sales
orders to meet the accelerated demand of our customers, including overtime costs
and freight and delivery charges.

         The  Company's  selling,  general  and  administrative  expenses  as  a
percentage  of sales  improved to 16.2% of revenues for the year ended  December
31, 2003 as compared to 18.3% for the year ended  December 31, 2002. The Company
incurred higher than normal selling,  general and administrative expenses during
the year ended  December 31, 2003 over the prior  comparable  period due to $2.7
million in bonuses paid to key employees and  executives to compensate  them for
their   contribution  to  the  success  of  the  Company.   These  bonuses  were
approximately  1% of revenues for the year ended December 31, 2003.  Also adding
to the selling,  general and administrative expenses for year ended December 31,
2003 was the legal and accounting  fees associated with the Form 10-K/A filed on
July 24, 2003 and the resignation of the Company's independent  auditors,  Grant
Thornton  LLP,  and the  associated  Form 8-Ks filed on August 27,  September 2,
September 9,  November 24, and  December 1, 2003.  During the fourth  quarter of


                                       14


<PAGE>


2003,  the  Company  also  retained  an Agent (a  Related  Party) to expand  its
overseas  opportunities,  and paid a consulting  fee of  $634,000.  Research and
development  expenditures  increased 157% to approximately $10.8 million for the
year  ended  December  31,  2003,  as  compared  to $4.2  million  for the prior
comparable  year.  The primary  reason for this increase is associated  with the
testing costs for the military,  which  increased  with the  significant  volume
increase  from the  military,  and the  addition of two new programs for testing
verification   of  incoming  raw  materials  and  the  development  of  new  law
enforcement  techniques  for a more in depth analysis of  performance.  Selling,
general and  administrative  expenses  during the year ended  December  31, 2002
included certain non-recurring expenses,  including sharply increased legal fees
pertaining to the Company's  successful  defense of a patent  infringement suit,
legal  and  professional  fees  associated  with the union  organizing  campaign
relating to the  Company's  Point Blank Body Armor  subsidiary,  and $646,000 in
non- cash compensation  charges for the issuance of stock warrants to an outside
consultant.  Operating  income  increased 88.4% to  approximately  $26.0 million
during the year ended  December  31,  2003 as compared  to  approximately  $13.8
million in the prior  comparable  period,  driven  primarily by increased  sales
volume  along with the  decrease  in the  percentage  of  selling,  general  and
administrative expenses.  Operating margins increased to 11.4% in 2003 from 9.4%
in 2002.

         Interest expense for the year ended December 31, 2003 was approximately
$1.3 million,  an 18.8% decrease from  approximately  $1.6 million for the prior
comparable  period . This  decrease was due  primarily to lower  interest  rates
under  the  Company's  revolving  credit  facility  and  the  repayment  of  the
shareholder loan. Included in other expenses is a $904,000 non-cash write off of
the Company's  long-term  investment in  non-marketable  securities of a private
company to its net realizable  value. Also included in other income was the gain
on the  sale  of  approximately  a 1%  interest  in the  Company's  Point  Blank
subsidiary.  In December 2003 as part of this transaction,  the Company received
inventory  as  consideration  for  the  sale  of  Point  Blank  Stock,  with  an
approximate  fair value of $1.65 million.  The shares of Point Blank Stock had a
book value of $200,000,  realizing a gain of $1.45 million in December  2003. In
2003,  the Company  settled its lawsuit with its  insurance  agent and insurance
carrier, for losses incurred from Hurricane Irene in 1999, for which the Company
received  net of legal  fees,  approximately  $1,009,000  during  the year ended
December 31, 2003 which is included in Other Income.

         Income before taxes increased by 113.8% to approximately  $26.3 million
for the year ended December 31, 2003, as compared to approximately $12.3 million
for the prior  comparable  period.  Income taxes for the year ended December 31,
2003 were approximately  $11.1 million as compared to approximately $3.7 million
income tax benefit for the year ended December 31, 2002. The Company's effective
tax rate was 42.2% for 2003, as compared to (29.8%) for 2002;  the effective tax
rate  was  nominal  in  2002  due  to the  utilization  of  net  operating  loss
carryforwards.

         Income available to common stockholders was approximately $14.8 million
or $0.34 per diluted share for the year ended  December 31, 2003, as compared to
approximately  $15.6  million  or $0.37 per  diluted  share  for the year  ended
December 31, 2002. The weighted  average  shares  outstanding on a diluted basis
for the year ended  December 31, 2003 were  44,196,802 as compared to 42,304,254
for the year ended December 31, 2002.

         YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001.

         Consolidated  net sales for the year ended  December 31, 2002 increased
33.0% to $130.3  million  compared  to net sales of $98.0  million  for the year
ended  December 31, 2001.  Due to the emphasis on homeland  security and various
military actions occurring  throughout 2002, the Armor Group's revenue increased


                                       15


<PAGE>


33.5% to $124.8  million  compared to $93.5 million for 2001. The Sports Group's
revenues  increased by 22.1% to $5.5 million for the year ended 2002 versus $4.5
million for 2001.  Gross profit margin for the year ended  December 31, 2002 was
28.9%  compared  to 26.9% in 2001,  primarily  as a result  of the  increase  in
revenues  as well as volume  purchase  discounts  which the  Company was able to
utilize  during  2002.  Selling,   general  and  administrative  expenses  as  a
percentage of sales  increased to 18.3% of 2002 revenues as compared to 13.9% of
revenues in 2001. The selling,  general and  administrative  expenses  increased
from $13.6  million in 2001 to $23.9  million in 2002,  primarily as a result of
increased legal fees in the successful defense of a patent infringement case and
legal  and  professional  fees  associated  with the union  organizing  campaign
targeting DHB's subsidiary,  including the associated security, public relations
and legal  fees  arising  out of the  defense  of the  organizing  effort.  Also
included  in  selling,  general  and  administrative  expenses  for 2002  were a
$646,000 non-cash compensation charge and $255,000 in additional rental expenses
in conjunction with the accounting  principal of straight-line rent expense over
the life of the lease.  Primarily as a result of the increased selling,  general
and  administrative  expenses,  operating margin decreased from 13.0% in 2001 to
10.6% in 2002.

         Interest expense for the year ended December 31, 2002 was approximately
$1.6 million, down nearly $900,000 from the $2.5 million of interest expense for
the year ended December 31, 2001.  This decrease is the result of lower interest
rates under the Company's credit  facility,  combined with the repayment of $5.5
million  of  shareholder  indebtedness  and  the  conversion  of $3  million  of
shareholder  indebtedness  into preferred stock.  Although the total amount owed
under the credit  facility  increased,  the  overall  cost of capital  decreased
during 2002.

         The Company had net operating loss (NOL) carryforwards of approximately
$7.4 million  available  to offset  income in future  years.  The benefit to the
Company is the reduction of the cash tax payments such NOL carryforwards offset.
Because the Company had three solid years of growth and projected  profitability
in 2003, it was  considered  more likely than not that the Company would be able
to utilize this benefit prior to its expiration in 2019. Therefore, in 2002, the
Company  recognized a deferred income tax benefit of approximately  $3.7 million
related to  temporary  differences  that will  result in  deductible  amounts in
future  years  and the net  operating  loss  carryforwards  bringing  the  total
deferred tax asset at December 31, 2002 to $4.7 million.  The deferred tax asset
was broken  down into the  current  portion of $3.3  million  and the  long-term
portion of $1.4 million for temporary timing  differences in book to tax income.
The income tax  expense  for 2001 was nominal and was offset by the NOL, so that
only state and franchise taxes were expensed.

         Net income was approximately  $16.0 million for 2002, which was reduced
by the $345,000  preferred stock dividend paid to bring the income  available to
common  stockholders  to $15.6 million or $0.37 cents per fully  diluted  share,
compared  to income of $10.1  million  for the year ended  December  31, 2001 or
$0.28 per fully diluted  share.  The fully diluted  shares  outstanding  for the
years  ended  December  31,  2002  and  2001  were  42,304,254  and  36,775,910,
respectively.

LIQUIDITY AND CAPITAL RESOURCES


         The Company's  expects that its primary capital  requirements  over the
next twelve months will be to assist its subsidiaries in financing their working
capital requirements.  The Company's operating subsidiaries sell the majority of
their products on 30 to 90-day terms.  Working  capital is needed to finance the
receivables,  manufacturing  process and inventory.  Working capital at December
31, 2003 was approximately $66.8 million as compared to working capital of


                                       16


<PAGE>


approximately  $53.1  million at December  31,  2002.  This  increase in working
capital primarily reflects a $10.6 million increase in accounts receivable,  and
$21.4 million  increase in inventory  reduced by $6.9 million increase in income
taxes  payable,  and $4.0 million  increase in accounts  payable.  The Company's
operations provided cash of $2.6 million for the year ended December 31, 2003 as
compared to cash used in operation of ($15.1)  million for the comparable  prior
year period.

         On March 15, 2004, the Company entered into an amendment to its exiting
$35 million credit agreement increasing borrowing limits from $35 million to $45
million.  Pursuant  to the  Credit  Agreement,  the  Company  may  borrow,  on a
revolving basis, up to $32.5 million on 85% of eligible accounts receivable, and
the Company borrowed a secured term loan of $12.5 million amortizing at the rate
of $1 million per quarter  commencing  July 2004.  This amended  agreement  will
expire on October 1, 2007.  Borrowings under the Credit Agreement are secured by
substantially all of the Company's assets,  and bear interest,  at the Company's
option,  at the bank's prime rate or LIBOR plus 1.75% per annum on the revolving
credit  facility  and at the  bank's  prime rate or LIBOR plus 2.25% on the term
loan.  Under  the  terms  of the  Credit  Agreement,  the  Company  can only pay
dividends on common stock with the written consent of the lender.  For 2003, the
borrowings  under the prior credit  agreement  bore interest at the bank's prime
rate or LIBOR  plus  1.75%.  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 by the Company's rate of growth.
At  December  31,  2003,   the  balance  due  under  the  credit   facility  was
approximately $24.0 million under the new facility, the Company would be able to
borrow up to $45 million  based upon  availability  to fund its working  capital
needs in the future.

         The Company's  capital  expenditures in 2003 increased to $741,000,  as
compared to approximately $367,000 during 2002. This increase is attributable to
the  addition  of a  second  Florida  location  for the  Company's  Point  Blank
subsidiary.  The Company anticipates increasing its capital expenditures in 2004
to help further the growth of the Company in connection  with the expansion into
the new  facility.

         The Company believes that its existing credit line, together with funds
generated from operations, will be adequate to sustain its operations (including
projected capital expenditures) through 2004. Historically, the Company has been
successful in obtaining increases in its revolving credit facility,  as required
in order to finance the increased  working capital needs brought on by the rapid
and substantial  expansion of the Company's business.  However,  there can be no
assurance  that the Company  will be able to obtain  further  such  increases if
needed,  and the Company may be required to explore other  potential  sources of
financing  (including  the  issuance of equity  securities  and,  subject to the
consent of the Company's lender,  other debt financing) if the Company continues
to experience escalating demand for its products.



                                       17


<PAGE>


CASH CONTRACTUAL OBLIGATIONS


The following  table  presents the Company's  estimated  cash  requirements  for
contractual obligations outstanding as of December 31, 2003:

                                          PAYMENTS DUE BY PERIOD
                                             ($ IN THOUSANDS)
                           Less
                           than         1-3        4-5        After
Contractual Obligations    1 year      years      years      5 years      Total
_______________________    ______     _______     ______     _______     _______

Long-Term Debt             $2,000     $22,514     $   --     $    --     $24,514

Employment Contracts          675         725         --          --       1,400

Operating Leases            1,698       4,360      4,269       7,557      17,884
                           ______     _______     ______     _______     _______

Total Contractual Cash
     Obligations           $4,373     $27,599     $4,269     $ 7,557     $43,798
                           ======     =======     ======     =======     =======



CRITICAL ACCOUNTING POLICIES

          The Company's management believes that its critical accounting polices
include:

         REVENUE  RECOGNITION  - DHB  recognizes  revenue when it is realized or
realizable and has been earned.  Product  revenue is recognized  when persuasive
evidence of an  arrangement  exists,  the product has been  delivered  and legal
title and all risks of ownership  have been  transferred,  written  contract and
sales  terms are  complete,  customer  acceptance  has  occurred  and payment is
reasonably  assured.  Returns  are  minimal  and do not  materially  affect  the
consolidated financial statements.

          ESTIMATES - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts of assets,  liabilities  and  contingent  assets and  liabilities in the
financial statements and accompanying notes.  Significant  estimates inherent in
the preparation of the accompanying  consolidated  financial  statements include
the carrying  value of long-lived  assets and  allowances  for  receivables  and
inventories. Actual results could differ from these estimates.

         INCOME TAXES - DHB uses the asset and liability approach to account for
income  taxes.  Under this  method,  deferred  tax assets  and  liabilities  are
recognized for the expected future tax  consequences of differences  between the
carrying  amounts of assets and liabilities and their respective tax basis using
enacted tax rates in effect for the year in which the  differences  are expected
to reverse. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period when the change is enacted. Deferred
tax  assets  are  reduced  by a  valuation  allowance  when,  in the  opinion of
management,  it is more likely than not that some portion or all of the deferred
tax assets will not be realized.

         OTHER  INVESTMENT - DHB had a cost-based  investment in a  non-publicly
traded  company.  During  2003,  a  decline  in the  value  of  this  cost-based
investment  below  cost that was  deemed  other than  temporary  was  charged to
earnings, resulting in a loss on investment of $904,000.


                                       18


<PAGE>


NEW ACCOUNTING STANDARDS

         New Accounting Standards

                  In  November  2002,  the FASB  issued  Interpretation  No. 45,
         "Guarantor's  Accounting and Disclosure  Requirements  for  Guarantees,
         including Indirect Guarantees of Indebtedness of Others," which expands
         previously issued accounting  guidance and disclosure  requirements for
         certain guarantees.  The Interpretation requires an entity to recognize
         an initial  liability  for the fair value of an  obligation  assumed by
         issuing  a  guarantee.   The  provision  for  initial  recognition  and
         measurement of the liability will be applied on a prospective  basis to
         guarantees   issued  or  modified   after   December  31,  2002.   This
         Interpretation  did  not  have  a  material  impact  on  the  Company's
         consolidated financial position or results of operations.

                  In December  2002,  the FASB issued SFAS No. 148,  "Accounting
         for Stock-Based  Compensation - Transition and Disclosure- an amendment
         of FASB Statement No. 123," which provides optional transition guidance
         for those  companies  electing  to  voluntarily  adopt  the  accounting
         provisions  of SFAS No.  123.  In  addition,  SFAS No.  148  amends the
         disclosure requirements of SFAS 123 to require prominent disclosures in
         both  annual  and  interim  financial  statements  about the  method of
         accounting for stock-based employee  compensation and the effect of the
         method used on reported results. The Company has not changed its method
         of accounting for stock-based employee compensation.

                  In  January  2003,  the  FASB  issued  Interpretation  No.  46
         "Consolidation  of Variable  Interest  Entities,"  which  clarifies the
         application  of  Accounting  Research  Bulletin  No. 51,  "Consolidated
         Financial  Statements."  Interpretation  46 requires  certain  variable
         interest entities to be consolidated by the primary  beneficiary of the
         entity  if  the  equity  investors  in  the  entity  do  not  have  the
         characteristics  of a controlling  financial interest or do not provide
         sufficient  equity at risk for the  entity to support  its  activities.
         In December 2003, the FASB concluded to revise certain elements of  Fin
         46.  The FASB also modified the effective date of Fin 46.  Fin 46 is to
         be applied for registrants  who  file  under  regulation S-X in periods
         ending after March 15, 2004.  The  Company is currently  assessing  the
         application of Fin 46 on its financial statement.

                  In May 2003,  the FASB issued SFAS No.  150,  "Accounting  for
         Certain Financial  Instruments with Characteristics of both Liabilities
         and Equity" ("SFAS No. 150").  SFAS No. 150  establishes  standards for
         how an issuer  classifies and measures  certain  financial  instruments
         with  characteristics  of both  liabilities  and equity.  The  Standard
         requires that an issuer classify a financial  instrument that is within
         its scope as a liability (or an asset in some circumstances).  SFAS No.
         150 is effective  for  financial  instruments  entered into or modified
         after May 31, 2003,  and otherwise is effective at the beginning of the
         first  interim  period  beginning  after  June  15,  2003,  except  for
         mandatory redeemable financial  instruments of nonpublic entities.  The
         adoption  of SFAS  No.  150 has not had and is not  expected  to have a
         material  impact on the Company's  consolidated  financial  position or
         results of operations.


YEAR-END TRANSACTION

         On December  19,  2003,  DHB's  subsidiary  Point Blank Body Armor Inc.
("Point Blank") issued to Hightower Capital Management, LLC ("Hightower") shares
of common stock of Point Blank  representing  .0065 of the  outstanding  capital
stock of Point Blank in  consideration  of which  Hightower had  transferred and
delivered to Point Blank on December 19, 2003 certain  inventories  of Ballastic
Plates and other goods usable in Point Blank's business.  The inventory received
by Point Blank had an aggregate list price of $1,650,000, equal to the appraised
value of the shares of Point Blank issued to Hightower  (such  appraisal  having
been  performed  by an  independent  business  appraiser).  Simultaneously,  DHB
contributed  to Point  Blank  shares of  common  stock of DHB's  subsidiary  NDL
Products,  Inc. ("NDL") having an aggregate  appraised value equal to 10% of the
appraised  value of Point Blank (such  appraisal of NDL having been performed by
the same  independent  business  appraiser as performed  the  appraisal of Point
Blank),  in  consideration of which Point Blank issued to DHB a number of shares
of common stock of Point Blank having an  equivalent  appraised  value.  DHB has
retained  rights of first refusal and rights to  repurchase  the shares of Point
Blank  issued  to  Hightower,  either  at the  offered  price (in the event of a
proposed sale by Hightower) or at fair market value (in the event of termination
of the business relationship between Point Blank and Hightower).  The book value
of Point Blank shares was approximately $200,000, which resulted in a $1,450,000
gain on the sale of the stock of Point Blank  which is included in other  income
for the year ended  December  31,  2003.  Hightower's  minority  interest in the
income of Point Blank was  approximately  $7,000 for the year ended December 31,
2003.

         In  conjunction  with the foregoing  transactions,  Point Blank entered
into a marketing  and  consulting  agreement  with an  affiliate  of  Hightower,
pursuant to which such affiliate  agreed,  in consideration of a cash payment of
$634,000,  to assist Point Blank in the  marketing,  sales and  distribution  of
Point  Blank's body armor  products in Asia,  Saudi  Arabia,  Turkey and Jordan.
Through  March  1,  2004,  the  Company  has  received  product  orders  for new
international customers in these territories totaling approximately $6 million.

         The Company incurred  approximately  $136,000 of appraisal,  accounting
and legal fees to consummate these transactions.


                                       19


<PAGE>


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 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, the continued
availability  of insurance for the Company's  products and other risks described
in this Annual Report on Form 10-K/A under the heading "Risk  Factors" and other
reports and materials filed with the Securities and Exchange Commission.  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.

RISK FACTORS

          The Company's business, operations and financial condition are subject
to various risks.  Several  material risks are described  below,  and you should
take these risks and other set forth in this Annual Report on Form 10-K/A and in
other materials we file with the Securities and Exchange Commission into account
in evaluating us or any investment  decision involving us. This section does not
describe all risks  applicable  to us, our industry or our  business,  and it is
intended only as a summary of certain  material  risk factors.  In this section,
the  Company is  referred to using "us,  ""our,"  "we" or similar  words and our
stockholders are referred to as "you."

THE  PRODUCTS  WE SELL ARE  INHERENTLY  RISKY  AND COULD  GIVE  RISE TO  PRODUCT
LIABILITY  AND OTHER  CLAIMS  FOR  WHICH WE MAY NOT BE ABLE TO  OBTAIN  ADEQUATE
INSURANCE.

         The products that we manufacture are typically used in applications and
situations that involve high levels of risk of personal  injury.  Failure to use
our products for their intended  purposes,  failure to use them properly,  their
malfunction,  or,  in  some  limited  circumstances,  even  correct  use  of our
products,  could result in serious bodily injury or death. We cannot assure that
our insurance coverage would be sufficient to cover the payment of any potential
claim. In addition, we cannot assure you that our current insurance or any other
insurance coverage will continue to be available or, if available,  that we will
be able to obtain  it at a  reasonable  cost.  Our cost of  obtaining  insurance
coverage  has  risen  substantially  since  September  11,  2001.  Any  material
uninsured loss could have a material  adverse effect on our business,  financial
condition and results of operations.


                                       20


<PAGE>


         MANY  OF OUR  CUSTOMERS  HAVE  FLUCTUATING  BUDGETS,  WHICH  MAY  CAUSE
SUBSTANTIAL FLUCTUATIONS IN OUR RESULTS OF OPERATIONS.

         Customers  for our products  include  federal,  state,  municipalities,
foreign,  military, law enforcement and other governmental agencies.  Government
tax revenues and budgetary  constraints,  which fluctuate from time to time, can
affect  budgetary  allocations  for these  customers.  Many domestic and foreign
government  agencies have in the past experienced  budget deficits that have led
to  decreased  spending in  defense,  law  enforcement  and other  military  and
security  areas.  Our  results  of  operations  may be  subject  to  substantial
period-to-period  fluctuations  because  of these  and other  factors  affecting
military,  law  enforcement  and other  governmental  spending.  A reduction  of
funding for federal, state,  municipal,  foreign and other governmental agencies
could have a material  adverse effect on sales of our products and our business,
financial  condition  and results of  operations.  For  example,  our sales have
increased due to the U.S.  military  operations in Iraq and Afghanistan.  We can
provide  no  assurance  that  these  increases  will  be  maintained  after  the
completion of those operations.


OUR  BUSINESS  IS SUBJECT  TO VARIOUS  LAWS AND  REGULATIONS  FAVORING  THE U.S.
GOVERNMENT'S  CONTRACTUAL POSITION, AND OUR FAILURE TO COMPLY WITH SUCH LAWS AND
REGULATIONS COULD HARM OUR OPERATING RESULTS AND PROSPECTS.

         As a contractor  to the U.S.  government,  we must comply with laws and
regulations  relating to the formation,  administration  and  performance of the
federal government contracts that affect how we do business with our clients and
may impose added costs on our  business.  These rules  generally  favor the U.S.
government's  contractual  position.  For example,  these  regulations  and laws
include  provisions  that  subject  contracts we have been awarded to protest or
challenge  by  unsuccessful  bidders and  unilateral  termination,  reduction or
modification  by the  government.  The accuracy and  appropriateness  of certain
costs and expenses used to  substantiate  our direct and indirect  costs for the
U.S.  government  under both cost-plus and fixed-price  contracts are subject to
extensive  regulation and audit by the Defense Contract Audit Agency,  an arm of
the U.S. Department of Defense.  Responding to governmental audits, inquiries or
investigations  may  involve   significant   expense  and  divert   management's
attention.  Our failure to comply with these or other laws and regulations could
result in contract  termination,  suspension or debarment from  contracting with
the federal  government,  civil fines and damages and criminal  prosecution  and
penalties,  any of which could have a material  adverse  effect on our business,
financial condition and results of operations.

THERE ARE LIMITED SOURCES FOR SOME OF OUR RAW MATERIALS, WHICH MAY SIGNIFICANTLY
CURTAIL OUR MANUFACTURING OPERATIONS.

The  raw  materials  used  by  our  Armor  Group  in  the  manufacturing  of our
ballistic-resistant  products include  Kevlar(TM),  Twaron(TM) and Zylon(TM) and
our  primary  shield  products  include  GoldFlex(TM),  Dyneema(TM)  and Spectra
Flex(TM).  Substantially  all of the raw materials used in the  manufacturing of
ballistic-resistant  garments  consist of fabrics  which are  patented  by major
corporations  and  which  are  purchased  from  four   independent   weaving  or
manufacturing  companies.  During  2002 and  2003,  shortages  of  required  raw
materials  have limited our  production  capacity.  If any of the  manufacturers
cease to produce these products or such shortages  persist or get worse,  we may
be required to use other  fabrics.  There can be no  assurance  that,  if any of
these manufacturers cease to produce these fabrics,  the Company will be able to
identify alternate fabrics with comparable performance.

OUR STOCK PRICE IS VOLATILE.

The market  price and  trading  volume of our common  stock has been  subject to
significant  volatility  and this  trend may  continue.  The  general  economic,
political and stock market  conditions  that may affect the market prices of our
common stock are beyond our control. The market price of our common stock at any
particular time may not remain the market price in the future.  The value of our
common stock may decline  regardless of our operating  performance or prospects.
Factors  affecting our market price include (but are not limited to)  variations
in our operating results, and whether we have achieved our key business targets,
the limited number of shares of our common stock available for purchase or sales
in the public markets,  sales or purchases of large blocks of our stock, changes
in, or our  failure to meet,  our  earnings  estimates,  changes  in  securities
analysts; buy/sell recommendations, differences between our reported results and
those expected by investors and  securities  analysts and  announcements  of new
contracts  by us or  our  competitors.  In the  past,  securities  class  action
litigation has been instituted against companies following periods of volatility
in the market price of their  securities.  Any such  litigation,  if  instituted
against us, could result in  substantial  costs and a diversion of  management's
attention and resources.

GROWTH  IN  OUR  OPERATIONS  MAY  STRAIN  OUR  RESOURCES,  AND  IF  WE  FAIL  TO
SUCCESSFULLY MANAGE OUR GROWTH, OUR BUSINESS COULD BE HARMED.

The  increase  in orders for body armor for  military  personnel  as well as the
introduction  of new  products,  is  placing,  and will  continue  to  place,  a
significant  strain on our operational,  financial and managerial  resources and
personnel.  Any failure to effectively manage growth could have material adverse
effects on our business, operating results and financial condition.


                                       21


<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALTITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company does not issue or invest in financial  instruments or their
derivatives for trading or speculative  purposes.  The Company's  market risk is
limited to fluctuations in interest rates as it pertains to its borrowings under
its $45 million credit facility. The Company can borrow at either the prime rate
of interest or LIBOR plus 1.75%.  Any  increase in these  reference  rates could
adversely affect the Company's  interest expense.  The Company does not have any
material sales, purchases, assets or liabilities denominated in currencies other
than the U.S.  Dollar,  and as such, is not subject to material foreign currency
exchange rate risk.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         SEE  INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  APPEARING  IN  THE
CONSOLIDATED FINANCIAL STATEMENTS ANNEXED HERETO.

<TABLE>
<CAPTION>

SUPPLEMENTAL  QUARTERLY  FINANCIAL DATA (UNAUDITED,  IN THOUSANDS EXCEPT FOR PER
SHARE DATA)

                                              FIRST          SECOND           THIRD          FOURTH
FISCAL 2003                                  QUARTER         QUARTER         QUARTER         QUARTER
                                           ___________     ___________     ___________     ___________
<S>                                        <C>             <C>             <C>             <C>

Net sales                                  $    46,153     $    56,525     $    54,417     $    72,916
Cost of goods sold                              33,185          41,001          39,599          52,885
                                           ___________     ___________     ___________     ___________
Gross profit                                    12,968          15,524          14,818          20,031
Selling, general and admin expense               5,793           7,773           9,055          14,704
                                           ___________     ___________     ___________     ___________
Operating income                                 7,175           7,751           5,763           5,327
Other income (expense), net                        423            (331)           (282)            451
                                           ___________     ___________     ___________     ___________
Income before income taxes                       7,598           7,420           5,481           5,778
Income taxes                                     2,579           3,369           2,231           2,919
                                           ___________     ___________     ___________     ___________
Income before minority interest                  5,019           4,051           3,250           2,859
Minority interest                                   --              --              --              (7)
                                           ___________     ___________     ___________     ___________
Net income                                       5,019           4,051           3,250           2,852
Dividend - preferred stock                         (90)            (90)            (90)            (90)
                                           ___________     ___________     ___________     ___________
Income available to common stockholders    $     4,929     $     3,961     $     3,160     $     2,762
                                           ===========     ===========     ===========     ===========
Earnings per share
Basic                                      $      0.12     $      0.10     $      0.08     $      0.07
                                           ===========     ===========     ===========     ===========
Diluted                                    $      0.12     $      0.09     $      0.07     $      0.06
                                           ===========     ===========     ===========     ===========
Weighted average shares outstanding
Basic shares                                40,413,746      40,458,867      40,594,746      40,687,774
                                           ===========     ===========     ===========     ===========
Diluted shares                              42,785,488      44,235,879      44,510,790      45,049,051
                                           ===========     ===========     ===========     ===========

                                            RESTATED        RESTATED        RESTATED        RESTATED
FISCAL 2002*(RESTATED)                       FIRST           SECOND          THIRD           FOURTH
                                            QUARTER         QUARTER         QUARTER         QUARTER
                                           ___________     ___________     ___________     ___________

Net sales                                  $    33,639     $    34,014     $    30,146     $    32,548
Cost of goods sold                              24,184          23,977          21,005          23,455
                                           ___________     ___________     ___________     ___________
Gross profit                                     9,454          10,037           9,141           9,093
Selling, general and admin expense               4,268           5,283           7,605           6,747
                                           ___________     ___________     ___________     ___________
Operating income                                 5,187           4,754           1,536           2,346
Other income (expense), net                       (441)           (452)           (503)           (119)
                                           ___________     ___________     ___________     ___________
Income before income taxes                       4,746           4,302           1,033           2,227
Income taxes                                        27              61              81          (3,841)
                                           ___________     ___________     ___________     ___________
Net income                                       4,719           4,241             952           6,068
Dividend - preferred stock                          --              --              --            (345)
                                           ___________     ___________     ___________     ___________
Income available to common stockholders
                                           $     4,719     $     4,241     $       952     $     5,723
                                           ===========     ===========     ===========     ===========


                                       22


<PAGE>


Earnings per share
Basic                                      $      0.14     $      0.11     $      0.03     $      0.14
                                           ===========     ===========     ===========     ===========
Diluted                                    $      0.11     $      0.10     $      0.03     $      0.13
                                           ===========     ===========     ===========     ===========

Weighted average shares outstanding
Basic shares                                31,486,391      36,789,796      40,413,746      40,413,746
                                           ===========     ===========     ===========     ===========
Diluted shares                              41,722,903      41,024,916      43,827,580      42,641,615
                                           ===========     ===========     ===========     ===========

<FN>

* - During the fourth quarter of 2002, the Company recorded certain  adjustments
as  described  in Note 15 to the  Company's  consolidated  financial  statements
contained  in Form  10-K/A  filed with the SEC on July 24,  2003.  The effect of
these adjustments on the condensed consolidated statements of operations for the
first  quarter of 2002 was a  decrease  in net income and no change in basic and
diluted  earnings  per share.  For the second and third  quarters  of 2002 there
would have been a decrease in net income,  basic earnings per share, and diluted
earnings per share for each quarter. The Company has restated the three and nine
months ended  September 30, 2002, to show the effect of the  adjustments  on the
condensed  consolidated  statements of operations.  The first  adjustment was an
additional  accrual to straight-line rent expense in accordance with SFAS No. 13
"Accounting for Leases," which increases the selling, general and administrative
expenses by $39 for each of the first three quarters of 2002 for a total of $117
for the nine months ended  September  30, 2002.  In addition to  straight-lining
rent expense,  the Company recorded in the fourth quarter of 2002 a $646 expense
for the issuance of stock warrants to an  unaffiliated  outside  consultant,  of
which $146 and $284 was  applicable  to the second and third  quarters  of 2002,
respectively.  These adjustments  increased selling,  general and administrative
expenses for the first  quarter,  second  quarter and third  quarter of 2002 and
decreased  the  selling,  general  and  administrative  expenses  for the fourth
quarter of 2002.

</FN>
</TABLE>

<TABLE>
<CAPTION>

                                              FIRST          SECOND           THIRD          FOURTH
FISCAL 2001                                  QUARTER         QUARTER         QUARTER         QUARTER
                                           ___________     ___________     ___________     ___________
<S>                                        <C>             <C>             <C>             <C>

Net sales                                  $    20,175     $    23,514     $    24,009     $    30,317
Cost of good sold                               15,223          17,309          17,280          21,827
                                           ___________     ___________     ___________     ___________
Gross profit                                     4,952           6,205           6,729           8,490
Selling, general and admin expense               3,304           3,090           3,282           3,921
                                           ___________     ___________     ___________     ___________
Operating income                                 1,648           3,115           3,447           4,569
Other income (expense)                            (619)           (678)           (627)           (547)
                                           ___________     ___________     ___________     ___________
Income before income taxes                       1,029           2,437           2,820           4,022
Income taxes                                         6             134              27               8
                                           ___________     ___________     ___________     ___________
Net income                                 $     1,023     $     2,303     $     2,793     $     4,014
                                           ===========     ===========     ===========     ===========

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
                                           ===========     ===========     ===========     ===========

</TABLE>


                                       23


<PAGE>


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

         On August 20, 2003,  the Company was notified  that Grant  Thornton LLP
("Grant   Thornton")  had  decided  to  resign  as  the  Company's   independent
accountant.  Grant Thornton had served as the Company's independent  accountants
since May 29, 2002.  Prior to May 29, 2002,  Paritz & Company P.A. served as the
Company's independent  accountants since January 23, 1998. Paritz & Company P.A.
issued their report on the  Company's  financial  statements  for the year ended
December 31, 2001. Grant Thornton issued their report on the Company's financial
statements for the year ended December 31, 2002.

         For the Company's  2002 fiscal year,  the opinion of Grant Thornton did
not contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to  uncertainty,  audit scope or accounting  principles.  During the
Company's  2002  fiscal  year  and  through  August  20,  2003,  there  were  no
disagreements  with Grant  Thornton on any matter of  accounting  principles  or
practices,  financial statement disclosure or auditing scope or procedure, which
disagreement,  if not resolved to the satisfaction of Grant Thornton, would have
caused  Grant   Thornton  to  make  reference  to  the  subject  matter  of  the
disagreement in connection with its reports.

         During the Company's  most recent  fiscal years and through  August 20,
2003, there were no "reportable events" as listed in Item 304(a)(1)(v)(A)-(D) of
Regulation  S-K adopted by the Securities  and Exchange  Commission  except that
Grant Thornton  notified the Company on August 20, 2003 that, in connection with
its audit of the Company's  consolidated financial statements for the year ended
December  31, 2002 for filing with the  Company's  Form  10-K/A,  it  identified
certain deficiencies  involving internal control it considered to be significant
deficiencies  that, in the  aggregate,  constituted  material  weaknesses  under
standards established by the American Institute of Certified Public Accountants.
These  deficiencies  included  the failure to  disclose  certain  related  party
transactions  in the Company's  Form 10-K for the fiscal year ended December 31,
2002, the Company's  reliance on  substantial  outside  assistance  from outside
professionals in preparing the Company's financial statements, and understaffing
in the Company's  accounting and finance department.  The Company filed its Form
10-K for the fiscal year ended  December 31, 2002 on March 31, 2003. The Company
subsequently  amended this Form 10-K on July 24, 2003 to fully disclose  related
party  transactions.  After further review,  Grant Thornton reissued their audit
report  in  the  Company's   Form  10-K/A,   which  states  that  the  Company's
consolidated  financial  statements  presented fairly, in all material respects,
the  consolidated  financial  position of the Company and its subsidiaries as of
December  31,  2002  and  the   consolidated   results  of  its  operations  and
consolidated cash flows for the year ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States.

         Grant Thornton formally  notified the Company of these  deficiencies on
the date of their  resignation.  The Company has  authorized  Grant  Thornton to
discuss  the  subject  matter  of each  material  weakness  identified  with the
successor auditor  subsequently engaged as the principal accountant to audit the
Company's financial statements.  The Company's Board of Directors engaged Weiser
LLP as the Company's new independent  accountants,  and the Company filed a Form
8-K on September 2, 2003, when this selection was made.


                                       24


<PAGE>


ITEM 9A.  CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation,  as  required  by  Exchange  Act Rule
13a-15(b),  under the  supervision and with the  participation  of the Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the
Exchange  Act) as of the end of the period  covered by this  report.  Based upon
that  evaluation,  the  Chief  Executive  Officer  and Chief  Financial  Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material  information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
Securities and Exchange  Commission  filings.  During the period covered by this
report,  the  Company has begun to  implement  certain  changes to its  internal
control  over  financial  reporting as described  below,  which have  materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.

Disclosure  controls and procedures are those controls and other procedures that
are designed to ensure that information  required to be disclosed by the Company
in the reports  that it files or submits  under the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and  communicated
to the Company's management, including the Company's principal executive officer
and  principal  financial  officer,  as  appropriate  to allow timely  decisions
regarding required disclosure.

As disclosed in the Company's Form 8-K filed on August 27, 2003, Grant Thornton,
the Company's  former  independent  accountants,  informed the Company that they
considered  there to be certain  deficiencies in the Company's  internal control
procedures  that  would be  deemed to be a  material  weakness  under  standards
established by the American  Institute of Certified  Public  Accountants.  Grant
Thornton made this  determination  in  connection  with the  preparation  of the
Company's  consolidated  financial  statements  as of and  for  the  year  ended
December 31, 2002 for inclusion in the Company's Form 10-K/A, which was filed on
July 24, 2003 to supplement the Company's Form 10-K filed on March 31, 2003. The
opinion of Grant Thornton in the Form 10-K/A did not contain an adverse  opinion
or disclaimer  of opinion and was not  qualified or modified as to  uncertainty,
audit scope or accounting principles.

 The former independent accountants informed the Company and the Audit Committee
of  these  deficiencies  in  a  letter  delivered  on  August  20,  2003.  These
deficiencies included the failure to disclose certain related party transactions
in the  Company's  Form 10-K for the fiscal year ended  December 31,  2002,  the
Company's reliance on substantial outside assistance from outside  professionals
in preparing  the  Company's  financial  statements,  and  understaffing  in the
Company's  accounting  and  finance  department.  The Form  10-K/A  filed by the
Company on July 24, 2003 fully disclosed the related party transactions.

In accordance with their fiduciary  responsibilities,  senior management and the
Audit Committee  directed the Company to dedicate  resources and take additional
steps to strengthen  its control  processes and  procedures to ensure that these
internal  control  deficiencies do not result in a material  misstatement in the


                                       25


<PAGE>


Company's consolidated financial statements.  Specifically,  we have implemented
or are preparing to implement the following additional procedures:

                o     The  Company  briefed  the  Chairman  and Chief  Executive
                      Officer  on the  requirement  to  disclose  related  party
                      transactions.

                o     The Company  distributed  a  questionnaire  to each of the
                      Company's officers and directors specific to related party
                      transactions;  and the Company has pursued and will pursue
                      more rigorous  follow-up  with its directors and executive
                      officers    regarding    their    responses    to   annual
                      questionnaires   used  in  preparing  the  Company's  Form
                      10-K/A and proxy materials.

                o     The Company  developed a  financial  statement  disclosure
                      checklist to be completed by the Chief  Financial  Officer
                      each time the Company prepares financial statements.

                o     The Company has begun the preparation of its quarterly and
                      annual financial  statements  sooner after the end of each
                      fiscal quarter and fiscal year. The Company has undertaken
                      an additional layer of internal review prior to delivering
                      drafts to its outside professionals.

                o     The Company  continues to reinforce  with its new auditors
                      their ability to communicate  with and obtain  information
                      from lower level personnel in the Company's accounting and
                      finance department.

                o     The  Company  will   evaluate   further   delegation   and
                      allocation of  responsibilities  within its accounting and
                      finance  department to facilitate  prompt  availability of
                      financial information.

                o     Since  the  beginning  of  2003,  the  Company  hired  new
                      financial reporting personnel,  including a Vice President
                      of  Finance  for the Point  Blank  subsidiary  and a staff
                      accountant/assistant  controller. The Company also hired a
                      Controller in late 2002 for its PACA facility.

                o     The Company continues to review,  confirm and clarify with
                      its    personnel    their    specific     functions    and
                      responsibilities   to  promote   the   orderly   flow  and
                      availability of financial data and information.

                o     During the second  quarter of 2003,  the Company  hired an
                      internal  control  specialist  to review  and  revamp  the
                      Company's  internal control  policies and procedures.  The
                      Company  engaged the firm Eisner LLP to assist  management
                      in complying with the internal control  requirements under
                      Section  404 of the  Sarbanes-Oxley  Act of  2002  to gain
                      greater efficiency and effectiveness. The Company provided
                      Eisner  LLP  with  copies  of  the  updated  policies  and
                      procedures   and  flowcharts  of  the  Accounting  and  IT
                      departments.

         The Company will  continue to: (a)  evaluate the  effectiveness  of its
internal  controls and procedures on an ongoing basis, (b) implement  actions to
enhance its  resources  and  training  in the area of  financial  reporting  and
disclosure  responsibilities,  and  (c)  review  such  actions  with  the  Audit
Committee and the Company's new independent accountants, Weiser LLP. The Company
has  discussed  its  corrective  actions and plans with the Audit  Committee and
Weiser LLP.

         The Company's  management,  including the Chief  Executive  Officer and
Chief Financial Officer,  does not expect that the Company's disclosure controls
or its  internal  controls  will  prevent  all errors  and all fraud.  A control


                                       26


<PAGE>


system, no matter how well conceived and operated,  can provide only reasonable,
not  absolute,  assurance  that the  objectives  of the control  system are met.
Further,  the design of a control  system  must  reflect the fact that there are
resource  constraints,  and the benefits of controls must be considered relative
to their costs.  Because of the inherent  limitations in all control systems, no
evaluation of controls can provide  absolute  assurance  that all control issues
and instances of fraud,  if any,  within the Company have been  detected.  These
inherent limitations include the realities that judgments in decision-making can
be faulty,  and that  breakdowns  can occur  because of simple error or mistake.
Additionally,  controls  can be  circumvented  by the  individual  acts  of some
persons,  by collusion of two or more people,  or by management  override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions.  Over time, controls may become inadequate because of changes
in conditions,  or the degree of compliance  with the policies or procedures may
deteriorate.  Because of the inherent  limitations in a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.

         The Company monitors its disclosure  controls and internal controls and
makes  modifications  as necessary;  the Company's intent in this regard is that
the disclosure  controls and the internal controls will be maintained as dynamic
systems that change  (including with improvements and corrections) as conditions
warrant.
                                    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 executive officers:

         DAVID H. BROOKS,  age 49, 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.

         JEROME  KRANTZ,  age 48, has been a director of the Company  since July
2000. Mr. Krantz has been the owner and President of Krantz  Financial Group for
over  five  years  and has over 20  years of  experience  in the  insurance  and
financial  industry.  Mr. Krantz is a chartered  life  underwriter,  a chartered
financial  consultant and a registered  investment advisor. Mr. Krantz currently
serves as  Chairman  of the Audit and  Compensation  Committees  of the Board of
Directors.

         DAWN M. SCHLEGEL,  age 34, has been the Chief Financial  Officer of the
Company since  September  1999.  Mrs.  Schlegel has also served as Treasurer and
Secretary of the Company since  September 1999, and was elected a Director as of
July 2000.  Prior  thereto,  Mrs.  Schlegel was the  Accounting  Manager for the
Company's operations and finances since 1996. Prior to joining the Company, Mrs.
Schlegel was a Senior  Accountant with Israeloff,  Trattner & Co. CPAs,  P.C., a
certified public accounting firm, for more than five years.


                                       27


<PAGE>


         GARY  NADLEMAN,  age 51, has been a director of the Company  since July
2001.  Since  2002,  Mr.  Nadelman  has  been  a  partner  in  a  company  which
manufactures ladies' sportswear under the labels Erik Stewart and Caryn Vallone.
Immediately prior thereto, he was the President of Synari,  Inc., a manufacturer
of women's sportswear and other apparel,  for more than five years. Mr. Nadelman
has over 20 years of experience in the apparel industry.  Mr. Nadelman currently
serves on the Audit and Compensation Committees of the Board of Directors.

         CARY CHASIN,  age 56, has been a Director of the Company  since October
2002. Mr. Chasin has been an advertising  executive at DSA Community  Publishing
for three years.  Immediately  prior  thereto,  he owned and operated an apparel
retail store. He was an employee of the Company from November 1999 through April
2000,  working  on  special  projects  including  the  closing of the hard armor
division.  He has over 30 years'  experience  in owning  and  operating  apparel
retail,  manufacturing and importing  businesses.  Mr. Chasin is a member of the
Audit and Compensation committees of the Board of Directors.

         BARRY  BERKMAN,  age 63,  has  been a  Director  of the  Company  since
February 2003. Mr. Berkman has been a partner with Berkman Bottger & Rodd, a New
York law firm, for more than five years,  and he is a member of the American Bar
Association.

         SANDRA L.  HATFIELD,  age 50, 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 before that,  she was the
Vice President of Production at PACA.

         AUDIT  COMMITTEE.  Effective  January  31,  2000,  the  Securities  and
Exchange  Commission  adopted new rules and amendments to current rules relating
to the disclosure of information about companies' audit committees. In addition,
the SEC  recommends  that audit  committees  adopt written  charters.  Our Audit
Committee  has adopted a charter,  a copy of which was included as Appendix A to
the Company's 2002 proxy  statement.  In 2003, our Audit Committee was comprised
of three directors,  Jerome Krantz, Gary Nadelman,  and Cary Chasin, who are not
officers or  employees  of the Company.  They are all  considered  "independent"
under Section 121(A) of the listing  standards of the American  Stock  Exchange.
The Board of Directors  determined  that Jerome  Krantz,  a certified  financial
planner and registered  investment  advisor,  is an "audit  committee  financial
expert," and he is independent of management.

         The primary  function of the Audit  Committee is to assist the Board of
Directors in fulfilling its oversight  responsibilities.  The primary duties and
responsibilities of the Audit Committee include: (i) monitoring the integrity of
the Company's financial reporting process and systems of internal controls, (ii)
monitoring  the  independence  and  performance  of  the  Company's  independent
auditors,  (iii)  providing  an avenue of  communication  among the  independent
auditors, management and the Board of Directors and (iv) reviewing and approving
the  engagement of  professionals  with respect to the  performance of non-audit
services.

         In this  context,  during  2003 the Audit  Committee  met  eight  times
telephonically   and  held   discussions   with  management  and  the  Company's
independent  auditors.  The Audit Committee's Chairman, as representative of the
Audit  Committee,  also discussed the Company's  interim  financial  information
contained in each  quarterly  earnings  announcement  with the  Company's  Chief
Financial  Officer  and the  Company's  independent  auditors  prior  to  public
release.


                                       28


<PAGE>


         CODE OF ETHICS. In June 2003, the Board of Directors adopted a code of
ethics  for the CEO,  CFO,  chief  accounting  officer,  controllers  and  other
financial  officers,  which  is  attached  to this  report  as an  exhibit.  The
Company's  Code of Ethics is intended to be a  codification  of the business and
ethical principles which guide the Company, and to deter wrongdoing,  to promote
honest and ethical conduct, to avoid conflicts of interest,  and to foster full,
fair,  accurate,   timely  and  understandable   disclosures,   compliance  with
applicable  governmental  laws,  rules  and  regulations,  the  prompt  internal
reporting of violations and accountability for adherence to this Code.


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 any of the years ended  December  31,  2003,  2002 or
2001 exceeded $100,000:

                                                                     SECURITIES
     NAME AND PRINCIPAL           YEAR      ANNUAL                   UNDERLYING
          POSITION                         SALARY(1)       BONUS     OPTIONS (#)

     David H. Brooks              2003     $781,250      1,000,000      50,000
     Chairman and CEO             2002      643,750              0      25,000
                                  2001      525,000              0      25,000

     Sandra L. Hatfield           2003     $163,068       $695,000          --
     Chief Operating Officer      2002      163,068              0      25,000
                                  2001      163,497              0          --

     Dawn M. Schlegel             2003     $140,625       $100,000      50,000
     Chief Financial Officer,     2002      140,625              0      25,000
     Treasurer and Secretary      2001      103,718              0     125,000

     ___________________________________________________________________________

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

         EMPLOYMENT AGREEMENTS. In July 2000, Mr. Brooks and the Company entered
into a five-year  employment  agreement.  Pursuant to the agreement,  Mr. Brooks
received an annual salary of $500,000  through July 2001, with annual  increases
of $50,000  thereafter.  On the  effective  date of the  agreement,  Mr.  Brooks
received  3,750,000  warrants  exercisable  at $1.00 per share and  vesting  20%
immediately and in 20% annual  increments  thereafter.  These warrants expire in
July 2010.

         STOCK WARRANTS. In January 2003, the then five members of the Company's
Board of Directors  were each awarded 50,000  warrants  exercisable at $1.41 per
share for five  years.  In July 2003,  the  additional  Board  member was issued
50,000 warrants  exercisable at $4.33 per share for five years. In addition,  in
February  2003,  the Board of Directors  awarded key employees a total of 35,000


                                       29


<PAGE>


warrants  exercisable at $2.01 per share, which expire in February 2008. In July
2003, the Board of Directors awarded a key employee 33,000 warrants  exercisable
at $3.85 per share,  which expire in July 2008. Also in 2003, the Company issued
15,000 unregistered shares of common stock to an employee. During the year ended
December 31, 2003,  employees  and  consultants  exercised  warrants for 165,000
shares of the Company's common stock, with aggregate  proceeds to the Company of
approximately $261,000.

         SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.  Section 16(a)
of the  Securities  Exchange Act of 1934  requires the  Company's  directors and
executive  officers,  and persons who own more than 10% 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 year  ended  December  31,  2003,  all  Section  16(a)  filing  requirements
applicable to the Company's officers,  directors and greater-than-10% beneficial
owners were complied with.

         The  following  table  summarizes   option/warrant   grants  (excluding
director grants) and the named officers' stock option activity during 2003.

<TABLE>
<CAPTION>


                       Number of
                       Securities      % of Total                                     Potential Gain at assumed
                       underlying     Options/SARs                                      Annual Rates of Stock
                        options/       granted to      Exercise or                     Price Appreciation for
                         SARs2        employees in     Base Price      Expiration          Option Term 1:
       Name             Granted       Fiscal Year       ($/Share)         Date          5%                10%
__________________     __________     ____________     ___________     __________     _______           _______
<S>                      <C>               <C>            <C>           <C>           <C>               <C>

David H. Brooks          50,000            4%             $1.41         01/15/08      $69,319           $78,101
Sandra L. Hatfield           --            --                --               --           --                --
Dawn M. Schlegel         50,000            4%             $1.41         01/15/08      $69,319           $78,101

<FN>


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 named officers will occur unless
the price of DHB's common shares exceeds the options' exercise price.

2. The Company has no SARs.

</FN>
</TABLE>


                        AGGREGATED WARRANT/OPTION VALUES

         The  following  table sets forth  information  regarding the number and
value of unexercised warrants/options held at December 31, 2003 by the executive
officers  listed in the Summary  Compensation  Table above.  This 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              Value of Unexercised
                          Underlying 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         3,125,000         750,000        $18,464,250      $4,492,500
Sandra L. Hatfield        325,000         100,000          1,394,000         599,000
Dawn M. Schlegel          205,000             -0-          2,321,400             -0-

</TABLE>


         In 2003,  none of such  executive  officers  exercised  any  options or
warrants to purchase stock of the Company.


                                       30


<PAGE>


                          COMPENSATION COMMITTEE REPORT

         The  compensation  of the  Company's  executive  officers is  generally
determined by either the Board of Directors or the Compensation Committee of the
Board of Directors,  subject to approval by the Board of Directors,  and subject
to applicable employment agreements.  See "Executive  Compensation." Each member
of the  Compensation  Committee  is a  director  who is not an  employee  of the
Company or any of its affiliates.

GENERAL POLICIES

         The Company's  compensation programs are intended to enable the Company
to  attract,  motivate,  reward and retain the  management  talent  required  to
achieve its corporate objectives,  and thereby increase shareholder value. It is
the Company's policy to provide  incentives to its senior  management to achieve
both short-term and long-term  objectives and to reward exceptional  performance
and  contributions  to the  development of the Company's  businesses.  To attain
these  objectives,  the  Company's  executive  compensation  program  includes a
competitive base salary and stock-based compensation.

         Stock  warrants  are  granted to  employees,  including  the  Company's
executive officers, by the Board or the Compensation Committee. The Compensation
Committee  believes that stock  warrants  provide an incentive  that focuses the
executive's  attention on managing the Company from the  perspective of an owner
with an equity stake in the business.  Incentive stock warrants are awarded with
an  exercise  price  equal to the  market  value of Common  Stock on the date of
grant,  and all such  warrants  have a maximum  term of ten years and  generally
become  exercisable  not less than six months from the date of grant.  Among the
Company's executive  officers,  the number of shares subject to warrants granted
to  each  individual   generally  depends  upon  the  level  of  that  officer's
responsibility.  Previous  grants of stock  warrants  are  reviewed  but are not
considered the most important  factor in determining the size of any executive's
stock option award in a particular  year.  In December  2003,  the  compensation
committee  authorized  the  payment of up to $3  million in cash  bonuses to key
employees  and  officers to reward  those  individuals  who  contributed  to the
Company's substantial revenue growth and profitability. The continued growth and
positive  performance  of the Company is a testament to the dedicated  employees
who work for the Company,  who have  exceeded the goals and forecasts set by the
Company.

         RELATIONSHIP OF COMPENSATION TO PERFORMANCE The Compensation  Committee
annually establishes,  subject to the approval of the Board of Directors and any
applicable  employment  agreements,  the  salaries  that  will  be  paid  to the
Company's  executive  officers during the coming year. In setting salaries,  the
Compensation Committee takes into account several factors, including competitive
compensation  data,  the extent to which an individual  may  participate  in the
stock plans  maintained by the Company,  and  qualitative  factors bearing on an
individual's experience, responsibilities,  management and leadership abilities,
and job performance.


                                       31


<PAGE>


COMPENSATION OF CHIEF EXECUTIVE  OFFICER For fiscal 2003,  pursuant to the terms
of his employment  agreement with the Company,  David H. Brooks  received a base
salary of $650,000.  See "Executive  Compensation - Employment  Agreements."  In
light of this employment agreement,  the Compensation Committee was not required
to make any  decision  regarding  Mr.  Brooks'  base  salary.  The  Compensation
Committee  elected to award Mr.  Brooks a $1,000,000  bonus for fiscal 2003,  in
recognition   of  the   outstanding   performance   of  the   Company   and  its
accomplishments  of exceeding  all  expectations  and  forecasts,  and increased
revenues and profits.

          Mr. Brooks also received  warrants to purchase 50,000 shares of common
stock at $1.41 per share (as did each of the other then-current Directors of the
Company).

                                         COMPENSATION COMMITTEE
                                         Jerome Krantz, Chairman
                                         Gary Nadelman
                                         Cary Chasin


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

         The  following  table  sets  forth  the  beneficial  ownership  of  the
Company's  common  stock as of March 1, 2004,  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 Owned1
                 Name                     Beneficially Owned2     * - Less than one (1%)
_____________________________________     ___________________     ______________________
<S>            <C>                           <C>                           <C>

David H. Brooks(3)                           15,866,440(3)                 35%
Jerome Krantz                                  145,350(4)                   *
Sandra L. Hatfield                             325,000(5)                   *
Dawn M. Schlegel                               205,500(6)                   *
Gary Nadelman                                  190,875(7)                   *
Cary Chasin                                    212,000(8)                   *
Barry Berkman                                  182,200(9)                   *
All officers and Directors as a group
(7 people)                                   17,127,365(10)               38%(9)

<FN>

1. Based upon 40,742,136 shares  outstanding as of March 1, 2004. In calculating
the  percentage  owned by any  individual  officer  or  director,  the number of
currently  exercisable  warrants and options held by such  individual  have been
included in the calculation of the percentage owned.

2.  Includes  currently  exercisable  options  or  warrants,   which  are  those
exercisable within 60 days after the date of this Form 10-K.

3. Consists of 5,415,402  common shares owned  directly by Mr.  Brooks,  768,746
common shares owned by a trust,  of which,  Mr.  Brooks is the trustee,  500,000
shares  issuable upon  conversion of Series A, 12%  Convertible  Preferred Stock
owned by Mr. Brooks,  3,057,292 shares owned by his wife, 3,000,000 shares owned
by his wife as custodian for his


                                       32


<PAGE>

minor children,  and 3,125,000  shares  acquirable  under currently  exercisable
warrants at prices  between  $1.00 and $7.11 per share;  50,000 of the  warrants
were  issued in 2003.  As the only  person  with more than 5%  ownership  of the
Company, Mr. Brooks' address is 400 Post Avenue, Westbury, New York 11590.

4.  Includes  100,000  shares,  which may be acquired upon exercise of currently
exercisable  warrants at prices between $1.41 and $7.11 per share; 50,000 of the
warrants were issued in 2003.

5. Consists of 325,000 shares, which may be acquired under currently exercisable
warrants at prices between $2.00 and $7.11 per share.

6. Consists of 205,000 shares, which may be acquired under currently exercisable
warrants at prices  between  $1.41 and $7.11 per share;  50,000 of the  warrants
were issued in 2003.

7.  Includes  100,000  shares,  which may be acquired upon exercise of currently
exercisable  warrants at prices between $1.41 and $7.11 per share; 50,000 of the
warrants were issued in 2003.

8. Includes  50,000 shares,  which may be acquired under  currently  exercisable
warrants at a price of $1.41 per share, issued in 2003.

9. Includes  50,000 shares,  which may be acquired under  currently  exercisable
warrants at a price of $4.33 per share, issued in 2003.

10. Includes  3,955,000  shares  purchasable  pursuant to currently  exercisable
warrants held by directors and officers.

</FN>
</TABLE>


         As of  December  31,  2003,  the  Company  maintained  a single  equity
compensation  plan (its 1995  Stock  Option  Plan),  which had  previously  been
approved  by the  Company's  security  holders,  and under which the Company was
authorized to issue options for up to 5,000,000  shares of common stock. A total
of 377,000 common stock options remained available for issuance under the plan.

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
and  principal  stockholder  of the  Company.  On January 14, 2002,  Mr.  Brooks
exchanged $3 million of the approximately $10 million of indebtedness due him at
the time, for 500,000  shares of the Company's  newly  authorized  Series A, 12%
Convertible  Preferred Stock (the "Preferred Stock").  The Preferred Stock has a
dividend rate of $0.72 per share per annum, an amount equal to the interest that
would have been payable 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 of each year.  During  2002,  the Company
repaid $5.5 million of principal  indebtedness owed to Mr. Brooks,  bringing the
total  indebtedness owed by the Company to Mr. Brooks as of December 31, 2002 to
$1.5 million.  During the second quarter of 2003, the Company repaid the balance
of $1.5  million  to Mr.  Brooks,  eliminating  the  shareholder  loan  from the
Company's  balance sheet.  These shareholder loans had borne interest at 12% per
annum. Interest expense included in the financial statements for the years ended
December 31, 2003 and 2002 was approximately $93 and $540, respectively.

         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 LLC ("V.A.E."),  a limited
liability company  controlled by Terry Brooks,  the wife of Mr. David H. Brooks,
and beneficially owned by Mr. and Mrs. Brooks' minor children. Total base rental


                                       33


<PAGE>


under this lease was $682,000 and $643,000 in 2003 and 2002,  respectively,  and
the lease  expires on December 31, 2010.  Management  performed a comparison  of
market rates at the time the lease was entered into, and believes that the terms
of the lease were at the current market price that would then have been obtained
from an unrelated party.

         The Company has been purchasing certain products,  which are components
of  ballistic-resistant  apparel  manufactured  and  sold by the  Company,  from
Tactical Armor Products, Inc. ("TAP"), a company owned by Terry Brooks, the wife
of Mr.  David H.  Brooks.  The total of such  purchases  during the years  ended
December 31, 2003, 2002, and 2001 were approximately $29,243,000, $7,975,000 and
$2,760,000,  respectively.  The Company has benefited by doing business with TAP
as the unit prices  charged by TAP have been less than the prices charged to the
Company by its previous outside  suppliers,  and TAP's products are available on
demand and the Company would not be able to fulfill the demand of its customers,
through any other source.  To facilitate  the delivery and  integration of these
components,  beginning in May 2001,  the Company  permitted  TAP to  manufacture
these  components  in a  portion  of the  Company's  manufacturing  facility  in
Jacksboro,  Tennessee,  for which TAP paid to the Company  occupancy  charges of
approximately  $39,600,  $39,600 and $26,400  for the years ended  December  31,
2003,  2002  and  2001,  respectively.  (The  rent  paid by TAP is an  estimated
allocable  portion of the Company's total rent for the entire  facility.)  Terry
Brooks also owned another company, U.S. Manufacturing Corporation, that received
revenues of $560,000 and $43,355 from the Company in 2003 and 2002 for stitching
work, but has since been merged into TAP. TAP is an approved subcontractor under
the  applicable  contracts  between the Company  and the United  States  federal
government.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         AUDIT  FEES.  The  aggregate  fees  billed  for  professional  services
rendered by Grant Thornton for the audit of the Company's  financial  statements
("Audit  Services")  during  the year  ended  December  31,  2002 were  $157,450
includes  services  rendered in connection  with the Company's Form 10-K/A.  The
aggregate  fees billed by Grant  Thornton for services  rendered to the Company,
other than the services  described above under "Audit Fees", for the fiscal year
ended  December 31, 2002 were  approximately  $29,870 for  services  rendered in
connection  with the  Company's  Form 10-Qs for the second and third  quarter of
2002 and the first and second quarter of 2003.  These fees were  principally for
review of the Company's  Quarterly  Reports on Form 10-Q. There were no audit or
non-audit  services  rendered by Grant  Thornton to the Company prior to May 29,
2002. The Company's current independent accountants,  Weiser LLP, had billed the
Company a total of $160,000  for audit  services  (in respect of the 2003 fiscal
year) through March 1, 2004.

         TAX  FEES.   Grant  Thornton   billed  the  Company   $19,200  for  the
preparations of its corporate income taxes for the year ended December 31, 2002.
Weiser  LLP  has  provided  the  Company  with  professional  services  for  tax
compliance,   tax  advice  or  tax  planning  and  billed   aggregate   fees  of
approximately $30,000 for such professional services through March 1, 2004.

         FINANCIAL  INFORMATION  SYSTEMS DESIGN AND  IMPLEMENTATION  FEES. Grant
Thornton  did not  render  any  professional  services  described  in  paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X (17 C.F.R. 210.2-01),  for the Company
during the year ended December 31, 2002. The Audit Committee determined that the
absence of any such services was compatible with maintaining the independence of
Grant Thornton LLP. There were no audit or non-audit  services rendered by Grant
Thornton to the Company  prior to May 29, 2002.  No such  services  have to date
been provided to the Company by Weiser LLP.


                                       34


<PAGE>


         ALL OTHER FEES.  Grant  Thornton billed a transition fee for the change
in accountants of $31,800.  There were no other fees billed or services rendered
to the Company by Grant  Thornton,  other than the services  described above for
the fiscal  year  ended  December  31,  2002.  There were no audit or  non-audit
services rendered by Grant Thornton to the Company prior to May 29, 2002. Except
for audit and tax fees described above, Weiser LLP has not billed the Company or
provided any services  other than in connection  with the audit of the Company's
financial statements and tax planning during the year ended December 31, 2003.

                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K.

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

         B. FORM 8-K:

The  Company  filed the  following  Reports  on Form 8-K  during  the year ended
December 31, 2003:

     (1) Form 8-K filed February 25, 2003 to report an amendment and increase of
         the Company's revolving credit facility.

     (2) Form 8-K filed  April  30,  2003 to report  financial  results  for the
         quarterly period ended March 31, 2003. The Form 8-K included  financial
         statements.

     (3) Form 8-K  filed  July 24,  2003 to  report  financial  results  for the
         quarterly  period ended June 30, 2003. The Form 8-K included  financial
         statements.

     (4) Form 8-K filed August 27, 2003 as amended by Form 8-K/A filed September
         9,  2003,  by Form 8-K/A #2 filed on October  16,  2003,  Form 8-K/A #3
         filed on October 29, 2003,  Form 8-K/A # 4 filed November 24, 2003, and
         Form 8-K/A #5 filed on December 1, 2003; all regarding the  resignation
         of the Company's former independent accountants, Grant Thornton LLP.

     (5) Form 8-K filed September 2, 2003 to report the engagement of Weiser LLP
         as the Company's new independent accountants.

     (6) Form 8-K filed  November 12, 2003 to report  financial  results for the
         quarterly  period  ended  September  30,  2003.  The Form 8-K  included
         financial statements.


                                      35


<PAGE>



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


                                    CONTENTS

                                                                         PAGE

Report of Independent Certified Public Accountants: Weiser LLP            F-2

Report of Independent Certified Public Accountants: Grant
Thornton LLP                                                              F-3

Report of Independent Certified Public Accountants: Paritz and
Company P.A.                                                              F-4

Consolidated Balance Sheets                                               F-5

Consolidated Statements of Operations                                     F-6

Consolidated Statements of Stockholders' Equity (Deficit) and
Comprehensive Income                                                      F-7

Consolidated Statements of Cash Flows                                     F-8

Notes to the Consolidated Financial Statements                        F-9- F- 25

Schedule II - Valuation and Qualifying Accounts                          F-26


                                      F-1


<PAGE>


INDEPENDENT AUDITORS' REPORT



The Board of Directors and
Stockholders of DHB Industries, Inc.

We have audited the accompanying  consolidated  balance sheet of DHB Industries,
Inc. and  Subsidiaries  (the "Company") as of December 31, 2003, and the related
consolidated  statements  of  operations,  stockholders'  equity  (deficit)  and
comprehensive  income,  and cash flows for the year then ended.  These 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 audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the 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  audit
provides 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, 2003, and the consolidated
results of their  operations  and their cash flows for the year then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

We have also audited the  financial  statement  schedule  listed in the Index at
Item  15(a)(2)  for the year ended  December  31,  2003.  In our  opinion,  this
schedule presents fairly, in all material respects,  the information required to
be set forth therein.

/s/ WEISER LLP


New York, New York


March 5, 2004 (except for Note 6, as to which the date is March 15, 2004)


                                       F-2


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors and
Stockholders of DHB Industries, Inc.

We have audited the accompanying consolidated balance sheet of DHB Industries,
Inc. and Subsidiaries (the "Company") as of December 31, 2002 and the related
consolidated statements of operations, stockholders' equity (deficit) and
comprehensive income, and cash flows for the year then ended. These 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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 audit
provides 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, 2002 and the consolidated
results of its operations and consolidated cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United States
of America.

We have also audited the financial statement schedule listed in the Index at
Item 15(a)(2) for the year ended December 31, 2002. In our opinion, this
schedule presents fairly, in all material respects, the information required to
be set forth therein.

On February 14, 2003 (except for Note 6, as to which the date is February 25,
2003 and Note 13, as to which the date is March 17, 2003), we originally
reported on the consolidated financial statements referred to above. This report
was issued prior to the discovery of the matters set forth in Note 10 and Note
13-Leases, to the consolidated financial statements, wherein revisions of
disclosures in connection with certain other related party transactions existing
as of December 31, 2002, and for the year then ended are described.


/s/GRANT THORNTON LLP


Melville, New York

February 14, 2003 (except for Note 6, as to which the date is February 25, 2003
and Note 13, as to which the date is March 17, 2003, and Note 10 and Note
13-Leases, as to which the date is July 18, 2003))


                                      F-3




<PAGE>

INDEPENDENT AUDITORS' REPORT





The Board of Directors of
DHB Industries, Inc.

We have audited the accompanying  consolidated  balance sheet of DHB Industries,
Inc.  and  Subsidiaries  as of December  31,  2001 and the related  consolidated
statements of operations,  stockholders'  equity and other comprehensive  income
and cash flows for each of the two 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 auditing standards generally accepted
in the  United  States of  America.  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 the consolidated
results  of its  operations  and its cash flows for each of the two years in the
period  ended  December  31,  2001  in  conformity  with  accounting  principles
generally accepted in the United States of America.  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.

On March 5, 2002 we originally reported on the consolidated financial statements
referred to above.  This report was issued prior to the discovery of the matters
set  forth  in  Note  10  and  Note  13-Leases,  to the  consolidated  financial
statements,  wherein  revisions of disclosures in connection  with certain other
related party  transactions  existing as of December 31, 2001 and 2000,  and for
the year then ended are described.

Paritz and Company P.A.

Hackensack, New Jersey
March 5, 2002  (except for Note 10,and Note 13- Leases,  as to which the date is
July 18, 2003)


                                       F-4


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)


                                                          DECEMBER 31,
                                                      2003           2002
                                                     _______        _______

ASSETS

Current assets:
Cash and cash equivalents                            $   441        $   393
Accounts receivable, less allowance for doubtful
  accounts of $852 and $1,070, respectively           33,707         22,904
Inventories                                           54,753         33,360
Deferred income tax assets                               372          3,319
Prepaid expenses and other current assets              1,518            971
                                                     _______        _______
Total current assets                                  90,791         60,947
                                                     _______        _______

Property and equipment, net                            1,819          1,620
                                                     _______        _______

Other assets:
Other investment                                          --            942
Deferred income tax assets                               437          1,402
Deposits and other assets                                381            460
                                                     _______        _______
Total other assets                                       818          2,804
                                                     _______        _______
Total assets                                         $93,428        $65,371
                                                     =======        =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable                                     $ 9,465        $ 5,368
Accrued expenses and other current liabilities         5,635          2,454
Note payable - bank                                    2,000             --
Income taxes payable                                   6,869             --
                                                     _______        _______
Total current liabilities                             23,969          7,822


LONG TERM LIABILITIES
Notes payable-bank                                    22,012         24,354
Note payable - stockholder                                --          1,500
Other liabilities                                        502            350
                                                     _______        _______

Total liabilities                                     46,483         34,026
                                                     _______        _______

Minority interest in consolidated subsidiary             207             --
                                                     _______        _______

COMMITMENTS AND CONTINGENCIES

Stockholders' equity
Convertible  preferred  stock,  $0.001 par value,
5,000,000 shares authorized, 500,000 shares of
Series A, 12% convertible preferred stock issued
and outstanding; liquidation preference $3,000             1              1
Common stock, $0.001 par value, 100,000,000
shares authorized, 40,742,136 and 40,413,746
shares issued and outstanding, respectively               41             40
Additional paid-in capital                            35,384         34,792
Accumulated other comprehensive (loss)                   (53)           (41)
Retained earnings (accumulated deficit)               11,365        (3,447)
                                                     _______        _______
Total stockholders' equity                            46,738         31,345
                                                     _______        _______
Total liabilities and stockholders' equity           $93,428        $65,371
                                                     =======        =======

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-5


<PAGE>

<TABLE>
<CAPTION>

                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31,
                 (In thousands, except share and per share data)

                                                                 2003         2002        2001
                                                               ________     ________     _______
<S>                                                            <C>          <C>          <C>

Net sales                                                      $230,011     $130,347     $98,015

Cost of goods sold (including related party purchases
  of $29,803, $7,975 and $2,760, respectively)                  166,670       92,621      71,639
                                                               ________     ________     _______

Gross profit                                                     63,341       37,726      26,376

Selling, general and administrative expenses                     37,325       23,903      13,597
                                                               ________     ________     _______

Income before other income (expense)                             26,016       13,823      12,779
                                                               ________     ________     _______

Other income (expense)
Interest expense                                                 (1,344)      (1,645)     (2,513)
Write down of other investment                                     (904)          --         (71)
Gain on sale of subsidiary stock                                  1,450
Other income (including insurance settlement
  of $1,009 in 2003)                                              1,059          130         113
                                                               ________     ________     _______
Total other income (expense)                                        261       (1,515)     (2,471)
                                                               ________     ________     _______

Income before income tax (benefit) expense                       26,277       12,308      10,308
                                                               ________     ________     _______

Income taxes (benefit) expense
Current taxes                                                     7,186           77         175
Deferred tax expense (benefit)                                    3,912       (3,749)         --
                                                               ________     ________     _______
Total income tax (benefit) expense                               11,098       (3,672)        175
                                                               ________     ________     _______

Income before minority interest of subsidiary                    15,179       15,980      10,133

Less minority interest of subsidiary                                 (7)          --          --
                                                               ________     ________     _______

Net income                                                       15,172       15,980      10,133

Dividend - preferred stock                                         (360)        (345)         --
                                                               ________     ________     _______

Income available to common stockholders                        $ 14,812     $ 15,635     $10,133
                                                               ========     ========     =======

Basic earnings per common share                                $   0.36     $   0.42     $  0.32
                                                               ========     ========     =======

Diluted earnings per common share                              $   0.34     $   0.37     $  0.28
                                                               ========     ========     =======

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-6


<PAGE>

<TABLE>
<CAPTION>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND
    COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                 (In thousands, except share and per share data)


                                                                                              Accumulated     Retained
                                  Series A                                     Additional        Other        Earnings
                                  Preferred     Par                    Par      Paid-in      Comprehensive    (Accumulated)
                                   Shares      Value      Common      Value     Capital          Loss         (Deficit)     Total
                                  _________    _____    __________    _____    __________    _____________    ________     _______
<S>                               <C>          <C>      <C>            <C>      <C>             <C>           <C>          <C>

Balance, December 31, 2000               --      $--    31,673,977     $ 32     $ 24,535        $(306)        $(29,215)    $(4,954)
                                                                                                                           _______
Net income                                                                                                      10,133      10,133
Effect of foreign currency
   translation                                                                                    (29)                         (29)
Effect of valuation allowance
   marketable securities                                                                          283                          283
                                                                                                                           _______
Total comprehensive income                                                                                                  10,387
Sale of common stock                                       225,000                   506                                       506
Stock issued for services                                  111,000                   355                                       355
Exercise of stock warrants                                 150,000                   450                                       450
Purchase of treasury stock               --       --      (678,063)      (1)      (1,737)          --               --      (1,738)
                                  _________    _____    __________    _____    __________    _____________    ________     _______
Balance December 31, 2001                --       --    31,481,914     $ 31     $ 24,109        $ (52)        $(19,082)    $ 5,006
                                                                                                                           _______
Net income                                                                                                      15,980      15,980
Effect of foreign currency
   translation                                                                                     11                           11
                                                                                                                           _______
Total comprehensive income                                                                                                  15,991
Issuance of Series A Preferred
   Stock                            500,000        1                               2,999                                     3,000
Preferred stock dividends paid                                                                                    (345)       (345)
Issuance of stock warrants to
   outside consultant                                                                646                                       646
Exercise of stock warrants
   (net of taxes)                         -        -     8,931,832        9        7,038           --               --       7,047
                                  _________    _____    __________    _____    __________    _____________    ________     _______
Balance December 31, 2002           500,000        1    40,413,746       40     $ 34,792          (41)          (3,447)     31,345
                                                                                                                           _______
Net income                                                                                                      15,172      15,172
Effect of foreign currency
   translation                                                                                    (12)                         (12)
                                                                                                                           _______
Total comprehensive income                                                                                                  15,160
Preferred stock dividends paid                                                                                    (360)       (360)
Stock issued for services                                   80,000                   165                                       165
Exercise of stock warrants                                 248,390        1          427                                       428
                                  _________    _____    __________    _____    __________    _____________    ________     _______
Balance, December 31, 2003          500,000      $ 1    40,742,136     $ 41     $ 35,384        $ (53)        $ 11,365     $46,738
                                  =========    =====    ==========    =====    ==========    =============    ========     =======

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-7


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
                 (In thousands, except share and per share data)


                                               2003         2002         2001
                                             ________     ________     ________

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                   $ 15,172     $ 15,980     $ 10,133
Adjustments to reconcile net income to
  net cash provided by (used in)
  operating activities:
Depreciation and amortization                     564          463          478
Amortization of deferred financing costs          130          125           30
Provision for doubtful accounts                  (218)         278          283
Write-off of other investment                     942           --           --
Change in minority interest due to sale
  of subsidiary stock                             200
Minority interest in consolidated subsidiary        7           --           --
Stock issued for services                         165           --          355
Issuance of stock warrants to outside
  consultant                                                   646
Deferred income tax expense                     3,912       (4,462)         170
Changes in operating assets and
  liabilities
Accounts receivable                           (10,585)     (11,929)      (3,131)
Marketable securities                              --           --          369
Inventories                                   (21,393)      (8,778)     (10,285)
Prepaid expenses and other current assets        (547)         106         (310)
Deposits and other assets                         (53)          67          327
Accounts payable                                4,097       (7,930)       2,040
Income taxes payable                            6,869           --           --
Accrued expenses and other current
  liabilities                                   3,181          (61)      (3,033)
Other liabilities                                 152          350
                                             ________     ________     ________
Net cash provided by (used in) operating
  activities                                    2,595      (15,145)      (2,574)
                                             ________     ________     ________

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and
  equipment                                       --           302           --
Purchases of property and equipment             (741)         (367)        (554)
                                             ________     ________     ________
Net cash used in investing activities           (741)          (65)        (554)
                                             ________     ________     ________

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid on preferred stock               (360)         (345)
Net (repayments) proceeds of note
  payable- bank                                 (342)       15,912        8,442
Payments of note payable- stockholder         (1,500)       (5,500)      (6,046)
Proceeds from the issuance of long-term
  debt                                             --           --        1,800
Issuance costs of long-term debt                   --          (32)        (355)
Principal payments on long-term debt             (20)         (863)        (324)
Proceeds from the issuance of common
  stock                                            --        6,275          956
Purchase of treasury stock                         --           --       (1,738)
Net proceeds from exercise of stock
  warrants                                        428           --           --
                                             ________     ________     ________

Net cash provided by (used in) financing
  activities                                   (1,794)      15,447        2,735
                                             ________     ________     ________

Effect of foreign currency translation           (12)           11          (29)
                                             ________     ________     ________

Net increase (decrease) in cash and cash
  equivalents                                      48          248         (422)

Cash and cash equivalents at beginning
  of year                                         393          145          567
                                             ________     ________     ________

Cash and cash equivalents at end of year     $    441     $    393     $    145
                                             ========     ========     ========

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       F-8


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 1       BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of consolidation

                  The consolidated  financial statements include the accounts of
         DHB Industries, Inc. and its subsidiaries ("DHB" or the "Company"), all
         of which are wholly owned (except for a .0065 interest in a subsidiary,
         Point Blank Body Armor Inc.,  ("Point Blank") issued to an unaffiliated
         third party during  December  2003.) DHB has two major  divisions,  DHB
         Armor  Group  and DHB  Sports  Group.  All  intercompany  balances  and
         transactions have been eliminated in consolidation.

         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 for United States
         armed  forces,  federal  agencies  and state and local law  enforcement
         communities. DHB Sports Group produces and markets a comprehensive line
         of  athletic  supports  and  braces,  which  are  merchandised  through
         national superstore chains. DHB maintains  manufacturing  facilities in
         Deerfield Beach, FL, Oakland Park, FL, and Jacksboro, TN.


         Use of estimates in the preparation of financial statements

                  The  preparation  of financial  statements in conformity  with
         accounting  principles  generally  accepted  in the  United  States  of
         America,  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

                  DHB  recognizes  revenue when it is realized or realizable and
         has been earned. Product revenue is recognized when persuasive evidence
         of an  arrangement  exists,  the product has been  delivered  and legal
         title  and all  risks  of  ownership  have  been  transferred,  written
         contract and sales terms are complete, customer acceptance has occurred
         and  payment is  reasonably  assured.  Returns  are  minimal and do not
         materially affect the consolidated financial statements.

         Accounts Receivable

                  Accounts  receivable consist of trade receivables  recorded at
         original invoice amount,  less an estimated allowance for uncollectible
         accounts.  Trade  credit is generally  extended on a short-term  basis;
         thus trade receivables do not bear interest,  although a finance charge
         may be applied to receivables that are past due. Trade  receivables are
         periodically  evaluated for collectibility based on past credit history
         with customers and their current  financial  condition.  Changes in the
         estimated  collectibility  of trade  receivables  are  recorded  in the
         results of operations  for the period in which the estimate is revised.
         Trade receivables that are deemed  uncollectible are offset against the
         allowance for  uncollectible  accounts.  The Company generally does not
         require collateral for trade receivables.

         Inventories

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

         Property and equipment

                  Property and equipment  are recorded at cost less  accumulated
         depreciation.  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 calculated  primarily on the  straight-line  basis over
         the estimated lives of the assets. Leasehold improvements are amortized
         over the  shorter  of the  estimated  life or the  term of the  related
         lease.


                                       F-9


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 1   BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

         Cash and cash equivalents

                  All  short-term,   highly  liquid  investments  with  original
         maturities of ninety days or less are considered cash equivalents.

         Marketable Securities

                  Investments  in marketable  securities  were  accounted for in
         accordance  with the  provisions  of Statement of Financial  Accounting
         Standards (SFAS) No. 115,  "Accounting for Certain  Investments in Debt
         and Equity Securities". DHB classified all its marketable securities as
         held for investment and, accordingly,  unrealized gains and losses were
         reflected as a component of other  comprehensive  income  (loss) in the
         statement of stockholders'  equity (deficit) and comprehensive  income.
         During the year ended  December 31, 2001,  the Company  liquidated  its
         investments in marketable securities.

         Other investment

                  DHB  had a  cost-based  investment  in a  non-publicly  traded
         company.  At December 31, 2002,  the  investment  is included in "Other
         investment" in the accompanying  balance sheet and was carried at cost.
         In December 2003, a decline in the value of this cost-based  investment
         below  cost  that was  deemed  other  than  temporary  resulted  in the
         investment being written off at December 31, 2003.

         Fair values of financial instruments

                  The  Company's  financial  instruments  include  cash and cash
         equivalents,  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.

         Income taxes

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

                  DHB uses the asset  and  liability  approach  to  account  for
         income taxes.  Under this method,  deferred tax assets and  liabilities
         are recognized for the expected future tax  consequences of differences
         between  the  carrying  amounts  of assets  and  liabilities  and their
         respective  tax basis using enacted tax rates in effect for the year in
         which the differences  are expected to reverse.  The effect on deferred
         tax assets and  liabilities  of a change in tax rates is  recognized in
         income in the period  when the change is enacted.  Deferred  tax assets
         are  reduced  by  a  valuation   allowance  when,  in  the  opinion  of
         management,  it is more likely than not that some portion or all of the
         deferred tax assets will not be realized.

         Research and development expenses

                  Research  and  development  expenses  are included in selling,
         general and administrative expenses as incurred and for the years ended
         December  31,  2003,  2002 and 2001 was  $10,815,  $4,221  and  $2,327,
         respectively.


                                      F-10


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 1   BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

         Advertising expenses

                  The cost of advertising  is expensed as incurred.  The Company
         incurred  approximately  $1,143,  $950  and $742 of  advertising  costs
         during the years ended December 31, 2003, 2002 and 2001, respectively.

         Earnings per share

                  Basic  earnings  per share is computed by dividing net income,
         as adjusted for preferred dividends,  by the weighted average number of
         common shares  outstanding.  Diluted  earnings per share is computed by
         dividing net income by the  weighted  average  number of common  shares
         outstanding  compounding the effects of all potentially dilutive common
         stock  equivalents,  principally  warrants,  using the  treasury  stock
         method except in cases where the effect would be anti-dilutive.

         Comprehensive income and foreign currency translation

                  Comprehensive   income   consists  of  net  income  and  other
         comprehensive  income.  Other  comprehensive  income  includes  foreign
         currency translation adjustments,  which are a component of accumulated
         other comprehensive loss in stockholders' equity.

         Stock-based compensation

                  The Company  accounts for stock-based  compensation  using the
         intrinsic value method in accordance with Accounting  Principles  Board
         Opinion No. 25,  "Accounting for Stock Issued to Employees" and related
         Interpretations   ("APB  No.  25")  and  has  adopted  the   disclosure
         provisions of SFAS No. 148, "Accounting for Stock-Based  Compensation -
         Transition  and  Disclosure,  an amendment of FASB  Statement  No. 123"
         ("SFAS No.  148").  Under APB No. 25,  when the  exercise  price of the
         Company's  employee  stock  warrants  equals  the  market  price of the
         underlying  stock on the date of  grant,  no  compensation  expense  is
         recognized. Accordingly, no compensation expense has been recognized in
         the consolidated financial statements in connection with employee stock
         warrant grants.

         Impairment of long-lived assets

                  DHB reviews the  recoverability  of its long-lived assets when
         events  or  changes  in  circumstances  occur  that  indicate  that the
         carrying value of the asset or asset group may not be recoverable.  The
         assessment of possible  impairment is based on DHB's ability to recover
         the  carrying  value  of the  asset or asset  group  from the  expected
         pre-tax cash flows  (undiscounted  and without interest charges) of the
         related  operations.  If these  cash  flows are less than the  carrying
         value  of  such  asset,  an  impairment  loss  is  recognized  for  the
         difference  between  estimated  fair  value  and  carrying  value.  The
         measurement of impairment  requires  management to estimate future cash
         flows and the fair value of long-lived assets.


                                      F-11


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 1   BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

         Reclassification

                  Years  prior to 2003 have been  reclassified  to conform  with
         the 2003 presentation.

         New Accounting Standards

                  In  November  2002,  the FASB  issued  Interpretation  No. 45,
         "Guarantor's  Accounting and Disclosure  Requirements  for  Guarantees,
         including Indirect Guarantees of Indebtedness of Others," which expands
         previously issued accounting  guidance and disclosure  requirements for
         certain guarantees.  The Interpretation requires an entity to recognize
         an initial  liability  for the fair value of an  obligation  assumed by
         issuing  a  guarantee.   The  provision  for  initial  recognition  and
         measurement of the liability will be applied on a prospective  basis to
         guarantees   issued  or  modified   after   December  31,  2002.   This
         Interpretation  did  not  have  a  material  impact  on  the  Company's
         consolidated financial position or results of operations.

                  In December  2002,  the FASB issued SFAS No. 148,  "Accounting
         for Stock-Based  Compensation - Transition and Disclosure- an amendment
         of FASB Statement No. 123," which provides optional transition guidance
         for those  companies  electing  to  voluntarily  adopt  the  accounting
         provisions  of SFAS No.  123.  In  addition,  SFAS No.  148  amends the
         disclosure   requirements   of  SFAS  No.  123  to  require   prominent
         disclosures in both annual and interim  financial  statements about the
         method of accounting  for  stock-based  employee  compensation  and the
         effect of the method  used on  reported  results.  The  Company has not
         changed its method of accounting for stock-based employee compensation.

                  In  January  2003,  the  FASB  issued  Interpretation  No.  46
         "Consolidation  of Variable  Interest  Entities,"  which  clarifies the
         application  of  Accounting  Research  Bulletin  No. 51,  "Consolidated
         Financial  Statements."  Interpretation  46 requires  certain  variable
         interest entities to be consolidated by the primary  beneficiary of the
         entity  if  the  equity  investors  in  the  entity  do  not  have  the
         characteristics  of a controlling  financial interest or do not provide
         sufficient equity at risk for the entity to support its activities.  In
         December 2003, the FASB concluded to revise certain elements of FIN 46.
         The FASB also  modified the  effective  date of FIN 46. FIN 46 is to be
         applied for registrants who file under Regulation S-X in periods ending
         after  March  15,  2004.   The  Company  is  currently   assessing  the
         application of FIN 46 on its financial statements.

                  In May 2003,  the FASB issued SFAS No.  150,  "Accounting  for
         Certain Financial  Instruments with Characteristics of both Liabilities
         and Equity" ("SFAS No. 150").  SFAS No. 150  establishes  standards for
         how an issuer  classifies and measures  certain  financial  instruments
         with  characteristics  of both  liabilities  and equity.  The  Standard
         requires that an issuer classify a financial  instrument that is within
         its scope as a liability (or an asset in some circumstances).  SFAS No.
         150 is effective  for  financial  instruments  entered into or modified
         after May 31, 2003,  and otherwise is effective at the beginning of the
         first  interim  period  beginning  after  June  15,  2003,  except  for
         mandatory redeemable financial  instruments of nonpublic entities.  The
         adoption  of SFAS  No.  150 has not had and is not  expected  to have a
         material  impact on the Company's  consolidated  financial  position or
         results of operations.


                                      F-12


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 2   SUPPLEMENTAL CASH FLOW INFORMATION

                                              YEAR ENDED DECEMBER 31,
                                       _____________________________________
                  Cash paid for:        2003            2002            2001
                                       _____________________________________
                  Interest             1,329           1,618          $2,364
                  Taxes                  295              73              13

                  For the year ended December 31, 2003, the Company exchanged an
         approximately  0.0065  interest in Point Blank for $1,650 of  inventory
         pursuant to a transaction which qualifies for non-recognition treatment
         pursuant to Section 351 of the Internal Revenue Code ("IRC") (See Notes
         8  and  14).  On  January  14,  2002,  the  Company  reduced  its  note
         payable-stockholder  by $3,000 through the issuance of preferred stock.
         (See Note 5 and Note 6.)

Note 3   INVENTORIES

                  The components of inventories as of December 31, 2003 and 2002
are as follows:

                                                    2003          2002
                                                   _______       _______

                  Raw materials and supplies       $21,750       $14,833
                  Work in process                   15,430         9,116
                  Finished goods                    17,573         9,411
                                                   _______       _______
                                                   $54,753       $33,360
                                                   =======       =======
Note 4    PROPERTY AND EQUIPMENT

                  Property and equipment, at cost, as of December 31, 2003 and
2002 are summarized as follows:

                                                                     Estimated
                                               2003       2002       Useful life
                                             _______     _______     ___________

         Machinery and equipment             $ 2,215     $ 1,937     5-10 years
         Furniture, fixtures and               1,147       1,146     3-7  years
         computer equipment
         Transportation equipment                453         374     3-5  years
         Leasehold improvements                  970         720     3-10 years
                                                                     or term of
                                             _______     _______     lease
                                               4,785       4,177
         Less accumulated depreciation        (2,966)     (2,557)
         and amortization                    _______     _______

                                             $ 1,819     $ 1,620
                                             =======     =======

                  Depreciation  and  amortization  expense  for the years  ended
         December 31, 2003, 2002 and 2001 was approximately $564, $463 and $478,
         respectively.


                                      F-13


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 5   NOTE PAYABLE - STOCKHOLDER

                  This note was payable to the principal  stockholder of DHB and
         bore  interest at 12% per annum.  The $1,500  balance was repaid in May
         2003.  On January 14, 2002,  the note holder  exchanged  $3,000 of this
         indebtedness  due him for 500,000 shares of the Company's Series A, 12%
         Convertible Preferred Stock.


Note 6    NOTE PAYABLE - BANK

                                                DECEMBER 31,
                                              2003        2002
                                             _______     _______

         Credit agreement - current          $ 2,000     $    --

        Credit agreement - non-current        22,012      24,354
                                             _______     _______
                                             $24,012     $24,354
                                             =======     =======

                  On March  15,  2004,  the  Company  amended  its  bank  credit
         agreement (the "Credit  Agreement"),  to increase its borrowings limits
         from $35,000 to $45,000.  Pursuant to the Credit Agreement, the Company
         may  borrow,  on a  revolving  basis,  up to $32,500 on 85% of eligible
         accounts  receivable(the  "Credit  Facility"),  and  the  Company  will
         receive  a  secured  term loan of  $12,500,  amortizing  at the rate of
         $1,000 per quarter.  This new agreement will expire on October 1, 2007.
         Borrowings under the Credit  Agreement bear interest,  at the Company's
         option,  at the bank's  prime rate or LIBOR plus 1.75% per annum on the
         revolving  Credit  Facility  and at the bank's prime rate or LIBOR plus
         2.25% on the term loan. For 2003,  the borrowings  bore interest at the
         bank's prime rate or LIBOR plus 1.75%  (3.145% at December  31,  2003).
         The borrowings under the Credit Agreement are collateralized by a first
         security  interest in  substantially  all of the assets of the Company.
         The  Company  has  reflected  these  transactions  in  accordance  with
         Statement of Financial  Accounting  Standards No.6, "Classification  of
         Short-Term  Obligations  Expected To Be Refinanced".  Accordingly,  the
         March 15, 2004 refinancing was retroactively  reflected on the December
         31, 2003 financial statements.


         Aggregate maturities of long-term debt are as follows:

                        FOR THE YEARS ENDING DECEMBER 31,
                      ____________________________________
                      2004                         $ 2,000
                      2005                           4,000
                      2006                           4,000
                      2007                          14,012
                                                   _______
                                                   $24,012


                  In addition, the Credit  Agreement  includes both negative and
         affirmative  covenants  customary  for a financing of this nature.  The
         Credit 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 Credit  Agreement  further limits the amount of
         capital  expenditures that the Company may incur in any fiscal year and
         the payment of dividends.


                                      F-14


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 6   NOTE PAYABLE - BANK - Continued


                  Deferred  financing costs associated with the Credit Agreement
         were capitalized and are being amortized over the term of the September
         2001 financing.  Amortization expense was $130, $125 and $30 during the
         years ended December 31, 2003, 2002 and 2001, respectively.


Note 7   ACCRUED EXPENSES AND OTHER CURRENT LIBILITIES


         Accrued expenses and other current liabilities consist of the following
         as of December 31,:

                                                          2003          2002
                                                         _______       ______

         Accrued Commissions                             $   815       $  545
         Accrued Wages                                     1,502          397
         Accrued Inventory                                 1,017           --
         Accrued Legal and professional fees                 796          564
         Accrued other expenses                            1,138          948
         Customer deposits                                   367           --
                                                         _______       ______
         Total accrued expenses and other
            current liabilities                          $ 5,635       $2,454
                                                         =======       ======

Note 8   MINORITY INTEREST


                  The  Company's minority  interest on the consolidated  balance
         sheet  includes the 10.76  minority  shares  related to its Point Blank
         subsidiary at December 31, 2003. The Company sold stock of a subsidiary
         representing  approximately  0.0065  minority  interest  for  $1,650 of
         inventory.  This interest had a book value of approximately $200, which
         resulted  in  a  gain  on  the sale of the stock of the  subsidiary  of
         approximately $1,450 included in other income.

Note 9   STOCKHOLDERS' EQUITY

         Convertible Preferred Stock

                  DHB is authorized to issue 5,000,000 shares of Preferred Stock
         ("Preferred Stock"). On January 14, 2002, the principal  stockholder of
         the Company  exchanged  $3,000 of the  indebtedness due him for 500,000
         shares of Series A, 12% Convertible  Preferred Stock. The Series A, 12%
         Convertible  Preferred Stock has a dividend rate of $0.72 per share per
         annum,  an amount equal to the interest that would have been payable on
         the  exchanged  indebtedness.  Shares of the Series A, 12%  Convertible
         Preferred Stock are convertible,  on a one-to-one  basis, at the option
         of the holder, into shares of common stock. The shares of Series A, 12%
         Convertible Preferred Stock are redeemable at the option of the Company
         on December 15 of each year. The Preferred Stock may be redeemed at the
         option of the  Company at an amount in cash  equal to $6 per share,  as
         defined. In addition,  the Preferred Stock has a liquidation preference
         at an amount equal to $6 per share, as defined.

         Common Stock

                  DHB has 100,000,000  shares authorized of its $0.001 par value
common stock.


                                      F-15


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 9   STOCKHOLDERS' EQUITY - Continued

         Treasury Stock

                  On  December  1,  2000,  the  Company's   Board  of  Directors
         announced  the  directive  for the Company to purchase up to  2,000,000
         shares of its common  stock in the open market,  from time to time,  at
         its  discretion.  As of  December  31,  2003,  the  Company  still  has
         authorization  to purchase  1,264,395  shares of its common stock.  The
         Credit  Agreement,  as  described  in Note 6, limits the dollar  amount
         available  to purchase  treasury  shares based upon an excess cash flow
         calculation, as defined. All treasury shares repurchased by the Company
         are immediately retired.

         Earnings per common share

                  Basic earnings per  common  share  calculations  are  based on
         the weighted  average number of common shares  outstanding  during each
         period:  40,588,605,  37,275,920,  and 31,455,406  shares for the years
         ended December 31, 2003, 2002, and 2001, 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:  44,196,802,  42,304,254,  and 36,775,910 shares for the years
         ended December 31, 2003, 2002 and 2001, respectively.

<TABLE>
<CAPTION>

                                                                    Income             Shares           Per Share
                                                                  (numerator)       (denominator)        Amount
                                                                  ___________       _____________       _________
<S>                                                                 <C>              <C>                 <C>

         Basic EPS
           Income available for common stockholders for the
             year ended December 31, 2003                           $14,812          40,588,605          $ 0.36
             Add preferred stock dividends                              360
             Convertible preferred stock                                                500,000
             Warrants                                                                 3,108,197
                                                                  _______________________________________________
         Diluted EPS                                                $15,172          44,196,802          $ 0.34
                                                                    =======          ==========          ======

         Basic EPS
           Income available for common stockholders for the
             year ended December 31, 2002                           $15,635          37,275,920          $ 0.42
             Add preferred stock dividends                              345
                                                                  _______________________________________________
         Diluted EPS                                                $15,980          42,304,254          $ 0.37
                                                                    =======          ==========          ======

         Basic EPS
           Income available for common stockholders
             for the year ended December 31, 2001                   $10,133          31,455,406          $ 0.32
                                                                  _______________________________________________
         Diluted EPS                                                $10,133          36,775,910          $ 0.28
                                                                    =======          ==========          ======

</TABLE>


         Stock option plan

                  The Company adopted a 1995 Stock Option Plan ("Plan") pursuant
         to which the Board of  Directors  is  authorized  to award  options  to
         purchase up to 5,000,000  shares of common stock to selected  officers,
         employees, agents, consultants and other persons who render services to
         the Company. All of the options granted are covered under the plan.


                                      F-16


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 9   STOCKHOLDERS' EQUITY - Continued


         Stock warrants

                  In  January  2003,  the  then  five  members  of the  Board of
         Directors  were each awarded 50,000  warrants  exercisable at $1.41 per
         share for five years.  In July 2003,  the new Board  member was granted
         50,000  warrants  exercisable  at $4.33 per share for five years.  Also
         during the year ended December 31, 2003, the Board of Directors awarded
         key employees 35,000 and 33,000 warrants exercisable at $2.01 and $3.85
         per share,  respectively,  which expire in February 2008 and July 2008.
         The Company also issued and subsequently canceled 10,000 warrants to an
         employee.

                  During the year ended  December 31, 2002,  the five members of
         the Board of Directors were each awarded 25,000 warrants exercisable at
         $7.11 per share for five years. Also during the year ended December 31,
         2002,  the Board of Directors  awarded key  employees  25,000  warrants
         exercisable at $7.11 per share, which expire in April 2007. The Company
         also issued and canceled 150,000 warrants to an employee.

                  On June 4, 2002, the Company  issued  275,000  warrants to its
         investor relations firm with an exercise price of $4.95 per share. This
         warrant  expires  June 4,  2006.  The fair  value of this  warrant  was
         determined to be  approximately  $646,000 which is included in selling,
         general and  administrative  expenses  for the year ended  December 31,
         2002. The Black-Scholes warrant pricing model used for this warrant had
         the following  assumptions:  Risk-free interest rate of 4.67%, expected
         volatility of common stock of 59.83% and a 4-year option term.


                  During the year ended December 31, 2002, the  CEO/Chairman and
         his wife exercised warrants totaling 5,593,751 shares.

                  A summary of the status of the  Company's  stock  warrants  is
presented in the table below:

<TABLE>
<CAPTION>

                                                           For the Year Ended December 31,
                                             2003                       2002                        2001
                                    ______________________     _______________________     _______________________
                                                  Weighted                    Weighted                    Weighted
                                                  Average                     Average                     Average
                                                  exercise                    exercise                    exercise
                                     Shares       Price          Shares       Price          Shares       Price
                                    _________     ________     __________     ________     __________     ________
<S>                                 <C>            <C>         <C>             <C>         <C>             <C>

         Warrants outstanding
         -beginning of year         5,163,857      $ 1.64      13,620,689      $ 1.72      13,007,666      $ 1.74

         Granted                      378,000      $ 2.08         625,000      $ 5.15         763,023      $ 2.13
         Exercised                   (248,390)     $ 2.61      (8,931,832)     $ 0.58        (150,000)     $ 3.00
         Cancelled                   (170,467)     $ 5.09        (150,000)     $ 2.92              --
                                    _________                  __________                  __________
         Warrants  outstanding
         - end of year              5,123,000      $ 1.51       5,163,857      $ 1.64      13,620,689      $ 1.72
                                    ==========     ======       =========                  ==========
</TABLE>



                                      F-17


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 9   STOCKHOLDERS' EQUITY - Continued

                  The per share  weighted  average fair value of stock  warrants
         granted during the years ended December 31, 2003 and 2002 was $1.71 and
         $5.1625,  respectively. The fair value of these warrants was determined
         at the date of grant using the Black-Scholes warrant pricing model with
         the following assumptions:

                  The Black-Scholes option valuation model was developed for use
         in estimating  the fair  value of traded  options  that have no vesting
         restrictions and are fully transferable.  In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility.  Because the Company's  employee stock
         warrants have  characteristics  significantly  different  from those of
         traded warrants and because changes in the subjective input assumptions
         can materially affect the fair value estimate, in management's opinion,
         the  existing  models  do not  necessarily  provide a  reliable  single
         measure of the fair value of its employee stock warrants.

                  The assumptions used to estimate these values are as follows:

                                                     Grants Issued During
                                                     ____________________
                                                 2003        2002        2001
                                                 ____        ____        ____

         Risk-free interest rate                 2.86%       4.67%         4.92%
         Expected volatility of common stock    98.44%      94.54%       100.67%
         Dividend yield                          0.00%       0.00%         0.00%
         Expected term                         5 years     5 years    5.14 years


                  The following  table  illustrates the effect on net income and
         earnings per share had the Company  applied the fair value  recognition
         provisions of SFAS No. 123, "Accounting for Stock-Based  Compensation,"
         to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                                      YEAR ENDED DECEMBER 31,
                                                                  _______________________________
                                                                   2003        2002         2001
                                                                  _______     _______     _______
<S>                                                               <C>         <C>         <C>

         Net income                                               $15,172     $15,980     $10,133
         Less dividend - preferred stock.                            (360)       (345)         --
                                                                  _______     _______     _______
         Income available to common stockholders as reported      $14,812     $15,635     $10,133
         Deduct: total stock-based employee compensation
             expense determined under fair value based method
             for all awards, net of related tax effect              1,027       1,829       2,225
                                                                  _______     _______     _______
         Pro forma                                                $13,785     $13,806     $ 7,908
                                                                  =======     =======     =======

         Basic earnings per common share
         As reported                                              $  0.36       $0.42     $  0.32
         Pro forma                                                $  0.34       $0.37     $  0.25

         Diluted earnings per common share
         As reported                                              $  0.34       $0.37     $  0.28
         Pro forma                                                $  0.32       $0.33     $  0.21
</TABLE>



                                      F-18


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 9   STOCKHOLDERS' EQUITY - Continued


         Pro  forma  compensation  expense  may not be  indicative  of pro forma
expense in future  years.  For  purposes  of  estimating  the fair value of each
warrant  on  the  date  of  grant,  the  Company   utilized  the   Black-Scholes
option-pricing model.

         The following  table  summarizes  information  regarding stock warrants
outstanding at December 31, 2003.

<TABLE>
<CAPTION>


                                                            Weighted
                                                             Average     Weighted
                                         Number of         Remaining     Average         Number of         Weighted
                Exercise Price           Warrants        Contractual     Exercise          Shares           Average
                    Range               Outstanding          Life           Price       Exercisable     Exercise Price
<S>               <C>                     <C>                   <C>         <C>          <C>                   <C>

                  0 to $1.00              3,750,000             6.51        $1.00        3,000,000             $1.00
                $1.01 to $1.50              250,000             4.04        $1.41          250,000             $1.41
                $1.51 to $2.00              530,000             2.75        $2.00          420,000             $2.00
                $2.01 to $2.50              135,000             4.10        $2.37          120,000             $2.42
                $2.51 to $3.00                5,000             1.09        $3.00            5,000             $3.00
               $3.01 and above              453,000             2.73        $5.24          420,000             $4.95
                                          _________                                      _________
                    Totals                5,123,000             5.57        $1.53        4,215,000             $1.60
                                          =========                                      =========
</TABLE>



Note 10  RELATED PARTY TRANSACTIONS

                  A summary of  related  party  transactions  paid or accrued to
         DHB's principal stockholder for the years ended December 31, 2003, 2002
         and 2001 is as follows:

<TABLE>
<CAPTION>


                                                      2003           2002            2001
                                                      ____           ____            ____
<S>                                                  <C>            <C>             <C>

         Repayment of note payable stockholder      $1,500         $5,500          $6,046
         Interest expense                               95            710           2,296
         Rent expense                                  811          1,060             607
         Deferred rent included above                 (118)          (350)             --
         Dividends                                     360            345              --
</TABLE>

                  On January 14, 2002, the principal  stockholder of the Company
         exchanged  $3,000 of the  indebtedness  due him for  500,000  shares of
         Series A, 12% Convertible Preferred Stock. (See Note 9)


                  The Company leases an office and  manufacturing  facility from
         an entity indirectly owned by the principal stockholder of DHB pursuant
         to  a  lease  expiring   December  31,  2010,  with  annual  rental  of
         approximately  $693,  $643 and $607 during the years ended December 31,
         2003,  2002  and  2001,  respectively,  and  with 6%  annual  increases
         thereafter.  In  addition,  included  in rental  expense was a non-cash
         expense of $152 and $350  relating to the  straight-lining  of the rent
         for the years ended December 31, 2003 and 2002.

                  The Company has been purchasing  certain  products,  which are
         components of ballistic resistant apparel, manufactured and sold by the
         Company, from a corporation owned by a shareholder andthe wife of DHB's
         principal  stockholder.  The total of such  purchases  during the years
         ended  December 31,  2003,  2002 and 2001 were  approximately  $29,243,
         $7,975  and  $2,760,  respectively.  The  Company  also  sells  certain
         components to this entity, which are used in manufacturing the products
         that the Company purchases from this entity. In addition,  this  entity

                                      F-19


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


         sub-leases a portion of the Company's Tennessee facility, for which the
         Company received  approximately $40, $40 and $26 during the years ended
         December 31, 2003,  2002 and 2001,  respectively.  The Company was owed
         $580 by this entity at December 31, 2002, which is included in accounts
         receivable in the accompanying consolidated balance sheets. The Company
         owed $108,  $1,665 and $208 to this entity at December 31,  2003,  2002
         and 2001,  respectively,  for  purchases  made,  which is  included  in
         accounts payable in the accompanying consolidated balance sheets. DHB's
         principal  stockholder's  wife also owned another company that received
         revenues  of $560 and $43  from  the  Company  during  the  year  ended
         December 31, 2003 and 2002, respectively,  for stitching work. In 2003,
         company has since been merged into the other entity.

                  The Company has  indebtedness to the principal  stockholder as
         described in Note 5.

                  In  conjunction  with the sale of stock of Point Blank,  Point
         Blank  entered  into a  marketing  and  consulting  agreement  with  an
         affiliate of the buyer,  pursuant to which such  affiliate  agreed,  in
         consideration  of a cash payment of $634,000,  to assist Point Blank in
         the  marketing,  sales and  distribution  of Point  Blank's  body armor
         products in Asia,  Saudi  Arabia,  Turkey and Jordan.

Note 11  CONCENTRATION OF CREDIT RISK

                  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  77%,  76% and 75% for the years ended  December
         31, 2003, 2002 and 2001, respectively,  of DHB's sales were made to the
         United States Government or its agencies.

                  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
         four independent  weaving  or  manufacturing  companies.  If any of the
         manufacturers  ceases 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 tests would
         need 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   SEGMENT INFORMATION

                  As described in Note 1, the Company  operates in two principal
         segments:  ballistic-resistant equipment and protective athletic/sports
         products.  Financial  information on the Company's business segments is
         as follows:


                                      F-20


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 12  SEGMENT INFORMATION - Continued


<TABLE>
<CAPTION>

                                                    2003         2002         2001
                                                  ________     ________     ________
<S>                                               <C>          <C>          <C>

NET SALES
Ballistic-resistant equipment                     $224,152     $124,860     $ 93,506
Protective athletic & sports products                5,859        5,492        4,520
                                                  ________     ________     ________
                                                   230,011      130,352       98,026
Less inter-segment sales                                --          (5)          (11)
                                                  ________     ________     ________
Consolidated net sales                            $230,011     $130,347     $ 98,015
                                                  ========     ========     ========

INCOME FROM OPERATIONS
Ballistic-resistant equipment                     $ 33,618     $ 17,534     $ 15,029
Protective athletic & sports products                  426          563           94
Corporate and other (1)                             (8,028)      (4,274)      (2,344)
                                                  ________     ________     ________
Consolidated operating income                     $ 26,016     $ 13,823     $ 12,779
                                                  ========     ========     ========

DEPRECIATION AND AMORTIZATION EXPENSE
Ballistic-resistant equipment                     $    350     $    289     $    223
Protective athletic & sports products                   64           86          157
                                                  ________     ________     ________
                                                       414          375          380
Corporate and other                                    150           88           98
                                                  ________     ________     ________
Consolidated depreciation amortization expense    $    564     $    463     $    478
                                                  ========     ========     ========

INTEREST EXPENSE
Ballistic-resistant equipment                     $  1,238     $    935     $    463
Protective athletic & sports products                   --           --           77
                                                  ________     ________     ________
                                                     1,238          935          540
Corporate and other (2)                                106          710        1,973
                                                  ________     ________     ________
Consolidated interest expense                     $  1,344     $  1,645     $  2,513
                                                  ========     ========     ========

INCOME TAXES (BENEFIT)
Ballistic-resistant equipment                     $ 14,341     $     22     $    143
Protective athletic & sports products                  182            2           --
                                                  ________     ________     ________
                                                    14,523           24          143
Corporate and other (2)                             (3,425)      (3,696)          32
                                                  ________     ________     ________
Consolidated tax (benefit) expense                $ 11,098     $ (3,672)    $    175
                                                  ========     ========     ========

IDENTIFIABLE ASSETS
Ballistic-resistant equipment                     $ 88,503     $ 56,471
Protective athletic & sports products                3,186        2,907
                                                  ________     ________
                                                    91,689       59,378
Corporate and other (2)                              1,739        5,993
                                                  ________     ________
Consolidated assets                               $ 93,428     $ 65,371
                                                  ========     ========

</TABLE>

         Foreign sales accounted for 1%, 2% and 2% of the total revenues for the
         years ended  December 31, 2003,  2002 and 2001,  respectively.  Foreign
         identifiable  assets accounted for 0%, 1% and 1% of the total assets at
         December 31, 2003, 2002 and 2001, respectively.

(1) Corporate and other includes corporate general and administrative expenses.

(2) Corporate assets are principally deferred income tax assets and property
    and equipment.


                                      F-21


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 13 COMMITMENTS AND CONTINGENCIES

Leases
                  The Company has non-cancelable  operating lease, which expire
         through 2014. These leases generally require the Company to pay certain
         costs,  such as real estate taxes. As further described in Note 10, the
         Company  leases an office  and  manufacturing  facility  from an entity
         owned by a related party. In addition,  the Company subleases a portion
         of one of its  facilities  to an  entity  owned by a  related  party as
         described  in Note 10.  Pursuant  to such  sublease,  which  expired on
         December   31,  2003,   the  Company   received   sublease   income  of
         approximately $40 for the year ending December 31, 2003.

                  In  December  2003,  the Company  entered  into a lease for an
         additional  facility for the purpose of expanding its operations.  This
         lease  expires  on April  30,  2014 and  requires  annual  base  rental
         payments of $723.

                  As of December  31, 2003,  future  minimum  lease  commitments
         (excluding   renewal   options)   under   non-cancelable   leases   are
         approximately:

                        For the Years Ending December 31,
                        _________________________________
                        2004                      $ 1,698
                        2005                        2,201
                        2006                        2,159
                        2007                        2,205
                        2008                        2,064
                        Thereafter                  7,557
                                                  _______
                                                  $17,884
                                                  =======

           Rent and real  estate tax expense on  operating  leases for the years
      ended December 31, 2003,  2002 and 2001 aggregated  approximately  $1,820,
      $1,785 and $1,106, respectively.

Employment agreements

           The Company is party to an  employment  agreement  dated July 1, 2000
      with its  principal  stockholder,  which expires in July 2005 and provides
      for an initial base salary of $500 per annum. The base salary is increased
      $50 each year on the  anniversary.  In addition,  on the effective date of
      the  employment  agreement,  the  employee  received  3,750,000  warrants,
      exercisable  at $1.00 per share and  vesting  20%  immediately  and in 20%
      annual increments thereafter. The warrants expire in July 2010.

Litigation

           The  Company  filed a lawsuit  against its  insurance  carrier and an
      insurance agent for negligence and breach of fiduciary  duties as a result
      of the damages  incurred during  Hurricane  Irene in October 1999.  During
      2003,  this  case was settled with all parties for $1,009,  net  of  legal
      fees.

           In October 2002, the Company was served with a derivative shareholder
      suit against the  Company's  officers and directors as well as the Company
      itself.  This case was dismissed with prejudice on March 13, 2003, without
      liability  to the  Company or its  officers or  directors.  The Company is
      seeking  dismissal of another identical suit brought on behalf of a second
      shareholder,  on the same  grounds  that  required  dismissal in the other
      suit.


                                      F-22


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 13  COMMITMENTS AND CONTINGENCIES - Continued

           On or about  October 30, 2002,  the Company  filed a lawsuit  against
      certain union leaders in the United States District Court for the Southern
      District  of  Florida,  claiming  defamation,  conspiracy  to  defame  and
      tortious interference with contractual and ongoing business relationships.
      The Company is vigorously pursuing this action.


           The Company is subject to other legal  proceedings and claims,  which
      have  arisen  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.

           The  Company  is currently the subject  of  an investigation  by  the
      Securities and Exchange  Commission  with respect to certain related party
      transactions.

Note 14  INCOME TAXES

Components of income taxes are as follows:

                            2003         2002          2001
                           ______       _______       _____
         Federal
         Current           $6,143       $     0       $   0
         Deferred           3,521        (3,175)          0
                           ______       _______       _____
         Total federal     $9,664       $(3,175)      $   0
                           ======       =======       =====

         State
         Current           $1,043       $    77       $ 175
         Deferred             391          (574)          0
                           ______       _______       _____
         Total state       $1,434       $  (497)      $ 175
                           ======       =======       =====


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>

                                                                                2003         2002          2001
                                                                               _____        _____          ----
<S>                                                                            <C>          <C>           <C>

         Statutory U.S. income tax rate                                        34.00%       34.00%        34.00%

         Utilization of federal net operating loss carryforwards                           (34.00)       (34.00)
         Utilization of state net operating loss carryforwards                              (5.00)
         Reduction of valuation allowance                                                  (23.39)
         Other                                                                   3.3          .08
         State and local income taxes (benefit), net of federal benefits         4.9        (1.52)         1.60
                                                                               _____        _____        ______

         Effective tax rate                                                     42.2%       (29.83)%        1.60%
                                                                               =====        ======       ======
</TABLE>



                                      F-23


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


Note 14  INCOME TAXES - CONTINUED

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

                                                   2003       2002       2001
                                                  ______     ______     ______

Net operating loss carryforwards                  $   --     $2,843     $5,440
AMT credit                                             7         21
Accounts receivable reserve                          437        417        270
Deferred rent                                        187        137
Inventories                                                     455
Deferred compensation                                178        252
Capital loss carryover                               641        641         95
Write down of non-marketable securities                                    448
Write down of investment in Point Blank Int'l         --        596        520
                                                  ______     ______     ______
                                                   1,450      5,362      6,773
Less valuation allowance                             641        641      6,514
                                                  ______     ______     ______
Net deferred income tax assets                    $  809     $4,721     $  259
                                                  ======     ======     ======

         During  the  year  ended  December  31,  2002,   the  Company   reduced
approximately  $5,873 of valuation  allowance  placed on the U.S. portion of the
Company's deferred tax assets. This reduction was based on updated  expectations
about  future  years'  taxable  income to  reflect  continuing  improvements  in
operating  results  influenced by the Company's  continued  revenue growth,  and
other indications that certain concerns that had previously limited management's
expectations about future taxable income no longer were applicable.

Year-End Transaction

         On December 19, 2003,  DHB's  subsidiary  Point Blank Body Armor,  Inc.
("Point Blank") issued to Hightower Capital Management, LLC ("Hightower") shares
of common stock of Point Blank representing  approximately 1% of the outstanding
capital stock of Point Blank in consideration of which Hightower had transferred
and  delivered to Point  Blank,  on December  19, 2003  certain  inventories  of
ballistic plates and other goods usable in Point Blank's business. The inventory
received by Point Blank had an aggregate list price of $1,650,000,  equal to the
appraised value of the shares of Point Blank issued to Hightower (such appraisal
having been performed by an independent business appraiser). Simultaneously, DHB
contributed  to Point  Blank  shares of  common  stock of DHB's  subsidiary  NDL
Products,  Inc. ("NDL") having an aggregate  appraised value equal to 10% of the
appraised  value of Point Blank (such  appraisal of NDL having been performed by
the same  independent  business  appraiser as performed  the  appraisal of Point
Blank),  in  consideration of which Point Blank issued to DHB a number of shares
of common stock of Point Blank having an  equivalent  appraised  value.  DHB has
retained  rights of first refusal and rights to  repurchase  the shares of Point
Blank  issued  to  Hightower,  either  at the  offered  price (in the event of a
proposed sale by Hightower) or at fair market value (in the event of termination
of the business relationship between Point Blank and Hightower). Due to the fact
that the amount of the income tax benefit is uncertain,  an estimated reserve of
approximately $3,500,000 was recorded as of December 31, 2003.


Note 15  QUARTERLY RESULTS (UNAUDITED)

         The following table presents summarized quarterly results of operations
for the  Company  for the years ended  December  31, 2003 and 2002.  The Company
believes all  necessary  adjustments  have been  included in the amounts  stated
below  to  present  fairly  the  following  selected  information  when  read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included  elsewhere  herein.  Future quarterly  operating  results may fluctuate
depending  on a number of  factors.  Results of  operations  for any  particular
quarter are not necessarily  indicative of results of operations for a full year
or any other quarter.

         During  the  fourth  quarter  of 2002,  the  Company  recorded  certain
adjustments  as described  in Note 15 to the  Company's  consolidated  financial
statements  contained in Form 10-K/A  filed with the SEC on July 24,  2003.  The
effect  of  these  adjustments  on  the  condensed  consolidated  statements  of
operations  for the first  quarter of 2002 was a  decrease  in net income and no
change in basic  and  diluted  earnings  per  share.  For the  second  and third
quarters of 2002 there would have been a decrease in net income,  basic earnings
per share,  and diluted  earnings  per share for each  quarter.  The Company has
restated the three and nine months ended  September 30, 2002, to show the effect
of the adjustments on the condensed consolidated  statements of operations.  The
first  adjustment  was an additional  accrual to  straight-line  rent expense in
accordance  with  SFAS No. 13  "Accounting  for  Leases,"  which  increases  the
selling,  general and administrative expenses by $39 for each of the first three
quarters of 2002 for a total of $117 for the nine  months  ended  September  30,
2002. In addition to straight-lining  rent expense,  the Company recorded in the
fourth  quarter of 2002 a $646 expense for the issuance of stock  warrants to an
unaffiliated  outside  consultant,  of which $146 and $284 was applicable to the
second  and third  quarter of 2002,  respectively.  These  adjustments  increase
selling,  general and  administrative  expenses  for the first  quarter,  second
quarter  and third  quarter  of 2002 and  decreased  the  selling,  general  and
administrative expenses for the fourth quarter of 2002.


                                      F-24


<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                 First      Second       Third      Fourth
                                               Quarter     Quarter     Quarter     Quarter
                                               _______     _______     _______     _______
<S>                                            <C>         <C>         <C>         <C>

Year ended December 31, 2003
Net sales                                      $46,153     $56,525     $54,417     $72,916
Gross profit                                    12,968      15,524      14,818      20,031
Income available to common stockholders          4,929       3,961       3,160       2,762
Basic earnings per share                       $  0.12     $  0.10     $  0.08     $  0.07
Diluted earnings per share                     $  0.12     $  0.09     $  0.07     $  0.06

Year ended December 31, 2002 - as restated
Net sales                                      $36,639     $34,014     $30,146     $32,548
Gross profit                                     9,455      10,037       9,141       9,093
Income available to common stockholders          4,719       4,241         952       5,723
Basic earnings per share                       $  0.14     $  0.11     $  0.03     $  0.14
Diluted earnings per share                     $  0.11     $  0.10     $  0.03     $  0.13

</TABLE>



                                      F-25



<PAGE>


                      DHB INDUSTRIES, INC. AND SUBSIDIARIES
                     SCHEDULE II TO THE FINANCIAL STATEMENTS
                        VALUATION AND QUALIFYING ACCOUNTS
                        DECEMBER 31, 2003, 2002 AND 2001
                                 (In thousands)


Allowances deducted from related balance sheet accounts:

                                              Accounts
                                             Receivable       Inventory
                                             __________       _________

          Balance at December 31, 2000         $  653            $ --

          Additions charged to
          costs and expenses                      290

          Deductions/writeoffs                   (151)             --
                                               ______            ____

          Balance at December 31, 2001            792              --

          Additions charged to
          costs and expenses                      379

          Deductions/writeoffs                   (101)             --
                                               ______            ____

          Balance at December 31, 2002          1,070              --

          Additions charged to                     99             226
          costs and expenses

          Deductions/writeoffs                   (317)              --
                                               ______            ____

          Balance at December 31, 2003         $  852            $226
                                               ======            ====


                                      F-26


<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 30th day of
March 2004.

                                                     DHB Industries, Inc.

                                                     /s/ DAVID H. 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 30, 2004
____________________     and Director
David H. Brooks


/s/ DAWN M. SCHLEGEL     Treasurer                        March 30, 2004
____________________     Principal Financial Officer
Dawn M. Schlegel         Principal Accounting Officer


/s/ JEROME KRANTZ        Director                         March 30, 2004
____________________
Jerome Krantz


/s/ GARY NADELMAN        Director                         March 30, 2004
____________________
Gary Nadelman



                                       36


<PAGE>


                               Index of Exhibits.

Exhibit       Description

3.1           Certificate of Incorporation of DHB Capital Group Inc., a
              Delaware corporation.                                         1

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

3.3           Certificate of Amendment to Certificate of Incorporation
              filed July 24, 2001                                           6

3.4           Certificate of Designations & Preference, an amendment to
              the Certificate of Incorporation filed on December 26, 2001   6

3.5           By-Laws                                                       1

4.2           Stock Subscription Agreement between the Registrant and
              David Brooks, dated December 14, 2001                         6

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

10.1          Employment Agreement dated July 1, 2000 between DHB and
              David Brooks                                                  3

10.2          Promissory Note between the Company and David Brooks dated
              November 6, 2000                                              3

10.3          1995 Stock Option Plan                                        4

10.6          Sale agreement dated March 10, 2000 between DHB and DMC2
              Electronic Components                                         5

10.7          Lease agreement dated January 1, 2001 between Point Blank
              Body Armor and VAE Enterprises.                               3

10.8          Lease agreement dated April 15, 2001 between DHB Capital
              Group and A&B Holdings, Inc.                                  3

10.9          Loan and Security Agreement dated September 24, 2001 with
              LaSalle Business Credit Inc.                                  7

10.10         First Amendment and Waiver to Loan and Security Agreement,
              dated June 28, 2002                                           8

10.11         Second Amendment to Loan and Security Agreement, dated
              February 25, 2003                                             9

10.12         Third Amendment to Loan and Security Agreement, dated as
              of August 30, 2002                                           10

10.13         Fourth Amendment to Loan and Security Agreement, dated as
              of November __, 2003

10.14         Industrial Lease dated December 5, 2003 between Point Blank
              Body Armor Inc. and Atlantic Business Center L.C.

10.15         Fifth Amendment to Loan and Security Agreement, dated as of
              December __, 2003

10.16         Subscription and Restructuring Agreement dated as of
              December 19, 2003 by and among Point Blank Body Armor Inc.,
              Hightower Capital Management, LLC and DHB.

10.17         Sixth amendment to Loan and Security Agreement dated March 15,
              2004 with LaSalle Business Credit LLC

14            Code of Ethics


                                       37


<PAGE>


21            List of Subsidiaries

31.1          Certification of Chairman and Chief Executive Officer pursuant to
              Section 302 of The Sarbanes-Oxley Act of 2002

31.2          Certification of Chief Financial Officer pursuant to Section
              302 of The Sarbanes-Oxley Act of 2002

32.1          Certification of Chairman and Chief Executive Officer pursuant to
              18 U.S.C. 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002

32.2          Certification of Chief Financial Officer pursuant to 18
              U.S.C. 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002

              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
              the Company's Registration Statement on Form SB-2, File #33-59764,
              filed on Jan 31, 1997.

3             Incorporated by reference to the Company's Form 10-K for the year
              ended December 31, 2000, filed March 30, 2001.

4             Incorporated by reference to the Company's Registration Statement
              on Form S-8 filed on or about November 6, 1995.

5             Incorporated by reference to the Company's Current Report on
              Form 8-K filed March 23, 2000.

6             Incorporated by reference to the Company's Current Report on Form
              8-K filed January 28, 2002.

7             Incorporated by reference to the Company's Form 10-Q for the
              quarter ended September 30, 2001, filed November 14, 2001.

8             Incorporated by reference to the Company's Current Report on
              Form 8-K filed July 12, 2002.

9             Incorporated by reference to the Company's Current Report on Form
              8-K filed February 25, 2003.

10            Incorporated by reference to the Company's Form 10-Q for the
              quarter ended September 30, 2003, filed November 14, 2003.


                                       38