##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549




Amendment No. 1 to


FORM 10-Q/A





(Mark One)

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|þ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|  |  | For the quarterly period ended June 30, 2003 or                                         
|  |  |                                                                                         
|o |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  |  | For the transition period from

to                                                      
|  |  |                                                                                         
|  |  | Commission file number 1-12410                                                          

Simula, Inc.




(Exact Name of Registrant as Specified in Its Charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Arizona                                                        |  | 86-0320129                          
|                                                               |  |                                     
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|7822 South 46th Street, Phoenix, Arizona |  | 85044     
|                                        
|(Address of Principal Executive Offices) |  | (Zip Code)

(602) 643-7233




(Registrants Telephone Number, Including Area Code)


2625 S. Plaza Drive, Suite 100,
Tempe, AZ 85282




(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)


Indicate by check mark whether the registrant:



|(1) |  | has filed all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of
1934 during the preceding 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 | þ |  |  | No | o | 

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the
Exchange Act).

|    |   |  |  |    |   | 
|--- | - |  |  | -- | - | 
|Yes | o |  |  | No | þ | 

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the
latest practicable date:

|                             |  |                              |            | 
|---------------------------- |  | ---------------------------- | ---------- | 
|Class                        |  | Outstanding
at June 30, 2003
|                             |  |                             
|Common Stock, $.01 par value |  |                              | 13,017,688 | 





---

TABLE OF CONTENTS



|                            |                                                                                                |                                                                                   |  |  |  |  |  | 
|--------------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                                | Consolidated Balance Sheets                                                      
|                            |                                                                                                | Unaudited Consolidated Statements of Operation                                   
|                            |                                                                                                | Unaudited Consolidated Statements of Shareholders Deficit and Comprehensive Loss
|                            |                                                                                                | Unaudited Consolidated Statements of Cash Flows                                  
|                            | Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition.
|                            | Item 3. Quantitative and Qualitative Disclosure about Market Risk                             
|                            | Item 4. Controls and Procedures                                                               
|PART II  OTHER INFORMATION
|                            | Item 6. Exhibits and Reports                                                                  
|SIGNATURES                 
|EXHIBIT INDEX              
|EX-31.1                    
|EX-31.2                    
|EX-32.1                    
|EX-32.2                    



---



##### Table of Contents



SIMULA, INC.

TABLE OF CONTENTS




|                                                                                                                                  |  |      |       | 
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|                                                                                                                                  |  | Page
|PART I  FINANCIAL INFORMATION                                                                                                    |  |      |       | 
|Item 1 - Interim Consolidated Financial Statements                                                                                |  |      |       | 
|Consolidated Balance Sheets as of
June 30, 2003 (as restated) and December 31, 2002                                               |  |      | 2     | 
|Consolidated Statements of Operations for the Three Month and Six Month
Periods Ended June 30, 2003 (as restated) and 2002        |  |      | 3     | 
|Consolidated Statement of Shareholders Deficit and Comprehensive Loss for the
Six Month Period Ended June 30, 2003 (as restated) |  |      | 4     | 
|Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 2003 (as restated) and 2002                        |  |      | 5     | 
|Notes to Interim Consolidated Financial Statements                                                                                |  |      | 6-11  | 
|Item 2
 Managements Discussion and Analysis of
Results of Operations and Financial Condition                                    |  |      | 12-16 | 
|Item 3
 Quantitative and Qualitative Disclosure about Market Risk                                                                |  |      | 17    | 
|Item 4   Controls and Procedures                                                                                                 |  |      | 17    | 
|PART II  OTHER INFORMATION                                                                                                       |  |      |       | 
|Item 6
 Exhibits and Reports                                                                                                     |  |      | 18-19 | 
|SIGNATURES                                                                                                                        |  |      | 20    | 







EXPLANATORY NOTE







This amendment No. 1 on
form 10-Q/A is being filed to give effect to the restatement of
the Companys unaudited interim consolidated financial
statements as of and for the three month and six month periods ended
June 30, 2003 as discussed in Note 14 to the unaudited interim consolidated financial statements.








---



##### Table of Contents






SIMULA, INC. AND SUBSIDIARIES




Unaudited Consolidated Balance Sheets
June 30, 2003 and December 31, 2002






|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |             |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------- | ------------------------ | ----------- | ---- | ---------- | ----------- | ----------- | -
|                                                     |                                                                                                                                                 |                             |            | 2003                     |             | 2002
|                                                     |                                                                                                                                                 |                             |            |                          |             |     
|                                                     |                                                                                                                                                 |                             |            | (As restatedsee
Note 14) |             |      |            |            
|ASSETS                                               |                                                                                                                                                 |                             |            |                          |             |      |            |            
|CURRENT ASSETS                                       |                                                                                                                                                 |                             |            |                          |             |      |            |            
|                                                     | Cash and cash equivalents                                                                                                                       |                             | $          | 193,199                  |             |      | $          | 147,842     |            
|                                                     | Contract
and trade receivables  Net (including costs and estimated
earnings in excess of billings of $8,207,578 and $14,216,255,
respectively) |                             |            | 17,545,914               |             |      |            | 20,446,665  |            
|                                                     | Inventories                                                                                                                                     |                             |            | 2,823,143                |             |      |            | 3,953,837   |            
|                                                     | Prepaid expenses and other                                                                                                                      |                             |            | 673,005                  |             |      |            | 1,402,252   |            
|                                                     | Current assets of discontinued operations                                                                                                       |                             |            | 10,492,818               |             |      |            | 9,115,864   |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|                                                     |                                                                                                                                                 | Total current assets        |            |                          | 31,728,079  |      |            |             | 35,066,460  |  
|PROPERTY, EQUIPMENT, and LEASEHOLD IMPROVEMENTS -Net |                                                                                                                                                 |                             | 6,253,145  |                          |             |      | 7,737,356  |            
|DEFERRED FINANCING COSTS                             |                                                                                                                                                 |                             | 1,290,344  |                          |             |      | 2,419,054  |            
|INTANGIBLES  Net                                    |                                                                                                                                                 |                             | 1,389,482  |                          |             |      | 1,311,857  |            
|OTHER ASSETS                                         |                                                                                                                                                 |                             | 473,295    |                          |             |      | 436,102    |            
|LONG-TERM ASSETS OF DISCONTINUED OPERATIONS          |                                                                                                                                                 |                             | 7,731,094  |                          |             |      | 7,908,655  |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|TOTAL                                                |                                                                                                                                                 | $                           | 48,865,439 |                          |             | $    | 54,879,484 |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|LIABILITIES AND SHAREHOLDERS DEFICIT                |                                                                                                                                                 |                             |            |                          |             |      |            |            
|CURRENT LIABILITIES                                  |                                                                                                                                                 |                             |            |                          |             |      |            |            
|                                                     | Revolving line of credit                                                                                                                        |                             | $          | 9,555,525                |             |      | $          | 11,283,393  |            
|                                                     | Trade accounts payable                                                                                                                          |                             |            | 4,089,792                |             |      |            | 3,555,552   |            
|                                                     | Other accrued liabilities                                                                                                                       |                             |            | 6,230,352                |             |      |            | 6,355,349   |            
|                                                     | Deferred revenue                                                                                                                                |                             |            | 60,000                   |             |      |            | 60,000      |            
|                                                     | Accrued restructuring costs                                                                                                                     |                             |            | 1,133,984                |             |      |            | 1,140,444   |            
|                                                     | Advances on contracts                                                                                                                           |                             |            | 532,180                  |             |      |            | 940,752     |            
|                                                     | Current portion of long-term debt                                                                                                               |                             |            | 61,892,822               |             |      |            | 29,988,315  |            
|                                                     | Current liabilities of discontinued operations                                                                                                  |                             |            | 6,115,989                |             |      |            | 6,374,093   |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|                                                     |                                                                                                                                                 | Total current liabilities   |            |                          | 89,610,644  |      |            |             | 59,697,898  |  
|DEFERRED REVENUE                                     |                                                                                                                                                 |                             | 450,000    |                          |             |      | 480,000    |            
|DEFERRED LEASE COST                                  |                                                                                                                                                 |                             | 1,003,152  |                          |             |      | 807,156    |            
|LONG-TERM DEBT  Less current portion                |                                                                                                                                                 |                             | 259,709    |                          |             |      | 32,313,087 |            
|LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS     |                                                                                                                                                 |                             | 3,928      |                          |             |      | 9,582      |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|                                                     |                                                                                                                                                 | Total liabilities           |            |                          | 91,327,433  |      |            |             | 93,307,723  |  
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|SHAREHOLDERS DEFICIT                                |                                                                                                                                                 |                             |            |                          |             |      |            |            
|                                                     | Preferred stock, $.05 par value   authorized 50,000,000 shares;
none outstanding                                                               |                             |            |                          |             |      |            |             |            
|                                                     | Common stock, $.01 par value   authorized 50,000,000 shares;
issued 13,017,688 and 13,014,395, respectively                                    |                             |            | 130,433                  |             |      |            | 130,144     |            
|                                                     | Additional paid-in-capital                                                                                                                      |                             |            | 62,772,245               |             |      |            | 62,715,713  |            
|                                                     | Accumulated deficit                                                                                                                             |                             |            | (100,935,281             | )           |      |            | (97,412,354 | )          
|                                                     | Accumulated other comprehensive loss                                                                                                            |                             |            | (4,429,391               | )           |      |            | (3,861,742  | )          
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|                                                     |                                                                                                                                                 | Total shareholders deficit |            |                          | (42,461,994 | )    |            |             | (38,428,239 | )
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            
|TOTAL                                                |                                                                                                                                                 | $                           | 48,865,439 |                          |             | $    | 54,879,484 |            
|                                                     |                                                                                                                                                 |                             |            |                          |             |      |            |             |            







See notes to unaudited consolidated financial statements.




2



---



##### Table of Contents






SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operation



|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---------------------- |  | ------------------------ | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                    |  | Three Month Period Ended |            | Six Month Period Ended
|                                                                                    |  | June 30,                 |            | June 30,              
|                                                                                    |  |                          |            |                       
|                                                                                    |  | 2003                     |            | 2002                   |  | 2003                     |            | 2002
|                                                                                    |  |                          |            |                        |  |                          |            |     
|                                                                                    |  | (As
restatedsee Note 14) |            |                        |  | (As
restatedsee Note 14) |            |     
|REVENUE                                                                             |  | $                        | 17,217,418 |                        |  | $                        | 21,604,622 |      |  | $ | 32,421,836 |   |  | $ | 41,409,757 |  
|COST OF REVENUE                                                                     |  |                          | 10,592,174 |                        |  |                          | 13,912,320 |      |  |   | 20,392,147 |   |  |   | 26,693,028 |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|GROSS MARGIN                                                                        |  |                          | 6,625,244  |                        |  |                          | 7,692,302  |      |  |   | 12,029,689 |   |  |   | 14,716,729 |  
|ADMINISTRATIVE EXPENSES (Note 14)                                                   |  |                          | 3,831,138  |                        |  |                          | 3,539,983  |      |  |   | 7,269,757  |   |  |   | 6,850,569  |  
|RESEARCH AND DEVELOPMENT                                                            |  |                          | 544,343    |                        |  |                          | 308,900    |      |  |   | 1,129,289  |   |  |   | 713,559    |  
|RESTRUCTURING CHARGES                                                               |  |                          | 298,090    |                        |  |                          |           |      |  |   | 598,921    |   |  |   |           |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|OPERATING INCOME                                                                    |  |                          | 1,951,673  |                        |  |                          | 3,843,419  |      |  |   | 3,031,722  |   |  |   | 7,152,601  |  
|INTEREST EXPENSE                                                                    |  |                          | 3,084,321  |                        |  |                          | 2,572,693  |      |  |   | 5,756,971  |   |  |   | 5,114,616  |  
|OTHER EXPENSE (Note 7)                                                              |  |                          | 1,000,000  |                        |  |                          |           |      |  |   | 1,000,000  |   |  |   |           |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME BEFORE INCOME TAXES                                                   |  |                          | (2,132,648 | )                      |  |                          | 1,270,726  |      |  |   | (3,725,249 | ) |  |   | 2,037,985  |  
|INCOME TAX EXPENSE                                                                  |  |                          |           |                        |  |                          | 559,047    |      |  |   | 17,011     |   |  |   | 839,501    |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME BEFORE DISCONTINUED
OPERATIONS                                        |  |                          | (2,132,648 | )                      |  |                          | 711,679    |      |  |   | (3,742,260 | ) |  |   | 1,198,484  |  
|(LOSS) INCOME FROM DISCONTINUED
OPERATIONS                                          |  |                          | (68,387    | )                      |  |                          | (202,424   | )    |  |   | 219,333    |   |  |   | (315,869   | )
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|NET (LOSS) INCOME                                                                   |  | $                        | (2,201,035 | )                      |  | $                        | 509,255    |      |  | $ | (3,522,927 | ) |  | $ | 882,615    |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME PER COMMON SHARE  Basic
(LOSS) INCOME BEFORE DISCONTINUED
OPERATIONS |  |                          | (.16       | )                      |  |                          | 0.06       |      |  |   | (.29       | ) |  |   | 0.09       |  
|(LOSS) INCOME FROM DISCONTINUED OPERATIONS                                          |  |                          | (.01       | )                      |  |                          | (0.02      | )    |  |   | .02        |   |  |   | (0.02      | )
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME PER COMMON SHARE  Basic                                              |  | $                        | (.17       | )                      |  | $                        | 0.04       |      |  | $ | (.27       | ) |  | $ | 0.07       |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME PER COMMON SHARE  Diluted                                            |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME BEFORE DISCONTINUED
OPERATIONS                                        |  |                          | (.16       | )                      |  |                          | 0.06       |      |  |   | (.29       | ) |  |   | 0.09       |  
|(LOSS) INCOME FROM DISCONTINUED OPERATIONS                                          |  |                          | (.01       | )                      |  |                          | (0.02      | )    |  |   | .02        |   |  |   | (0.02      | )
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  
|(LOSS) INCOME PER COMMON SHARE  Diluted                                            |  | $                        | (.17       | )                      |  | $                        | 0.04       |      |  | $ | (.27       | ) |  | $ | 0.07       |  
|                                                                                    |  |                          |            |                        |  |                          |            |      |  |   |            |   |  |   |            |  







See notes to unaudited consolidated financial statements.




3



---



##### Table of Contents






SIMULA, INC. AND SUBSIDIARIES




Unaudited Consolidated Statement of Shareholders Deficit and Comprehensive Loss
Six Months Ended June 30, 2003 (As Restated, See Note 14)







|                                 |  |              |            |            |  |             |         |               |  |               |            |               |  |      |              |   |  |             |            |   |  |   |             |   |  |   |            |  
|-------------------------------- |  | ------------ | ---------- | ---------- |  | ----------- | ------- | ------------- |  | ------------- | ---------- | ------------- |  | ---- | ------------ | - |  | ----------- | ---------- | - |  | - | ----------- | - |  | - | ---------- | -
|                                 |  |              |            |            |  |             |         |               |  |               |            |               |  |      |              |   |  | Accumulated |            |   |  |   |             |   |  |  
|                                 |  | Common Stock |            | Additional |  |             |         |               |  | Other         |            | Total         |  |      |              |  
|                                 |  |              |            | Paid-in    |  | Accumulated |         | Comprehensive |  | Shareholders |            | Comprehensive
|                                 |  | Shares       |            | Amount     |  | Capital     |         | Deficit       |  | Loss          |            | Deficit       |  | Loss
|                                 |  |              |            |            |  |             |         |               |  |               |            |               |  |     
|Balance, January 1, 2003         |  |              | 13,014,395 |            |  | $           | 130,144 |               |  | $             | 62,715,713 |               |  | $    | (97,412,354  | ) |  | $           | (3,861,742 | ) |  | $ | (38,428,239 | ) |  | $ |           |  
|Net
loss (Note 14)               |  |              |            |            |  |             |         |               |  |               |            |               |  |      | (3,522,927   | ) |  |             |            |   |  |   | (3,522,927  | ) |  |   | (3,522,927 | )
|Issuance of common
shares        |  |              | 3,293      |            |  |             | 289     |               |  |               | 56,532     |               |  |      |              |   |  |             |            |   |  |   | 56,821      |   |  |   |           |  
|Currency translation
adjustment  |  |              |            |            |  |             |         |               |  |               |            |               |  |      |              |   |  |             | (567,649   | ) |  |   | (567,649    | ) |  |   | (567,649   | )
|                                 |  |              |            |            |  |             |         |               |  |               |            |               |  |      |              |   |  |             |            |   |  |   |             |   |  |   |            |  
|Balance,
June 30, 2003 (Note 14) |  |              | 13,017,688 |            |  | $           | 130,433 |               |  | $             | 62,772,245 |               |  | $    | (100,935,281 | ) |  | $           | (4,429,391 | ) |  | $ | (42,461,994 | ) |  | $ | (4,090,576 | )
|                                 |  |              |            |            |  |             |         |               |  |               |            |               |  |      |              |   |  |             |            |   |  |   |             |   |  |   |            |  







See notes to unaudited consolidated financial statements.




4



---



##### Table of Contents






SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows
Six Month Periods Ended June 30, 2003 and 2002




|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |           |            |          |  
|------------------------------------------------- | ----------------------------------------------------------------- | ----------------- | --------------------------------------------------------- | --------------------------------------------------- | --------- | ------------------------ | ---------- | ------- | --------- | ---------- | -------- | -
|                                                  |                                                                   |                   |                                                           |                                                     |           | 2003                     |            | 2002   
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |        
|                                                  |                                                                   |                   |                                                           |                                                     |           | (As
restatedSee Note 14) |            |         |           |           
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                   |                   |                                                           |                                                     |           |                          |            |        
|                                                  | Net (loss) income                                                 |                   | $                                                         | (3,522,927                                          | )         |                          | $          | 882,615 |          
|                                                  | Adjustment to reconcile net (loss) income to net cash provided by |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  | operating activities:                                             |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   |                   | Depreciation and amortization                             |                                                     |           | 1,781,135                |            |         |           | 1,620,366  |         
|                                                  |                                                                   |                   | Deferred income taxes                                     |                                                     |           |                         |            |         |           | 574,481    |         
|                                                  |                                                                   |                   | Capitalized interest                                      |                                                     |           | 795,875                  |            |         |           | 749,860    |         
|                                                  |                                                                   |                   | Loss (gain) on disposal of assets                         |                                                     |           | 175,959                  |            |         |           | (971       | )       
|                                                  |                                                                   |                   | Restructuring charge                                      |                                                     |           | 598,921                  |            |         |           |           |         
|                                                  |                                                                   |                   | Currency translation adjustment                           |                                                     |           | (567,649                 | )          |         |           | (143,057   | )       
|                                                  |                                                                   |                   | Bad debt expense                                          |                                                     |           |                         |            |         |           | 310,874    |         
|                                                  |                                                                   |                   | Non-cash equity compensation                              |                                                     |           |                         |            |         |           | 74,779     |         
|                                                  |                                                                   |                   | Write down of intangibles                                 |                                                     |           | 99,754                   |            |         |           |           |         
|                                                  | Changes in net assets and liabilities:                            |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   |                   | Contract and trade receivables  net of advances          |                                                     |           | 2,492,179                |            |         |           | (624,287   | )       
|                                                  |                                                                   |                   | Inventories                                               |                                                     |           | 1,130,694                |            |         |           | 638,125    |         
|                                                  |                                                                   |                   | Prepaid expenses and other                                |                                                     |           | 729,247                  |            |         |           | 220,360    |         
|                                                  |                                                                   |                   | Other assets                                              |                                                     |           | (37,193                  | )          |         |           | 16,045     |         
|                                                  |                                                                   |                   | Trade accounts payable                                    |                                                     |           | 534,240                  |            |         |           | (408,365   | )       
|                                                  |                                                                   |                   | Deferred revenue                                          |                                                     |           | (30,000                  | )          |         |           | (693       | )       
|                                                  |                                                                   |                   | Deferred lease costs                                      |                                                     |           | 195,996                  |            |         |           | 210,246    |         
|                                                  |                                                                   |                   | Accrued
restructuring costs                               |                                                     |           | (605,381                 | )          |         |           | (334,875   | )       
|                                                  |                                                                   |                   | Other accrued liabilities                                 |                                                     |           | (124,999                 | )          |         |           | (941,144   | )       
|                                                  |                                                                   |                   | Net assets of discontinued operations                     |                                                     |           | (1,463,151               | )          |         |           | (1,891,326 | )       
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   |                   |                                                           | Net cash provided by operating activities           |           |                          | 2,182,700  |         |           |            | 953,033  |  
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                   |                   |                                                           |                                                     |           |                          |            |        
|                                                  |                                                                   |                   | Purchase of property and equipment                        |                                                     |           | (742,401                 | )          |         |           | (766,077   | )       
|                                                  |                                                                   |                   | Costs incurred to obtain intangibles                      |                                                     |           | (330,311                 | )          |         |           | (67,321    | )       
|                                                  |                                                                   |                   | Proceeds from sale of property, equipment and intangibles |                                                     |           | 1,551,162                |            |         |           |           |         
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   |                   |                                                           | Net cash provided by (used in) investing activities |           |                          | 478,450    |         |           |            | (833,398 | )
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                   |                   |                                                           |                                                     |           |                          |            |        
|                                                  |                                                                   |                   | Net borrowings under line of credit                       |                                                     |           | (1,727,868               | )          |         |           | 143,095    |         
|                                                  |                                                                   |                   | Principal payments under other debt arrangements          |                                                     |           | (944,746                 | )          |         |           | (89,895    | )       
|                                                  |                                                                   |                   |                                                           | Issuance of Common Stock                            |           |                          | 56,821     |         |           |            | 101,205  |  
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   |                   |                                                           | Net cash (used in) provided by financing activities |           |                          | (2,615,793 | )       |           |            | 154,405  |  
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|NET INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                   |                   | 45,357                                                    |                                                     |           |                          | 274,040    |        
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    |                                                                   |                   | 147,842                                                   |                                                     |           |                          | 461,502    |        
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|CASH AND CASH EQUIVALENTS, END OF PERIOD          |                                                                   | $                 | 193,199                                                   |                                                     |           | $                        | 735,542    |        
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                   |                   |                                                           |                                                     |           |                          |            |        
|                                                  |                                                                   | Interest
Paid     |                                                           | $                                                   | 3,784,118 |                          |            | $       | 3,749,175 |           
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          
|                                                  |                                                                   | Income
Taxes Paid |                                                           | $                                                   | 76,668    |                          |            | $       | 394,418   |           
|                                                  |                                                                   |                   |                                                           |                                                     |           |                          |            |         |          







See notes to unaudited consolidated financial statements.




5



---



##### Table of Contents



Note 1  Basis of Presentation

The consolidated financial statements include the accounts of Simula, Inc.
and its subsidiaries (collectively we and our). All of the subsidiaries
are wholly owned. All intercompany transactions are eliminated in
consolidation.




The
accompanying unaudited consolidated financial statements have been prepared on
a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
As noted in the accompanying financial statements, current maturities
of debt are approximately $71,450,000 million as of
June 30, 2003 and there is uncertainty relating to the
Companys ability to refinance certain of its debt. These
factors, among others, indicate that the Company may be unable to
continue as a going concern. The accompanying financial statements do
not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. As part of the plan
to meet future quarterly covenants and current and long-term debt
maturities, we sold our automotive safety business during July 2003 and subsequently
entered into a letter of intent providing for the sale and merger of
Simula, Inc. as discussed in Note 12  Subsequent Events.







As permitted by rules of the Securities and Exchange Commission for
interim reporting, we have prepared the accompanying interim
unaudited consolidated
financial statements in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim financial
information and with the instructions to Form 10-Q. As permitted by these
rules, certain information and notes required by GAAP for complete financial
statements are condensed or omitted. In the opinion of management, all
adjustments and reclassifications considered necessary for a fair and
comparable presentation have been included and are of a normal recurring
nature. Operating results for the three and six-month periods ended June 30,
2003 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2003. Such interim financial statements should be
read in conjunction with our consolidated financial statements and notes
thereto included in our 2002 Form 10-K.

Note 2  Recently Issued Accounting Standards




In April 2003, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 149, Amendment of
Statement No. 133 on Derivative Instruments and Hedging Activities, which
amended and refined certain characteristics of derivative instruments and
hedges. The application of SFAS No. 149 did not have a material effect on the
Companys financial statements.




In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity,
which requires the classification of certain financial instruments, previously
classified within the equity section of the balance sheet, to be included in
liabilities. SFAS No. 150 is effective for financial instruments entered into
or modified after May 31, 2003 and June 15, 2003 for all other instruments.
The application of SFAS No. 150 did not have a material effect on the Companys
financial statements







In April
2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, amendment of FASB Statement No.13, and Technical
Corrections, which, among other things, no longer allows for the
classification of gains and losses from extinguishment of debt as
extraordinary. We adopted SFAS No. 145 effective January 1, 2003 and upon
adoption, gains and losses on certain future debt extinguishment, if any, will
be recorded in pre-tax income. In addition any previously recorded
extraordinary gains or losses from early extinguishment of debt will be
reclassified to income before extraordinary income or loss to conform to the
requirements under SFAS 145.







In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities,which addresses financial
accounting and reporting for costs associated with exit or disposal activities.
SFAS No. 146 also nullifies Emerging Issues Task Force (EITF) No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS No. 146 is effective for exit or disposal activities
initiated after December 31, 2002. We adopted SFAS No. 146 effective January
1, 2003. Current transactions which may effect the Company are
discussed in Note 12, to the unaudited consolidated financial
statements.




In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure. This Statement amends
SFAS No. 123 to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. We adopted the new disclosure requirements of SFAS No. 148 in
2002. We continue to account for stock-based compensation under the
recognition and measurement principles of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees,and related
Interpretations.

In November 2002, the FASB issued Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. The interpretation requires a
guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee and expands
the disclosures required. Initial recognition and measurement provisions of FIN
No. 45 are applicable on a prospective basis to guarantees

6



---



##### Table of Contents



issued or modified after December 31, 2002. The adoption of FIN No. 45
had no effect on our financial position, results of operations or cash flows.

In
January 2003, the FASB issued FIN No. 46, Consolidation of
Variable Interest Entities  an Interpretation of ARB No. 51. FIN No. 46
clarifies the consolidation requirements of variable interest entities. We have
adopted the interpretation. We have no interests in any variable interest
entities and, consequently, adoption of FIN No. 46 had no effect on our
financial position, results of operations or cash flows.

Note 3  Earnings per share




The following is a reconciliation of the numerators and denominators of
basic and diluted per share computations. For the three and six month periods
ended June 30, 2003 the effect of 142,212 and 190,936,
respectively, shares related to stock
options were not used in determining dilutive earnings per share because the
result would have been anti-dilutive. Additionally, for the
three and six month periods ended June 30, 2003 and 2002, the effect of
1,774,074 shares to be issued upon conversion of the 8% Senior Subordinated
Convertible Notes was not used in determining dilutive earnings per share
because the result would have been anti-dilutive.







|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 
|---------------------------------------------------- |  | ------------------ | ---------- | ---------------- |  | ------------ | ---------- | ------------ |  | - | ---------- | - |  | - | ---------- | 
|                                                     |  | Three Months Ended |            | Six Months Ended
|                                                     |  | June 30,           |            | June 30,        
|                                                     |  |                    |            |                 
|                                                     |  | 2003               |            | 2002             |  | 2003         |            | 2002        
|                                                     |  |                    |            |                  |  |              |            |             
|                                                     |  | (As restated       |            |                  |  |              |            | (As restated |  |   |            |  
|                                                     |  | see
Note 14)       |            |                  |  | see
Note 14) |            |             
|Net (loss) earnings
available to common
shareholders |  | $                  | (2,201,035 | )                |  | $            | 509,255    |              |  | $ | (3,522,927 | ) |  | $ | 882,615    | 
|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 
|Basic weighted average
shares outstanding            |  |                    | 13,020,980 |                  |  |              | 12,910,428 |              |  |   | 13,017,688 |   |  |   | 12,901,694 | 
|Effect of dilutive
securities                        |  |                    |           |                  |  |              | 360,011    |              |  |   |           |   |  |   | 321,852    | 
|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 
|Diluted weighted
average
shares outstanding          |  |                    | 13,020,980 |                  |  |              | 13,270,439 |              |  |   | 13,017,688 |   |  |   | 13,223,546 | 
|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 
|Basic per share amounts                              |  | $                  | (0.17      | )                |  | $            | 0.04       |              |  | $ | (0.27      | ) |  | $ | 0.07       | 
|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 
|Diluted per share
amounts                            |  | $                  | (0.17      | )                |  | $            | 0.04       |              |  | $ | (0.27      | ) |  | $ | 0.07       | 
|                                                     |  |                    |            |                  |  |              |            |              |  |   |            |   |  |   |            | 




Note 4  Stock Based Compensation

We have three stock-based employee compensation plans. We account for
those plans under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees,and related Interpretations
under which no compensation cost has been recognized. However, we have
computed compensation cost, for pro forma disclosure purposes, based on the
fair value of all options awarded on the date of grant, utilizing the
Black-Scholes option pricing method. The following table illustrates the
effect on net (loss) income and (loss) income per share if we had applied the fair value
recognition provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation,to stock-based employee compensation for the three month and six
month periods ended June 30:




|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | ---------------- |  | ------------ | -------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                 |  | Three Months Ended |            | Six Months Ended
|                                                                                                 |  | June 30,           |            | June 30,        
|                                                                                                 |  |                    |            |                 
|                                                                                                 |  | 2003               |            | 2002             |  | 2003         |          | 2002        
|                                                                                                 |  |                    |            |                  |  |              |          |             
|                                                                                                 |  | (As restated       |            |                  |  |              |          | (As restated |  |   |            |  
|                                                                                                 |  | see
Note 14)       |            |                  |  | see
Note 14) |          |             
|Net (loss) income  as reported                                                                  |  | $                  | (2,201,035 | )                |  | $            | 509,255  |              |  | $ | (3,522,927 | ) |  | $ | 882,615    |  
|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  
|Deduct: Total stock based employee compensation
expense determined under fair value based method |  |                    | (211,481   | )                |  |              | (115,334 | )            |  |   | (476,141   | ) |  |   | (1,413,659 | )
|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  
|Net (loss) income  pro forma                                                                    |  | $                  | (2,412,516 | )                |  | $            | 393,921  |              |  | $ | (3,999,068 | ) |  | $ | (531,044   | )
|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  
|(Loss) income per share: basic and diluted as reported                                           |  | $                  | (0.17      | )                |  | $            | 0.04     |              |  | $ | (0.27      | ) |  | $ | 0.07       |  
|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  
|(Loss) income per share: basic and diluted  pro forma                                           |  | $                  | (0.19      | )                |  | $            | 0.03     |              |  | $ | (0.31      | ) |  | $ | (0.04      | )
|                                                                                                 |  |                    |            |                  |  |              |          |              |  |   |            |   |  |   |            |  




7



---



##### Table of Contents



The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options pricing model and the following table
illustrates the assumptions used for grants for the three month and six-month
periods ended June 30:

|                        |  |                    |      |                  |  |      |      |      |  |  |      |   |  |  |      |  
|----------------------- |  | ------------------ | ---- | ---------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                        |  | Three Months Ended |      | Six Months Ended
|                        |  | June 30,           |      | June 30,        
|                        |  | 2003               |      | 2002             |  | 2003 |      | 2002
|                        |  |                    |      |                 
|Dividend yield          |  | None               |      | None             |  | None |      | None
|Expected volatility     |  |                    | 116  | %                |  |      | 96   | %    |  |  | 116  | % |  |  | 98   | %
|Risk-free interest rate |  |                    | 3.6  | %                |  |      | 3.6  | %    |  |  | 3.6  | % |  |  | 3.6  | %
|Expected lives          |  |                    | 3.25 |                  |  |      | 3.25 |      |  |  | 3.25 |   |  |  | 3.25 |  

Note 5  Inventories

At June 30, 2003 and December 31, 2002, inventories consisted of the
following:

|                  |                   |   |           |           |      |   |           |           | 
|----------------- | ----------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                  |                   |   | 2003      |           | 2002
|                  |                   |   |           |           |     
|Raw Materials     |                   | $ | 2,802,905 |           |      | $ | 3,298,676 |          
|Work in Progress  |                   |   | 370,238   |           |      |   | 636,980   |          
|Finished Goods    |                   |   |          |           |      |   | 258,181   |          
|Inventory Reserve |                   |   | (350,000  | )         |      |   | (240,000  | )        
|                  |                   |   |           |           |      |   |           |          
|                  | Total Inventories |   | $         | 2,823,143 |      |   | $         | 3,953,837 | 
|                  |                   |   |           |           |      |   |           |          

Note 6  Property, Equipment and Leasehold Improvements

At June 30, 2003 and December 31, 2002 property, equipment and leasehold
improvements consisted of the following:

|                                               |                                                      |   |            |           |      |   |             |           | 
|---------------------------------------------- | ---------------------------------------------------- | - | ---------- | --------- | ---- | - | ----------- | --------- | 
|                                               |                                                      |   | 2003       |           | 2002
|                                               |                                                      |   |            |           |     
|Land                                           |                                                      | $ | 481,888    |           |      | $ | 816,888     |          
|Buildings and leasehold improvements           |                                                      |   | 2,640,798  |           |      |   | 3,885,263   |          
|Equipment                                      |                                                      |   | 12,939,670 |           |      |   | 13,229,244  |          
|                                               |                                                      |   |            |           |      |   |             |          
|Total                                          |                                                      |   | 16,062,356 |           |      |   | 17,931,395  |          
|Less accumulated depreciation and amortization |                                                      |   | (9,809,211 | )         |      |   | (10,194,039 | )        
|                                               |                                                      |   |            |           |      |   |             |          
|                                               | Property,
equipment and leasehold improvements - net |   | $          | 6,253,145 |      |   | $           | 7,737,356 | 
|                                               |                                                      |   |            |           |      |   |             |          

Note 7  Debt

On June 30, 2003, we were not in compliance with certain non-monetary
financial covenants under our Revolving Line of Credit (the
RLC). On August 12, 2003, we received a waiver of the non-compliance at June 30, 2003. Our RLC
had outstanding borrowings of $9.6 million and remaining borrowing availability
of $5.8 million at June 30, 2003 as compared to outstanding borrowings of $11.3
million and a remaining borrowing availability of $1.3 million at December 31,
2002. In addition, as of June 30, 2003, we were not in compliance with a
certain non-monetary financial covenant under our Senior Secured Note which,
provided for a performance fee of $1.0 million. The fee has been recorded as
of June 30, 2003, is separately classified in other expense, and was paid on
July 31, 2003. On August 12, 2003, we received a waiver of the non-compliance
at June 30, 2003.

Note 8  Other Intangible Assets

All of our intangible assets with finite lives ranging from 15 to 20 years
were principally comprised of technology patents with a total cost at June 30,
2003 and December 31, 2002 as follows:

|                              |                   |   |           |           |      |   |           |           | 
|----------------------------- | ----------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                              |                   |   | 2003      |           | 2002
|                              |                   |   |           |           |     
|Patents and licenses          |                   | $ | 1,626,068 |           |      | $ | 1,686,456 |          
|Other                         |                   |   | 132,669   |           |      |   | 566,010   |          
|                              |                   |   |           |           |      |   |           |          
|Total                         |                   |   | 1,758,737 |           |      |   | 2,252,466 |          
|Less accumulated amortization |                   |   | (369,255  | )         |      |   | (940,609  | )        
|                              |                   |   |           |           |      |   |           |          
|                              | Intangibles  net |   | $         | 1,389,482 |      |   | $         | 1,311,857 | 
|                              |                   |   |           |           |      |   |           |          

8



---



##### Table of Contents



Intangible asset amortization expense for the three month periods ended
June 30, 2003 and 2002 were approximately $ 58,000 and $ 60,000, respectively.
Estimated amortization expense for the five succeeding fiscal years is as
follows:

|     |  |   |         | 
|---- |  | - | ------- | 
|2003 |  | $ | 116,000 | 
|2004 |  |   | 100,000 | 
|2005 |  |   | 100,000 | 
|2006 |  |   | 100,000 | 
|2007 |  |   | 100,000 | 

Note 9  Research and Development

Our research and development efforts arise from funded development
contracts and proprietary research and development. Amounts arising from such
efforts are as follows:

|                                  |                                   |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |           |            |  
|--------------------------------- | --------------------------------- | ---------------------------------- | ------- | ------------------ | ------- | ---------------- | ------- | -------- | -------- | -------- | --------- | ------- | -------- | - | ------- | --------- | ---------- | -
|                                  |                                   |                                    |         | Three Months Ended |         | Six Months Ended
|                                  |                                   |                                    |         | June 30,           |         | June 30,         |         | June 30, |          | June 30,
|                                  |                                   |                                    |         | 2003               |         | 2002             |         | 2003     |          | 2002    
|                                  |                                   |                                    |         |                    |         |                  |         |          |          |         
|Research and development expenses |                                   | $                                  | 544,343 |                    |         | $                | 308,900 |          |          | $        | 1,129,289 |         |          | $ | 713,559 |          
|                                  |                                   |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |          
|Funded contracts:                 |                                   |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |          
|                                  | Revenue funded by customers       |                                    | $       | 180,928            |         |                  | $       | 771,092  |          |          | $         | 471,578 |          |   | $       | 1,829,104 |           
|                                  | Research and development expenses |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |           |           
|                                  |                                   | classified as cost of such revenue |         |                    | (99,531 | )                |         |          | (462,105 | )        |           |         | (267,310 | ) |         |           | (1,236,402 | )
|                                  |                                   |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |          
|Income of funded contracts        |                                   | $                                  | 81,397  |                    |         | $                | 308,987 |          |          | $        | 204,268   |         |          | $ | 592,702 |          
|                                  |                                   |                                    |         |                    |         |                  |         |          |          |          |           |         |          |   |         |          

Note 10  Restructuring




In December 1999, we adopted a plan of restructuring that included the
divestiture of our commercial airline seat manufacturing operation. In July
2002, we adopted a plan of restructuring focused on reducing workforce to align
with a newly developed strategic focus and in January 2003, we adopted a plan
to restructure our Aerospace and Defense business by reducing workforce and
closing our Asheville facility and consolidating those operations into our
Phoenix facility. The Asheville facility was closed and all operations were
moved to the Phoenix location as of March 31, 2003. We completed the sale of
the Asheville facility on April 8, 2003 and retired the mortgage note payable
related to that facility. At June 30, 2003, there was $1,133,984 of remaining
restructuring liability, which principally relates to lease obligations
associated with the closed airline facility, which run through May of
2008 and other contracts as a part of
the 1999 restructuring and severance obligations as part of the 2002 and 2003
restructuring, which are expected to be fully paid by December of 2004. A summary of the change in accrued restructuring is as follows:




|                                  |  |          |          |           |  |           |          |       |  |   |          |   |  |   |           |  
|--------------------------------- |  | -------- | -------- | --------- |  | --------- | -------- | ----- |  | - | -------- | - |  | - | --------- | -
|                                  |  | Facility |          | Other     |  |           |          |       |  |   |          |  
|                                  |  | Closure  |          | Contracts |  | Severance |          | Total
|                                  |  |          |          |           |  |           |          |      
|Balance at December 31, 2002      |  | $        | 535,285  |           |  | $         | 331,941  |       |  | $ | 273,218  |   |  | $ | 1,140,444 |  
|First quarter 2003
restructuring  |  |          |         |           |  |           |         |       |  |   | 300,831  |   |  |   | 300,831   |  
|Second quarter 2003
restructuring |  |          |          |           |  |           | 39,647   |       |  |   | 258,443  |   |  |   | 298,090   |  
|Reclassification of charges       |  |          | 294,279  |           |  |           | (294,279 | )     |  |   |         |   |  |   |          |  
|Cash payments                     |  |          | (117,721 | )         |  |           | (2,040   | )     |  |   | (485,620 | ) |  |   | (605,381  | )
|                                  |  |          |          |           |  |           |          |       |  |   |          |   |  |   |           |  
|Balance at June 30, 2003          |  | $        | 711,843  |           |  | $         | 75,269   |       |  | $ | 346,872  |   |  | $ | 1,133,984 |  
|                                  |  |          |          |           |  |           |          |       |  |   |          |   |  |   |           |  

9



---



##### Table of Contents



Note 11  Derivative Instruments

As of June 30, 2003, we have certain receivables and payables denominated
in Euros, however those receivables and payables denominated in Euros we sold
as part of the transaction completed on July 22, 2003 related to our commercial
automotive business (see Note 12). To eliminate our exposure to changes in the
U.S. dollar/Euro exchange rate, we periodically enter into forward contracts to
protect our future cash flows. Our forward contracts generally range from one
to three months in original maturity. As of June 30, 2003, we have no
outstanding contracts.

In accordance with SFAS No. 133, we designate such forward contracts as
cash flow hedges. We account for changes in the fair value of our forward
contracts, based on changes in the forward exchange rate, with all such changes
in fair value reported in other comprehensive income. Amounts in other
comprehensive income are reclassified into earnings upon settlement of the
forward contract at an amount that will offset the related transaction gain or
loss arising from the re-measurement and adjust earnings for the cost of the
forward contracts. As of June 30, 2003, there were no significant gains or
losses recognized in earnings for hedge ineffectiveness and we did not
discontinue any hedges because it was probable that the original forecasted
transaction would not occur.

Note 12  Subsequent Events

On July 22, 2003, we completed the sale of all the assets of our
Automotive Safety division to Zodiac, S.A. at a selling price of $14.3 million
in cash. Customary closing and purchase price adjustments are expected to be
completed within 45 days of the sale closing. After deducting closing costs
and purchase price adjustments, we received net proceeds of approximately $11.0
million. Currently included in the closing costs is approximately $1.0 million
related to two separate escrow accounts, from which we can potentially recover
a maximum $0.5 million within three months and a maximum of $0.5 million in 18
months. The transaction resulted in a gain on sale of discontinued operations
of approximately $0.1 million before any recovery of amounts deposited in
escrows previously discussed. We applied the net proceeds to repay a portion
of our outstanding debt.




Our automotive safety business, which represents the
Companys commercial segment, has been reported as a
discontinued operation within these financial statements. The
major classes of assets and liabilities included as part of the
sale of our automotive safety business consisted of the
following:







|                                             |                                                  |                                                |            |                   |            |   |            |       |           | 
|-------------------------------------------- | ------------------------------------------------ | ---------------------------------------------- | ---------- | ----------------- | ---------- | - | ---------- | ----- | --------- | 
|                                             |                                                  | June 30, 2003                                  |            | December 31, 2002
|                                             |                                                  |                                                |            |                  
|Receivables and other                        |                                                  | $                                              | 6,893,021  |                   |            | $ | 6,999,476  |      
|Inventory and other                          |                                                  |                                                | 3,599,797  |                   |            |   | 2,116,388  |      
|                                             |                                                  |                                                |            |                   |            |   |            |      
|                                             |                                                  | Current Assets of Discontinued Operations      |            |                   | 10,492,818 |   |            |       | 9,115,864 | 
|                                             |                                                  |                                                |            |                   |            |   |            |      
|Property, Equipment and Leaseholds, net      |                                                  |                                                | 3,708,729  |                   |            |   | 4,035,891  |      
|Intangibles, net                             |                                                  |                                                | 2,279,009  |                   |            |   | 2,222,621  |      
|Other assets                                 |                                                  |                                                | 1,743,356  |                   |            |   | 1,650,143  |      
|                                             |                                                  |                                                |            |                   |            |   |            |      
|                                             |                                                  | Long Term Assets of Discontinued Operations    |            |                   | 7,731,094  |   |            |       | 7,908,655 | 
|                                             |                                                  |                                                |            |                   |            |   |            |      
|Total Assets of Discontinued Operations      |                                                  | $                                              | 18,223,912 |                   |            | $ | 17,024,519 |      
|                                             |                                                  |                                                |            |                   |            |   |            |      
|Trade accounts payable                       |                                                  | $                                              | 2,916,718  |                   |            | $ | 2,615,033  |      
|Other accrued liabilities and other          |                                                  |                                                | 3,199,271  |                   |            |   | 3,759,060  |      
|                                             |                                                  |                                                |            |                   |            |   |            |      
|                                             |                                                  | Current Liabilities of Discontinued Operations |            |                   | 6,115,989  |   |            |       | 6,374,093 | 
|                                             |                                                  |                                                |            |                   |            |   |            |      
|Deferred Income                              |                                                  |                                                | 3,928      |                   |            |   | 9,582      |      
|                                             |                                                  |                                                |            |                   |            |   |            |      
|                                             | Long Term Liabilities of Discontinued Operations |                                                |            | 3,928             |            |   |            | 9,582 |          
|Total Liabilities of Discontinued Operations |                                                  | $                                              | 6,119,917  |                   |            | $ | 6,383,675  |      
|                                             |                                                  |                                                |            |                   |            |   |            |      







Revenue and (loss) income before income taxes for our automotive
safety business for the periods ended June 30:







|                                  |  |                          |           |      |                        |      |           |      |  |  |            |  |  |  |            |  
|--------------------------------- |  | ------------------------ | --------- | ---- | ---------------------- | ---- | --------- | ---- |  |  | ---------- |  |  |  | ---------- | -
|                                  |  |                          |           |      |                        |     
|                                  |  | Three
Month Period Ended |           |      | Six Month Period Ended
|                                  |  | 2003                     |           | 2002 |                        | 2003 |           | 2002
|                                  |  |                          |           |      |                        |      |           |     
|Revenues                          |  |                          | 9,456,837 |      |                        |      | 8,576,869 |      |  |  | 18,565,287 |  |  |  | 17,874,023 |  
|(Loss) income before income taxes |  |                          | 104,613   |      |                        |      | (376,100  | )    |  |  | 485,322    |  |  |  | (564,628   | )




On July 23, 2003 we announced that we signed a Letter of Intent (LOI) to
be acquired by Armor Holdings, Inc. (NYSE:AH) of Jacksonville, Florida. The
LOI states that Armor Holdings shall acquire all outstanding common stock of
Simula, retire outstanding indebtedness, and assume all liabilities of Simula
for total consideration of $110.5 million. Consideration to Simulas
shareholders will, at Armor Holdings discretion, consist of cash or a
combination of cash and registered shares of Armor Holdings common stock, with
at least 20% of the value of the payment to shareholders to be in cash. The
transaction is structured as a merger and is expected to be taxable to Simulas
shareholders.

The LOI calls for an exclusive negotiation period through August 29, 2003,
during which the companies will endeavor to complete all necessary activities
leading to the execution of a definitive merger agreement. The LOI provides
for a good faith deposit by Armor Holdings, expedited due diligence and payment
of a break-up fee if Simula accepts a competing offer. The transaction is
subject to, among other things, satisfactory due diligence, the execution of a
definitive agreement, regulatory approvals including satisfaction of the
requirements and waiting period related to the Hart-Scott-Rodino Antitrust
Improvements Act, requisite approvals by each companys Board of Directors, and
the approval of our shareholders. Upon completion of the definitive agreement,
we anticipate submission of a proxy and registration statement to shareholders for
approval of the transaction and a closing on or about November 15, 2003. The
Board of Directors of both Simula and Armor Holdings have approved the proposed
transaction as defined in the LOI.

Note 13  Segment Reporting

We are a holding company for wholly owned subsidiaries, which now operates
in one primary business segment. Our Commercial segment consisted of our
Automotive Safety division which was sold as discussed in Note 12, above. Our
Aerospace and Defense segment includes operations that design and manufacture
crash resistant components, energy absorbing devices, and ballistic armor
products, which are sold principally to branches of the United States armed
forces. All other activity, included in Other, represents general corporate
operations, including unallocated interest and technology sales and royalties
and operations from our business derived from proprietary technology and
polymer materials.

10



---



##### Table of Contents






For the three-month period ended June 30, 2003 and 2002, inter-segment
sales were insignificant and total intercompany sales of $ 71,437 and $ 20,685,
respectively, have been eliminated. For the three-month periods
ended June 30, 2003 and 2002, sales to branches of the United
States Armed Forces were 88% and 96%, respectively, of total sales.







|                        |                                |       |            |            |   |                           |          |                           |        |   |            |            |        | 
|----------------------- | ------------------------------ | ----- | ---------- | ---------- | - | ------------------------- | -------- | ------------------------- | ------ | - | ---------- | ---------- | ------ | 
|                        |                                |       |            | 2003      
|                        |                                |       |            |           
|                        |                                |       |            |            |   |                           |          |                          
|                        |                                |       |            | Aerospace  |   |                           |          |                          
|                        |                                |       |            | Defense    |   | Other                     |          | Total                    
|                        |                                |       |            |            |   |                           |          |                           |        |   |            |            |       
|                        |                                |       |            |            |   | (As restated
see Note 14) |          | (As restated
see Note 14)
|Revenue:                |                                |       |            |            |   |                           |          |                           |        |   |            |           
|                        | Contract revenue               |       | $          | 16,899,461 |   |                           | $        |                          |        |   | $          | 16,899,461 |       
|                        | Product sales:                 |       |            |            |   |                           |          |                           |        |   |            |            |       
|                        |                                | Other |            |            |  |                           |          |                           | 32,378 |   |            |            | 32,378 | 
|                        | Technology sales and royalties |       |            |           |   |                           |          | 285,579                   |        |   |            | 285,579    |       
|                        |                                |       |            |            |   |                           |          |                           |        |   |            |            |       
|Total revenue           |                                | $     | 16,899,461 |            |   | $                         | 317,957  |                           |        | $ | 17,217,418 |           
|                        |                                |       |            |            |   |                           |          |                           |        |   |            |            |       
|Operating income (loss) |                                | $     | 2,828,710  |            |   | $                         | (877,037 | )                         |        | $ | 1,951,673  |           




|                        |                                |       |            |               |   |       |         |         |        |   |            |            |        | 
|----------------------- | ------------------------------ | ----- | ---------- | ------------- | - | ----- | ------- | ------- | ------ | - | ---------- | ---------- | ------ | 
|                        |                                |       |            | 2002         
|                        |                                |       |            |              
|                        |                                |       |            | Aerospace and |   |       |         |         |        |   |            |           
|                        |                                |       |            | Defense       |   | Other |         | Total  
|                        |                                |       |            |               |   |       |         |         |        |   |            |            |       
|Revenue:                |                                |       |            |               |   |       |         |         |        |   |            |           
|                        | Contract revenue               |       | $          | 21,083,449    |   |       | $       |        |        |   | $          | 21,083,449 |       
|                        | Product sales:                 |       |            |               |   |       |         |         |        |   |            |            |       
|                        |                                | Other |            |               |  |       |         |         | 84,249 |   |            |            | 84,249 | 
|                        | Technology sales and royalties |       |            |              |   |       |         | 436,924 |        |   |            | 436,924    |       
|                        |                                |       |            |               |   |       |         |         |        |   |            |            |       
|Total revenue           |                                | $     | 21,083,449 |               |   | $     | 521,173 |         |        | $ | 21,604,622 |           
|                        |                                |       |            |               |   |       |         |         |        |   |            |            |       
|Operating income (loss) |                                | $     | 3,871,454  |               |   | $     | (28,035 | )       |        | $ | 3,843,419  |           




For the six-month periods ended June 30, 2003 and 2002, inter-segment sales
were insignificant and total intercompany sales of $ 211,052 and $ 47,478,
respectively, have been eliminated. For the six-month period
ended June 30, 2003 and 2002, sales to branches of the United
States Armed Forces were 88% and 82%, respectively, of total sales.







|                        |                                |       |            |            |   |                           |            |                           |        |   |            |            |        | 
|----------------------- | ------------------------------ | ----- | ---------- | ---------- | - | ------------------------- | ---------- | ------------------------- | ------ | - | ---------- | ---------- | ------ | 
|                        |                                |       |            | 2003      
|                        |                                |       |            |           
|                        |                                |       |            |            |   |                           |            |                          
|                        |                                |       |            | Aerospace  |   |                           |            |                          
|                        |                                |       |            | Defense    |   | Other                     |            | Total                    
|                        |                                |       |            |            |   |                           |            |                           |        |   |            |            |       
|                        |                                |       |            |            |   | (As restated
see Note 14) |            | (As restated
see Note 14)
|Revenue:                |                                |       |            |            |   |                           |            |                           |        |   |            |           
|                        | Contract revenue               |       | $          | 31,939,045 |   |                           | $          |                          |        |   | $          | 31,939,045 |       
|                        | Product sales:                 |       |            |            |   |                           |            |                           |        |   |            |            |       
|                        |                                | Other |            |            |  |                           |            |                           | 36,287 |   |            |            | 36,287 | 
|                        | Technology sales and royalties |       |            |           |   |                           |            | 446,504                   |        |   |            | 446,504    |       
|                        |                                |       |            |            |   |                           |            |                           |        |   |            |            |       
|Total revenue           |                                | $     | 31,939,045 |            |   | $                         | 482,791    |                           |        | $ | 32,421,836 |           
|                        |                                |       |            |            |   |                           |            |                           |        |   |            |            |       
|Operating income (loss) |                                | $     | 4,773,583  |            |   | $                         | (1,741,861 | )                         |        | $ | 3,031,722  |           




|                        |                                |       |            |               |   |       |           |         |         |   |            |            |         | 
|----------------------- | ------------------------------ | ----- | ---------- | ------------- | - | ----- | --------- | ------- | ------- | - | ---------- | ---------- | ------- | 
|                        |                                |       |            | 2002         
|                        |                                |       |            |              
|                        |                                |       |            | Aerospace and |   |       |           |         |         |   |            |           
|                        |                                |       |            | Defense       |   | Other |           | Total  
|                        |                                |       |            |               |   |       |           |         |         |   |            |            |        
|Revenue:                |                                |       |            |               |   |       |           |         |         |   |            |           
|                        | Contract revenue               |       | $          | 40,373,195    |   |       | $         |        |         |   | $          | 40,373,195 |        
|                        | Product sales:                 |       |            |               |   |       |           |         |         |   |            |            |        
|                        |                                | Other |            |               |  |       |           |         | 187,014 |   |            |            | 187,014 | 
|                        | Technology sales and royalties |       |            |              |   |       |           | 849,548 |         |   |            | 849,548    |        
|                        |                                |       |            |               |   |       |           |         |         |   |            |            |        
|Total revenue           |                                | $     | 40,373,195 |               |   | $     | 1,036,562 |         |         | $ | 41,409,757 |           
|                        |                                |       |            |               |   |       |           |         |         |   |            |            |        
|Operating income (loss) |                                | $     | 7,386,334  |               |   | $     | (233,733  | )       |         | $ | 7,152,601  |           




Note 14  Restatement:







Subsequent to the issuance of the
Companys unaudited consolidated financial statements for the quarter
ended June 30, 2003, the Company determined that certain costs
of the sale of the automotive safety business and the potential merger with Armor Holdings were incorrectly capitalized as Prepaid Expenses and Other on the balance sheet. These costs include legal
and other fees, related to these proposed transactions that had been
incurred by the Company and should have been recorded as expense as incurred. The Prepaid Expense and Other amount
in the balance sheet at June 30, 2003 has been restated to
expense the capitalized amount of $593,890. Of this amount, $144,057
was expensed in the restated three month period ended March 31,
2003 and $449,833 has been expensed in the three month period ended
June 30, 2003. In addition, (loss)/income per share
from discontinued operations for the three month and six month periods ended
June 30, 2003 have been restated to ($0.01) and $.02 per share,
respectively, instead of the previously reported amounts of $0.00 and
$0.01, respectively. A summary of the significant effects of the
restatement is as follows:







| |                                             |  |               |               |   |             |   |              |   | 
| | ------------------------------------------- |  | ------------- | ------------- | - | ----------- | - | ------------ | - | 
| |                                             |  | June 30, 2003
| |                                             |  |              
| |                                             |  |               | As Previously |   |            
| |                                             |  |               | Reported      |   | As Restated
| |                                             |  |               |               |   |             |   |              |  
| | Prepaid expense and other                   |  | $             | 1,266,895     |   |             | $ | 673,005      |  
| | Total current assets                        |  |               | 32,321,969    |   |             |   | 31,728,079   |  
| | Total assets                                |  |               | 49,459,329    |   |             |   | 48,865,439   |  
| | Accumulated
deficit                         |  |               | (100,341,391  | ) |             |   | (100,935,281 | )
| | Total
shareholders deficit                 |  |               | (41,868,104   | ) |             |   | (42,461,994  | )
| | Total
liabilities and shareholders deficit |  |               | 49,459,329    |   |             |   | 48,865,439   |  







| |                                     |  |                            |               |   |             |   |            |   | 
| | ----------------------------------- |  | -------------------------- | ------------- | - | ----------- | - | ---------- | - | 
| |                                     |  | For the
Three Months Ended
| |                                     |  | June 30, 2003             
| |                                     |  |                           
| |                                     |  |                            | As Previously |   |            
| |                                     |  |                            | Reported      |   | As Restated
| |                                     |  |                            |               |   |             |   |            |  
| | Administrative Expenses             |  | $                          | 3,381,305     |   |             | $ | 3,831,138  |  
| | Operating Income                    |  |                            | 2,401,506     |   |             |   | 1,951,673  |  
| | Loss
Before Income Taxes            |  |                            | (1,682,815    | ) |             |   | (2,132,648 | )
| | Loss Before Discontinued Operations |  |                            | (1,682,815    | ) |             |   | (2,132,648 | )
| | Net loss                            |  |                            | (1,751,202    | ) |             |   | (2,201,035 | )
| | Net
loss per share  basic          |  | $                          | (.13          | ) |             | $ | (.17       | )
| | Net
loss per share  diluted        |  | $                          | (.13          | ) |             | $ | (.17       | )







| |                                     |  |                          |               |   |             |   |            |   | 
| | ----------------------------------- |  | ------------------------ | ------------- | - | ----------- | - | ---------- | - | 
| |                                     |  | For the Six Months Ended
| |                                     |  | June 30, 2003           
| |                                     |  |                         
| |                                     |  |                          | As Previously |   |            
| |                                     |  |                          | Reported      |   | As Restated
| |                                     |  |                          |               |   |             |   |            |  
| | Administrative Expenses             |  | $                        | 6,675,867     |   |             | $ | 7,269,757  |  
| | Operating Income                    |  |                          | 3,625,612     |   |             |   | 3,031,722  |  
| | Loss Before Taxes                   |  |                          | (3,131,359    | ) |             |   | (3,725,249 | )
| | Loss Before Discontinued Operations |  |                          | (3,148,370    | ) |             |   | (3,742,260 | )
| | Net loss                            |  |                          | (2,929,037    | ) |             |   | (3,522,927 | )
| | Net
loss per share  basic          |  | $                        | (.23          | ) |             | $ | (.27       | )
| | Net
loss per share  diluted        |  | $                        | (.23          | ) |             | $ | (.27       | )




11



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Results of Operations and
Financial Condition.




The
following managements discussion and analysis
gives effect to the restatement discussed in Note 14 to the unaudited consolidated financial statements.




Results of Operations

Three and Six Month Periods Ended June 30, 2003 Compared to
Three and Six Month Periods Ended June 30, 2002

CONSOLIDATED




|                                                                                |  |                          |        |                  |  |                          |        |                          |  |                          |         |      |  |                          |      |                          |  |   |        |   |  |   |        |   |  |   |        |         |  |  |      |   
|------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---------------- |  | ------------------------ | ------ | ------------------------ |  | ------------------------ | ------- | ---- |  | ------------------------ | ---- | ------------------------ |  | - | ------ | - |  | - | ------ | - |  | - | ------ | ------- |  |  | ---- | --
|                                                                                |  | Three Months Ended       |        | Six Months Ended
|                                                                                |  | June 30,                 |        | June 30,        
|                                                                                |  |                          |        |                 
|                                                                                |  |                          |        |                  |  |                          |        |                          |  |                          |         |      |  | Percent                  |      |                          |  |   |        |   |  |   |        |   |  |   |        | Percent
|(In thousands)                                                                  |  | 2003                     |        | 2002             |  | Change                   |        | Inc (Dec)                |  | 2003                     |         | 2002 |  | Change                   |      | Inc (Dec)               
|                                                                                |  |                          |        |                  |  |                          |        |                          |  |                          |         |      |  |                          |      |                         
|                                                                                |  | (As
restatedSee Note 14) |        |                  |  | (As
restatedSee Note 14) |        | (As
restatedSee Note 14) |  | (As
restatedSee Note 14) |         |      |  | (As
restatedSee Note 14) |      | (As
restatedSee Note 14)
|                                                                               
|Revenue                                                                         |  | $                        | 17,217 |                  |  | $                        | 21,605 |                          |  |                          | ($4,388 | )    |  |                          | (20  | %)                       |  | $ | 32,422 |   |  | $ | 41,410 |   |  | $ | (8,988 | )       |  |  | (21  | %)
|Gross margin                                                                    |  |                          | 6,625  |                  |  |                          | 7,692  |                          |  |                          | (1,067  | )    |  |                          | (13  | %)                       |  |   | 12,030 |   |  |   | 14,717 |   |  |   | (2,687 | )       |  |  | (18  | %)
|Administrative and research
and development expense                             |  |                          | 4,375  |                  |  |                          | 3,849  |                          |  |                          | 526     |      |  |                          | 14   | %                        |  |   | 8,399  |   |  |   | 7,564  |   |  |   | 835    |         |  |  | 11   | % 
|Operating income                                                                |  |                          | 1,952  |                  |  |                          | 3,843  |                          |  |                          | (1,891  | )    |  |                          | (49  | %)                       |  |   | 3,032  |   |  |   | 7,153  |   |  |   | (4,121 | )       |  |  | (57  | %)
|Interest expense, net                                                           |  |                          | 3,084  |                  |  |                          | 2,573  |                          |  |                          | 511     |      |  |                          | 19   | %                        |  |   | 5,757  |   |  |   | 5,115  |   |  |   | 642    |         |  |  | 12   | % 
|Other expense                                                                   |  |                          | 1,000  |                  |  |                          |       |                          |  |                          | 1,000   |      |  |                          | 100  | %                        |  |   | 1,000  |   |  |   |       |   |  |   | 1,000  |         |  |  | 100  | % 
|(Loss)
income before income tax                                                 |  |                          | (2,132 | )                |  |                          | 1,271  |                          |  |                          | (3,403  | )    |  |                          | (268 | %)                       |  |   | (3,725 | ) |  |   | 2,038  |   |  |   | (5,763 | )       |  |  | (283 | %)
|Income tax expense                                                              |  |                          |       |                  |  |                          | 559    |                          |  |                          | (559    | )    |  |                          | (100 | %)                       |  |   | 17     |   |  |   | 840    |   |  |   | (823   | )       |  |  | (97  | %)
|Gross margin as a percentage
of revenue                                         |  |                          | 38     | %                |  |                          | 35     | %                        |  |                          |         |      |  |                          |      |                          |  |   | 37     | % |  |   | 35     | % |  |   |        |         |  |  |      |   
|Administrative and research
and development expenses
as a percentage of revenue |  |                          | 25     | %                |  |                          | 17     | %                        |  |                          |         |      |  |                          |      |                          |  |   | 26     | % |  |   | 18     | % |  |   |        |         |  |  |      |   




AEROSPACE & DEFENSE

|                                        |  |                    |        |                  |  |        |        |           |  |      |        |      |  |         |     |       |  |   |        |   |  |   |        |   |  |   |        |     |  |         |     |   
|--------------------------------------- |  | ------------------ | ------ | ---------------- |  | ------ | ------ | --------- |  | ---- | ------ | ---- |  | ------- | --- | ----- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | --- |  | ------- | --- | --
|                                        |  | Three Months Ended |        | Six Months Ended
|                                        |  | June 30,           |        | June 30,        
|                                        |  |                    |        |                 
|                                        |  |                    |        |                  |  |        |        |           |  |      |        |      |  |         |     |       |  |   |        |   |  |   |        |   |  |   |        |     |  | Percent
|                                        |  |                    |        |                  |  |        |        |           |  |      |        |      |  | Percent |     |       |  |   |        |   |  |   |        |   |  |   |        | Inc
|(In thousands)                          |  | 2003               |        | 2002             |  | Change |        | Inc (Dec) |  | 2003 |        | 2002 |  | Change  |     | (Dec)
|                                        |  |                    |        |                  |  |        |        |           |  |      |        |      |  |         |     |      
|Revenue                                 |  | $                  | 16,899 |                  |  | $      | 21,083 |           |  | $    | (4,184 | )    |  |         | (19 | %)    |  | $ | 31,939 |   |  | $ | 40,373 |   |  | $ | (8,434 | )   |  |         | (20 | %)
|Gross margin                            |  |                    | 6,464  |                  |  |        | 7,312  |           |  |      | (848   | )    |  |         | (11 | %)    |  |   | 11,817 |   |  |   | 14,022 |   |  |   | (2,205 | )   |  |         | (15 | %)
|Gross margin as a
percentage of
revenue |  |                    | 38     | %                |  |        | 34     | %         |  |      |        |      |  |         |     |       |  |   | 36     | % |  |   | 34     | % |  |   |        |     |  |         |     |   

Results of Operations for the Three-Month Period Ended June 30, 2003

Revenue for the three-month period ended June 30, 2003 decreased 20%
compared to revenue in the same period for 2002. Revenue for the period
declined 19% in the Aerospace and Defense segment primarily due to timing of
orders and delays in Department of Defense funding of various programs.We completed the move of our Asheville facility to
our Phoenix facility as of March 31, 2003; however, temporary revenue
shortfalls affected this area of our business as the former Asheville
operations were integrated into the Phoenix facility. Small Arms Protective
Inserts (SAPI) business continues to be robust. However, SAPI revenues were
negatively impacted during the second quarter of 2003 compared to the same
period in 2002 due to the timing of orders and the validation and rework
completed in the first quarter of 2003. The aforementioned decreases were
partially offset by increased revenues related to our Inflatable Systems and
Product Spares. The remaining revenue decrease is attributable to our
technology licensing efforts, which decreased during the second quarter of
2003, primarily due to a strategic decision to retain all technology rights as
an asset during our focused efforts on selling the entire Company.
Results were consistent with internal expectations and forecasts.

12



---



##### Table of Contents



Gross margin as a percent of sales increased to 38% for the three-month
period ended June 30, 2003 from 35% for the comparable period in 2002. Gross
margin as a percent of sales in our Aerospace and Defense segment increased to
38% for the three months ended June 30, 2003 from 34% for the same period in
2002. The increase was primarily due to cost savings related to the move and
integration of the Asheville facility to our Phoenix location as well as the
effect of cost reduction efforts completed in 2002 and early 2003.



Administrative and research and development expenses for the three-month
period ended June 30, 2003 increased $0.5 million or 14% as compared to the same
2002 period. The increase is related to increased research and development
activities and transaction costs related to selling our automotive
safety business as well as the sale of the entire Company. We and others in the aerospace and defense industry have
experienced a shift from externally funded development to more internally
funded development, which has caused research and development expenditures to
increase for the three months ended June 30, 2003 compared to the same period
in 2002. Transaction costs for the three-month period ended
June 30, 2003 were approximately $0.4 million, additionally, approximately $0.3 million of relocation charges
related to the Asheville facility shutdown and move is included in general
administrative expense for the three months ended June 30, 2003. The
aforementioned increases were partially offset by cost saving reductions in
general administrative expenses related to restructuring activities discussed
above.






Operating
income for the three-month period ended June 30, 2003 was $2.0 million compared to $3.8 million for the same period in 2002. This decrease
was attributable to lower revenues and transaction costs discussed above as well as restructuring
charges and other costs associated with the move and integration of our
Asheville facility.




Interest expense increased to $3.1 million for the three-month period
ended June 30, 2003 compared to $2.6 for the same period in 2002. The increase
is primarily attributable to approximately $0.4 million of expense related to a
yield maintenance interest feature in the mortgage note for the Asheville
facility that was retired in April 2003. Cash paid for interest for each of
the three-month periods ended June 30, 2003 and 2002 was $1.4 million and $1.4
million, respectively.

Other expense for the three-month period ended June 30, 2003 was $1.0
million and was entirely attributable to a one-time performance fee payment
related to covenant non-compliance under our Senior Secured Note.




We recorded a tax expense of approximately $173,000 and a tax benefit of $173,676, respectively in discontinued
operations for the three-month period ended June 30, 2003 and 2002 for our operations in
the U.K. and believe that the year to date tax rate is properly reflected in
the financial statements.




Results of Operations for the Six-Month Period Ended June 30, 2003

Revenue for the six-month period ended June 30, 2003 decreased 21%
compared to revenue in the same period for 2002. Revenue for the period
declined 20% in the Aerospace and Defense segment. In the first quarter of
2003, SAPI body armor revenue grew compared to the same period in 2002.
However, production revenues and profitability were negatively impacted as we
completed the SAPI body armor design validation for rework announced in
November of 2002. We resumed full production of SAPI for the U.S. Army in late
February 2003, but the design validation process did cause delay in the timing
of revenues anticipated in the second quarter of 2003 related to new SAPI
orders. Also in the first quarter, we completed the consolidation of our
Asheville, North Carolina, operation into the larger Aerospace and Defense
facility based in Phoenix. The plant closure and transition resulted in a
temporary revenue shortfall. Additionally, revenues were negatively impacted
by decreases in orders for our military sealed parachute product and were
partially offset by increased production of military personnel vests. The
aforementioned decreases were also partially offset by increases in our
Inflatable Systems and Product Spares. Technology and licensing revenues for
the six-months ended June 30, 2003 decreased approximately 48% compared to the
same period in 2002 and is primarily attributed to a strategic decision to
retain all technology rights as an asset during our focused efforts on selling
the entire Company.

Gross margin as a percentage of sales increased to 37% for the six-month
period ended June 30, 2003 from 35% for the comparable period in 2002. Gross
margin as a percent of sales in our Aerospace and Defense segment increased to
36% for the six months ended June 30, 2003 from 34% for the same period in
2002. The integration of the Asheville facility to the Phoenix location
enabled us to achieve cost savings not experienced in 2002 and cost reduction
efforts began in 2002 and early 2003 have been the key drivers for the
increased margins.

13



---



##### Table of Contents






Administrative and research and development expenses for the six-month
period ended June 30, 2003 increased $0.8 million or 11% as compared to the same
2002 period. The increase is due primarily to increases in research and
development costs due to investments in the design and qualification testing of
new SAPI body armor product for future procurements as well as by company wide
premium increases in insurance that did not have an impact in the six month
period ended June 30, 2002. Also included in general administrative expense as
of June 30, 2003 is approximately $0.6 million of
transaction costs related to the selling of our automotive safety
business as well as the sale of the entire Company and $0.4 million of relocation costs related to
the Asheville facility shutdown and move. These increases in costs were
partially offset by cost reductions activities initiated in 2002 and early
2003.






Operating
income for the six-month period ended June 30, 2003 was $3.0 million as compared to $7.2 million for the same period in 2002. The 2003
operating income for the six-month period was negatively impacted by lower
revenues discussed above as well as restructuring charges,
transaction costs, costs associated
with the move of our Asheville facility, the investments in the design and
qualification testing for SAPI body armor for future procurements and the
completion of the voluntary SAPI rework.




Interest expense for the six-month period ended June 30, 2003 was $5.8
million compared to $5.1 million for the same period in 2002. The increase in
interest expense between the two periods is primarily attributable to
approximately $0.4 million of expense related to a yield maintenance interest
feature in the mortgage note for the Asheville facility that the was retired in
April 2003. Cash paid for interest for each of the six-month periods ended
June 30, 2003 and 2002 was $3.8 million.



Other
expense for the six-month period ended June 30, 2003 was $1.0
million and was entirely attributable to a one-time performance fee payment
related to covenant non-compliance for failure to met a leverage ratio as of
June 30, 2003 under our Senior Secured Note.







We recorded a tax expense of approximately $283,000, of which
approximately $265,989 is recorded in discontinued operations, for the
six-month period ended June 30, 2003 for our operations in the U.K. and North
Carolina and a tax expense of approximately $591,000, of which
approximately $248,759 of benefit was recorded in discontinued
operations, for the six month period ended June 30, 2002. We believe that
the year to date tax rate is properly reflected in
the financial statements.




Liquidity and Capital Resources




The
accompanying unaudited consolidated financial statements have been prepared on
a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
As noted in the accompanying financial statements, current maturities
of debt are approximately $71,450,000 million as of
June 30, 2003 and there is uncertainty relating to the
Companys ability to refinance certain of its debt. These
factors, among others, indicate that the Company may be unable to
continue as a going concern. The accompanying financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. As part
of the plan to meet future quarterly covenants and current and
long-term debt maturities, we sold our automotive safety business
during July 2003 and subsequently entered into a letter of intent
providing for the sale and merger of Simula, Inc. as discussed in
Note 12. Subsequent Events of the unaudited consolidated
financial statements.







Current
maturities of our debt as of June 30, 2003 are $71.5 million and
primarily consist of $ 9.6 million under our revolving line of credit (RLC)
due September 30, 2003, $3.2 million of our 9.5% Senior Subordinated Notes due
September 30, 2003, $27.3 million of our Senior Secured Note due December 31,
2003, and $31.4 million of our 8% Senior Subordinated Notes due May 1, 2004.
As part of the plan to meet future quarterly covenants and current and long-term debt
maturities, we sold our Automotive Safety division during July 2003
and subsequently entered into a
letter of intent providing for the sale and merger of Simula, Inc., as discussed below.




On July 22, 2003, we completed the sale of all the assets of our
Automotive Safety division to Zodiac, S.A. at a selling price of $14.3 million
in cash. Customary closing and purchase price adjustments are expected to be
completed within 45 days of the sale closing. After deducting closing costs
and purchase price adjustments, we received net proceeds of approximately $11.0
million. Currently included in the closing costs is approximately $1.0 million
related to two separate escrow accounts, from which we can potentially recover
a maximum $0.5 million within three months and a maximum of $0.5 million in 18
months. The transaction resulted in a gain on sale of discontinued operations
of approximately $0.1 million before recovery of any amounts deposited in the
escrows previously discussed. We applied the net proceeds to repay a portion
of our outstanding debt.

On July 23, 2003, we announced that we signed a Letter of Intent (LOI)
to be acquired by Armor Holdings, Inc. (NYSE:AH) of Jacksonville, Florida. The
LOI states that Armor Holdings shall acquire all outstanding common stock of
the Company, retire outstanding indebtedness, and assume all liabilities of
Simula for total consideration of $110.5 million. Consideration to Simulas
shareholders will, at Armor Holdings discretion, consist of cash or a
combination of cash and registered shares of Armor Holdings common stock, with
at least 20% of the value of the payment to shareholders to be in cash. The
transaction is structured as a merger and is expected to be taxable to Simulas
shareholders.

The LOI calls for an exclusive negotiation period through August 29, 2003,
during which the companies will endeavor to complete all necessary activities
leading to the execution of a definitive merger agreement. The LOI provides
for a good faith deposit by Armor Holdings, expedited due diligence and payment
of a break-up fee if Simula accepts a competing offer. The transaction is
subject to, among other things, satisfactory due diligence, the execution of a
definitive agreement, regulatory approvals including

14



---



##### Table of Contents



satisfaction of the requirements and waiting period related to the
Hart-Scott-Rodino Antitrust Improvements Act, requisite approvals by each
companys Board of Directors, and the approval of Simulas shareholders. Upon
completion of the definitive agreement, we anticipate submission of a
proxy/registration statement to its shareholders for approval of the
transaction and a closing on or about November 15, 2003. The Board of
Directors of both Simula and Armor Holdings have approved the proposed
transaction as defined in the LOI.

On June 30, 2003, we were not in compliance with certain non-monetary
financial covenants under our RLC. On August 12, 2003, we received waivers of
the non-compliance at June 30, 2003. In addition, as of June 30, 2003, we were
not in compliance with certain non-monetary financial covenants under our
Senior Secured Note, which provided for a fee of $1.0 million. The fee has
been recorded as of June 30, 2003, is separately classified in other income and
expense and was paid on July 31, 2003. On August 12, 2003, we received a
waiver of the non-compliance at June 30, 2003.

Because of our management and operational re-alignment and our operational
profitability, we expect to generate future positive operating cash flows that,
together with our existing availability under our RLC, will be adequate to fund
our planned operations, excluding the principal payments on the current debt
previously discussed.

We continually review our revenue and cost forecasts so that we can react
to changes in our operations and liquidity position. The amount and timing of
Department of Defense procurement and future constraints on certain raw
materials and their costs could impact our ability to generate Aerospace and
Defense revenue and income. SeeForward-Looking Information and Risks and
Uncertainties in our Businessbelow andQuantitative and Qualitative
Disclosure about Market Riskincluded Item 3 of this Part I

Our ability to generate sufficient cash flow from operations is
principally dependent upon our ability to continue to increase revenue and
contain or reduce operating expenses. At June 30, 2003, we had cash and cash
equivalents of $193,199 compared to $147,842 at December 31, 2002. Our RLC had
outstanding borrowings of $9.6 million and remaining borrowing availability of
$5.8 million at June 30, 2003 as compared to outstanding borrowings of $11.3
million and a remaining borrowing availability of $1.3 million at December 31,
2002. At August 11, 2003 our outstanding borrowings under the
RLC was $0.7 million and remaining borrowing availability was
$4.1 million. Because of our
federal and certain state net operating loss carryforwards, we are not a
significant cash taxpayer.

Operating activities provided approximately $2.2 million of cash during
the six months ended June 30, 2003 as compared to approximately $1.0 million
for the comparable period in 2002. The increase in cash provided by operations
was attributable to less overall working capital required as compared to the
prior 2002 period, which required heavier investments primarily in accounts
receivable and inventory and was partially offset by an increase in accounts
payable and decreases in advances on contracts.

Investing activities provided $0.5 million during the six-months ended
June 30, 2003 compared to a use of approximately $0.8 million for the same
period in 2002. The increase in cash provided by investing activities is
related to the completion of the sale of the Asheville facility. After closing
costs, we received proceeds of approximately $1.5 million and applied those
proceeds to retire the mortgage on the facility of approximately $0.9 million
and pay a yield maintenance interest fee of approximately $0.4 million, which
is recorded in interest expense. The cash provided by investing activities was
partially offset by the purchase of manufacturing equipment and additional
investment in our patent portfolio.

Financing activities used net cash of $2.6 million for the six-months
ended June 30, 2003, compared to $0.2 million provided by financing activities
for the same period in 2002. Cash used in financing activities during the
six-months ended June 30, 2003 was attributable to retirement of the Asheville
facility mortgage note payable and decreased borrowings under our RLC.

We believe we have sufficient manufacturing capacity, at June 30, 2003, to
meet our anticipated future delivery requirements. We may, however, seek
strategic partners for the joint development of capital intensive manufacturing
capacity for new high technology products.

15



---



##### Table of Contents



Research and Development

Historically, we have made significant investments in research and
development. Our research and development expenditures have fluctuated based
on available government-funded contracts and available company funding. We
anticipate that future fluctuations will continue as a result of our efforts to
expand product lines and enhance our existing technologies.

Forward Looking Information and Risks and Uncertainties in our Business

A wide variety of factors affect our projected operating and financial
results and can adversely impact our revenues, profitability and cash flows.
Our liquidity and available working capital depend upon our cash flow from
operations and, will require proceeds from asset sales or licensing,
refinancing of our debt, or potential sale or merger of Simula. Improved cash
flow from operations will depend on our ability to continue to implement our
cost cutting initiatives. Continued compliance with our debt covenants is
necessary to avoid loan defaults and is a requirement for maintaining access to
funds available under our RLC.

With respect to our product offerings many of our products are
subassemblies in final products. We act as subcontractor to defense industry
prime contractors. Accordingly, we are reliant on others to gain and retain
market acceptance for our products, and we must continue to demonstrate that
our products will provide advantages to the manufacturers of final products,
including increasing product safety and providing such manufacturers with
competitive cost advantages

Although we have long established relationships with a number of our
Aerospace and Defense customers, we do not have significant long-term supply
contracts with any of these customers. Our customers typically do not commit
to long-term production schedules and, as a result, customer orders generally
are subject to cancellation or delay. Reliance upon defense contracts involves
certain risks, including dependence on congressional appropriations and changes
in governmental policies that reflect military and political developments.

Factors pertinent to our ability to meet our current and future financial
requirements and projections include:



| |  | our ability to complete the pending acquisition by Armor Holdings, Inc.;                                                                                                                                                     
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | our relationship with our senior lenders and on-going compliance with loan terms and covenants;                                                                                                                              
| 
| |  | our relationship with significant customers and maintenance of preferred supplier relationships with them that are
renegotiated frequently;                                                                                  
| 
| |  | our leveraged status and the level and cost of our debt;                                                                                                                                                                     
| 
| |  | the continued reduction of our fixed expenses;                                                                                                                                                                               
| 
| |  | ability to monetize assets including through sales of certain assets or technologies at a favorable price;                                                                                                                   
| 
| |  | our ability to continue to provide design and manufacturing services, products and new product applications that compare
favorably on the basis of time to introduction, cost, and performance with those of our competitors;
| 
| |  | the level and makeup of military expenditures;                                                                                                                                                                               
| 
| |  | contract mix and shifting production and delivery schedules among our market segments;                                                                                                                                       
| 
| |  | the amount of resources available for independent research and development;                                                                                                                                                  
| 
| |  | proof of concept and production validation of certain of our new technologies and proposed products, as well as our
financial ability to establish manufacturing capacity for such products; and                             
| 
| |  | technological changes introduced by competitors and customers.                                                                                                                                                               

As used throughout this report, the words estimate, anticipate,
expect, should, intend, project, target, or other expressions that
indicate future events identify forward-looking statements which are made
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. We undertake no obligation to update any of these forward-looking
statements to reflect events or circumstances after the date on which such
statements were made or to reflect the occurrence of unanticipated events.
Actual results and trends may differ materially. Risks include those described
herein and in our registration statements and periodic reports filed with the
U.S. Securities and Exchange Commission.

16



---



##### Table of Contents









Item 3. Quantitative and Qualitative Disclosure about Market Risk

Currency Exchange Rate Risk

We have currency exposures related to buying and selling in currencies
other than the local currency in which we operate. These exposures may impact
future earnings and/or operating cash flows. Currently, our most significant
exposure relates to the Euro and the British Pound. We have supply contracts
that are Euro denominated for our ITS® and AHPS products. We maintained a
manufacturing facility in the United Kingdom for which we fund operating
expenses in British Pounds. We enter into foreign currency hedge transactions
to mitigate our associated risks. The magnitude of the exposure varies over
time and we enter into agreements from time to time by which we seek to manage
certain portions of our foreign exchange exposure in accordance with
established policy guidelines. These arrangements primarily hedge cash flows
for forecasted transactions involving receivables and payables. We currently
have no hedging contracts open as of June 30, 2003, and we disposed of our U.K.
manufacturing facility when we sold our Automotive Safety division on July 22,
2003.

Item 4. Controls and Procedures




We
evaluated, under the supervision and with the participation of management,
including the Chief Executive Officer (CEO) and the Chief Financial Officer
(CFO), the effectiveness of the design and operation of our disclosure controls
and procedures as of June 30, 2003, pursuant to Rule 15d-14 under the Securities Exchange Act of
1934 (Exchange Act). Based upon that evaluation, the CEO and CFO concluded
that Simulas disclosure controls and procedures are effective to ensure that
information required to be disclosed in Simulas reports filed or submitted
under the Exchange Act are recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules
and forms.







During
the quarterly period covered by this amended report, there were no significant
changes in our internal controls or in other factors that could significantly
affect the disclosure controls.




17



---



##### Table of Contents









PART II  OTHER INFORMATION

Item 6. Exhibits and Reports

(a) Exhibits: The following Exhibits are included pursuant to Item 601 of Regulation S-K.

|       |  |                                                                                                                                               |  |           |     |  
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | --- | -
|No.    |  | Description                                                                                                                                   |  | Reference
|3.1    |  | Articles of Incorporation of Simula, Inc., as amended and restated                                                                            |  |           | (2  | )
|       |  |                                                                                                                                               |  |           |     |  
|3.2    |  | Bylaws of Simula, Inc., as amended and restated                                                                                               |  |           | (1  | )
|       |  |                                                                                                                                               |  |           |     |  
|4.7    |  | Indenture dated April 1, 1997, in connection with the Companys issuance of the 8%
Senior Subordinated Convertible Notes due May 1, 2004.     |  |           | (6  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.11  |  | 1992 Stock Option Plan, as amended effective September 15, 1998.                                                                              |  |           | (3  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.12  |  | 1992 Restricted Stock Plan                                                                                                                    |  |           | (1  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.21  |  | 1994 Stock Option Plan, as amended effective September 15, 1998.                                                                              |  |           | (3  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.26  |  | Simula, Inc. Employee Stock Purchase Plan                                                                                                     |  |           | (2  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.27  |  | Outside Directors Equity Plan                                                                                                                 |  |           | (9  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.37  |  | Simula, Inc. 1999 Incentive Stock Option Plan                                                                                                 |  |           | (4  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41  |  | Financing Agreement with The CIT Group/Business Credit, Inc. dated December 30,1999.                                                          |  |           | (5  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41A |  | Amendment Number Three to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated September 26, 2001.           |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41B |  | Amendment Number Five to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated June 30, 2002.                 |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41C |  | Amendment Number Seven to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated October 22, 2002.             |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41D |  | Amendment Number Nine to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated March 25, 2003.                |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41E |  | Waiver to Certain Financial Covenants to Financing Agreement between the Company and
The CIT Group/Business Credit, Inc. dated April 9, 2003. |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45  |  | Loan Agreement between the Company and Allied Capital Corporation dated September 26,
2001.                                                   |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45A |  | Waiver and Amendment No. 1 to Loan Agreement between the Company and Allied Capital
Corporation dated August 19, 2002.                        |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45B |  | Consent and Amendment No. 2 to Loan Agreement between the Company and Allied Capital
Corporation dated March 25, 2003.                        |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.46  |  | Employment Agreement between the Company and Bradley P. Forst dated November 12,
2001, effective October 1, 2000.                             |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.48  |  | Employment Agreement between the Company and Joseph Coltman dated December 13, 2001,
effective October 13, 2000.                              |  |           | (8  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.50  |  | Retention Agreement between the Company and John A. Jenson dated December 20, 2002.                                                           |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|31.1   |  | Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|31.2   |  | Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|32.1   |  | Certification of Chief Executive Officer pursuant to item 601(b)(32) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|32.2   |  | Certification of Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K                                                        |  |           | *   |  



|* |  | Filed herewith
|- |  | --------------



| | (1)  |  | Filed with Registration Statement on Form S-18, No. 33-46152-LA,
under the Securities Act of 1933, effective April 13, 1992.
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------
|
| | (2)  |  | Filed with Definitive Proxy on May 15, 1996, for the Companys
Annual Meeting of Shareholders held on June 20, 1996.        
|
| | (3)  |  | Filed with report on Form 10-Q for the quarter ended September 30,
1998.                                                    
|
| | (4)  |  | Filed with Definitive Proxy on May 14, 1999, for the Companys
Annual Meeting of Shareholders held on June 17, 1999.        
|
| | (5)  |  | Filed with report on Form 10-K for the year ended December 31,
1999.                                                        
|
| | (6)  |  | Filed with report on Form 10-Q for the quarter ended March 31,
2000.                                                        
|
| | (7)  |  | Filed with report on Form 10-Q for the quarter ended September 30,
2001.                                                    
|
| | (8)  |  | Filed with report on Form 10-K for the year ended December 31,
2001.                                                        
|
| | (9)  |  | Filed with Registration Statement on Form S-8, effective March 28,
2002.                                                    
|
| | (10) |  | Filed with report on Form 10-Q for the quarter ended September 30,
2002.                                                    

18



---



##### Table of Contents





| | (11) |  | Filed with report on Form 10-K for the year ended December 31,
2002.
| | ---- |  | --------------------------------------------------------------------

(b) Reports on Form 8-K:



| | (1) |  | Report on Form 8-K dated May 15, 2003 furnishing notification of
issuance of a press release pertaining to earnings for the fiscal
quarter ended March 31, 2003.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | Report on Form 8-K dated June 17, 2003 disclosing an agreement for
the sale of assets of the Companys Automotive Safety subsidiary.                            

19



---



##### Table of Contents






SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amended report on Form 10-Q/A
(Amendment No. 1) for the quarter ended June 30, 2003 to be signed on its behalf by the undersigned thereunto duly
authorized.







|                       |  |                                       
|---------------------- |  | --------------------------------------
|                       |  | SIMULA, INC.                          
|                       |  |                                       
|DATE: November 5, 2003 |  | /s/ John A. Jenson                    
|                       |  |                                       
|                       |  | John A. Jenson
Chief Financial Officer




20



---



##### Table of Contents






EXHIBIT INDEX

|       |  |                                                                                                                                               |  |           |     |  
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | --- | -
|No.    |  | Description                                                                                                                                   |  | Reference
|3.1    |  | Articles of Incorporation of Simula, Inc., as amended and restated                                                                            |  |           | (2  | )
|       |  |                                                                                                                                               |  |           |     |  
|3.2    |  | Bylaws of Simula, Inc., as amended and restated                                                                                               |  |           | (1  | )
|       |  |                                                                                                                                               |  |           |     |  
|4.7    |  | Indenture dated April 1, 1997, in connection with the Companys issuance of the 8%
Senior Subordinated Convertible Notes due May 1, 2004.     |  |           | (6  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.11  |  | 1992 Stock Option Plan, as amended effective September 15, 1998.                                                                              |  |           | (3  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.12  |  | 1992 Restricted Stock Plan                                                                                                                    |  |           | (1  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.21  |  | 1994 Stock Option Plan, as amended effective September 15, 1998.                                                                              |  |           | (3  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.26  |  | Simula, Inc. Employee Stock Purchase Plan                                                                                                     |  |           | (2  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.27  |  | Outside Directors Equity Plan                                                                                                                 |  |           | (9  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.37  |  | Simula, Inc. 1999 Incentive Stock Option Plan                                                                                                 |  |           | (4  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41  |  | Financing Agreement with The CIT Group/Business Credit, Inc. dated December 30,1999.                                                          |  |           | (5  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41A |  | Amendment Number Three to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated September 26, 2001.           |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41B |  | Amendment Number Five to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated June 30, 2002.                 |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41C |  | Amendment Number Seven to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated October 22, 2002.             |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41D |  | Amendment Number Nine to Financing Agreement between the Company and The CIT
Group/Business Credit, Inc. dated March 25, 2003.                |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.41E |  | Waiver to Certain Financial Covenants to Financing Agreement between the Company and
The CIT Group/Business Credit, Inc. dated April 9, 2003. |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45  |  | Loan Agreement between the Company and Allied Capital Corporation dated September 26,
2001.                                                   |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45A |  | Waiver and Amendment No. 1 to Loan Agreement between the Company and Allied Capital
Corporation dated August 19, 2002.                        |  |           | (10 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.45B |  | Consent and Amendment No. 2 to Loan Agreement between the Company and Allied Capital
Corporation dated March 25, 2003.                        |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|10.46  |  | Employment Agreement between the Company and Bradley P. Forst dated November 12,
2001, effective October 1, 2000.                             |  |           | (7  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.48  |  | Employment Agreement between the Company and Joseph Coltman dated December 13, 2001,
effective October 13, 2000.                              |  |           | (8  | )
|       |  |                                                                                                                                               |  |           |     |  
|10.50  |  | Retention Agreement between the Company and John A. Jenson dated December 20, 2002.                                                           |  |           | (11 | )
|       |  |                                                                                                                                               |  |           |     |  
|31.1   |  | Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|31.2   |  | Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|32.1   |  | Certification of Chief Executive Officer pursuant to item 601(b)(32) of Regulation S-K                                                        |  |           | *   |  
|       |  |                                                                                                                                               |  |           |     |  
|32.2   |  | Certification of Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K                                                        |  |           | *   |  



|* |  | Filed herewith
|- |  | --------------



| | (1)  |  | Filed with Registration Statement on Form S-18, No. 33-46152-LA,
under the Securities Act of 1933, effective April 13, 1992.
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------
|
| | (2)  |  | Filed with Definitive Proxy on May 15, 1996, for the Companys
Annual Meeting of Shareholders held on June 20, 1996.        
|
| | (3)  |  | Filed with report on Form 10-Q for the quarter ended September 30,
1998.                                                    
|
| | (4)  |  | Filed with Definitive Proxy on May 14, 1999, for the Companys
Annual Meeting of Shareholders held on June 17, 1999.        
|
| | (5)  |  | Filed with report on Form 10-K for the year ended December 31,
1999.                                                        
|
| | (6)  |  | Filed with report on Form 10-Q for the quarter ended March 31,
2000.                                                        
|
| | (7)  |  | Filed with report on Form 10-Q for the quarter ended September 30,
2001.                                                    
|
| | (8)  |  | Filed with report on Form 10-K for the year ended December 31,
2001.                                                        
|
| | (9)  |  | Filed with Registration Statement on Form S-8, effective March 28,
2002.                                                    
|
| | (10) |  | Filed with report on Form 10-Q for the quarter ended September 30,
2002.                                                    
|
| | (11) |  | Filed with report on Form 10-K for the year ended December 31,
2002.