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


            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the transition period from_______ to________
                           Commission File No. 0-22429


                             DHB CAPITAL GROUP INC.
                         (Name of issuer in its charter)


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


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


                    Issuer's telephone number: (516) 997-1155
       Securities registered under Section 12(b) of the Exchange Act: None
         Securities registered under Section 12(g) of the Exchange Act:


                         COMMON STOCK, $0.001 PAR VALUE
                                (Title of Class)


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 there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of Regulation S-K is not contained herein,  and will not be
contained, to the best of the registrant's knowledge, in the definitive proxy or
information  statements  incorporated by Reference in Part III of this Form 10-K
or any amendment to this Form 10-K [ X ]


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 16 2001: $49,058,765.

Number of shares outstanding of the issuer's common equity, as of March 16, 2001
      (Exclusive of securities convertible into common equity): 31,491,914

DOCUMENTS INCORPORATED BY REFERENCE:   None


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ITEM 1.  BUSINESS

GENERAL
-------

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

         DHB  Capital  Group  Inc. was  originally  incorporated  as  a New York
Corporation in 1992 by Mr. David H. Brooks, the Company's Chairman. In 1995, the
Company   was   re-incorporated   in   Delaware.   Under   the   terms   of  the
re-incorporation,  the Delaware Corporation succeeded to all rights,  interests,
assets and  liabilities  of the New York  Corporation.  Holders of  certificates
evidencing  the New York  Corporation  automatically  became  holders  of a like
number of securities of the Delaware Corporation.

RECENT DEVELOPMENTS

         BUYBACK OF COMMON STOCK.  In December  2000,  the Board of Directors of
the Company  announced its  authorization  for the Company to purchase up to one
million  additional shares of its common stock on the open market,  from time to
time, at its  discretion.  The Board of Directors had previously  authorized the
repurchase of two million  shares of its common stock.  To date, the Company has
repurchased and retired 2,304,605 shares at a cost of $7,061,353.

DHB ARMOR GROUP ("THE ARMOR GROUP")

         PRODUCTS.  Point Blank, PACA, and PB Int'l comprise the Armor Group and
they  manufacture  two basic types of body armor:  concealable  armor,  which is
designed to be worn beneath the user's  clothing,  and tactical armor,  which is
worn  externally  and is  designed to protect  against  more  serious  ballistic
threats.

         Both the concealable and tactical vests are manufactured using multiple
layers and/or a combination of KevlarTM, TwaronTM, Gold FlexTM, SpectrashieldTM,
SpectraFlexTM,  ZylonTM, and other ballistic fabrics, covered and fully enclosed
in an  outer  carrier.  Although  some  products  of  Point  Blank  and PACA are
competitive with each other,  Point Blank and PACA products are  distinguishable
by brand  recognition,  brand  loyalty and the two  entities  utilize  different
distribution channels.

         Concealable  vests are  contoured to closely fit the user's body shape.
Vests  are  manufactured  in  standard  male and  female  sizes  and may also be
custom-made.   Vests  are


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fastened  using  VelcroTM  type  elastic  strapping.  Concealable  vests  may be
supplemented  for additional  protection  and supplied with an additional  armor
plate,  which  consists  of  either  metal or  certain  composite  materials  to
withstand  greater threat levels than the vest is otherwise  designed to protect
against.

         During 2000, the NIJ (National  Institute of Justice)  introduced a new
NIJ STD  0101.04.  This was the first  update  of the  standard  for  certifying
performance  of vests  since 1987.  Shortly  after the  introduction  of the new
standard,  the  Armor  Group  introduced  more  than 12 new  ballistic  products
including a new vest line that meets the  requirements of the new standard.  The
new line is the LEGACY LINE featuring the NIJ level II-a "LEGACY PREMIERE". This
new vest is less than .10  inches  thick  with an aerial  density of .47 lbs per
square foot.  All levels of protection in the "LEGACY" line are the lightest and
thinnest ever certified to the NIJ Standard. The HP WHITE wearability rating was
the  highest  rating  ever  for  concealable   body  armor.  In  addition,   the
introduction  of the LEGACY line  provides  law  enforcement  officers  with the
highest level of ballistic  protection in all NIJ threat levels available in the
body armor industry today.  The Armor Group has also upgraded its Beast,  Fusion
and Hi-lite Pro Plus lines to meet the new NIJ  Standard  .04  requirements,  as
well as the requirements of the original NIJ .03 Standard. In addition the Armor
Group   re-engineered  the  private  label  Galls'  line  to  NIJ  .04  Standard
requirements.  Galls is a premier  law  enforcement  catalog and the Armor Group
produces low cost,  high  performance,  private label body armor as an exclusive
product for Galls. The Armor Group also launched the "Z3" (100% Zylon) Ballistic
series of vests in late 2000,  with full rollout in 2001. This series features a
soft,  comfortable  Level  II  vest  at  .68psf,  making  it one of the  highest
performing,  lightest weight, and technologically advanced designs on the market
today.

         DHB  Armor's  Corrections  Division  introduced  in 2000  the  BLOCK 10
series.  This series is certified to NIJ Standard  0115.00,  a new certification
initiative from NIJ. The  Corrections  Division also certified to NIJ Stab level
1-3 standards,  the "LEGACY  PREMIERE."  This vest had already been certified to
stab level III and ballistic level II  requirements.  In total,  the Armor Group
certified   eleven  new  stab  /  ballistic   resistant  panels  that  are  used
independently  or  in  tandem  to  provide  previously  unavailable  soft  armor
protection against both stab and ballistics.  The Armor Group also has certified
three new products to the New  California  Stab  Standard.  The Company has seen
growth in sales of its TAC Pants, a product developed to provide the corrections
professional with the ultimate in lower torso stab / slash protection. DHB Armor
Group's full line of correctional vests for anti-stab protection is derived from
extensive  research and the realization that corrections  officers have specific
needs  unique  to law  enforcement.  The  Armor  Group's  Correction's  Division
provides  complete  solutions for unique  requirements  including,  for example,
combining  the  Hit-ManTM  Training  Suit  with  the  Thrust-GuardTM  Anti  Stab
technology to be utilized together as a cell extraction suit.

         The Armor Groups  "Interceptor"  contract  with the U.S.  Department of
Defense is an important  and growing  Company  program.  The  Interceptor  Outer
Tactical Vest has been in use by the US Marines for several years;  recently the
US Army  accepted  the design and began  purchasing  Interceptor  for its Troops
increasing  the  estimated  contract  value  to  at  least  $350  million.   The
Interceptor System increases the level of fragmentation and ballistic protection


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while  dramatically  reducing the overall weight of the vest. Orders received to
date for the Interceptor now total more than $100 million. The Armor Group plans
to triple  manufacturing  capacity for the units delivered by the fourth quarter
of 2001.  The  Interceptor  program is  designed  as a  continually  upgradeable
modular,  soft body armor  system.  The Outer  Tactical  Vest consists of a base
vest, collar assembly,  throat protector and groin protector.  The Armor Group's
research  and  development  team   continuously   seeks  ways  to  increase  the
performance,  reduce the weight, and maximize the protective capabilities of the
Interceptor vest.

         The  Armor  Group's   VectorTM   garment  system  and  Armor  IceTM
introduced  in late 1999 have seen sales  increase  throughout  2000.  The Armor
Group has long recognized  that the single most important  factor in individuals
not wearing body armor is excessive  body heat buildup under the armor.  Working
in conjunction with Frisby Technology,  the Armor Group developed this system to
keep personnel cool while wearing armor. In mid-1999, the Armor Group negotiated
the exclusive worldwide distribution rights to Frisby Technology's  ComfortempTM
for all body armor  applications  and is marketing it under the brand name Armor
IceTM. Armor IceTM is the first active cooling system proven to work under armor
utilizing   a   patented    open-cell   foam   technology   that    incorporates
micro-encapsulated  phase change  materials into the structure of the foam. This
Armor Group's agreement with Frisby is effective through August 31, 2001.

          The  Armor  Group  introduced  the  new  Tactical   "Spider"  (Stealth
Protection   Intergradedly   Designed  Equipment  Resource)  at  the  2000  IACP
(International  Association  of  Chiefs  of  Police)  conference  in San  Diego.
Tactical  vests are designed to give  all-around  protection  and more  coverage
around the neck,  shoulders  and kidneys  than  concealable  vests.  These vests
contain  pockets to  incorporate  small panels  constructed  from hard composite
materials  and  high-alumina  ceramic  tiles,  all of which  provide  additional
protection  against high power rifle fire.  Tactical  vests come in a variety of
styles, including tactical assault vests, high-coverage armor, and flak jackets,
each of which is  manufactured  to protect  against varying degrees of ballistic
threats.

         The Armor Group's other  body-armor  products include a tactical police
jacket,  military field jacket,  executive vests,  NATO-style  vests, K-9 vests,
fragmentation  vests and attack vests. Blast and fragmentation armor is designed
to  specifications in U.S.  government  contracts to offer full torso protection
against materials and velocities  associated with the fragmentation of explosive
devices such as grenades and artillery  shells.  In general,  concealable  vests
sold to law enforcement agencies and distributors are designed to resist bullets
from  handguns.  Blast and  Fragmentation  gear  utilizes a variety of  designs,
materials and patterns slightly different from bullet-resistant vests. The Armor
Group also  manufactures  a variety of  accessories  for use with its body armor
products.

         POTENTIAL PRODUCT LIABILITY.  The products  manufactured or distributed
by the Armor  Group  are used in  situations,  which  could  result  in  serious
personal 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  $20,000,000  each  per  occurrence,  and
$20,000,000 in the aggregate, less a deductible of $100,000 for each company. PB
Int'l maintains product liability insurance in the amount of $2,000,000 for each
occurrence,  with a $5,000 deductible.  There is no assurance that these amounts
would be sufficient to cover the


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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 PACA,  Point Blank and PB Int'l would be able to obtain such insurance at a
reasonable cost. Any substantial uninsured loss would have to be paid out of the
Armor Group's assets,  as applicable,  and may have a material adverse effect on
the Company's  financial  condition and results of operations on a  consolidated
basis.  The inability to obtain  product  liability  coverage may prohibit PACA,
Point  Blank,  or PB Int'l,  in the future from  bidding for orders from certain
governmental  customers.  Currently  many  governmental  agencies  require  such
insurance coverage,  and any such inability to bid would have a material adverse
effect on the  Company's  financial  condition  and results of  operations  on a
consolidated basis.

         RAW  MATERIALS  AND   MANUFACTURING.   The  Armor  Group   manufactures
substantially  all  of  their  respective  bullet,   blast,   fragmentation  and
projectile-resistant   garments  and  other  ballistic-protection  devices.  The
primary raw material used by the Armor Group in a majority of its  manufacturing
of ballistic-resistant  garments is KevlarTM, a patented product of E.I. Du Pont
de Nemours & Co.  SpectrashieldTM,  GoldFlexTM,  and  SpectraFibreTM,  which are
patented   products  of  Honeywell   (formerly  Allied  Signal),   are  used  in
approximately   one-quarter  of  all  vests.   Utilizing  Honeywell's  patented,
non-woven SHIELD  technology,  GoldFlexTM is softer and thinner than traditional
ballistic  materials  while  offering the maximum in  multi-hit  and angled shot
protective  capabilities.  In 2000,  Point Blank became the largest consumer and
manufacturer of ZylonTM based armor,  which is utilized in many of the Company's
vests. ZylonTM, together with TwaronTM, a product utilized in a small percentage
of vests, are patented  products of Barrday Inc. ZylonTM enables the Armor Group
to supply a lighter,  more flexible,  higher  performance  body armor. The Armor
Group purchases cloth woven from these materials from three independent  weaving
companies.  The woven fabric is placed on tables,  layered  over  patterns for a
particular  component of a garment (for  example,  the front or back of a vest),
cut using  computerized  cutting  machines  and  electric  knives,  and then are
stitched together.  The Armor Group utilizes several hundred patterns based upon
size, shape and style  (depending upon whether the garment is a bullet-,  blast-
or  fragmentation-resistant  garment).  KevlarTM,  GoldFlexTM,  SpectrashieldTM,
SpectraFibreTM,  TwaronTM, and ZylonTM differ in their pliability,  strength and
cost, such that the materials are combined to suit a particular application.  In
the opinion of management,  the Armor Group enjoys a good  relationship with its
suppliers.  However,  if supplies  from DuPont,  Honeywell,  or Barrday,  or its
affiliate,  Toyobo, of their patented products were, for any reason,  disrupted,
the  Armor  Group  would  be  required  to  utilize  other   fabrics,   and  the
specifications  of some of the Armor Group's products would have to be modified.
Until the Armor Group selected an alternative  fabric and appropriate  ballistic
tests were performed,  its operations would be severely  curtailed and the Armor
Group's  financial  condition  and  results  of  operations  would be  adversely
affected.

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

         RESEARCH AND  DEVELOPMENT.  DHB Armor Group's  research and development
team has  combined  50 years  of  notable  ballistic  research  and  development
experience,   including  24  years


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of  experience  in an NIJ  certification  environment.  Many of its research and
development  personnel  previously  held positions of  responsibility  with H.P.
White  Laboratories.  Allen  Price who  heads an  eight-man  department  that is
responsible for certification and new product  development  directs the research
and  development  department.  Each  location/facility  for DHB Armor  Group has
on-site ballistic laboratory test facilities or facility.

         CUSTOMERS.  The Armor Group's products are sold  domestically to United
States  law  enforcement  agencies  and  the  military  and  internationally  to
governments and  distributors.  Sales to the United States armed forces directly
or as a  subcontractor  accounted  for 57%,  19%,  and 5% of the  Armor  Group's
revenues for the years ended December 31, 2000, 1999, 1998, respectively.  Sales
to domestic law enforcement agencies, security and intelligence agencies, police
departments,  federal and state  correctional  facilities,  highway  patrols and
sheriffs' departments accounted for 7%, 29% and 22%, respectively,  of the Armor
Group's  revenues in each of the years ended  December 31, 2000,  1999 and 1998.
With the exception of the U.S.  Government,  no other customer accounted for 10%
or more of the  Company's  revenues in 2000 nor would the loss of any such other
customer be expected to have a significant  impact on the Company's  business or
financial results.

         Certain  sales by the  Armor  Group to the  armed  services  and  other
federal agencies are made pursuant to standard purchasing contracts between PACA
or  Point  Blank  and  the  General  Services   Administration  of  the  Federal
Government,  commonly  referred  to as a "GSA  Schedule".  The Armor  Group also
responds to invitations by military branches and government  agencies to bid for
particular orders. GSA Schedule contracts  accounted for approximately 12%, 19%,
and 25%,  respectively,  of the Armor Group's sales for the year ended  December
31, 2000, 1999 and 1998.

         PACA and Point Blank, as GSA Schedule Contract  vendors,  are obligated
to make all sales  pursuant to such  contracts  at its lowest unit price.  Their
current GSA Contracts expires July 31, 2001. However,  they have applied for the
renewal of their GSA Contracts.

         During the years ended  December  31, 2000,  1999 and 1998,  commercial
sales (i.e., sales to non-governmental entities) were 23%, 26 %, and 44 % of the
Armor Group's revenues.

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

         GOVERNMENT AND INDUSTRY  REGULATIONS  AND  STANDARDS.  Bullet and blast
resistant 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 publish  invitations for bidding which specify certain
standards of performance the bidders' products must


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meet. The National Institute of Justice, under the auspices of the United States
Department  of  Justice,  has  issued a  revised  voluntary  ballistic  standard
(NIJ0101.04) for bullet-resistant  vests in several categories.  The Armor Group
regularly  submits its vests to independent  laboratories for ballistic  testing
under this  voluntary  ballistic  standard and all of its products  have, at the
time  of  manufacture,  met or  exceeded  such  standards  in  their  respective
categories.  The NIJ has  also  established  various  standards  of  performance
against stab attacks. Where applicable, the Company products have been submitted
for testing to determine  compliance with these standards and have been found to
meet such standards.

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

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

         The Armor Group believes that the principal  elements of competition in
the sale of  ballistic-resistant  garments are its innovative design,  price and
quality. In dealings with law enforcement agencies and the military, PACA, Point
Blank,  and PB Int'l bid for orders in response to invitations for bidding which
set forth specifications for product performance.  The Company believes that the
Armor Group enjoys a favorable reputation in the industry with over twenty years
of supplying federal, state and municipal governments and agencies.

         THE ARMOR GROUP'S BACKLOG. As of December 31, 2000, the Armor Group had
a backlog of  approximately  $42  million,  as compared to  approximately  $32.7
million as of December  31,  1999.  The Armor Group has  several  large  orders,
subsequent  to the  year-end,  which  increased  its backlog by over $23 million
bringing it to $65 million as of March 16, 2001.  Backlog at any one date is not
a reliable indicator of future sales.

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

         EMPLOYEES. As of March 1, 2000, the Armor Group's employed four hundred
twenty-nine full time employees.  There were two officers of the Armor Group, 20
persons  employed in


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supervisory   capacities,   386   employed  for   manufacturing,   shipping  and
warehousing, 4 technical/research development personnel and 17 office personnel.
In the opinion of management, the Armor Group maintains a good relationship with
its employees.

DHB SPORTS GROUP

         The  Sports  Group is a  collection  of brands  that  service  specific
segments of the sporting goods and health care markets with its sports medicine,
protective gear, health supports and magnetic 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 NDLTM, GRIDTM, MagneSystemsTM,  FLEX-AIDTM, and Doctor Bone SaversTM. The
Sports  Group  markets its product to a variety of  distribution  points with an
emphasis on major retailers. Mass merchandisers, chain drug stores, food chains,
independent  sporting  goods and  pharmacy  retailers,  catalog,  wholesale  and
e-commerce  offer the various  brands to the consumer.  The Sports Group account
list includes  retail and  wholesale  establishments  such as Wal-Mart,  Target,
Meijer and Phar Mor. Two customers,  Walmart and Target,  accounted for 54 % and
51% of the Sports Group  revenue for the year ended  December 31, 2000 and 1999,
respectively.

         The Sports Group has  negotiated  private label  programs with three of
the largest  wholesalers to the retail trade:  Amerisource,  Cardinal Health and
CDMA.  These  wholesalers  have begun servicing their 10,000 store networks with
their Family PharmacyTM,  LeaderTM and Quality Choice BrandsTM of health support
products.

         In 1998, the Company signed an exclusive  (except for certain rights in
the field of products for horses) licensing  agreement,  to manufacture and sell
magnetic  products  covered  by  certain  U.S.  and  Canadian  patents  owned by
MagneSystems.

         In addition,  the Sports Group added valuable  distribution during 2000
in the area of  magnetic  therapy  by  securing a  national  sales  organization
focusing on the  distribution of natural  products to specialty care and natural
products retailers.

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

         DHB SPORTS GROUP'S  POTENTIAL PRODUCT  LIABILITY.  Some of the products
manufactured  or  distributed  by the Sports Group are used in situations  where
serious personal  injuries could occur,  including  injuries  resulting from the
failure of the Sports  Group's  products.  The Sports  Group  maintains  product
liability  insurance in the amount of $20,000,000 per occurrence and $20,000,000
in the aggregate,  including legal fees, subject to a $100,000 deductible. There
can be no assurance  that these  amounts would be sufficient to cover payment of
potential claims, and there can be no assurance that this or any other insurance
coverage would continue to be


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available,  or if available,  that the Sports Group would be able to obtain such
insurance at reasonable  cost. Any  substantial  uninsured loss would have to be
paid out of the Sports Group's  assets and could have a material  adverse effect
on the Company's financial condition and results of operations.

         EMPLOYEES.  As of March 1, 2001,  there were two officers of the Sports
Group,   4  persons   employed  in  supervisory   capacities,   40  employed  in
manufacturing,  shipping and warehousing,  3 in sales and customer service and 8
were office  personnel.  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 good.  The Sports Group also have more than 50  independent  sales
representatives  who together the sales  executives  are  responsible  for sales
throughout the Untied 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.


DISCONTINUED OPERATIONS

        In 1998,  DHB  sought to expand its  product  offerings  addressing  the
segment markets in which the Company participates through the acquisition of two
privately held domestic companies and one Japanese company. One of the entities,
Lanxide  Armor  Products Inc.  ("LAP")  manufactured  "hard armor"  products for
personal  body armor as well as for use in ground  vehicles  and  aircraft.  The
other two entities,  Lanxide Electronic Components Inc. ("LEC") and the Japanese
subsidiary,  DHB KK,  together with LEC, the  "Electronics  Group"  manufactured
electronic  component  products used for thermal  management,  packaging and the
structural  components for the electronics  industry.  In 1999, the Company made
the  strategic  decision  to focus on its core  businesses:  soft body armor and
sports protective gear and related  products.  LAP and the Electronics Group had
very high  research and  development  costs as well as  engineering  costs.  The
Company has elected to focus the majority of its research and development  funds
on the design,  development and production of technologically advanced soft body
armor for the U.S.  Military and law enforcement  communities.  The LAP facility
was closed in October 1999 and in March 2000,  the Company sold the  Electronics
Group to DMC2 Electronic Components  Corporation,  an unrelated third party. The
sales price was $4,375,000,  less an outstanding loan of $141,217.  The proceeds
of the sale were used to pay off all of the  Company's  bank  indebtedness.  The
Company realized a gain on the disposition of the Electronics Group of $857,860.
The results of  operations  of the  Electronics  Group and LAP are  presented as
Discontinued Operations.

SEGMENT INFORMATION

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


                                       9


<PAGE>

<TABLE>
<CAPTION>


Net Sales                                           2000               1999               1998
---------                                           ----               ----               ----
<S>                                              <C>                <C>                <C>

Ballistic-resistant equipment                    $64,720,773        $30,358,537        $28,695,127
Electronic components/LAP                            401,299          8,441,393          8,398,107
Protective athletic & medical equipment            5,296,799          6,236,438          8,388,544
                                                 -----------        -----------        -----------
                                                  70,418,871         45,036,368         45,481,778
Less inter-segment sales                                  --         (2,381,099)        (3,647,353)
Less discontinued operations (3)                    (401,299)        (7,514,541)        (8,761,007)
                                                 -----------        -----------        -----------
Consolidated Net Sales                           $70,017,572        $35,140,728        $33,073,418
                                                 ===========        ===========        ===========

Income from Operations
----------------------
Ballistic-resistant equipment                    $10,591,126        $(9,629,504)       $ 2,485,395
Electronic components                               (517,288)        (1,835,137)          (782,908)
Protective athletic & medical equipment             (166,114)        (2,390,834)         1,207,743
Corporate and Other (1)                           (2,225,757)        (2,824,826)        (1,508,027)
                                                 -----------        ------------       -----------
     Sub-total                                     7,681,967        (16,680,301)         1,402,203
Income (Loss) from discontinued
operations (3)                                       517,288         (6,809,082)         1,451,216
                                                 -----------        ------------       -----------
Consolidated Operating Income                    $ 8,199,255        $(9,871,219)       $ 2,853,419
                                                 ===========        ============       ===========

Identifiable Assets (2)
-----------------------
Ballistic-resistant equipment                    $22,383,129        $14,283,739        $23,743,604
Electronic components                                     --          6,177,019          5,749,438
Protective athletic & medical equipment            3,517,194          3,335,253          8,844,627
                                                 -----------        -----------        -----------
                                                  25,900,323         23,796,011         38,337,669
Corporate and Other                                2,155,948            400,038          4,641,566
                                                 -----------        -----------        -----------
Consolidated Net Assets                           28,056,271         24,196,049         42,979,235
Discontinued operations (3)                                          (4,825,532)        (5,568,122)
Assets held for sale                                      --          3,928,980          3,952,697
                                                 -----------        -----------        -----------
Adjusted Net Assets                              $28,056,271        $23,299,497        $41,363,810
                                                 ===========        ===========        ===========

Foreign  sales  accounted  for 2%, 17%,  and 12%, of the total  revenues for the
years ended December 31, 2000, 1999 and 1998, respectively. Foreign identifiable
assets  accounted  for 1%, 13%, and 5% of the total assets at December 31, 2000,
1999 and 1998, respectively.

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


ITEM 2.  PROPERTIES


                                       10


<PAGE>


         CORPORATE  HEADQUARTERS.  On January 1, 2000 the Company  relocated its
corporate  headquarters  to a 3,750  square  foot leased  office  located at 555
Westbury Avenue,  Carle Place, NY 11514. The property is leased for three-years.
Previously,  the  corporate  headquarters  were located in a one-story  building
located at 11 Old Westbury  Road, Old Westbury,  New York. The old  headquarters
property was sold in July 2000.

         PACA. On March 12, 2001,  DHB Armor Group entered into an agreement for
a 60,060  square foot  manufacturing  facility  with  administrative  offices in
Caryville,  Tennessee,  to relocate its  subsidiary,  PACA. The five-year  lease
commences April 15, 2001, however, PACA was allowed to occupy the premises as of
March 15, 2001.

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

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


ITEM 3.  PENDING LITIGATION

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

         Robert  Bruno,  the former  Vice-president  and General  Counsel of DHB
Capital Group Inc., has initiated  arbitration  against the Company  seeking two
years unearned compensation under a three-year employment contract.  Arbitration
has been held and a  determination  is expected by May 31, 2001. The Company has
vigorously defended this action and intends to continue to do so.

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


                                       11


<PAGE>


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


                                     PART II



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


         The Common  Stock of the  Company  was  traded on the Nasdaq  Small Cap
MarketTM from September 4, 1998 until December 20, 1999 under the symbol "DHBT".
Nasdaq delisted the Company's securities effective December 20, 1999 for failure
to meet its listing qualifications.  Since such date, the Company's common stock
has traded on the  over-the-counter  bulletin board ("OTC Bulletin Board").  The
following table shows the high and low bid prices of the Company's  Common Stock
for each quarter in the two-year period ended December 31, 2000.

         1999     1st Quarter          3.25             5.25
                  2nd Quarter          3.25             5.1875
                  3rd Quarter          3.0625           4.5625
                  4th Quarter           .25             3.0625

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

         No cash dividends have been  paid for the last three years. The Company
presently  retains all of its earnings and anticipates  that its future earnings
will be retained to finance the expansion of its business and the  repurchase of
its  Common  Stock  under  its previously   announced  repurchase  program.  Any
determination  to pay cash  dividends 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.  No cash
dividends were declared for the last three years.

         The number of holders of record of the Company's  Common Stock on March
12, 2001 was 162; however,  the number of holders of record includes brokers and
other  depositories for


                                       12


<PAGE>


the accounts of others. The Company estimates that there are approximately 1,400
beneficial owners of Common Stock.


RECENT SALES/ISSUANCE OF UNREGISTERED SECURITIES

         In 2000, 1999, and 1998, the Company issued 15,625,  79,414, and 55,211
shares,  respectively,  to  certain  of  its  salesmen  pursuant  to  employment
contracts.  In the same three-year period,  the Company issued 23,709,  108,800,
and 10,000  additional  shares for services to attorneys,  consultants and other
service  providers.  The  aggregate  value of the  services  rendered  for these
issuances  totaled  $58,850,  $391,000  and  $261,000 in 2000,  1999,  and 1998,
respectively.  The Company relied on the exemption to  registration  provided by
Section 4(2) of the Securities Act of 1933, as amended.

         In December 1999, the Company sold 6,216,700  shares of common stock in
a  private  placement  to  accredited  investors  for  proceeds  of  $3,125,000.
Companies  affiliated  with Morton Cohen,  a director of the Company,  purchased
500,000 of the above-mentioned  shares. The Company also issued 60,000 shares of
its common  stock to the broker  associated  with the above  transaction.  These
proceeds were used for general working capital requirements.  The offering price
per common share ranged from $0.50  through  $0.75.  A commission of $43,700 was
paid and the  Company  relied  on the  exemption  to  registration  provided  by
Regulation D pursuant to the Securities Act of 1933, as amended.

         In January and May 1999,  the  Company  sold  369,000  shares of common
stock, respectively, in a private placement to accredited investors for proceeds
of   $1,197,000.   These  proceeds  were  used  for  general   working   capital
requirements.  The  offering  price per common  share ranged from $3.00 to $4.00
depending on the market price.  A commission of $20,000 was paid and the Company
relied on the exemption to registration provided by Regulation D pursuant to the
Securities Act of 1933, as amended.

         In 1998,  the Company  sold an  aggregate  of 746,500  shares of common
stock in two private  placements for proceeds of  $2,746,000.  The proceeds were
used for general working capital  purposes.  The offering price per common share
was $4.00.  No  commissions  were paid.  The Company  relied on the exemption to
registration  provided by Regulation D promulgated  under the  Securities Act of
1933, as amended.


ITEM 6.  SELECTED FINANCIAL INFORMATION


         The selected  consolidated  financial data set forth below for the year
ended  December 31, 2000,  1999,  1998,  1997,  and 1996,  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 10-K.


                                       13


<PAGE>

<TABLE>
<CAPTION>


                                        2000                1999               1998              1997             1996
                                        ----                ----               ----              ----             ----
<S>                                  <C>                <C>                 <C>              <C>              <C>

Income Statement Data
Net Sales                            $70,017,572        $ 35,140,728        $33,073,418      $33,271,607      $23,378,698
Cost of Sales                         49,358,476          27,566,278         20,441,663       22,153,925       19,027,741
                                     -----------        ------------        -----------      -----------      -----------
Gross Profit                          20,659,096           7,574,450         12,631,755       11,117,682        4,350,957
Selling, General and
                                      12,459,841          17,445,669          9,778,336        9,641,655        8,668,950
                                     -----------        ------------        -----------      -----------      -----------
Administrative
expenses
Operating income                       8,199,255          (9,871,219)         2,853,419        1,476,027       (4,317,993)
(loss)
Interest expense                      (2,743,132)         (2,908,495)        (1,095,553)        (339,754)        (327,347)
Other                                    340,555          (9,560,523)            21,957          801,126       (1,054,723)
                                     -----------        ------------        -----------      -----------      -----------
income
(expense)
Income before discon-
tinued operations                      5,796,778         (22,340,237)         1,779,823        1,937,399       (5,700,063)
Discontinued                             340,572          (9,714,291)        (1,628,371)              --               --
                                     -----------        ------------        -----------      -----------      -----------
operations
Income before
    income taxes                       6,137,350         (32,054,528)           151,452        1,937,399       (5,700,063)
Income taxes                             129,999              67,385             21,650          396,509         (834,191)
                                     -----------        ------------        -----------      -----------      -----------
Net income (loss)                    $ 6,007,351        $(32,121,913)       $   129,802      $ 1,540,890       (4,865,872)
                                     ===========        ============        ===========      ===========      ===========

Earnings per share
    Basic                                  $0.18              $(1.24)            $0.005            $0.06           $(0.20)
    Diluted                                $0.17              $(1.09)            $0.005            $0.05           $(0.20)

Balance Sheet Data

Working capital                      $ 7,496,588        $  2,047,312        $21,634,389      $13,621,014      $ 8,900,398
Total Assets                          28,056,271          23,299,497         41,363,810       27,674,629       19,160,419
Short-term debt                       16,949,494           5,152,815          4,334,607        2,740,192        1,461,664
Long-term debt                        16,061,825          16,280,051         11,915,116        1,411,258        1,444,091
Stockholders' equity                  (4,955,048)        (10,186,322)        18,172,267       17,741,619       12,980,086

</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 document.


GENERAL


                                       14


<PAGE>

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

         The Company  commenced  operations  in November  1992 by acquiring  the
outstanding  common stock of PACA, a manufacturer and distributor of bulletproof
garments and  accessories.  From the acquisition of PACA through  December 1994,
when  the  Company  acquired  the  assets  of its NDL  subsidiary,  PACA was the
Company's only source of revenue from operations.

RESULTS OF OPERATIONS

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

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

         Other  income  (Expense) in 2000  totaled  ($2,402,477)  as compared to
($12,469,018). Included in the 1999 figures are a $7.7 million loss attributable
to damages caused by Hurricane  Irene, a $1,688,000  write down of investment in
subsidiaries and equity investments, and $118,136 loss on marketable securities.
Interest expense declined $165,000 to $2,743,132 in 2000,  reflecting a decrease
in the amount of borrowed  indebtedness.  Also included in other income for 2000
was a gain on the sale of the old corporate headquarters of $235,694.

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


                                       15


<PAGE>


         The effective tax rate for 2000 was nominal due to the  utilization  of
net operating  loss  carryforwards.  The Company has recorded an estimated  loss
carryfoward of $26 million,  which can be utilized in 2001 and subsequent  years
to offset taxable income in those years.

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

         YEAR ENDED  DECEMBER  31, 1999 AS COMPARED TO YEAR ENDED  DECEMBER  31,
1998. Consolidated net sales of the Company for the year ended December 31, 1999
increased from  $33,073,418  to  $35,140,728  primarily as a result of increased
sales  volumes.  The sales numbers do not include the revenue from  discontinued
operations of  approximately  $7.5 million for the year ended  December 31, 1999
and $8.7  million for the year ended  December 31, 1998.  In October  1999,  the
Company  announced  its plan to divest  its  "Lanxide  subsidiaries".  This plan
included the shut down of the LAP plant and to enter into  negotiations  for the
sale of the Electronics Group. The sale of the Electronics group was consummated
on  March  10,  2000 for a cash  payment  of  approximately  $4.2  million.  The
divestiture  of  the  Lanxide  subsidiaries  reflects  the  Company's  strategic
decision  to refocus and  rededicate  is efforts  and  resources  on the design,
development  and  production of  technologically  advanced soft body armor.  All
revenue  and  expenditures  associated  with LAP and the  Electronics  Group are
presented as a loss from  discontinued  operations.  The year ended December 31,
1998 has been restated to reflect the discontinued operations.

         Gross profit in 1999 was  $7,574,450  as compared to $  12,631,755  for
1998.  Impacting  gross profit in 1999 was the write-off of additional  research
and  development  costs.  Previously,  the  Company's  ballistic  testing  for a
contract  was a prepaid  expense and expensed to the cost of goods sold over the
life of the contract.  This change resulted in approximately $200,000 additional
expenditures  in 1999.  The  Company  also  decided  to write off some  obsolete
inventory.

         The Company's selling, general and administrative expenses ("S, G & A,"
expenses")  for 1999  increased to $ 17,445,669  from  $9,778,336  in 1998.  The
reason for the increase is S,G, & A expenses is by-fold.  Professional fees were
increased approximately $5 million in 1999. The increase in professional fees is
associated  with  winning the  interceptor  contract  award,  the defense of the
protest of the  award,  the  professional  fees  associated  with  becoming  Y2K
compliant and ISO9000 certified, and the legal fees associated with the lawsuits
against the company.  Most of the legal fees are non-recurring in nature and the
majority of the cases were  settled in 1999.  The Company  had a  deductible  on
their liability  insurance of $100,000 during 1998. A claim was made during 1999
for a 1998 incident when the insurance  policy had the $100,000  deductible  and
the Company  expensed  $100,000  in legal fees in the defense of the claim.  The
insurance  company will pay the balance of the claim. The second reason selling,
general and  administrative  expenses is higher during 1999 is that  advertising
expenditures  increased  from  approximately  $640,000 in 1998 to  approximately
$1,062,000 in 1999. The Sports group  successfully  negotiated  agreements  with
some large  retail  companies,  which  required a one-time  advertising  rebate.
Included  in  expense  for  1999  is   approximately   $400,000


                                       16


<PAGE>


in advertising incentives. The Sports Group produced an infomercial for $250,000
in 1999.  The  construction  of DHB and  subsidiaries  website  cost the company
approximately  $70,000.  Also included in expense were promotional samples given
to promote  our  various  new lines of vests to our  numerous  distributors  and
salesman resulting in a $600,000 charge to expense during 1999.

         Other income  (expense)  also increased in 1999 to  ($12,469,018)  over
1998 (1,073,596).  The primary reason for this increase was on October 15, 1999,
the office and manufacturing  facility located in Oakland Park, Florida suffered
extensive  damage,  a $7.7 million dollar loss,  related to Hurricane Irene. The
loss was primarily  inventory and the  corresponding  overhead  expenses on that
inventory. The Company currently has a lawsuit with their insurance companies to
recover some of the loss,  but as of today no agreement  has been  reached.  The
Company  expensed  the  entire  loss in  October  1999  and has not  recorded  a
receivable  for any  amount,  which  may be due  from the  insurance  companies.
Interest  expense  increased  due to an increase in borrowing  of  approximately
$11,000,000  associated with the purchase of LAP and LEC. The Company also wrote
off the goodwill  associated with their investment in Belgium Company as well as
the write down of their non-marketable securities,  which resulted in a $688,000
expense.

LIQUIDITY AND CAPITAL RESOURCES.

         The Company's primary capital  requirements over the next twelve months
are to assist the subsidiaries in financing their working capital  requirements.
Its operating  subsidiaries  sell the majority of their  products on 60 - 90 day
terms.  Working  capital is needed to  finance  the  receivables,  manufacturing
process  and  inventory.  Working  capital at December  31, 2000 was  $7,496,588
compared to working  capital of  $2,047,312  at the end of 1999.  This  increase
reflects  primarily a $4.9 million and $5.3 million  increase in receivables and
inventory  as a result of the increase in U.S.  Military  sales and a $5 million
decrease in current  borrowed  indebtedness,  offsetting a $2.8  million  dollar
increase in  payables,  and $3 million in  increased  accrued  expenses  and the
disposal of $3.9 million of the  Electronics  Group  (previously  classified  as
assets held for sale).

         During 2000, the Company  repurchased and retired 697,538 shares in the
open market for an aggregate price of approximately $1,206,000.

         The Company's capital  expenditures for 2000 were $429,319,  a decrease
from the $707,374 expended in 1999.


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


                                       17


<PAGE>


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

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

         INTEREST RATE RISK: The Company's  exposure to market risk for interest
rate changes relates primarily to its investment portfolio.  The Company ensures
the safety and preservation of the invested principal funds by investing in safe
and high-credit  quality securities,  which includes only marketable  securities
with active secondary or resale markets to ensure portfolio liquidity.


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


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


                                       18


<PAGE>

<TABLE>
<CAPTION>


SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
                                                   FIRST            SECOND              THIRD               FOURTH
FISCAL 2000                                       QUARTER          QUARTER             QUARTER              QUARTER
-----------                                     -----------      -----------         -----------          -----------
<S>                                             <C>              <C>                 <C>                  <C>

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

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

</TABLE>



                                       19


<PAGE>

<TABLE>
<CAPTION>


                                                   FIRST           SECOND               THIRD               FOURTH
FISCAL 1999                                       QUARTER          QUARTER             QUARTER              QUARTER
-----------                                     -----------      -----------         -----------          -----------
<S>                                              <C>              <C>                <C>                   <C>

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

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

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


                                                   FIRST           SECOND              THIRD                FOURTH
FISCAL 1998                                       QUARTER          QUARTER             QUARTER              QUARTER
-----------                                     -----------      -----------         -----------          -----------

Net Sales                                       $ 8,600,681      $ 8,045,467         $ 7,585,125          $ 8,842,145
Cost of sales                                     5,859,642        4,963,208           3,816,378            5,802,435
                                                -----------      -----------         -----------          -----------
Gross profit                                      2,741,039        3,082,259           3,768,747            3,039,710
Selling, general and admin expense                2,718,509        2,411,404           2,872,816            1,775,607
                                                -----------      -----------         -----------          -----------
Operating income                                     22,530          670,855             895,931            1,264,103
Other income (expense)                              (93,559)        (139,617)           (367,480)            (472,940)
                                                -----------      -----------         -----------          -----------
Income before discontinued operations               (71,029)         531,238             528,451              791,163
Discontinued operations                            (406,092)        (419,014)           (265,157)            (538,108)
                                                -----------      -----------         -----------          -----------
Income before income taxes                         (477,121)         112,224             263,294              253,055
Income taxes                                          7,950            3,534               7,469                2,697
                                                -----------      -----------         -----------          -----------
Net income                                         (485,071)         108,690             255,825              250,358
                                                ===========      ===========         ===========          ===========
Earnings per share
Basic                                                (0.017)           0.004               0.010                0.009
                                                ===========      ===========         ===========          ===========
Diluted                                              (0.017)           0.003               0.008                0.008
                                                ===========      ===========         ===========          ===========

Weighted average shares outstanding
Basic shares                                     27,137,331       24,774,376          24,832,394           25,160,628
                                                ===========      ===========         ===========          ===========
Diluted shares                                   28,053,959       29,227,939          29,505,594           30,345,085
                                                ===========      ===========         ===========          ===========

</TABLE>


                                       20


<PAGE>


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

                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

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

         DAVID H. BROOKS,  age 46, has served as the Chairman or  Co-Chairman of
the Company  since its  inception  in 1992.  Mr.  Brooks has served as the Chief
Executive  Officer of the Company since July 2000,  having  previously served in
that capacity prior to September 1998. Mr. Brooks also serves as Chairman of the
Board,  President and a Director of Brooks Industries of L.I., Inc., a privately
held venture capital firm.


         MORTON A. COHEN, age 65, has been a director of the Company since 1996.
Mr. Cohen has been Chairman,  President and Chief  Executive  Officer of Clarion
Capital Corp., a private,  small business  investment company for more than five
years.  He  is  also  a  director  of  Cohesant   Technologies  Inc.  and  Zemex
Corporation.  He  presently  serves as the Chairman of the  Company's  audit and
compensation committees.

         SANDRA  HATFIELD,  age 47,  has been  Chief  Operating  Officer  of the
Company since December  2000.  Form October 1996 until December 2000, she served
as President of Point Blank.  For more than five years prior thereto she was the
Vice President of Production at PACA.

         JEROME  KRANTZ,  age 45, has been a director of the Company  since July
2000.  He has over  twenty  years  experience  in the  insurance  and  financial
industry.  Mr. Krantz is a chartered life underwriter and a chartered  financial
consultant.  In addition he is a  registered  investment  advisor.  He currently
serves on the audit and compensation committees.

         DAWN M.  SCHLEGEL,  age  31,  is the  Chief  Financial  Officer  of the
Company.  She has also served as Treasurer  and  Secretary of the Company  since
September  1999,  and was elected a Director as of July 2000. She has functioned
in various  positions  within the Company's  operations and finances since 1996.
Prior to joining the Company, Mrs. Schlegel worked for Israeloff, Trattner & Co.
CPA's P.C., a certified public accounting firm, for more than five years.


ITEM 11. EXECUTIVE COMPENSATION


                                       21


<PAGE>


         SUMMARY  COMPENSATION  TABLE.  The  following  table sets forth certain
summary  information  regarding the compensation of the executive officers whose
total salary and bonus for the year ended  December 31,  2000,  1999,  and 1998,
exceeded $100,000:

            Name and Principal                            Annual
                 Position                  Year          Salary(1)
         ------------------------          ----          ---------

         David Brooks,(2)                  2000          $413,542
         Chairman and CEO                  1999          $143,750
                                           1998            50,000

         Sandra Hatfield                   2000          $152,098
         President of Point Blank          1999           149,196
                                           1998           149,080

         Leonard Rosen,(3)                 2000          $165,400
         President of PACA                 1999          $165,400
                                           1998           163,750
         --------------------------------------------------------

1.   Although certain officers receive certain benefits, such as auto allowances
     and expense  allowances,  the value of such  perquisites did not exceed the
     lesser of $50,000 or 10% of the respective officers' salary and bonus.
2.   Certain  warrants  were awarded to Mr.  David Brooks in 2000 and 1999;  see
     "Employment  Agreements"  and "Certain Transactions."
3.   Mr. Rosen employment was terminated in February 2001.

         EMPLOYMENT AGREEMENTS. In July 2000, Mr. Brooks and the Company entered
into a new five-year employment agreement.  Pursuant to the agreement Mr. Brooks
receives an annual salary of $500,000  through July 2001, with annual  increases
of $50,000 thereafter.  The terms of Mr. Brooks' contract provides for 3,750,000
warrants  exercisable  at $1.00 and  vesting 20%  immediately  and in 20% annual
increments  thereafter.  The  warrants  expire in July 2010.  As the Company has
businesses in Florida and requires Mr. Brooks to spend  considerable time there,
this contract includes provisions for certain of his Florida living expenses.

         STOCK WARRANTS. In December 2000 in conjunction with becoming the Chief
Operating Officer,  Sandra Hatfield was awarded 400,000 warrants vesting 100,000
per year  exercisable at $2.00 per share and expire in December 2006. Ms. Rhonda
Graves was also  awarded  warrants in  conjunction  with her  promotion to Chief
Operations  Officer of Point Blank Body Armor.  During  1999,  the then  current
three Board Members were awarded 25,000 warrants  exercisable at $3.25 for three
years for serving as board members.  No additional  stock  options,  warrants or
similar  securities,  rights or interests  were granted to any of the  executive
officers  of the Company  listed in the Summary  Compensation  Table  above,  no
options,  warrants or similar securities,  rights or interests were exercised by
any such  executive  officers  with  the  exception  of  Joseph  Giaquinto,  who
exercised 49,500 warrants in 1998.

         Under the  Company's  1995 Stock  Option Plan (the "Plan") the Board of
Directors or a committee (the  "committee")  of the Board is authorized to award
up to 3,500,000 shares of


                                       22


<PAGE>


Common Stock to selected  officers,  employees,  agents,  consultants  and other
persons who render  services to the  Company.  The options may be issued on such
terms and conditions as determined by the Board or Committee,  and may be issued
so as to qualify as incentive stock options under Internal  Revenue Code Section
422A.  The  directors  who are  authorized  to award options are not eligible to
receive options under the Plan.

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent of a registered  class of the Company's  equity  securities to file with
the Securities and Exchange  Commission initial reports of ownership and reports
of changes of  ownership  of Common  Stock and other  equity  securities  of the
Company.

         To the  Company's  knowledge,  based  solely on review of the copies of
such reports furnished to the Company and written  representations that no other
reports  were  required  during the fiscal year ended  December  31,  1999,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater-than-ten-percent beneficial owners were complied with.

The following table  summarizes the named officers' stock option activity during
2000.

<TABLE>
<CAPTION>


                                         Warrants Granted in Last Fiscal Year

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

David Brooks           3,750,000(2)            88%                $1.00             7/1/10          $2,358,355            $5,976,534

Sandra Hatfield          400,000(3)             9%                $2.00            12/31/06         $  503,116            $1,274,994

Leonard Rosen                  0                0%                 N/A

<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 name officers will occur  unless the
     price of DHB's  common  shares  exceeds the options' exercise price.
2.   One-fifth of the shares covered by these options are exercisable immediately, and 20% annual thereafter.
3.   These shares vest annual over the next four years.
</FN>
</TABLE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


                                       23


<PAGE>


         The  following  table  sets  forth  the  beneficial  ownership  of  the
Company's  Common Stock as of March 16,  2001,  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.


                           Number of Shares          Percent Owned (1)
Name                     Beneficially Owned(2)     ----------------------
----                     ---------------------     * - Less than one (1%)

David Brooks(3)              20,750,600(3)                 51.5%

Morton Cohen                  1,290,300(4)                  4.1%

Jerome Krantz                    25,000                      *

Sandra Hatfield                 100,000(5)                   *

Dawn Schlegel                     5,500(6)                   *

Leonard Rosen                    45,142                      *

All officers and             22,216,542(7)                 55%(7)
Directors as a group
(6 people)

1.       Based upon  31,491,914  shares  outstanding as of March 16, 2001. In
         calculating  the  percentage  owned  by  any  individual,  officer,  or
         director, the number of currently exercisable warrants and options have
         been included in calculation of percentage owned. Currently exercisable
         options or warrants  are those,  which are  exercisable  within 60 days
         after March 16, 2001.
2.       Includes currently exercisable options or warrants are those, which are
         exercisable within 60 days after the date of this form 10-KSB.
3.       Consists of 7,500,600 shares owned by Mr. Brooks and 4,500,000 owned by
         his wife as  custodian  for his  minor  children  as well as  8,775,000
         shares  acquirable  under currently  exercisable  warrants as described
         below.  Mrs. Brooks may acquire 3,750,000 shares at $1.33 per share and
         500,000  shares at $3.50 per share upon the  exercise of her  currently
         exercisable  warrants for. Mr. Brooks may acquired  3,750,000 shares at
         $2.33 per share,  25,000 shares at $3.25 per share,  and 750,000 shares
         at $1.00 per share upon exercise of his currently exercisable warrants.
         As the only  person with more than 5%  ownership  of the  Company,  Mr.
         Brooks address is 555 Westbury Avenue, Carle Place NY 11514.
4.       Clarion  Capital  Corporation,  Clarion  Offshore Fund Ltd, and Clarion
         Partners of which Morton  Cohen is an executive or director,  own these
         1,265,300  shares and 25,000  shares which may be acquired by Mr. Cohen
         at $3.25 per share upon exercise of a currently exercisable warrant for
         serving on the Board.
5.       Includes 100,000 shares acquirable under currently exercisable warrants
         awarded to Mrs. Hatfield.
6.       Includes 5,000 shares acquirable under of a currently exercisable
         warrant.
7.       Includes 8,905,000 currently exercisable warrants of common stock held
         by directors and officers


ITEM 13.  CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS


                                       24


<PAGE>


         The Company has funded certain of its  acquisitions  through the use of
term loans from Mr. David H. Brooks,  Chairman of the Board of the Company,  and
Mrs.  Terry  Brooks,  his wife.  During 1998,  Mr.  Brooks loaned the Company in
excess  of $7  million  in  conjunction  with the  purchases  of LAP and LEC and
increased  working capital for LAP and LEC. The balance of the shareholder loans
at December 31, 2000 is $16,046,469. These shareholders loans expire in November
2002 and bear interest at 12% per annum.

         In 1998,  the Company  granted  warrants to purchase  500,000 shares of
Common Stock, at a price of $3.50 per share and expiring in 2004, to Mrs. Brooks
in consideration for the outstanding and additional loans lent to the Company in
February 1998.

         Point  Blank  leases a 67,000  square  foot  office  and  manufacturing
facility  (the  "Oakland  Park  Facility")  located at 4031 N.E.  12th  Terrace,
Oakland Park, Florida 33334, from V.A.E.  Enterprises ("V.A.E."),  a partnership
controlled by Terry Brooks,  wife of Mr. David H. Brooks, and beneficially owned
by Mr. and Mrs.  Brooks'  minor  children.  NDL Products  entered into a net-net
lease for a portion of the space in the Oakland Park facility.  Annual aggregate
base  rental is  $607,353  in 2001 and is  scheduled  to increase by 6% per year
until the lease expires in December 31, 2010.  Point Blank and NDL Products,  as
lessees,  are  responsible  for all real estate  taxes and other  operating  and
capital  expenses.  Management  believes  that the terms of the lease are at the
current market price that would be obtained from an unrelated party.


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

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

     B.   FORM 8-K:  NO REPORTS ON FORM 8-K WERE FILED DURING THE QUARTER ENDED
          DECEMBER 31, 2000.


<PAGE>


                    DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
                     CONSOLIDATED FINANCIAL STATEMENTS INDEX


                                    CONTENTS

                                                                            Page

INDEPENDENT AUDITORS' REPORT                                                F-1


Consolidated Balance Sheets as of December 31, 2000 and 1999                F-2


Consolidated Statements of Operations for the years ended
         December 31, 2000, 1999 and 1998                                   F-3


Consolidated Statements of Stockholders' Equity for the years
         ended December 31, 2000, 1999 and 1998                             F-4


Consolidated Statements of Cash Flows for the years ended
         December 31, 2000, 1999 and 1998                                   F-5


Consolidated Statements of Comprehensive Income for the years
         ended December 31, 2000, 1999 and 1998                             F-6


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

Schedule II Valuation and Qualifying Accounts                              F-19


                                       26


<PAGE>


INDEPENDENT AUDITORS' REPORT
----------------------------


The Board of Directors of
DHB Capital Group Inc.

We have  audited the  accompanying  consolidated  balance  sheets of DHB Capital
Group Inc.  and  Subsidiaries  as of December  31, 2000 and 1999 and the related
consolidated   statements  of   operations,   stockholders'   equity  and  other
comprehensive  income and cash flows for each of the  three-years  in the period
ended  December  31,  2000.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of DHB
Capital  Group Inc.  and  Subsidiaries  as of December 31, 2000 and 1999 and the
consolidated  results of its operations and its cash flows for each of the three
years in the  period  ended  December  31,  2000 in  conformity  with  generally
accepted accounting principles.




Paritz and Company P.A.
Hackensack, New Jersey
March 1, 2001


                                      F-1


<PAGE>

<TABLE>
<CAPTION>


                     DHB CAPITAL GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  DECEMBER 31,

                      ASSETS                                     2000                1999
                      ------                                     ----                ----
<S>                                                          <C>                  <C>

CURRENT ASSETS
Cash and cash equivalents                                    $   566,887          $   473,441
Marketable securities                                            368,996                   --
Accounts receivable, less allowance for doubtful
   accounts of $653,384 and $757,741                           8,121,188            5,208,365
Inventories                                                   14,297,059            9,045,853
Net assets held for sale                                              --            3,928,980
Prepaid expenses and other current assets                      1,091,952              596,441
                                                             -----------          -----------

Total Current Assets                                          24,446,082           19,253,080
                                                             -----------          -----------

PROPERTY AND EQUIPMENT                                         1,940,326            2,252,693
                                                             -----------          -----------

OTHER ASSETS
Investments in non-marketable securities                         941,750            1,000,000
Deferred tax assets                                              429,300              444,000
Deposits and other assets                                        298,813              349,724
                                                             -----------          -----------

Total Other Assets                                             1,669,863            1,793,724
                                                             -----------          -----------

TOTAL ASSETS                                                 $28,056,271          $23,299,497
                                                             ===========          ===========

                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                    -------------------------------------------------

CURRENT LIABILITIES
Notes payable-bank                                           $         -          $ 5,000,000
Accounts payable                                              11,257,987            9,495,663
Accrued expenses and other current liabilities                 5,547,759            2,557,290
Current maturities of long term debt                             143,748              152,815
                                                             -----------          -----------

Total Current Liabilities                                     16,949,494           17,205,768
                                                             -----------          -----------

LONG TERM LIABILITIES
Long term debt, net of current maturities                         15,356              233,582
Note payable - stockholder                                    16,046,469           16,046,469
                                                             -----------          -----------

Total Long Term Debt                                          16,061,825           16,280,051
                                                             -----------          -----------

Total Liabilities                                             33,011,319           33,485,819

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIENCY)                             (4,955,048)         (10,186,322)
                                                             -----------          -----------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)                                          $28,056,271          $23,299,497
                                                             ===========          ===========

                   See accompanying notes to financial statements.

</TABLE>


                                      F-2


<PAGE>

<TABLE>
<CAPTION>


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

                                                                                  2000             1999            1998
                                                                                  ----             ----            ----
<S>                                                                            <C>               <C>            <C>

Net sales                                                                      $70,017,572       $35,140,728    $33,073,418

Cost of goods sold                                                              49,358,476        27,566,278     20,441,663
                                                                               -----------      ------------    -----------

Gross profit                                                                    20,659,096         7,574,450     12,631,755

Selling, general & administrative expenses                                      12,459,841        17,445,669      9,778,336
                                                                               -----------      ------------    -----------

Income (loss) before other income (expense)                                      8,199,255        (9,871,219)     2,853,419
                                                                               -----------      ------------    -----------

Other income (expense)
Interest expense, net of interest income                                        (2,743,132)       (2,908,495)    (1,095,553)
Hurricane loss                                                                          --        (7,740,231)            --
Other income                                                                       367,331           255,844         34,835
Settlement of employment contract                                                        -          (270,000)      (220,000)
Loss on holding of equity investments                                                    -          (688,000)             -
Write down of investment in subsidiary                                                   -        (1,000,000)             -
Realized gain (loss) marketable securities                                         (26,676)          (16,050)       154,155
Unrealized gain (loss) on marketable securities                                          -          (102,086)        52,967
                                                                               -----------      ------------    -----------
Total other income (expense)                                                    (2,402,477)      (12,469,018)    (1,073,596)
                                                                               -----------      ------------    -----------

Income (loss) from continuing operations before income taxes                     5,796,778       (22,340,237)     1,779,823

Income taxes                                                                       129,999            67,385        633,650
                                                                               -----------      ------------    -----------

Income (Loss) from continuing operations                                         5,666,779       (22,407,622)     1,146,173

Discontinued operations
Loss from discontinued operations                                                 (517,288)       (4,238,800)    (1,016,371)
Gain (loss) on disposal of discontinued operations                                 857,860        (5,475,491)             -
                                                                               -----------      ------------    -----------
Total discontinued operations                                                      340,572        (9,714,291)    (1,016,371)
                                                                               -----------      ------------    -----------


Net income (loss)                                                              $ 6,007,351      $(32,121,913)   $   129,802
                                                                               ===========      ============    ===========


Earnings (loss) per common share (Note 10)
   Continuing operations                                                       $      0.18      $      (0.86)   $     0.046
   Discontinued operations                                                            0.00             (0.38)        (0.041)
                                                                               -----------      ------------    -----------
    Net earnings (loss) per common share                                       $      0.18      $      (1.24)   $     0.005
                                                                               ===========      ============    ===========


                 See accompanying notes to financial statements.

</TABLE>


                                      F-3


<PAGE>

<TABLE>
<CAPTION>


                     DHB CAPITAL GROUP INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

                                                                                                            Accumulated
                                               Number of                  Additional      Common Stock        Other
                                                Common          Par         Paid-in       Subscription     Comprehensive
                                                Shares         Value        Capital        Receivable         Income
                                              -----------    --------     -----------     ------------     -----------
<S>              <C> <C>                       <C>           <C>          <C>                       <C>      <C>

Balance December 31, 1997                      25,347,224    $ 25,347     $20,953,107               0        $  (6,135)

Net income
Effect of foreign currency translation                                                                          38,004
                                                                                                             ---------
   Total comprehensive income
Sale of common stock                              686,500         687       2,705,313
Stock issued for services                          65,211          64         260,780
Exercise of warrants                               49,500          50          65,950
Purchase of treasury stock                       (700,995)       (701)     (2,769,301)              -                -
                                               ----------    --------     -----------       ---------        ---------
Balance December 31, 1998                      25,447,440    $ 25,447     $21,215,849               0        $  31,869

Net loss
Effect of foreign currency translation                                                                         (19,461)
   Total comprehensive income
Sale of common stock                            6,645,700       6,646       4,241,609        (700,025)
Stock issued for services                         273,214         273         390,777
Exercise of warrants                               40,977          41          83,709
Purchase of treasury stock                        (75,150)        (75)       (240,170)              -                -
                                               ----------    --------       ---------       ---------        ---------
Balance December 31, 1999                      32,332,181     $32,332     $25,691,774       $(700,025)       $  12,408

Net income
Effect of foreign currency translation                                                                         (35,959)
Effective of valuation allowance marketable
   securities                                                                                                 (283,211)
                                                                                                             ---------
   Total comprehensive income
Sale of common stock                                                           (8,900)        700,025
Stock issued for services                          22,607          22          35,828
Stock issued in settlement of a lawsuit            16,727          17          22,983
Purchase of treasury stock                       (697,538)       (697)     (1,206,184)              -                -
                                               ----------    --------     -----------       ---------        ---------
Balance December 31, 2000                      31,673,977    $ 31,674     $24,535,501       $      --        $(306,762)
                                               ==========    ========     ===========       =========        =========

<CAPTION>

                                                 Retained
                                                 Earnings
                                                 Deficit)             Total
                                                ---------             -----
<S>                                           <C>                  <C>

Balance December 31, 1997                     $(3,230,700)         $17,741,619

Net income                                        129,802              129,802
Effect of foreign currency translation                                  38,004
                                                                   -----------
   Total comprehensive income                                          167,806
Sale of common stock                                                 2,706,000
Stock issued for services                                              260,844
Exercise of warrants                                                    66,000
Purchase of treasury stock                              -           (2,770,002)
                                              -----------         ------------
Balance December 31, 1998                     $(3,100,898)         $18,172,267

Net loss                                      (32,121,913)         (32,121,913)
Effect of foreign currency translation                                 (19,461)
                                                                   -----------
   Total comprehensive income                                      (32,141,374)
Sale of common stock                                                 3,548,299
Stock issued for services                                              390,981
Exercise of warrants                                                    83,750
Purchase of treasury stock                              -             (240,245)
                                              -----------         ------------
Balance December 31, 1999                    $(35,222,811)        $(10,186,322)

Net income                                      6,007,351            6,007,351
Effect of valuation allowances                                        (319,170)
Effect of valuation allowance marketable
   securities                                                         (283,211)
                                                                  ------------
   Total comprehensive income                                        5,688,181
Sale of common stock                                                   691,125
Stock issued for services                                               35,850
Stock issued in settlement of a lawsuit                                 23,000
Purchase of treasury stock                              -           (1,206,882)
                                              -----------          -----------
Balance December 31, 2000                    $(29,215,460)         $(4,955,048)
                                             ============          ===========



            See accompanying notes to financial statements.

</TABLE>


                                      F-4


<PAGE>

<TABLE>
<CAPTION>



                    DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,


CASH FLOWS FROM OPERATING ACTIVITIES                                 2000              1999                1998
                                                                     ----              ----                ----
<S>                                                               <C>               <C>                 <C>

Net Income (loss)                                                 $ 6,007,351       $(32,121,913)       $   129,802

Adjustments to reconcile net income to net cash provided by
    operating activities:
Depreciation and amortization                                         324,161            592,213            112,562
Valuation allowances/reserves                                        (283,211)         4,017,806                  -
Stock issued for services                                              35,850            200,981            260,844
Stock issued in settlement of a lawsuit                                23,000            190,000                  -
Unrealized gain on transfers from non-marketable securities            58,250
Deferred income taxes                                                  14,700           (110,000)           121,300
Changes in assets and liabilities:
Accounts receivable                                                (2,912,823)         2,705,402           (910,080)
Marketable securities                                                (368,996)           529,328          1,174,478
Inventories                                                        (5,251,206)         9,017,763         (4,146,468)
Assets held for sale                                                        -             23,717
Prepaid expenses and other current assets                            (495,511)         1,335,850         (3,952,697)
Deposits and other assets                                              41,195            217,601           (798,049)
Accounts payable                                                    1,762,324          4,366,516         (1,101,290)
Accrued expenses and other current liabilities                      2,990,469            744,616            448,938
                                                                  -----------       ------------        -----------
Net cash provided (used) by operating activities                    1,945,553        (8,290,120)         (8,660,660)
                                                                  -----------       ------------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Sale (payments for purchase) of assets of subsidiary, net of
cash acquired                                                       3,933,980                  -         (2,884,360)
Sale of property and equipment                                        422,241
Payments made for property and equipment                             (429,319)          (311,043)          (819,870)
                                                                  -----------       ------------        -----------
Net cash provided (used) by investing activities                    3,926,902          (311,043)         (3,704,230)
                                                                  -----------       ------------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank                        (5,000,000)           825,000          1,500,000
Proceeds of note payable- shareholder                                       -          4,518,865         10,227,604
Proceeds from the issuance of long term debt                                                                250,000
Principal payments on long-term debt                                 (227,293)          (160,722)           (16,483)
Proceeds from the exercise of warrants - common stock                       -             83,750             66,000
Foreign currency translation                                          (35,959)           (19,461)            38,004
Purchase of treasury stock                                         (1,206,882)          (240,245)        (2,770,002)
Net proceeds from sale of common stock                                691,125          3,548,300          2,706,000
                                                                  -----------       ------------        -----------
Net cash provided (used) by financing activities                   (5,779,009)         8,555,487         12,001,123
                                                                  -----------       ------------       ------------

NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS                                                            93,446            (45,676)          (363,767)

CASH AND CASH EQUIVALENTS - BEGINNING                                 473,441            519,117            882,884
                                                                  -----------       ------------        -----------

CASH AND CASH EQUIVALENTS - END                                   $   566,887       $    473,441        $   519,117
                                                                  ===========       ============        ===========


                See accompanying notes to financial statements.

</TABLE>


                                      F-5


<PAGE>


                    DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Principles of consolidation

                  The consolidated  financial statements include the accounts of
            DHB Capital Group Inc. and its  subsidiaries  ("DHB"),  all of which
            are wholly owned.  DHB has three major  divisions,  DHB Armor Group,
            DHB Sports Group,  and DHB Electronics  Group (sold March 2000). DHB
            Armor Group  consists of Protective  Apparel  Corporation  ("PACA"),
            Point Blank Body Armor Inc.,  Lanxide Armor  Products Inc.  ("LAP"),
            which  was  closed   and   terminated   in  1999  and  Point   Blank
            International  S.A ("PB  Int'l").  DHB Sports Group  consists of NDL
            Products Inc. ("NDL") and Orthopedic  Products Inc.  ("OPI"),  which
            ceased its  operations in 2000.  DHB  Electronics  Group consists of
            Lanxide  Electronic  Components  ("LEC")  and DHB KK.  All  material
            inter-company balances and transactions have been eliminated.

                  Business description

                  DHB Armor Group develops, manufactures, and distributes bullet
            and   projectile   resistant   garments,    bullet   resistant   and
            fragmentation  vests,  bomb  projectile  blankets,  aircraft  armor,
            bullet   resistant   plates  and  shields   and  related   ballistic
            accessories.   DHB  Sports  Group   manufactures   and   distributes
            specialized protective athletic apparel and equipment and orthopedic
            products.  DHB Electronics  Group  manufactures  and markets thermal
            management,  packaging and structural  components for the electronic
            industry  within the  United  States and Japan and was sold in March
            2000.

                  Uses of estimates in the preparation of financial statements

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

                  Revenue recognition

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

                  Inventories

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

                  Property, plant and equipment and depreciation

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


                                      F-6


<PAGE>


Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

            Marketable/Non-Marketable Securities

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

                  Non-marketable securities are valued at historical cost and if
            necessary,  reduced by a valuation  allowance to the net  realizable
            value.

            Income taxes

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

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

            Research and development expenses

                  Research  and  development  expenses are expensed as incurred.
            The Company incurred approximately $317,000,  $825,000, and $523,000
            of  research  and  development costs in 2000, 1999, and 1998 respec-
            tively.

            Advertising expenses

                  The cost of advertising  is expensed as incurred.  The Company
            incurred  approximately  $728,000,   $1,062,000,   and  $642,000  of
            advertising costs in 2000, 1999, and 1998 respectively.

            Earnings per share

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


                                      F-7


<PAGE>


Note 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

            Comprehensive income (loss)

                  Effective  January 1, 1998, the Company  adopted the provision
            of statement No. 130, Reporting  comprehensive  income that modifies
            the  financial   presentation  of   comprehensive   income  and  its
            components.  In  accordance  with  this  Statement,  a  Consolidated
            Statement of  Comprehensive  Income is included in the  Consolidated
            financial  statements to present all changes in Stockholders' equity
            in  the  periods   presented  other  than  changes   resulting  from
            transactions relating to the Company's stock.

            Stock based compensation

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

            Impairment of long-lived assets

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

Note 2      SUPPPLEMENTAL CASH FLOW INFORMATION

                 Cash paid for:      2000         1999       1998
                                    -------     -------     -------
                    Interest        124,757     355,160     308,282
                    Taxes            29,131      63,933      78,877

                  On March 10, 2000,  the Company sold LEC and DHB KK for a cash
            payment  of  approximately  $4.234  million.  During  the year ended
            December 31, 1998,  the Company  purchased  LAP and the  Electronics
            Group for a cash payment of approximately  $4,924,073 million net of
            cash acquired.

Note 3      BUSINESS ACQUISITIONS

                  In  1998,  the  Company  purchased  the  common  stock  of two
            privately  held Delaware  corporations,  Lanxide Armor Products Inc.
            (LAP) and Lanxide Electronic  Components Inc. (LEC) and one Japanese
            company,  DHB KKK for a cash  payment  of  approximately  $4,924,073
            million net of cash  acquired.  The purchase  price was funded by an
            additional  loan  from  the  Company's  majority  shareholder.   LAP
            specializes   in  the  design,   development   and   manufacture  of
            ceramic/metal  matrix composites for protective armor  applications.
            LEC and DHB KK are a leading  supplier of silicon carbide / aluminum
            composites  for  heat  management  applications  in the  electronics
            industry. This transaction was accounted for as a purchase. On March
            10,  2000 the  Company  sold  its  Electronics  Division  for a cash
            payment of $4.234 million.


                                      F-8


<PAGE>


Note 4      MARKETABLE SECURITIES/NON-MARKETABLE SECURITIES

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

                                      2000        1999        1998
                                      ----        ----        ----

            Cost                    $652,207      $ 0       $476,361
            Unrealized gain         (283,211)      --         52,967
                                    --------      ----      --------
            Market Value            $368,996      $ 0       $529,328
                                    ========      ====      ========


Note 5      INVENTORIES

            Inventories consist of the following:

<TABLE>
<CAPTION>

                                              2000           1999             1998
                                              ----           ----             ----
            <S>                           <C>             <C>             <C>

            Finished goods                $ 2,225,136     $ 3,376,747     $ 7,901,221
            Work in process                 5,365,685       1,889,701       5,533,648
            Raw materials and supplies      6,706,238       5,001,428       6,566,678
                                           ----------     -----------     -----------
                 Sub-total                 14,297,059      10,267,876      20,001,547
            Discontinued Operations                --      (1,222,023)     (1,937,931)
                                          -----------     -----------     -----------
                                          $14,297,059     $ 9,045,853     $18,063,616
                                          ===========     ===========     ===========

</TABLE>


Note 6      PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>

                                                                                 Estimated
                                                     2000            1999       useful life
                                                     ----            ----       -----------
            <S>                                   <C>            <C>            <C>

            Land                                          --     $   47,500         --
            Buildings                                     --        427,500       39  years
            Machinery and equipment                1,767,158      5,012,360     5-30  years
            Furniture, fixtures and
            computer equipment                     1,173,909        828,552     5-7   years
            Transportation equipment                 391,016        234,270     3-5   years
            Leasehold improvements                   751,062        688,560     5-31.5 years
                                                  ----------     ----------
                                                   4,083,145      7,238,742
            Less accumulated depreciation and
            amortization                           2,142,812      2,119,578
                                                  ----------     ----------
                                                   1,940,326      5,119,164
            Discontinued Operations                       --      2,866,471
                                                  ----------     ----------
                                                  $1,940,326     $2,252,693
                                                  ==========     ==========

</TABLE>


Note 7      NOTES PAYABLE - BANK

                  Notes   payable  -  bank  were  due  in  April  1999  and  was
            collateralized  by the assets of the Company.  The weighted  average
            interest rate on these borrowings was  approximately 12% at December
            31, 1999. The entire indebtedness was repaid in March 2000 using the
            proceeds from the sale of the DHB Electronics Group.

Note 8      NOTES PAYABLE STOCKHOLDER

                  These  notes bear  interest  at 12% per annum and are due,  as
            extended, in November 2002.


                                      F-9


<PAGE>


Note 9      LONG-TERM DEBT

<TABLE>
<CAPTION>


                       Long-term debt consists of the following:                  2000         1999
                                                                                  ----         ----
            <S>                                                                 <C>          <C>

            Capital  lease  obligation   payable  in  monthly  payments  of     $121,324     $169,519
            $5,281  this  note  is   collateralized  by  certain  equipment
            originally costing $250,000

            Note  payable in monthly  installments  of $4,729  inclusive of            -      153,500
            interest at 5.1%.
                                                                                  37,780       63,378
            Other
                                                                                 159,104      386,397
            Less current portion                                                 143,748      152,815
                                                                                --------      -------

            Total long term debt                                                $ 15,356     $233,582
                                                                                ========     ========

</TABLE>


                       Long-term debt matures as follows:

                       2001                            $143,748
                       2002                               7,286
                       2003                               2,765
                       2004                               5,305
                                                       --------
                          Total                        $159,104
                                                       ========

Note 10     STOCKHOLDERS' EQUITY

            Common and preferred stock

                  DHB has 100,000,000  shares  authorized of its $.001 par value
            Common. In addition,  DHB is authorized to issue 1,500,000 shares of
            Class A 10% convertible  Preferred  Stock,  none of which was issued
            and  outstanding  at December 31, 2000 and 1999. On December 1, 2000
            the Board of  Directors  announced  the  directive to the Company to
            purchase  up to two million  shares of its common  stock in the open
            market, from time to time, at its discretion.

            Earnings Per share

                  Earnings  per  common  share  calculations  are  based  on the
            weighted  average  number of common shares  outstanding  during each
            period;  32,219,376,  25,866,880  and 24,982,394 for the years ended
            December 31, 2000,  1999, and 1998,  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; 34,086,963,  29,511,115, and 29,685,262 for the years ended
            December 31, 2000, 1999 and 1998, respectively.


                                      F-10


<PAGE>


Note 10     STOCKHOLDERS' EQUITY - Continued

<TABLE>
<CAPTION>


                                                    Income (loss)       Shares         Per Share
                                                    (numerator)      (denominator)       Amount
                                                    -------------    -------------     ---------
<S>                                                 <C>               <C>                 <C>

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

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

        Basic EPS
          Earnings from continuing operations-1998  $  1,779,823      24,982,394          $0.005
                                                    ------------     -----------          ------
        Diluted EPS                                 $  1,779,823      24,982,394          $0.005
                                                    ============     ===========          ======

</TABLE>


                  Stock  options  outstanding  of  5,209,500,   3,644,236,   and
            3,216,188 at December 31, 2000, 1999, and 1998,  respectively,  have
            not been included in diluted earnings per common share because to do
            so would have been anti-dilutive for the periods presented.


            Stock option plan

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

            Stock warrants

                  In 2000,  the board of  directors  awarded  two key  employees
            warrants  which vest over four to five years and are  exercisable at
            $2.00 per share.  Pursuant to employment  agreements  (See Note 14),
            the Company has 3,750,000 stock warrants outstanding  exercisable at
            $2.33 per share and expiring in 2006 and 3,750,000 stock warrants at
            $1.00 and  vesting  20%  immediately  and in 20%  annual  increments
            thereafter. The warrants expire in July 2010. During 1999, the three
            members of the board were awarded  25,000  warrants  exercisable  at
            $3.25 for three years for serving as a board member.

Note 11     DISCONTINUED OPERATIONS.

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


                                      F-11


<PAGE>

Note 11     DISCONTINUED OPERATIONS - Continued.

<TABLE>
<CAPTION>



                                                                                                     1999
                                                                                                     ----
            <S>                                                                           <C>

            Current assets (mainly trade receivables and inventory)                               $1,865,454
            Accounts payable and accrued expenses                                                    896,552
                                                                                                  ----------
            Net current assets                                                                       968,902
                                                                                                  ----------
            Property, plant and equipment, net                                                     2,866,471

            Other non-current assets                                                                  93,607
                                                                                                  ----------
            Net Long-term assets                                                                   2,960,078
                                                                                                  ----------

            The condensed statements of operations relating to the discontinued
             operations are presented below
                                                                                      2000            1999
                                                                                      ----            ----

            Net Sales                                                               $401,299      $7,514,541
            Cost and expenses                                                       (918,587)     11,753,341
                                                                                    --------      ----------
            Loss before income taxes                                                (517,288)     (4,238,800)
            Gain (Loss) on Disposal                                                  857,860      (5,475,491)
                                                                                    --------      ----------
            Net Income (Loss)                                                        340,572      (9,714,291)
                                                                                    --------      ----------

</TABLE>


Note 12     HURRICANE LOSSES

                  On October 15,  1999,  the office and  manufacturing  facility
            located in Oakland Park,  Florida  suffered  extensive damage due to
            hurricane Irene. Substantial damage was done to the building as well
            as  inventory.  The  Company  currently  has a  lawsuit  with  their
            insurance  carrier and agent to recover some of the loss,  but as of
            today no agreement has been reached. The Company expensed the entire
            loss in  October  1999 and has not  recorded  a  receivable  for any
            amount, which may be due from the insurance companies.


Note 13     RELATED PARTY TRANSACTIONS


                  A summary of related  party  transactions  for the years ended
            December 31, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>

                                                                    2000           1999           1998
                                                                    ----           ----           ----
            <S>                                                <C>            <C>              <C>

            Interest, rental, professional and other
            expenses paid or accrued to  DHB's majority
            stockholder                                        3,528,995      5,064,765        992,359

</TABLE>



                  The Company leases a warehouse and manufacturing facility from
            a partnership  indirectly  owned by the majority  stockholder of DHB
            pursuant  to  a  lease  expiring  December  31,  2010  with a annual
            rental of approximately $607,353 and 6% increases per annum.



                                      F-12


<PAGE>


Note 14     RISKS AND UNCERTAINTIES

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

                  Approximately  64%,  35% and 22% for the years ended  December
            31, 2000, 1999 and 1998,  respectively,  of DHB's sales were made to
            the United States Government or its agencies.

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

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


Note 15     FAIR VALUES OF FINANCIAL INSTRUMENTS

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


Note 16     SEGMENT INFORMATION:

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


                                      F-13


<PAGE>


Note 16 SEGMENT INFORMATION:  -Continued


<TABLE>
<CAPTION>


Net Sales                                      2000                1999              1998
---------                                      ----                ----              ----
<S>                                         <C>                <C>               <C>

Ballistic-resistant equipment               $64,720,773        $30,358,537       $28,695,127
Electronic components/LAP                       401,299          8,441,393         8,398,107
Protective athletic & medical equipment       5,296,799          6,236,438         8,388,544
                                            -----------        -----------       -----------
                                             70,418,871         45,036,368        45,481,778
Less inter-segment sales                             --         (2,381,099)       (3,647,353)
Less discontinued operations (3)               (401,299)        (7,514,541)       (8,761,007)
                                            -----------        -----------       -----------
Consolidated Net Sales                      $70,017,572        $35,140,728       $33,073,418
                                            ===========        ===========       ===========

Income from Operations
Ballistic-resistant equipment               $10,591,126        $(9,629,504)      $ 2,485,395
Electronic components                          (517,288)        (1,835,137)         (782,908)
Protective athletic & medical equipment        (166,114)        (2,390,834)        1,207,743
Corporate and Other (1)                      (2,225,757)        (2,824,826)       (1,508,027)
                                            -----------        -----------       -----------
     Sub-total                                7,681,967        (16,680,301)        1,402,203
Income (loss) from discontinued
operations (3)                                  517,288         (6,809,082)        1,451,216
                                            -----------        -----------       -----------
Consolidated Operating Income               $ 8,199,255        $(9,871,219)      $ 2,853,419
                                            ===========        ===========       ===========

Identifiable Assets (2)
Ballistic-resistant equipment               $22,383,129        $14,283,739       $23,743,604
Electronic components                               ---          6,177,019         5,749,438
Protective athletic & medical equipment       3,517,194          3,335,253         8,844,627
                                            -----------        -----------       -----------
                                             25,900,323         23,796,011        38,337,669
Corporate and Other                           2,155,948            400,038         4,641,566
                                            -----------        -----------       -----------
Consolidated Net Assets                      28,056,271         24,196,049        42,979,235
Discontinued operations (3)                                     (4,825,532)       (5,568,122)
Assets held for sale                                 --          3,928,980         3,952,697
                                            -----------        -----------       -----------
Adjusted Net Assets                         $28,056,271        $23,299,497       $41,363,810
                                            ===========        ===========       ===========

                  Foreign  sales  accounted  for 2%, 17%,  and 12%, of the total
            revenues  for the years  ended  December  31,  2000,  1999 and 1998,
            respectively. Foreign identifiable assets accounted for 1%, 13%, and
            5% of the  total  assets  at  December  31,  2000,  1999  and  1998,
            respectively.
<FN>
      (1)   Corporate and Other includes corporate general and administrative expenses.
      (2)   Corporate assets are principally cash, marketable securities, and deferred charges.
      (3)   Discontinued  operations included the Companies sold, LEC and DHB KK as well as the loss from
            the shutdown of the LAP plant.
</FN>
</TABLE>


                                      F-14


<PAGE>


Note 17     COMMITMENTS AND CONTINGENCIES

            Leases

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

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

                  Years Ending
                  2001                    $  966,000
                  2002                     1,045,000
                  2003                     1,035,000
                  2004                     1,076,000
                  2005                     1,119,000
                  Thereafter               1,075,000
                                          ----------
                                          $6,316,000
                                          ==========

                  Rent and real estate tax expense on  operating  leases for the
            years  ended   December   31,   2000,   1999  and  1998   aggregated
            approximately $1,417,000, $1,684,000 and $1,917,000, respectively.

            Employment agreements

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

            Litigation

                  In  October  1999,  certain  agencies  of  the  United  States
            government  began  a  preliminary  investigation  of  the  Company's
            employment  practices,  amongst  other things.  In April 2000,  U.S.
            Department  of Justice  notified the Company that it had  terminated
            its investigation and that no criminal prosecution was contemplated.

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


                                      F-15


<PAGE>



Note 18     INCOME TAXES

            Components of income taxes are as follows:

                                    2000          1999        1998
                                    ----          ----        ----
            Federal
               Current             $      0     $     0     $      0
               Deferred                   0           0      605,000
                                   --------     -------     --------
                  Total federal           0           0      605,000

            State
               Current              129,999      67,385       28,650
               Deferred                   0           0            0
                                   --------     -------     --------
                                    129,999      67,385       21,650

                  Total state      $129,999     $67,385     $ 21,650
                                   ========     =======     ========

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>


                                                                                 2000          1999          1998
                                                                                 ----          ----          ----
                <S>                                                              <C>           <C>          <C>

                Statutory U.S. income tax rate                                    34%          -34%           34%

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

                Increase resulting from:
                     State and local income taxes, net of federal benefits      2.10%                       1.60%
                     Non-availability of net operating loss carryforwards          0%           34%            0%
                                                                                ----           ---          ----

                Effective tax rate                                              2.10%            0%        35.60%
                                                                                ====           ===         =====

</TABLE>


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

<TABLE>
<CAPTION>


                                                                       2000             1999                  1998
                                                                       ----             ----                  ----
  <S>                                                               <C>              <C>                   <C>

  Net operating loss carryforwards                                  $ 8,840,000      $10,920,000           $1,000,000
  Accounts receivable reserve                                           222,000           85,000              172,000
  Write down of marketable securities                                   520,000          212,000                    0
  Write down of non-marketable securities                               448,000          234,000              213,000
  Write down of investment in                                           520,000          340,000                0,000
                                                                    -----------      -----------           ----------
                                                                     10,550,000       11,791,000            1,385,000

Less valuation allowance                                             10,120,700       11,347,000                    0
                                                                    -----------      -----------           ----------
Net deferred tax asset                                              $   429,300      $   444,000           $1,385,000
                                                                    ===========      ===========           ==========

</TABLE>

                                      F-16



<PAGE>

<TABLE>
<CAPTION>

                     DHB CAPITAL GROUP INC. AND SUBSIDIARIES
                     SCHEDULE II TO THE FINANCIAL STATEMENTS
                        VALUATION AND QUALIFYING ACCOUNTS
                        DECEMBER 31, 2000, 1999 AND 1998


Allowances deducted from related balance sheet accounts:

                                                              Investment     Net Write
                                                              in Non-        Down of
                                 Accounts                     marketable     investment in
                                 Receivable     Inventory     securities     subsidiaries
                                 ----------     ---------     ----------     -------------
<S>                              <C>                  <C>     <C>            <C>

Balance at December 31, 1997     $353,230             $ 0     $  628,000     $  529,579

Additions charged to
     costs and expenses           154,509

Subtractions charged to
     costs and expenses                 -               -              -              -
                                 --------        --------     ----------     ----------

Balance at December 31, 1998     $507,739        $      0     $  628,000     $  529,579
                                 ========        ========     ==========     ==========

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

Subtractions charged to
     costs and expenses                 -               -              -              -
                                 --------        --------     ----------     ----------

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

Additions charged to
     costs and expenses            36,000

Subtractions charged to
     costs and expenses           140,357               -              -              -
                                 --------         -------     ----------     ----------
Balance at December 31, 2000     $653,384        $624,898     $1,316,750     $1,529,579
                                 ========        ========     ==========     ==========

</TABLE>


                                      F-17


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(D) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto  duly  authorized on this the 16th day of
March 2001.

                                        DHB Capital Group Inc.

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

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


Signature                        Capacity                     Date
---------                        --------                     ----

/s/ DAVID H. BROOKS     Chairman of the Board,           March 24, 2000
-------------------     and Director
    David H. Brooks


/s/ DAWN SCHLEGEL       Treasurer                        March 24, 2000
-----------------       Principal Financial Officer
    Dawn Schlegel       Principal Accounting Officer


/s/ MORTON COHEN        Director                         March 24, 2000
----------------
    Morton Cohen


                                      F-18


<PAGE>


Item 13 (a) Exhibits.

<TABLE>
<CAPTION>


Exhibit     Description
-------     -----------
<C>         <S>                                                                                                 <S>

3.1         Certificate of Incorporation of DHB Capital Group Inc., a Delaware corporation (hereinafter,
            "DHB".)                                                                                              1

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

3.3         By-laws of DHB                                                                                       1

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

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

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

10.3        1995 Stock Option Plan                                                                               4

10.4        Transfer Agreement, dated as of February 6, 1998 by and among Lanxide Corporation, DHB Capital
            Group, Inc., Lanxide Armor Products, Inc. Lanxide Electronic Components, Inc.  and Lanxide
            Technology Company, L.P.                                                                             5

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

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

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

21          List of Subsidiaries

            Notes to Exhibit Table:

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

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

3           Incorporated by reference to the Company's Registration Statement on Form SB-2, No. 33-59764,
            which became effective on May 14, 1993.

5           Incorporated by reference to Current Report on Form 8-K filed February 25, 1998.

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

6           Incorporated by reference to the Current Report on Form 8-K dated March 23, 2000.

</TABLE>


                                      F-19