DHB CAPITAL GROUP INC /DE/, SB-2, 1997-07-16

DHB CAPITAL GROUP INC /DE/
SB-2, 1997-07-16
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

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As filed with the Commission on July ____, 1997 Registration No. ___________
- --------------------------------------------------------------------------------

U.S. Securities and Exchange Commission
Washington, D.C. 20549

Form SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

Delaware 3842 11-3129361
- --------------------------------------------------------------------------------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

11 Old Westbury Road
Old Westbury, New York 11568
(516) 997-1155

(Address and telephone number of principal executive offices, and
address of principal place of business or intended principal place of business)

David H. Brooks, Chief Executive Officer With copies to
DHB Capital Group Inc. Peter Landau
11 Old Westbury Road Opton Handler Feiler & Landau, LLP
Old Westbury, New York 11568 52 Vanderbilt Avenue
(516) 997-1155 New York, New York 10017
(Name, address and telephone number (212) 599-1744
of agent for service)

Title of each class of Proposed maximum Proposed maximum
securities to be Dollar amount to be offering price per aggregate offering Amount of
registered registered share price registration fee
---------- ---------- ----- ----- ----------------
<S> <C> <C> <C> <C>
Common Stock, $8,454,500 At Market At Market $ 2,915.34
$0.001 par value
</TABLE>

In Accordance with Commission Rule 457(c), the registration fee and all other
dollar amounts have been calculated based upon the average of the high and low
prices of the Common Stock on the OTC Bulletin Board on July 10, 1997, a date
within 5 business days of the date of filing this Registration Statement.

The Registrant hereby amends this its registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this amendment shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement should become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE SHEET

- -----------------------------------------------------------------------------------------------------------------------------
Item and Caption of Form SB-2 Caption in Prospectus
- ----------------------------- ---------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front Cover of Front of Registration Statement; Outside
Prospectus Front Cover Page

2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover

3. Summary Information and Risk Factors Summary; Risk Factors

4. Use of Proceeds Use of Proceeds

5. Determination of Offering Price Cover Page; Selling Shareholders; Plan of
Distribution

6. Dilution Not Applicable

7. Selling Security Holders Plan of Distribution

8. Plan of Distribution Cover Page; Plan of Distribution

9. Legal Proceedings Business - Pending Litigation

10. Directors, Executive Officers, Promoters and Control Persons Management

11. Security Ownership of Certain Beneficial Owners and Management Management

12. Description of Securities Description of Securities

13. Interest of Named Experts and Counsel Experts; Legal Matters

14. Disclosure of Commission Position on Indemnification for Securities Management - Personal Liability and
Act Liabilities indemnification of Directors

15. Organization Within Last Five Years Business

16. Description of Business Business

17. Management's Discussion and Analysis or Plan of Operation Management's Discussion and Analysis of
Financial Condition and Results of
Operations

18. Description of Property Business - Properties

19. Certain Relationships and Related Transactions Certain Transactions; Selling Shareholders

20. Market for Common Equity and Related Stockholder Matters Certain Market Information and Dividends

21. Executive Compensation Management

22. Financial Statements Index to Financial Statements

23. Changes in and Disagreements with Accountants on Accounting and Not Applicable
Financial Disclosure
</TABLE>
<PAGE>
Subject to Completion
Date July , 1997

Prospectus

DHB CAPITAL GROUP INC.

1,850,000 Shares of Common Stock, $0.001 par value

This prospectus (the "Prospectus") relates to 1,850,000 shares (the "Shares") of
the common stock, $0.001 par value, (the "Common Stock") of DHB Capital Group
Inc., a Delaware corporation (the "Company"). The shares offered hereby are to
be sold for the accounts of certain selling shareholders of the Company set
forth herein (the "Selling Shareholders"). The Company will not receive any of
the proceeds from the sale of the Shares. The Company estimates that its
expenses will be approximately $10,000 in connection with the offering (the
"Offering") of the Shares. See "Selling Shareholders" and "Plan of
Distribution".

All of the shares being offered hereby were issued in private placements under
Section 4(2) of the Securities Act of 1933, as amended (the "Act"). The Selling
Shareholders may sell the Shares to or through underwriters, and also may sell
the Shares directly to other purchasers or through agents from time to time in
the over-the-counter market at prevailing prices in such market. See "Plan of
Distribution".

The Common Stock is traded (i) in the over-the-counter market, and quotations
are available through the OTC Bulletin Board under the symbol "DHBT," and (ii)
on the Boston Stock Exchange under the symbol "DHB." On July 10, 1997, the
closing bid quotation on the OTC Bulletin Board was $5.00. See "Certain Market
Information and Dividends."

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS," WHICH BEGINS
ON PAGE 7.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is July ___,1997.
<PAGE>
DECLARATION OF 50% STOCK DIVIDEND

On July 1, 1996, the Board of Directors of the Company declared a 50% Stock
Dividend (the "Stock Dividend") payable on July 16, 1996, to shareholders of
record as of July 15, 1996. As a result thereof , the number of outstanding
shares of the Common Stock has been increased from 15,303,019 to 22,954,529.
Except where specifically noted, all information in this Prospectus about shares
outstanding, per-share financial information, share prices, option prices,
warrant prices and the like have been restated to give effect to the Stock
Dividend as if it occurred prior to the date or period for which such
information is reported or disclosed herein. The Summary Financial Information
on page 7 has been adjusted to give effect to the Stock Dividend. See ' Business
- - Recent Developments - Stock Dividend. '

SPECIAL NOTICE REGARDING REINCORPORATION IN DELAWARE

The Company was originally incorporated as a New York corporation in 1992.
Effective April 17, 1995 (the "Reincorporation Date), pursuant to the
authorization of the security holders of the Company, the Company was
reincorporated (the "Reincorporation") in Delaware. Any reference in this
Prospectus to the Company as of or for any period ending prior to the
Reincorporation Date includes the New York corporation. Under the terms of the
Reincorporation, the Delaware corporation is the successor in interest to all
the rights, interests, assets and liabilities of the New York corporation.
Holders of certificates which, prior to the Reincorporation Date, evidenced
securities of the New York corporation, automatically become holders of a like
number of securities of the Delaware corporation and are entitled (subject to
compliance with customary procedures) to exchange their certificates for
certificates evidencing the Delaware corporation.

OTHER PROSPECTUSES

The Company registered an aggregate of 4,050,000 shares of Common Stock for sale
under Registration Statement No. 33-59764 which became effective May 14, 1993
and Registration Statement No. 333-26249 and which became effective May 7, 1997
which also served as a post-effective amendment to the prior Registration
Statement. Both relate to shares reserved for issuance in connection with future
business acquisitions. As of June 30 1997, 4,000,000 shares remained to be
issued in connection with one or more future business acquisitions.

The Company has also filed a Registration Statement on Form S-8, pursuant to
which selected persons may offer for sale shares of Common Stock which they
acquire under the Company's 1995 Stock Option Plan. As of the date hereof, the
Company has not awarded any such options. See "Risk Factors," and "Management -
Executive Compensation."
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial statements and other matters. As permitted by the rules and
regulations of the SEC, this Prospectus omits certain information, exhibits and
undertakings contained in the Registration Statement. Copies of the Registration
Statement and exhibits thereto may be inspected and copied at the public
reference facilities of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Such periodic reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at the SEC's regional offices located at: Suite 788, 1376
Peachtree St. N.E., Atlanta, Georgia 30367; Northwestern Atrium Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Also, copies of such material can
be obtained at prescribed rates from the Public Reference Section of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and are also
available on the Commission's web site at http:\\www.secgov..

The Company's Common Stock is listed on the Boston Stock Exchange and reports,
proxy statements and other information concerning the Company can be inspected
and copied at the library of the Exchange at One Boston Place, Boston,
Massachusetts 02108.
<PAGE>
TABLE OF CONTENTS

DECLARATION OF 50% STOCK DIVIDEND...............................................

SPECIAL NOTICE REGARDING REINCORPORATION IN DELAWARE...........................

OTHER PROSPECTUSES..............................................................

AVAILABLE INFORMATION...........................................................

PROSPECTUS SUMMARY..............................................................

RISK FACTORS....................................................................

USE OF PROCEEDS.................................................................

CERTAIN MARKET INFORMATION AND DIVIDENDS........................................

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

BUSINESS........................................................................

MANAGEMENT......................................................................

PRINCIPAL SHAREHOLDERS..........................................................

CERTAIN TRANSACTIONS............................................................

DESCRIPTION OF SECURITIES.......................................................

SELLING SHAREHOLDERS............................................................

PLAN OF DISTRIBUTION............................................................

LEGAL MATTERS...................................................................

EXPERTS.........................................................................

ADDITIONAL INFORMATION..........................................................

INDEX TO FINANCIAL STATEMENTS ..................................................
<PAGE>
PROSPECTUS SUMMARY

The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information,
including the financial statements, appearing elsewhere in this Prospectus.

The Company

The Company was originally incorporated as a New York corporation in
1992. Effective April 17, 1995 (the "Reincorporation Date"), pursuant to the
authorization of the security holders of the Company, the Company was
reincorporated (the "Reincorporation") in Delaware. Any reference in this
Prospectus to the Company as of or for any period ending prior to the
Reincorporation Date includes the New York corporation. Under the terms of the
Reincorporation, the Delaware corporation is the successor in interest to all
the rights, interests, assets and liabilities of the New York corporation.
Holders of certificates which, prior to the Reincorporation Date, evidenced
securities of the New York corporation, automatically become holders of a like
number of securities of the Delaware corporation and are entitled (subject to
compliance with customary procedures) to exchange their certificates for
certificates evidencing the Delaware corporation.

Declaration of 50% Stock Dividend

On July 1, 1996, the Board of Directors of the Company declared a 50%
Stock Dividend (the "Stock Dividend") payable on July 16, 1996, to shareholders
of record as of July 15, 1996. As a result thereof , the number of outstanding
shares of the Common Stock has been increased from 15,303,019 to 22,954,529.
Except where specifically noted, all information in this Prospectus about shares
outstanding, per-share financial information, share prices, option prices,
warrant prices and the like have been restated to give effect to the Stock
Dividend as if it occurred prior to the date or period for which such
information is reported or disclosed herein. The Summary Financial Information
on page 7 has been adjusted to give effect to the Stock Dividend. See ' Business
- - Recent Developments - Stock Dividend. '

Ballistic-resistant Equipment

In November 1992, the Company acquired Protective Apparel Corporation
of America ("PACA"), which manufactures and distributes ballistic-resistant
equipment and apparel and related products used by police and other
law-enforcement and security personnel. In August 1995, the Company, through a
wholly owned subsidiary now known as Point Blank Body Armor, Inc., a Delaware
corporation (hereinafter, "Point Blank"), acquired from a trustee in bankruptcy
certain assets (the "Point Blank Assets"), free of all liabilities, of Point
Blank Body Armor, L.P., and an affiliated company (collectively, "Old Point
Blank"), for a cash payment of $2,000,000 at an auction held pursuant to Chapter
7 of the United States Bankruptcy Code (the "Bankruptcy Code"). Prior to the
filing of the petition in bankruptcy, Old Point Blank had been the leading
manufacturer of bullet resistant garments and related accessories. In February
1997, the Company acquired Zunblindage S.A., a privately held Belgian
Corporation in exchange for a total of 666,000 shares of the Company's
registered Common Stock. Zunblindage is engaged in the manufacture and
distribution of bullet resistant equipment, apparel and related products and
specializes in sales distribution and marketing in the European theater and the
Middle East regions. PACA, Point Blank, and Zunblindage are now wholly owned by
DHB Armor Group, Inc., a Delaware corporation (the "Armor Group"), which is a
wholly owned subsidiary of the Company.
<PAGE>
PACA was founded in 1975 and has been engaged in the development,
manufacture and distribution of bullet- and projectile-resistant garments,
including bullet-resistant vests, fragmentation vests, bomb-protection blankets
and tactical load-bearing vests. Old Point Blank was founded in 1975 and was,
prior to its bankruptcy, the leading United States manufacturer of bullet- and
projectile-resistant garments. In addition to these products, both companies
distribute other ballistic-protection devices including helmets and shields, and
the Armor Group will continue to do so. Zunblindage is a forty year old company
with ties throughout Europe and has been engaged in the development, manufacture
and distribution of bullet resistant equipment, apparel and related products. In
1993, PACA began manufacturing and distributing a line of reversible utility
jackets which is marketed under the trade name "DHB USA", and a line of nylon
tactical equipment (holsters, gun cases and specialty utility bags) which is
marketed under the trade name "DHB Systems". The Armor Group's products are sold
through a nationwide independent sales representative and distributor network
primarily to domestic law enforcement agencies, the U.S. military, various
federal government agencies, federal and state correctional facilities, highway
patrols and sheriffs' departments. In 1990, in connection with certain
transactions, PACA entered into a domestic and international non-competition
agreement with American Body Armor & Equipment, restricting the Company's right
to sell products outside the United States and to certain domestic distributors
prior to 2000. In August 1995, the Armor Group purchased the agreement from
American Body Armor & Equipment, Inc., for a cash payment of $250,000, thereby
terminating this agreement and the restriction on the Armor Group against
international sales.

Protective Athletic Equipment

On December 20, 1994, the Company started up a business of
manufacturing and distributing protective athletic equipment and apparel by
purchasing (the "NDL Transaction"), through a wholly-owned subsidiary now known
as NDL Products, Inc., a Florida corporation (hereinafter, "NDL"), the assets
(the "NDL Assets") of N.D.L. Products, Inc., a Delaware corporation, and of its
wholly owned subsidiaries, for a cash payment of $3,080,000, net of cash
acquired, at an auction held pursuant to Chapter 7 the U.S. Bankruptcy Code.
Prior to the transaction and a conversion, the Seller was a
debtor-in-possession, under Chapter 11 of the Bankruptcy Code. The transaction
was consummated pursuant to an order of the U.S. Bankruptcy Court, Southern
District of Florida dated 12-20-94. NDL distributes protective athletic apparel
and equipment, such as elbow, breast, hip, groin, knee, shin and ankle supports,
and wrist, elbow, groin and knee braces.

Orthopedic Products

The Company has entered the orthopedic products business by acquiring
the outstanding capital stock of Orthopedic Products, Inc., a Florida
corporation ("OPI"). The Company issued 270,000 shares (after giving effect to
he Stock Dividend) of its registered Common Stock in March 1996, in two
transactions, in exchange for all the outstanding capital stock of OPI. In
August, 1996 Jeff Schepp and Leon Wagner, the former shareholders from whom the
Company acquired the stock of OPI, resigned as officers of OPI. The Company
initiated legal actions against the former shareholders for misrepresentation.
This matter was settled in mediation on April 23, 1997 which resulted in the
return of 38,625 shares of the Company's common stock. In each of the years
ended September 30, 1995 and 1994, OPI had sales in excess of $3,000,000 and
losses of approximately $200,000 in 1995 and $41,000 in 1994. See "Business" and
"Management". OPI is engaged in the manufacture and sale of medical and or
orthopedic products.
<PAGE>
Other Business

The Company also actively seeks to acquire and finance, as appropriate,
additional operating companies or interests therein. The Company has made the
following minority interests in the common stock or securities convertible into
common stock, of the following companies:

Zydacron, Inc., which designs and manufactures video teleconferencing
codecs that are fully compliant with ITU H.320 standards. Zydacron
codecs provide full-featured multimedia capabilities that integrate
into micro-computers running Windows 3.1 operating system software.
Zydacron's family of codec products offers a low-cost full-function
"codec engine" that meets existing video teleconferencing environments.

Darwin Molecular Corporation ("DMC"), which hopes to use DNA sequencing
to create novel drugs for the treatment of cancer, AIDS and auto-immune
disease. On December 18, 1996 Chiroscience Group plc, a publicly traded
company located in England, acquired Darwin Molecular. The Company
received approximately 394,000 shares of Chiroscience in exchange for
its Darwin shares. These shares were restricted until June 1997.

FED Corporation, a development-stage company, intends to manufacture
liquid crystal display devices using proprietary field emission display
technologies, which can be used in smart notebook computers and other
smart devices.

The Company intends to continue to evaluate and consider the acquisition of
additional businesses, which may or may not be related to its current
businesses. Except as set forth above, the Company is not currently involved in
any substantive negotiations for purchasing any business or group of assets.

The Company maintains its executive offices at 11 Old Westbury Road,
Old Westbury, New York 11568, telephone number (516) 997-1155. PACA is located
in Norris, Tennessee. NDL, Point Blank, and OPI are located in Oakland Park,
Florida. Zunblindage is locate Liege, Belgium.

See "Risk Factors", "Management" and "Certain Transactions" for a
discussion of certain factors that should be considered in evaluating the
Company and its business.

The Offering

This Prospectus covers an aggregate of 1,850,000 shares (the "Shares")
of common stock, $0.001 par value. (the "Common Stock") The Shares offered
hereby are being sold by certain shareholders of the Company (the "Selling
Shareholders"). The Company will not receive any of the proceeds from the sale
of these Shares. All of the Shares being offered hereby were issued in private
placements. See "Selling Shareholders". There are, as of July 10, 1997,
25,875,958 shares of Common Stock outstanding, and warrants to purchase an
additional 5,412,500 shares.
<PAGE>
The Shares offered hereby constitute approximately 7% of all shares of the
Company's outstanding Common Stock (without giving effect to the exercise of
outstanding warrants). The resale of the shares by the Selling Shareholders, if
and when made, may be made through customary brokerage channels either through
broker-dealers acting as agents or brokers or through broker-dealers acting as
principals who may then resell the Shares in the over-the-counter market or
otherwise, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of Shares for whom such broker-dealers may act as agent or to whom
they sell as principal, or both (which compensation as to any particular
broker-dealer may be in excess of customary commissions); sales may be at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices, or by
a combination of such methods. The period of distribution of the Shares may
occur over an extended period of time. The Company has no interest in, and will
receive no proceeds from any sales of the Shares. The Company will not pay or
assume brokerage commissions or discounts incurred in the sale of any of the
Shares. See "Plan of distribution."

SEC Consent Decree

David H. Brooks, Chairman and principal shareholder of the Company, and
his brother, Mr. Jeffrey Brooks, and Jeffrey Brooks Securities, Inc. ("JBSI"), a
company wholly owned by Mr. Jeffrey Brooks, entered into a consent decree with
the SEC in December 1992. Without admitting or denying any allegations, they
were assessed a fine and agreed to be enjoined from future violations of Section
15(b) and 15(f) of the Exchange Act. Mr. David Brooks is barred from having any
direct or indirect interest in, or acting as a director, officer or employee of,
any broker, dealer, municipal securities dealer, investment advisor, or
investment company. Mr. David Brooks may apply to become so associated after a
five-year period. Mr. David Brooks is not barred from being an officer or
director of any public company other than a registered broker-dealer or
investment company. Mr. Jeffrey Brooks was prohibited (for a period of one year
which ended December 1993) from acting in a supervisory capacity with respect to
any employee or any broker, dealer, municipal securities dealer, investment
company or investment adviser, and JBSI (his company) was required to institute
and maintain procedures pursuant to Section 15(f) of the Exchange Act. See "Risk
Factors," "Management," "Principal Shareholders," and "Certain Transactions."
<PAGE>
Summary Financial Information

The following summary financial information concerning the Company has
been derived from the financial statements included elsewhere in this Prospectus
and should be read in conjunction with such financial statements and the notes
thereto. See "Financial Statements". All per share information has been adjusted
for the Stock Dividend.
<TABLE>
<CAPTION>
Statement of Income For the Quarter
Data: Ended March 31,
(unaudited) For Year Ended December 31,
----------------------------- ------------------------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue $7,144,676 $7,044,626 $23,378,698 14,494,094 $9,102,373

Net Income (loss) 364,050 580,661 (4,865,872) $244,475 $(75,273)

Primary income per
common share 0.015 0.027 $ ( 0.20) $0.01 $(0.005)

Weighted average 25,078,097 21,185,556 24,879,521 21,167,754 16,701,220
number of primary
common shares
outstanding
<CAPTION>

Balance Sheet Unaudited Unaudited December 31, December 31,
Data March 31, 1997 March 31, 1996 1996 1995
---- -------------- -------------- ---- ----
<S> <C> <C> <C> <C>
Working Capital . $10,288,698 9,585,015 $ 8,900,398 $ 6,526,004

Total Assets .... 23,221,775 20,710,753 19,160,419 19,465,208

Total Liabilities 8,082,547 7,250,844 4,736,242 7,663,240

Stockholders'
Equity ...... $15,139,228 $13,459,909 $12,980,086 $11,801,968

</TABLE>
<PAGE>
RISK FACTORS

The securities offered are speculative and involve a high degree of
risk. They should be purchased only by persons who can afford the loss of their
entire investment. Prospective investors, prior to making an investment
decision, should carefully read this Prospectus and consider, along with other
matters referred to herein, the following Risk Factors:

RELATING TO THE SECURITIES:

Depressive Effect on Market of Untimely Sales by Selling Shareholders;
Shares Eligible for Future Sale. The Company has engaged in private placements
of unregistered securities, including the Shares covered by this Prospectus, at
prices approximating prevailing market prices for registered shares at the times
the private placements were effected. In February 1997, the Company issued
666,000 registered shares to acquire Zunblindage. In March 1996, the Company
issued 270,000 registered shares (after giving effect to the 50% stock dividend)
to acquire OPI. The Company initiated a lawsuit alleging misrepresentation which
was settled in mediation and resulted in the return and retirement of 38,625
shares of the Company's Common Stock. In October 1995, the Company adopted a
plan (the "1995 Stock Option Plan" or the "Plan") pursuant to which the Board of
Directors of the Company is authorized to award up to 3,500,000 options to
purchase Common Stock (the "Plan Options") to officers, employees and
independent contractors of the Company. The Company has also filed a
registration statement covering the shares (the "Plan Shares") acquirable under
the Plan Options. At the present time, no Plan Options have been awarded.

Exercise of Outstanding Warrants May Have Dilutive Effect on Market.
There are presently outstanding warrants or options (collectively, the
"Miscellaneous Warrants") to purchase approximately 5,412,500 shares of the
Company's Common Stock, after giving effect to the 50% Stock Dividend, with
exercise prices ranging from $1.33 to $2.66 per share, for various terms of up
to 5 years, which are held by certain of the Company's officers or directors or
their affiliates. The Miscellaneous Warrants provide, during their respective
terms, an opportunity for the holder to profit from a rise in the market price
of the Common Stock, with resulting dilution in the ownership interest in the
Company held by the then present shareholders. Holders of the Miscellaneous
Warrants would most likely exercise them and purchase the underlying Common
Stock at a time when the Company may be able to obtain capital by a new offering
of securities on terms more favorable than those provided by such Miscellaneous
Warrants, in which event the terms on which the Company may be able to obtain
additional capital would be adversely affected. At the present time, neither the
Miscellaneous Warrants nor the shares underlying the Miscellaneous Warrants are
registered under the Act, but the Company reserves the right to do so at any
time.

Rights of Common Shareholders May be Affected by Issuance of Preferred
Shares. The Company's Delaware charter authorizes the Board of Directors to
issue up to 5,000,000 shares of preferred stock, $0.001 par value of the
Company, in such amounts and with such rights to dividends, voting, conversion,
redemption and other terms as the Board may determine. No preferred shares are
presently issued or outstanding. If the Board were to authorize and issue
preferred shares, the holders of preferred shares may be entitled to dividends
in preference to the holders of the common stock, may be entitled to preferences
in liquidation, and may be entitled to voting rights, which may affect the
composition of the Board of Directors. See "Dividends" and "Description of
Securities".
<PAGE>
Increase in Authorized Shares of Common Stock. On December 30, 1996 at
a Special Meeting of the Stockholders, an amendment to the Company's Certificate
of Incorporation was approved, increasing the number of authorized shares of
Common Stock from 25,000,000 shares to 100,000,000 shares. This amendment became
effective on December 31, 1996.

Dividends. The Company has paid no cash dividends on its Common Stock
and does not anticipate paying cash dividends on its Common Stock in the
foreseeable future. The Company's ability to pay dividends is dependent upon,
among other things, future earnings, the operating results and financial
condition of the Company, its capital requirements, general business conditions
and other pertinent factors, and is subject to the discretion of the Board of
Directors. The Board is authorized to issue, at any time hereafter, up to
5,000,000 shares of preferred stock on such terms and conditions as it may
determine, which may include preferences as to dividends. Accordingly, there is
no assurance that any dividends will ever be paid on the Company's Common Stock.
See "Certain Market Information and Dividends" and Description of Securities".

RELATING TO THE BUSINESS OF THE ARMOR GROUP:

Concentration of Business Activities; Dependence on Major Customer. The
market for products of the Armor Group is, in large part, composed of domestic
and international, military, and civil authorities. Accordingly, the Armor
Group's operations are subject to the risk of fluctuations in the demand for
such products by such authorities. Point Blank had a significant international
customer, Egypt, which accounted for 12% of Point Blank's sales for the year
ended December 31, 1996.

Reliance Upon Governmental Spending. The Armor Group's products are
sold nationally and internationally, primarily to law enforcement agencies and
military services. Sales to domestic law enforcement agencies, including
government, security and intelligence agencies, police departments, federal and
state correctional facilities, highway patrol and sheriffs' departments,
comprise the largest portion of the Armor Group's business. Accordingly, any
substantial reduction in governmental spending or change in emphasis in defense
and law enforcement programs could have a material adverse effect on the Armor
Group's business. See "Business - DHB Armor Group Customers."

Products Liability. The products manufactured by the Armor Group are
used in applications where the failure of such products could result in serious
personal injuries and death. The Armor Group maintains product liability
insurance for both PACA and Point Blank in the amount of $11,000,000 per
occurrence and $12,000,000 in the aggregate, excluding legal fees which are
borne by the insurance carriers, less a $12,500 deductible. There is no
assurance that these amounts would be sufficient to cover the payment of any
potential claim. In addition, there is no assurance that this or any other
insurance coverage will continue to be available or, if available, that PACA
and/or Point Blank will be able to obtain it at a reasonable cost. Any
substantial uninsured loss would have to be paid out of the assets of the Armor
Group, as applicable, and may have a material adverse effect on the Company's
financial condition and operations on a consolidated basis. In addition, the
inability to obtain product liability coverage would prohibit PACA or Point
Blank, as applicable, from bidding for orders from certain municipal customers
since, at present, many municipal bids require such coverage, and any such
inability would have a material adverse effect on the Company's financial
condition and results of operations, on a consolidated basis.
<PAGE>
Limited Sources of Raw Material. The primary raw material used by the
Armor Group in 60% of its manufacturing ballistic-resistant garments is
Kevlar(TM), a patented product of E. I. Du Pont de Nemours Co., Inc. ("Du
Pont"). Du Pont and its European licensee are currently the only producers of
Kevlar. The Armor Group purchases Kevlar in the form of woven cloth from three
independent weaving companies. In the event Du Pont or its licensee in Europe
cease, for any reason, to produce and sell Kevlar, the Company would be required
to utilize other fabrics as a substitute. The Armor Group also uses
Spectrashield(TM) and SpectraFibre(TM), patented products of Allied Signal,
Inc., as a ballistic-resistant fabric and has tested a new woven
ballistic-resistant fabric, to reduce dependence on Kevlar. SpectrashieldTM and
SpectraFibreTM have been used in combination with Kevlar in approximately 20% of
all vests sold by the Armor Group. Neither SpectrashieldTM nor SpectraFibreTM,
due to their respective physical characteristics, is expected to become a
complete substitute for Kevlar in the near future. In the opinion of management,
the Armor Group enjoys a good relationship with its suppliers of Kevlar,
SpectrashieldTM and SpectraFibreTM. Until the Armor Group secured an adequate
supply of an alternative fabric and appropriate ballistic tests were performed,
its operations would be severely curtailed and the Armor Group's financial
condition and operations would be adversely affected. See "Business - Raw
Materials, Sources and Availability".

Competition. The ballistic-resistant garment industry is highly
competitive. Some competitors may have substantially greater financial
resources, brand recognition, market share, marketing power and other
competitive advantages over the competitors in the business, including the
Company. The Company believes that the principal elements of competition in the
sale of ballistic-resistant garments are price and quality. The Company must
therefore maintain profitable prices and control costs and quality. As
manufacturing technology changes, there can be no assurance that the Company
will continue to be able to manufacture its products at competitive prices.

Bankruptcies of Prior Owners of Certain Assets. The Company acquired
the assets of NDL from a debtor-in-possession under the Bankruptcy Code, and
certain assets of Old Point Blank from a trustee in bankruptcy. The prior owners
became unable to utilize the assets in a profitable business, and there can be
no assurance that the Company will be able to utilize the assets on a profitable
basis.

New Venture in Zunblindage S.A. In late February 1997, the Company
expanded its bullet resistant business into the European market by acquiring
Zunblindage S.A a company located in Liege, Belgium. Zunblindage had sales for
the years ended December 31, 1996 and 1995 of over $1,000,000 with a breakeven
net income for the year ended December 31, 1996 and a $30,000 net income for the
year ended December 31, 1995. There can be no assurance that Zunblindage will
remain profitable or that its profits will increase.

RELATING TO THE BUSINESS OF NDL:

Limited Operating History. NDL is a new business with two year's
operating history. NDL has very limited business experience and is subject to
all the risks in the establishment of any new business venture. Therefore, in
addition to other risk factors, the likelihood of NDL's success must be
considered in light of the problems, expenses, difficulties, complications and
delays frequently encountered in the development of a new business. The Company
<PAGE>
entered the protective athletic equipment and apparel business by purchasing the
inventory, trademarks, trade names, equipment, and certain other assets of a
failed enterprise from a trustee in bankruptcy. Senior management of NDL, have
all been hired since January 1, 1995. See "Management"; see, also, "Bankruptcies
of Prior Owners of Certain Assets," above.

Significant Competition. The protective athletic equipment and apparel
business is highly competitive. NDL believes that the principal elements of
competition are price and quality. The major manufacturers of protective
athletic equipment include well-known brands like Everlast, Roller Blade and Ace
Bandage, and lesser known manufacturers such as Tru-fit Manufacturing, of
Boston, Massachusetts, Stromgren Co., of Kansas City, Missouri, and Mueller Co.,
of Wisconsin. Some competitors have substantially greater financial resources,
brand recognition, market share, marketing power and other competitive
advantages over the smaller competitors in the business, including the Company.
There can be no assurance that the Company will be able to compete successfully
in this business.

RELATING TO THE BUSINESS OF OPI:

Limited Operating History. In late March 1996, the Company entered the
orthopedic products business by acquiring OPI, which had sales in its last two
fiscal years of over $3,000,000, and losses or approximately $200,000 and
$41,000, respectively, in the years ended September 30, 1995 and 1994. In August
1996, Mr. Schepp and Mr. Wagner, the former shareholders from whom the Company
acquired the stock of OPI, resigned as officers of OPI. There can be no
assurance that OPI will become profitable or that its losses will not grow.

RELATING TO OTHER BUSINESS ACTIVITIES:

Possible Acquisition of Unidentified Businesses. The Company intends to
continue to diversify its business operations through the possible acquisition
of one or more operating companies. The Company has not presently identified any
specific business or industry in which it intends to expand through the purchase
or development of a business. Up to 4,000,000 Acquisition Shares are reserved
for issuance in one or more future business acquisitions and may be resold by
the recipients thereof. Purchasers of the Shares offered hereby will have no
opportunity to evaluate or to have a voice in the determination of the business
or businesses that the Company may purchase. In addition, the Company is
presently a passive investor in several other public or private companies and
has little or no control over the business and affairs of such entities. See
"Business" and "Management".

Need for Additional Financing. The Company has, throughout its
existence, obtained funds for acquisitions and operations from term bank loans
for periods of up to a year, which have been secured, in part, by the
controlling shareholder's hypothecation of marketable securities. In the past,
the Company has always been able to roll over such loans with new loans at
prevailing interest rates. At the present time, it has a loan of $1,900,000 from
The Bank of New York ("BNY,") coming due in May 1998. There is no assurance that
the Company will be able to roll over such term loans as they become due. See,
also, "Financial Accommodations by Related Persons."
<PAGE>
Financial Accommodations by Related Persons. David H. Brooks, the
Company's Chairman and principal shareholder, previously loaned the Company the
funds necessary to complete the acquisition of PACA. The Company repaid Mr.
Brooks' loan from the proceeds of private placements completed in 1993. Mr.
Brooks and his wife, Mrs. Terry Brooks, made loans totaling $1,140,000 in
connection with the start-up of NDL, and they have pledged certain of their
personal assets to guaranty term loans made by the Banks. The outstanding
balance on this loan is presently $550,000. In connection with the purchase of
the Point Blank Assets, Mr. David H. Brooks made a loan in the amount of
$2,000,000, of which $750,000 is still outstanding. The Company is currently
indebted to Mr. and Mrs. Brooks in the principal sum of $1,300,000 expiring
November 1998 bearing interest at 12% per year. All term loans from banks which
the Company has obtained since inception have been secured, in part, by the
hypothecation of marketable securities owned by Mr. and Mrs. Brooks. There can
be no assurance that the Company will not require similar accommodations in the
future or that Mr. and Mrs. David Brooks will be able or willing to do so on
terms acceptable to the Company. An entity controlled by Mrs. Terry Brooks and
beneficially owned by the Brooks' minor children leased (as lessor) the facility
occupied by NDL, OPI and Point Blank in Oakland Park, Florida. While the Company
believes that no future transactions will be entered into between the Company
and its officers, directors or 5% shareholders unless such transactions are on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties, any current or future transactions between the Company and such
affiliates may involve possible conflicts of interest. See "Management's
Discussion and Analysis of Results of Financial Condition and Results of
Operations," "Business - Properties" and "Certain Transactions".

RELATING TO MANAGEMENT:

Control by Management. David H. Brooks currently beneficially owns
approximately 55% of the outstanding Common Stock. His brother owns 2,353,500
shares (8%), and each disclaims beneficial ownership of shares owned by the
other. Shareholders do not have cumulative voting rights, and each shareholder
is entitled to cast one vote per share on all matters submitted to a vote of
shareholders, including the election of directors, and so shareholders holding a
majority of the outstanding shares will be able to elect all of the directors.
Accordingly, Mr. David Brooks is able to elect all of the directors of the
Company and generally direct the management of the Company, and other
shareholders will be unable to elect any members of the Board of Directors. See
"Principal Shareholders" and "Description of Securities - Common Stock".

SEC Consent Decree Affecting the Chairman. Mr. David Brooks entered
into a consent decree in December 1992 with the SEC, together with Jeffrey
Brooks, his brother and owner of Jeffrey Brooks Securities, Inc. ("JBSI"). The
SEC had filed a civil complaint in the United States District Court for the
Southern District of New York (Docket No. 922846) alleging that an employee of
JBSI was involved in an unlawful insider-trading scheme allegedly conducted
through JBSI and the filing of false information by JBSI, which was then a
registered broker-dealer. The SEC alleged that JBSI did not establish, maintain
or enforce policies and procedures that are required under Section 15(f) of the
Exchange Act, designed to detect and prevent insider trading by an employee of
JBSI, and that JBSI did not make required disclosures under Section 15(b) of the
Exchange Act. The SEC further alleged that David Brooks exercised "de facto
control" of certain aspects of JBSI's operations and that David Brooks and
Jeffrey Brooks aided and abetted the reporting violations of JBSI. Pursuant to
<PAGE>
the settlement of these charges, without admitting or denying such allegations,
David Brooks, Jeffrey Brooks and JBSI were assessed an aggregate civil fine of
$405,000 and were enjoined from future violations of Section 15(b) and 15(f) of
the Exchange Act; David Brooks was barred from having any direct or indirect
interest in, or acting as a director, officer or employee of, any broker,
dealer, municipal securities dealer, investment advisor, or investment company,
provided that David Brooks is able to apply to become so associated after a
five-year period; Jeffrey Brooks was prohibited from acting in a supervisory
capacity with respect to any employee or any broker, dealer, municipal
securities dealer, investment company or investment advisor for a period of one
year, which ended in December 1993; and JBSI was required to institute and
maintain procedures pursuant to Section 15(f) of the Exchange Act. Mr. David
Brooks is not under any prohibition from serving as an officer or director of
any public company other than a registered broker-dealer or an investment
company. See "Management," "Principal Shareholders," and "Certain Transactions."

Reliance Upon Key Personnel. The Company is substantially dependent
upon the personal efforts and abilities of Mr. David H. Brooks, Chairman of the
Board and Chief Executive Officer, and to a lesser extent, Ms. Mary Kreidell,
Secretary and Treasurer, and, at present, Leonard Rosen the President of PACA
and Sandra Hatfield the President of Point Blank. Should any of the members of
the Company's senior management be unable or unwilling to continue in their
present roles, or should such person determine to enter into competition with
the Company, the Company's business could be adversely affected. Because of the
relatively small size of the Company, the loss of a senior executive may have a
materially adverse effect upon the Company until a suitable replacement can be
found. See "Business" and "Management".

USE OF PROCEEDS

Since all of the 1,850,000 Shares offered hereby shares are being
offered by Selling Shareholders, the Company will not receive any cash proceeds
pursuant to this Offering.
<PAGE>
Certain Market Information and Dividends

The Common Stock of the Company has been traded on the over-the-counter
market ("OTC Bulletin Board") since September 22, 1993. Prior thereto, there was
no public market for the Company's securities. The bid prices set forth below
represent quotations by brokers making a market in the Company's Common Stock,
have been adjusted to reflect the 50% Stock Dividend and do not include retail
mark-ups, mark-downs or commissions, and may not necessarily reflect actual
transactions. Commencing on June 8, 1994, the Company was listed on the Boston
Stock Exchange and traded under the symbol "DHB."
<TABLE>
<CAPTION>
Low High
--- ----
<S> <C> <C>
1994: 1st Quarter 1.67 3.50

2nd Quarter 1.50 3.00

3rd Quarter 1.50 2.33

4th Quarter 1.33 3.25

1995: 1st Quarter 1.92 2.50

2nd Quarter 1.92 3.75

3rd Quarter 2.92 4.00

4th Quarter 2.17 3.17

1996: 1st Quarter 2.00 2.75

2nd Quarter 2.67 6.67

3rd Quarter 5.00 10.00

4th Quarter 3.00 5.88

1997: 1st Quarter 1.75 2.75

2nd Quarter 1.75 4.25

3rd Quarter through July 10 4.00 5.50
</TABLE>
On July 1, 1996, the Board of Directors declared a 50% Stock
Dividend payable on July 16, 1996, to holders of record as of July 15, 1996. See
'Business - Recent Developments - 50% Stock Dividend.' With respect to the
Company's current policy on cash dividends, if the Company generates earnings,
the Company will retain such earnings for further development of its business.
The payment of cash dividends in the future will depend upon the earnings and
financial requirements of the Company and all other relevant factors, including
approval of such dividends by the Board of Directors.

The number of holders of record of the Company's Common Stock on July
10, 1997, was 148; however, the number of holders of record includes several
brokers and depositories for the accounts of their customers. The Company
estimates that shares of Common Stock are held by approximately 1,000 beneficial
owners.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

General

The Company is a holding company which is principally engaged through
its wholly-owned subsidiaries in the development, manufacture and distribution
of bullet- and projectile-resistant garments, and the manufacture and
distribution of protective athletic equipment and apparel. In August 1995, the
Company acquired certain assets, free of all liabilities (the "Point Blank
Assets") of Point Blank Body Armor, L.P., and an affiliated company
(collectively, "Old Point Blank") at an auction held pursuant to Chapter 7 of
the United States Bankruptcy Code. In late December 1994, the Company started up
its protective athletic equipment business by acquiring the trade inventory,
work in process, raw materials, trade names and trademarks (the "NDL Assets") of
N.D.L. Products, Inc., a Delaware corporation, at an auction held pursuant to
Chapter 7 of the Bankruptcy Code. In March 1996, the Company acquired Orthopedic
Products, Inc. ("OPI"), which is a manufacturer of orthopedic products and a
distributor of general medical supplies. The Company also owns a minority
interest in several other companies, some privately held and some publicly held,
in the pharmaceutical business, health care, telecommunications, and
electronics. The management of the Company is engaged in the review of potential
acquisitions and in providing management assistance to the Company's operating
subsidiaries.

The Company commenced operations in November 1992 by acquiring the
outstanding common stock of PACA, a manufacturer and distributor of bullet-proof
garments and accessories. From the acquisition of PACA through December 20,
1994, i.e., the date of the start-up of NDL, PACA was the Company's only source
of revenue from operations. Thereafter, and to date, NDL, Point Blank, and OPI
are also a source of revenue from operations.

The Armor Group's products are sold nationally and internationally,
primarily to law enforcement agencies and military services. Sales to domestic
law enforcement agencies, including government, security and intelligence
agencies, police departments, federal and state correctional facilities, highway
patrol and Sheriffs' departments, comprise the largest portion of the Armor
Group's business. Accordingly, any substantial reduction in governmental
spending or change in emphasis in defense and law enforcement programs could
have a material adverse effect on the Armor Group's business.

The discussion that follows must be read in conjunction with the
financial statements, including the notes thereto.

Results of Operations

Three Months Ended March 31, 1997, Compared to the Three Months Ended
March 31, 1996. Consolidated net sales for the three months ended March 31, 1997
increased by approximately $100,000 to $7,144,676 compared to the three months
ended March 31, 1996. This increase was primarily due to the inclusion of
Zunblindage S.A. in 1997. The Company's gross profit percentage increased to 33%
<PAGE>
for the three months ended March 31, 1997 as compared to 28% for the three
months ended March 31, 1996. This increase was the result of the improved
production controls on material usage and pricing which were instituted at the
end of 1996. Operating income increased from $243,064 for the three months ended
March 31, 1996 to $456,726 for the three months ended March 31, 1997 as a result
of the higher profit margins. Net income for the three months ended March 31,
1997 was $364,050 as compared to $580,661 for the three months ended March 31,
1996. This decrease was primarily due to a lower total gain on marketable
securities at March 31, 1997 as compared to March 31, 1996.

The Company received "other income" of approximately $21,000 as a part of a
settlement of a lawsuit the Company initiated against the former shareholders of
OPI. $17,000 of this income was the result of the former shareholders breach of
their covenant not to compete with the Company within a certain area. The
balance related to breach of their employment contracts and misrepresentation of
the net worth.

Year Ended December 31, 1996, compared to year ended December 31, 1995.
Consolidated net sales of the Company for the year ended December 31, 1996
increased by $8,884,604, or 61% to approximately $23,378,698. The increase was
primarily due to the inclusion of Point Blank for a full year. Gross profit in
1996 decreased $1,054,520. The Company's gross profit percentage decreased from
27% in 1995 to 19% in 1996. This decrease was the result of lower selling prices
to induce new customers and a weakness in production management and production
controls which allowed for above normal usage of raw materials. The Company has
a consolidated net loss of approximately $4,866,000 for 1996 as compared to a
consolidated net income of approximately $244,000 for 1995.

During the last quarter of 1996, the Company instituted major changes
at their Florida facility which houses Point Blank, NDL and OPI. New management
was put in place in October 1996 including a new production manager. Pricing was
reviewed and controls put in place to yield better profit margins and better
material usages. The new management instituted a policy regarding the
capitalization of salesmen samples after finding that the returned samples were
normally reissued to other salesmen and seldomly sold for their recorded value.
Therefore, the decision was made to write these salesmen samples off in 1996
resulting in a $292,000 charge to income. Additionally, the Company changed it
policies regarding the percentage of inventory to reserve for future slow moving
inventory, which resulted in a charge of approximately $700,000 against income
in 1996.

The Company's selling, general and administrative expenses ("S,G&A
expenses") for 1996 increased to $8,668,963 from $5,140,399 in 1995. As a
percentage of net sales the S,G & A expenses were 37% in 1996 compared to 35% in
1995. In 1996 the Company wrote off a loan-receivable of approximately $52,000
which was made to an individual relating to the acquisition of Media. All
attempts to collect the debt were unsuccessful, and therefore, the loan was
written off. In connection with the major changes instituted above, the Company
incurred some non-recurring consulting and management fees during the year ended
1996 for approximately $250,000. Included in rent expense for 1996 was a one
time buy-out of OPI's lease for its former location of $80,000. Management
believed that by moving OPI into the facility with the other Florida Companies
would enable them to reduce costs in the future due to the synergy of
businesses. Additionally, the Company increased its percentage of accounts
receivable to record an allowance for, which resulted in a $233,320 increase in
S,G,&A expenses.
<PAGE>
In 1996 the Company aggressively sought to regain its market share by
increasing its marketing efforts. This amounted to 8% of the S,G&A expenses for
1996 as compared 4 % of the S,G&A expenses for 1995. The Company also incurred
additional research and development to launch a new product line which increased
S,G&A expenses over 1995 levels by over $150,000.

The Company incurred additional legal and professional fees for the
year ended 1996 regarding the purchase of OPI, a proposed merger which was
terminated, the Company commencing a lawsuit against the former shareholders of
OPI. Legal fees increased over $50,000 in 1996 compared to 1995.

Interest expense, net of interest income, for 1996 increased to
$327,347 from $303,615 due to a decline of interest income on the Company's cash
balances.

At the end of Fiscal 1996, Management of the Company analyzed its
current operations to examine the most effective/profitable ways to direct its
future efforts. This resulted in the decision to put on hold, for an indefinite
period, the pursuit of ID's patents and technology and the film library of DHB
Media. These write-downs resulted in a loss on the "Net write-down of Investment
in Subsidiaries" for the year ended December 31, 1996 of approximately $530,000.
Also included in other income (expense) is a $1,000,000 write-off of two of the
Company's long term investments. The Company's entire $500,000 investment in
Solid Manufacturing was written off as a result of them filing for bankruptcy.
The Company recorded a valuation allowance for the full value of the $500,000
investment in Pinnacle Diagnostic as result of Pinnacles' insolvency. The
Company had a net realized gain of $381,337 and an unrealized gain of $69,168
for the year ended December 31, 1996 as compared to a $675,743 realized gain and
a $347,481 unrealized gain for the year ended December 31, 1995.

Year Ended December 31, 1995, compared to year ended December 31, 1994.
Consolidated net sales of the Company for the year ended December 31, 1995,
increased by $5,391,721, or 59% to approximately $14,494,000. The increase was
primarily due to the inclusion of Point Blank and NDL. The start-up of NDL on
December 20, 1994, contributed less than $100,000 to sales in 1994 as compared
to $4,276,603 in 1995. The Company had consolidated net income of approximately
$244,000 for 1995, as compared to a consolidated net loss of $75,243 for 1994.
The improved results are attributable to the ability to utilize volume discounts
and eliminating duplication of expenses, as well as income derived from the sale
and appreciation of the Company's marketable securities.

Gross profit in 1995 increased to $5,405,477 an increase of 119% over
1994. The Company's gross profit ratio increased from 27% in 1994 to 37% in
1995, primarily because of the products sold by Point Blank yielded greater
margins.

The Company's selling, general and administrative expenses for 1995
increased to $5,140,399 from $2,250,550 in 1994. These expenses as a percentage
of net sales were 35% in 1995, compared to 25% in 1994. The increase was
attributable to costs associated with the move of Point Blank and NDL into the
present location and other nonrecurring expenses.

Interest expense, net of interest income, for 1995 increased to
$303,615 from $65,072 for 1994, principally due to a decline in interest income
because of the use of the Company's funds in its operating business, and
increases in the borrowings of the Company.
<PAGE>
The Company had a net realized gain of $675,743 and an unrealized gain
on its investments in marketable securities of $347,481 for the year ended
December 31, 1995, as compared to a net realized loss of $360,817 and an
unrealized loss of $293,854 for the year ended December 31, 1994.

Liquidity and Capital Resources.

The Company's primary capital requirements over the next twelve months
are to assist PACA, Point Blank, NDL, Zunblindage in financing their working
capital requirements, and to make possible acquisitions. PACA, Point Blank,
Zunblindage and NDL sell most of their products on 60 - 90 day terms, and OPI
sells most of its products on 30-60 day terms, and working capital is needed to
finance the receivables, manufacturing process and inventory. Working capital at
December 31, 1996 was $8,900,398 compared to $8,416,004 at December 31, 1995 and
its ratio of current assets to current liabilities was 2.88:1 and 2.46:1,
respectively, on such dates. Working Capital at March 31, 1997 was $10,288,698
as compared to $9,610,405 at March 31, 1996.

Cash, cash equivalents, and marketable securities totaled $340,970 at March 31,
1997 compared to $734,462 at March 31, 1996 and $1,249,655 at December 31, 1996.
The decrease in cash, cash equivalents and marketable securities was primarily
used to fund operations. The Company throughout its existence, obtained funds
for acquisitions and operations from term bank loans for periods of up to a
year, which ave been secured, in part, by the controlling shareholders's
hypothecation of marketable securities. In the past, the Company has always been
able to roll over such loans with new loans at prevailing interest relates. At
the present time, it has a loan of $1,900,000 from the Bank of New York coming
due in May 1998, bearing interest at 6.4375% per year. There is no assurance
that the Company will be able to roll over such loans as they become due. The
Company expects to renew this loan, at prevailing interest rates, when it
becomes due.

The Company's principal commitments at March 31, 1997 consisted of obligations
under their operating leases for its facilities.

The Company's capital expenditures for the quarter ended March 31, 1997 was
$118,458 compared to capital expenditures of $485,999 for the quarter ended
March 31, 1996. The Company's capital expenditures for the year ended December
31, 1996 was $1,123,739 as compared to $4,222,257 for the year ended December
31, 1995. The company purchased OPI in March 1996 and Zunblindage in February
1997 by issuing stock in lieu of a cash payment.

The Company invested approximately $3,316,750 as of March 31, 1997 at historical
cost. in the securities of certain privately held companies and restricted
securities of certain public companies, which are included in "Investments in
Non-marketable Securities" on the Company's Balance Sheet. As of December 31,
1996, the Company has recorded a valuation allowance of $1,000,000 against two
specific investments to bring the net realizable value to $2,316,750 at December
31, 1996 and March 31, 1997.

The Company's current ratio is 2.5% at March 31, 1997 and was 2.87% at March 31,
1996. The Company's quick ratio was 1.19% at March 31, 1997 as compared to 1.47%
at March 31, 1996. Total Stockholders' Equity at March 31, 1997 was $15,139,228
as compared to $13,399,129 at March 31, 1996. The Company believes it has
sufficient resources to meet its working capital requirements for the next
twelve months.
<PAGE>
Cash, cash equivalents and marketable securities totaled $2,591,682 at
December 31, 1996 compared to $2,304,964 at December 31, 1995. The increase in
cash, cash equivalents and marketable securities was primarily through the
proceeds from private offerings of the Company's securities. This increase was
partially offset by cash used to pay off a line of credit of $1,150,000 and to
repay a shareholder loan of $590,000. Although the Company had a net loss of
$4,869,122 for the year ended December 31, 1996, there was a net increase of
cash of $774,547 as compared to a net income for the year ended December 31,
1995 of $244,475 with a net increase in cash of $67,683. The Company's quick
ratio increased to 1.34% in 1996 as compared to 1.09% in 1995. The Company
believes it has sufficient resources to meet its working capital requirements
for the next twelve months.

BUSINESS

History

DHB Capital Group, Inc. and Subsidiaries, (the "Company") was
originally incorporated as a New York corporation on October 22, 1992 by Mr.
David H. Brooks. (Mr. Brooks may be deemed a "founder" as defined under the
Act.) Effective April 17, 1995 (the "Reincorporation Date"), pursuant to the
authorization of the security holders of the Company, the Company was
reincorporated (the "Reincorporation") in Delaware. Under the terms of the
Reincorporation, the Delaware corporation is the successor in interest to all
the rights, interests, assets and liabilities of the New York corporation.
Holders of certificates which, prior to the Reincorporation Date, evidenced
securities of the New York corporation, automatically become holders of a like
number of securities of the Delaware corporation and are entitled (subject to
compliance with customary procedures) to exchange their certificates for
certificates evidencing the Delaware corporation.

Ballistic - resistant Equipment

The Company entered the body-armor business by acquiring Protective
Apparel Corporation of America ("PACA") at the end of 1992. PACA is engaged in
the development, manufacture and distribution of bullet-, bomb- and
projectile-resistant garments, including bullet-resistant vests,
fragmentation-protective vests, bullet-resistant blankets and tactical
load-bearing vests. In addition, PACA distributes other ballistic protection
devices, including helmets, face masks and trauma shields, manufactured by other
companies. In August 1995, the Company, through a wholly owned subsidiary now
known as Point Blank Body Armor, Inc., a Delaware corporation ("Point Blank"),
acquired from a trustee in bankruptcy certain assets (the "Point Blank Assets")
of Point Blank Body Armor, L.P., and an affiliated company (collectively, "Old
Point Blank"), for a cash payment of $2,000,000, which was provided by a loan
from Mr. David Brooks. Prior to the filing of the petition in bankruptcy, Old
Point Blank had been a leading U.S. manufacturer of bullet-resistant garments
and related accessories. On February 28, 1997 the Company exchanged a total of
666,000 shares of its registered common stock to acquire 100% of the common
stock of a privately held Belgian corporation, Zunblindage S.A.. Zunblindage is
engaged in the manufacture and distribution of bullet resistant equipment,
apparel and related products and specializes in sales distribution and marketing
in the European theater and the Middle East regions. PACA, Point Blank and
Zunblindage are now wholly owned by DHB Armor Group, Inc., a Delaware
corporation (the "Armor Group"), which is a wholly owned subsidiary of the
Company.
<PAGE>
Protective Athletic Equipment

On December 20, 1994, the Company, through a newly organized, wholly
owned subsidiary, DHB Acquisition, Inc., a Florida corporation, purchased (the
"Transaction") the assets (the "NDL Assets"), free of all liabilities, of N.D.L.
Products, Inc., a Delaware corporation and of its wholly owned subsidiaries
(collectively, the "Seller"), for a cash payment of $3,080,000, net of cash
acquired, at an auction held pursuant to Chapter 7 of the Bankruptcy Code. Prior
to the Transaction, the Seller was a debtor-in-possession under Chapter 11 of
the United States Bankruptcy Code. The transaction was consummated pursuant to
an order of the United States Bankruptcy Court, Southern District of Florida,
dated December 20, 1994.

The Seller was engaged in the manufacture and distribution of
protective athletic apparel and equipment, such as elbow, breast, hip, groin,
knee, shin and ankle supports, and wrist, elbow, groin and knee braces. The
Company changed the name of DHB Acquisition, Inc., to "NDL Products, Inc."
(hereinafter, "NDL"), in order to use the NDL Assets to start up a business as a
manufacturer and distributor of specialized protective athletic apparel and
equipment.

Orthopedic Products, Inc.

The Company has entered the orthopedic products business by acquiring
the outstanding capital stock of Orthopedic Products Inc., ("OPI"), a Florida
corporation. The Company issued 270,000 shares (after giving effect to the Stock
Dividend) of its registered Common Stock in March 1996, in two transactions, in
exchange for all the outstanding capital stock of OPI. In April 1997, 38,625 of
the shares issued were returned to the Company and retired as a result of the
adjustment of the purchase price of OPI. OPI is engaged in the manufacture and
sale of medical and orthopedic products. OPI's products are sold directly to the
medical industry, including hospitals, sports medicine centers and medical
practices.

Other Business

Intelligent Data Corporation. In April 1994, the Company acquired a 98%
interest in the common stock of Intelligent Data Corporation, ("ID"), a Nevada
corporation. ID is a development-stage company engaged in applying sophisticated
telecommunications systems, known as "virtual writing" for remote document
signature and authentication, remote issuance of bank or brokerage cashier's
checks and the facilitation of COD payment transactions. The net assets were
written down in 1996 see below "Write-down of Net Assets of Subsidiaries"

DHB Media Group Inc. In April 1994, the Company acquired a 100%
interest of the capital stock of DHB Media Group Inc. ("Media"), a New York
corporation, whose principal asset is a film library. The net assets were
written down in 1996 see below "Write-down of Net Assets of Subsidiaries."

Write-down of Net assets of Subsidiaries. At the end of Fiscal 1996,
Management of the Company analyzed its current operations to examine the most
effective/profitable ways to direct its future efforts. This resulted in the
decision to put on hold, for an indefinite period, the pursuit of ID's patents
and technology and the film library of DHB Media. These write-downs resulted in
a loss on the "Write-down of Net Assets in Subsidiaries" for the year ended
December 31, 1996 of approximately $530,000.
<PAGE>
Recent Developments

Increase in Authorized Shares of Common Stock. On December 30, 1996 at
a Special Meeting of the Stockholders, an amendment to the Company's Certificate
of Incorporation was approved, increasing the number of authorized shares of
Common Stock from 25,000,000 shares to 100,000,000 shares. This amendment became
effective on December 31, 1996.

50% Stock Dividend Declared July 1, 1996. On July 1, 1996, the Board of
Directors of the Company declared a 50% Stock Dividend (the "Stock Dividend")
payable on July 16, 1996, to shareholders of record as of July 15, 1996. As a
result thereof, the number of outstanding shares of the Common Stock has been
increased from 15,303,019 to 22,954,529. Except where specifically noted, all
information in this Prospectus about shares outstanding, per-share financial
information, share prices, option prices, warrant prices and the like have been
restated to give effect to the Stock Dividend as if it occurred prior to the
date or period for which such information is reported or disclosed herein. The
Summary Financial Information on page 7 has been adjusted to give effect to the
Stock Dividend. The Company will pay cash in lieu of fractional shares issuable
on account of the Stock Dividend; the aggregate amount of such payments is not
expected to be material.

Buyback of Common Stock. On October 22, 1996 the Board of Directors of
the Company announced a directive authorizing the Company to purchase up to one
million shares of its common stock on the open market, from time to time, at its
discretion. The Company has not purchased any of its common stock on the open
market to date.

Equity Investments.

The Company also actively seeks to acquire and finance, as appropriate,
additional operating companies or interests therein. Since January 1, 1994, the
Company made acquired minority interests in the common stock or securities
convertible into common stock, of the following companies:

Darwin Molecular Corporation ("DMC"), which hopes to use DNA sequencing
to create novel drugs for the treatment of cancer, AIDS and auto-immune
disease. The Company owns 3.9% of the equity. On December 18th 1996
Chiroscience Group plc, a publicly traded company located in England,
acquired Darwin Molecular. The Company received 394,000 shares of
Chiroscience in exchange for its Darwin shares.
These shares were restricted until June 1997.

Positron Corporation, a publicly held Texas corporation, designs,
manufactures, markets and services advanced medical imaging devices
which utilize positron emission tomography ("PET") technology. Unlike
other available imaging technologies, PET technologies, permits the
measurement of the biological processes of organs and tissues as well
as producing anatomical and structural images. The Company owns less
than 2% of the equity securities of Positron.
<PAGE>
FED Corporation, a development-stage company, intends to manufacture
liquid crystal display devices using proprietary field emission display
technologies, which can be used in small notebook computers and other
similar devices. The Company owns 2.9% of the equity.

The Company intends to continue to evaluate and consider the
acquisition of additional businesses, which may or may not be related to its
current businesses. The Company has no specific plans, arrangements,
understandings or commitments with respect to any such acquisition at the
present time, and it is uncertain as to when or if any acquisition will be made.
The Company is not currently involved in any substantive negotiations for
purchasing any business or group of assets.

BUSINESS

DHB Armor Group

Products. The Armor Group manufactures two basic types of body armor:
concealable armor, which is generally intended to be worn beneath the user's
clothing, and tactical armor, which is worn externally and is designed to
protect against more serious ballistic threats. Both types of armor are
manufactured using multiple layers of KevlarTM and/or a combination of KevlarTM,
Spectra shield,TM SpectraFibre,TM Goldflex, and Dynema and ballistic fabric,
then covered and fully enclosed in an outer carrier. Although some products of
Point Blank and PACA are competitive with each other, brand recognition, brand
loyalty and distribution channels are expected to minimize the extent to which
products of the three companies may impact each other's sales. PACA specializes
in concealable and correctional vests. Point Blank specializes in tactical vests
and patented concealable GenesisTM series vests. Zunblindage specializes in
European Standard.

Concealable vests are contoured to closely fit the user's body shape.
The Armor Group sells a line of vests designed specifically for the body shapes
of women users. Male vests are manufactured in standard sizes and may also be
custom-made. Vests are fastened using Velcro-brand elastic strapping.
Concealable vests may be supplied with a shock plate or SpectrashieldTM trauma
plate, which is a light insert designed to enhance protection of vital areas.
Vests may be supplemented with additional armor plate made of either metal or
ceramic to withstand greater threat levels than the vest is otherwise designed
to protect against. PACA's wholesale prices for its concealable vests range from
approximately $150 to approximately $475. Point Blank's wholesale prices for its
concealable vests ranged from approximately $215 to $440, and the Armor Group
expects to continue these price levels.

Tactical vests are designed to give all-around protection and more
coverage around the neck, shoulders and kidneys than concealable vests. A groin
protector is a popular accessory. These vests contain pockets to incorporate
small panels constructed from high-alumina ceramic tiles which provide
additional protection against rifle fire. Tactical vests come in a variety of
styles, including tactical assault vests, high-coverage armor, and flak jackets,
each of which is manufactured to protect against varying degrees of ballistic
threat. PACA's wholesale prices of these products range from approximately $370
to approximately $1200. Point Blank's wholesale prices for its tactical garments
ranged from approximately $295 to $1150, and the Armor Group expects to continue
these price levels.
<PAGE>
The Armor Group's other body-armor products include a tactical police
jacket, military field jacket, executive vests, NATO-style vests, fragmentation
vests and attack vests. Bomb and fragmentation vests and pants are designed to
specifications in U.S. government contracts to offer protection against
materials and velocities associated with the fragmentation of explosive devices
such as grenades and artillery shells. In general, concealable vests sold to law
enforcement agencies and distributors are designed to resist bullets from
handguns. Bomb gear utilizes a variety of designs and materials and patterns
slightly different from bullet-resistant vests. The Armor Group also
manufactures a variety of accessories for use with its body-armor products.

Potential Product Liability. The products manufactured or distributed
by the Armor Group, e.g., bullet-resistant vests, are used in situations which
could result in serious personal injuries and death, whether on account of the
failure of such products, or otherwise. The Armor Group maintains product
liability insurance for both PACA and Point Blank in the amount of $11,000,000
each per occurrence, and $12,000,000 in the aggregate less a deductible of
$12,500 for each company. There is no assurance that these amounts would be
sufficient to cover the payment of any potential claim. In addition, there is no
assurance that this or any other insurance coverage will continue to be
available or, if available, that PACA and Point Blank would be able to obtain it
at a reasonable cost. Any substantial uninsured loss would have to be paid out
of the Armor Group's assets, as applicable, and may have a material adverse
effect on the Company's financial condition and results of operations on a
consolidated basis. In addition, the inability to obtain product liability
coverage would prohibit PACA or Point Blank as applicable, from bidding for
orders from certain governmental customers, because many governmental agencies
require such coverage, and any such inability to bid would have a material
adverse effect on the Company's financial condition and results of operations on
a consolidated basis.

Raw Materials and Manufacturing. The Armor Group manufactures
substantially all of their respective bullet-, bomb- and projectile-resistant
garments and other ballistic-protection devices. The primary raw material used
by the Armor Group in 60% of its manufacturing of ballistic-resistant garments
is Kevlar(TM), a patented product of E.I. Du Pont de Nemours & Co.
Spectrashield(TM) and SpectraFibre(TM), which are patented products of Allied
Signal are used in approximately 20% of all vests. The Armor Group uses Twaron
for their balance of vest, a fabric manufactured by Akxo, an Israeli company.
The Armor Group purchases cloth woven from these materials from three
independent weaving companies. See "Raw Materials, Sources and Availability".
The woven fabric is placed on tables, layered over patterns for a particular
component of a garment (for example, the front or back of a vest), cut using
electric knives and computerized cutting machines, and then they are stitched
together. The Armor Group utilizes several hundred patterns based upon size,
shape and style (depending upon whether the garment is a bullet-, bomb- or
fragmentation-resistant garment). The various components of the garment are then
sewn together to create the finished product. KevlarTM, SpectrashieldTM,
SpectraFibreTM and Twaron differ in their pliability, strength and cost, such
that the materials are combined to suit a particular application. In the opinion
of management, the Armor Group enjoys a good relationship with its suppliers of
KevlarTM, SpectrashieldTM, SpectraFibreTM and Twaron. If, however, Du Pont or
its European licensee were to cease, for any reason, to manufacture and
distribute the bullet-resistant fabrics, the Armor Group would be required to
utilize other fabrics, and the specifications of some of the Armor Group's
products would have to be modified. Until the Armor Group selected an
alternative fabric and appropriate ballistic tests were performed, its
operations would be severely curtailed and the Armor Group's financial condition
and results of operations would be adversely affected.
<PAGE>
The Armor Group purchases other raw materials used in the manufacture
of their products from a variety of sources and believes additional sources of
supply for these materials are readily available.

Customers. The Armor Group's products are sold to United States law
enforcement agencies and the military and internationally to governments and
distributors. Sales to domestic law enforcement agencies, security and
intelligence agencies, police departments, federal and state correctional
facilities, highway patrols and sheriffs' departments accounted for 44% and 29%,
respectively, of the Armor Group's revenues in each of the years ended December
31, 1996 and 1995. One customer, the New York City Police Department, accounted
for approximately 4% and 5% of PACA's sales for the years ended December 31,
1996 and 1995, respectively. PACA was the successful bidder for a significant
portion of this customers new 1996 - 1997 contract. Besides domestic customers,
Point Blank also has international customers which account for 20% of Point
Blank's 1996 sales. One major international customer, Egypt, accounted for 12%
of Point Blank's sales for the year ended December 31, 1996. The loss of any one
customer would not be expected to have a significant impact on the Armor Group's
continuing financial results, due to the Armor Group's constant submission of
bids for new contracts.

Sales to the United States armed forces directly or as a subcontractor
accounted for 5% of revenues in 1996 and 1995.

Substantially all sales by the Armor Group to the armed services and
other federal agencies are made pursuant to standard purchasing contracts
between PACA or Point Blank and the General Services Administration of the
Federal Government, commonly referred to as a "GSA Contract". The Armor Group
also responds to invitations by military branches and government agencies to bid
for particular orders. GSA contracts accounted for 28% of the Armor Group's
sales for the year ended December 31, 1996. Zunblindage has government contracts
with the Belgian and Netherlands governments.

PACA and Point Blank, as GSA Contract vendors, are obligated to make
all sales pursuant to such contract at its lowest unit price. PACA's current GSA
Contract expires July 31, 2001, while Point Blank's GSA Contract is from August
1, 1996 through August 1997.

During the years ended December 31, 1996 and 1995, commercial sales
(i.e., sales to non-governmental entities) accounted for 49% and 52%,
respectively, of Armor Group's revenues.

Marketing and Distribution. The Armor Group employs 10 customer support
representatives, 2 regional sales managers and 25 independent sales
representatives who are paid solely on a commission basis. These personnel are
responsible for marketing the Armor Group's products to law enforcement agencies
in the United States. These individuals often call upon personnel within these
agencies who are responsible for making purchasing decisions in order to provide
information concerning the Armor Group's products. Sales are made primarily
through independent local distributors. However, in areas in which there are no
suitable distributors, the Armor Group will fill orders directly.

Substantially all of the Armor Group's advertising is directed toward
law enforcement agencies in the form of catalogs and trade shows. The Armor
Group advertises its products primarily in law enforcement trade magazines and
at trade shows. During the years ended December 31, 1996 and 1995, advertising
expenditures were $363,000 and $79,000, respectively.
<PAGE>
Government and Industry Regulations and Standards. Bullet- and
bomb-resistant garments and accessories manufactured and sold by the Armor Group
are not currently the subject of government regulations. However, law
enforcement agencies and the military publish invitations for bidding which
specify certain standards of performance which the bidders' products must meet.
The National Institute of Justice, under the auspices of the United States
Department of Justice, has issued a revised voluntary ballistic standard
(NIJ0101.03) for bullet-resistant vests of several categories. The Armor Group
regularly submits its vests to independent laboratories for ballistic testing
under this voluntary ballistic standard and all of its products have, at the
time of manufacture, met or exceeded such standards in their respective
categories.

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

Competition. The ballistic-resistant garment business is highly
competitive and the number of United States manufacturers is estimated to be
less than 20. Management is not aware of published reports concerning the
market, and most companies are privately held. Nevertheless, the Armor Group
believes, based upon its experience in the industry and that the largest
manufacturer was Old Point Blank prior to its filing for Liquidation under
Chapter 7 of the United States Bankruptcy Code and that as a result of its
purchase of the Point Blank Assets, it is positioned to become the largest
manufacturer of ballistic-resistant garments in the United States. In the
future, the Company may face other and unknown competitors, some of whom may
have substantially greater financial, marketing and other resources than the
Company.

The Armor Group believes that the principal elements of competition in
the sale of ballistic-resistant garments are its innovative design, price and
quality. In dealings with domestic law enforcement agencies and the military,
PACA and Point Blank bid for orders in response to invitations for bidding which
set forth specifications for product performance. The Armor Group believes its
products are competitive as to both price and quality with the products of its
competitors having similar ballistic capabilities and that its ability to remain
competitive in pricing is due to its relatively lower labor and production
costs. In addition, the Company believes that the Armor Group enjoys a favorable
reputation in the industry with over 20 years of supplying federal, state and
municipal governments and agencies. These factors, combined with the financial
resources made available to the Armor Group by the Company, have permitted it,
and are expected to continue to permit it, to reduce interest expenses, improve
production efficiency and capacity, control purchasing costs and permit the
Armor Group to compete favorably.
<PAGE>
In March 1990, before PACA was controlled by the Company, PACA entered
into an agreement with American Body Armor and Equipment, Inc., which prohibited
PACA, for a period of ten years ending March 2000, from soliciting business from
American Body Armor's twelve largest domestic distributors, nor may PACA solicit
business outside the United States relating to the manufacturing, distribution
or sale of projectile-resistant garments and materials and other
ballistic-protection devices, including without limitation personal body armor.
In August 1995, PACA entered into an agreement which terminated all such
restrictions, for a payment of $250,000, which was expensed in the quarter ended
September 30, 1995.

The Armor Group's Backlog. As of December 31, 1996, the Armor Group had
a backlog of approximately $2,500,000, as compared to $3,096,000 as of December
31, 1995. Backlog at any one date is not a reliable indicator of future sales or
sales trends.

In addition to the backlog, which represents orders believed to be
firm, from time to time the Armor Group receives contract awards for municipal
orders which may be placed over an extended period of time. The actual dollar
amount of products to be delivered pursuant to this and similar contracts cannot
be accurately predicted and is generally excluded from reported backlog.

Employees. As of June 30, 1997, there were two officers of the Armor
Group, 15persons employed in supervisory capacities, 282 employed for
manufacturing, shipping and warehousing, and 29 are office personnel. All of
Armor Group's employees are employed full time. In the opinion of management,
the Armor Group enjoys good relationships with its employees.

NDL PRODUCTS, INC.

In December 20, 1994, the Company, through a wholly-owned subsidiary,
acquired the NDL Assets for a cash payment of $3,080,000, and renamed the
acquiring subsidiary "NDL Products, Inc." NDL is engaged in business as a
manufacturer and distributor of specialized protective athletic equipment and
apparel.

NDL's protective sports apparel and fitness products and related items
are sold under the brand names NDL(TM), Grid(TM), Dr. Bone Savers(TM),
Hitman(TM) and Flex Aid(TM). NDL has hired new executives for sales and
marketing, production, and new product research and development.

NDL's Marketing and Distribution. NDL employs 4 sales executives who
are responsible for sales throughout the United States, Western Europe, Asia,
the Middle East and Latin America and who supervise 30 independent sales
representatives who are paid solely on a commission basis. These representatives
call on customers, who are generally major retailers and distributors. NDL also
sells to local distributors and has a telemarketing staff of 5. NDL added a
marketing director who is currently evaluating and developing marketing and
sales strategies.

NDL's Potential Products Liability. Some of the products manufactured
or distributed by NDL are used in situations where serious personal injuries
could occur, whether on account of the failure of NDL's products or otherwise.
NDL maintains product liability insurance in the amount of $1,000,000 per
occurrence and $2,000,000 in the aggregate, including legal fees, subject to a
$10,000 deductible. There can be no assurance that these amounts would be
sufficient to cover payment of potential claims, and there can be no assurance
that this or any other insurance coverage would continue to be available, or if
available, that NDL would be able to obtain it at reasonable cost. Any
<PAGE>
substantial uninsured loss would have to be paid out of NDL's assets and could
have a material adverse effect on the Company's financial condition and results
of operations.

Employees. As of December 31, 1996, there was one officer of the NDL
Products, Inc., 6 persons employed in supervisory capacities, 14 employed for
shipping and warehousing, and 10 are office personnel. All of NDL's
manufacturing employees are subcontracted from Point Blank. Every NDL employee
is employed full time. In the opinion of management, NDL enjoys good
relationships with its employees.

ORTHOPEDIC PRODUCTS, INC.

In March 1996, the Company exchanged a total of 270,000 shares of its
common stock with a value of approximately $579,000 to acquire 100% of the
common stock of Orthopedic Products, Inc, a Florida corporation. This
transaction was accounted for as a purchase, and resulted in an excess purchase
price over the fair value of identifiable assets acquired and liabilities
assumed of approximately $57,000 which was allocated to goodwill. In April 1997,
there was a reduction of the purchase price of OPI as a result of a lawsuit
initiated by the Company alleging misrepresentation of the net worth of OPI.
This matter was settled in mediation and resulted in the return of 38,625 shares
of the Company's common stock and a reduction of the purchase price of
approximately $72,000. OPI is engaged in the manufacture and sale of orthopedic
products, and the distribution and sale of general medical supplies to
orthopedists, orthopedic clinics, hospitals, sports medicine centers and
orthopedic medical practices.

OPI's Marketing and Distribution. OPI employs 2 sales executives who
supervise 3 sales representatives. OPI's products are sold directly to the
medical industry, including hospitals, sports medicine centers and medical
practices. OPI's objective is to broaden their sales to a national level over
the next year.

OPI's Potential Products Liability. Some of the products manufactured
or distributed by OPI are used in situations where serious personal injuries
could occur, whether on account of the failure of OPI's products or otherwise,
OPI maintains product liability insurance in the amount of $1,000,000 per
occurrence, and $2,000,000 in the aggregate, including legal fees, subject to a
$10,000 deductible. There can be no assurance that these amounts would be
sufficient to cover payment of potential claims and there can be no assurance
that this or any other insurance coverage would continue to be available, or if
available, that OPI would be able to obtain it at a reasonable cost. Any
substantial uninsured loss would have to be paid out of OPI's assets and could
have a material adverse effect on the Company's financial condition and results
of operations.

Employees. As of June 30, 1996, OPI has one officer, two people
employed in supervisor capacities, 6 employed for shipping and warehousing, and
6 office personnel. All of OPI's manufacturing employees are subcontracted from
Point Blank. OPI's employees are employed full time. In the opinion of
management, OPI enjoys good relationships with its employees.

Segment Information: As described in detail above, the Company operates in two
principal segments: Ballistic-resistant equipment and Protective
athletic/medical equipment. The Company designs, manufacturers and markets
products in both segments as described above.
<PAGE>
Financial information on the Company's business segments was as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net Sales:
Ballistic-resistant equipment ......... $ 18,358,614 $ 10,370,602
Protective athletic & medical equipment 5,909,238 4,276,603
------------ ------------
24,267,852 14,647,205
Less inter-segment sales ........... (889,154) (153,111)
------------ ------------
Consolidated Net Sales ....... 23,378,698 14,494,094
============ ============

Income from Operations
Ballistic-resistant equipment ......... $ (728,388) $ 618,934
Protective athletic & medical equipment (2,449,120) (118,733)
------------ ------------
(3,177,508) 500,201
Corporate and Other (1) ............... (1,140,497) (235,123)
------------ ------------
Consolidated Operating Income $ (4,318,005) $ 265,078
============ ============

Identifiable Assets (2)
Ballistic-resistant equipment ......... $ 10,648,863 $ 9,818,189
Protective athletic & medical equipment 4,204,341 3,827,460
------------ ------------
14,853,204 13,645,649
Corporate and Other ................... 3,549,941 5,819,559
------------ ------------
Consolidated Net Assets ...... $ 18,403,145 $ 19,465,208
============ ============

(1) Corporate and other includes corporate general and
administrative expenses, net interest expense, other
non-operating income and expense, and income taxes.

(2) Identifiable assets by industry segment exclude intercompany
loans, advances, and investments. Intercompany trade
receivables between companies have also been excluded form
identifiable assets. Corporate assets are principally cash,
marketable securities, deferred charges and assets held for
disposition.
</TABLE>

PROPERTIES

Corporate Headquarters. On January 17, 1996, the Company purchased a
one-story building on a two-acre lot at 11 Old Westbury Road, Old Westbury, New
York, and relocated its corporate headquarters into that building on or about
January 19, 1996.
<PAGE>
PACA. PACA leases 23,400 square feet of office, manufacturing and
warehouse space at 148 Cedar Place, Norris, Tennessee from Leonard Rosen,
President of PACA, at a present annual rental of $43,200, plus real estate taxes
of approximately $4,800 annually. The space is occupied pursuant to a five-year
lease which expires October 31, 1997, with an option to acquire the property for
$500,000. In the opinion of management, PACA's facilities are adequate for its
current needs and for its needs in the foreseeable future. Management believes
that the terms of the lease are no less favorable to the Company than could be
obtained from an unrelated party.

NDL/Point Blank/OPI Facility. NDL Products leases a 67,000 square foot
office and warehouse facility (the "Oakland Park Facility") located at 4031 N.E.
12th Terrace, Oakland Park, Florida 33334 from V.A.E. Enterprises ("V.A.E."), a
partnership controlled by Mrs. Terry Brooks, wife of Mr. David H. Brooks, and
beneficially owned by Mr. and Mrs. Brooks' minor children. V.A.E. purchased the
Oakland Park facility as of January 1, 1995. Point Blank and OPI entered into a
net-net lease for a portion of the space in the Oakland Park facility. Annual
aggregate base rental is $480,000 and is scheduled to increase by 4% per year.
NDL Products, Point Blank, and OPI, as lessees, are responsible for all real
estate taxes and other operating and capital expenses. Management believes that
the terms of the lease are at the current market price that would be obtained
from an unrelated party. In April 1997, the Company entered a one year leased
for a 60,000 square foot warehouse adjacent to the Oakland Park, Florida
facility with an annual rental of approximately $210,000 and an option to extend
the lease for four years. This warehouse is located at 1201 NE 38th Street
Oakland Park, Florida.

Zunblindage Facility. Zunblindage leases a 5,700 square foot office and
warehouse facility located at Rue Leon Frederiq, 14, 4020 Liege, Belgium and a
1,800 square foot store located at Passage Lemonnier, 84000 Liege, Belgium.
These spaces are occupied pursuant to a nine year lease with annual rentals
totaling $42,000.

PENDING LITIGATION

In June 1996, the Company commenced a lawsuit against the former
president of NDL, Barry Finn, for breach of his employment agreement. On
December 13, 1996 Mr. Finn filed a counterclaim against the Company asserting
Breach of Contract. The legal counsel handling the case for the Company have
advised that it is too early to reliably predict the outcome of the case.

The Company is party to other litigation matters and claims which are
normal in the course of its operations, and while the results of the litigation
and claims cannot be predicted with certainty, management believes, based on
advice of counsel, the final outcome of such matters will not have a materially
adverse effect on the consolidated financial position.

MANAGEMENT

The Directors serve for a term of one year following their election at
the Annual Meeting of Shareholders, and until their successors have been elected
and qualified. The officers serve at the discretion of the Board of Directors.

Directors and Executive Officers

The executive officers, directors and key employees of the Company and
their respective positions and ages as of June 30, 1997, are as follows:
<PAGE>
David H. Brooks, age 42, has served as Chairman of the Board and Chief
Executive Officer of the Company since its inception. Mr. Brooks has been the
Chairman of the Board, President and a Director of Brooks Industries of L.I.,
Inc. ("Brooks Industries"), since October 1988, a New York corporation of which
he is the sole shareholder and through which he makes investments. Brooks
Industries engages in the venture capital business and in securities trading.
Mr. Brooks served as a consultant to U.S. Alcohol Testing of America Inc. during
the period from February 1991 to November 1992 and has, through Brooks
Industries, served as a consultant to Good Ideas Enterprises, Inc., a
majority-owned indirect subsidiary of U.S. Alcohol pursuant to an agreement
having a five-year term expiring in May 1997. Mr. Brooks served as a consultant
to The Thunder Group, Inc. from October 25, 1991, until the filing of an
involuntary Chapter 11 bankruptcy petition against The Thunder Group in February
1993. In each case, Mr. Brooks provided advice on matters relating to the
business, financial management and marketing activities. Mr. Brooks does not
serve as a consultant to any other company at the present time and, other than
as previously described, he has not served in such capacity for more than the
past five years. Mr. Brooks received a bachelor of science degree in accounting
from New York University in 1976. Since that time he has been engaged
principally as an investor for his own account.

David H. Brooks, his brother Jeffrey Brooks, and Jeffrey Brooks
Securities, Inc. ("JBSI"), which was wholly owned by Jeffrey Brooks, entered
into a consent decree in December 1992 with the SEC. The SEC had filed a civil
complaint in the United States District Court for the Southern District of New
York (Docket No. 922846) alleging that an employee of JBSI was involved in an
unlawful insider-trading scheme allegedly conducted through JBSI and the filing
of false information by JBSI, a registered broker-dealer. The SEC alleged that
JBSI did not establish, maintain or enforce policies and procedures that are
required under Section 15(f) of the Exchange Act, designed to detect and prevent
insider trading by an employee of JBSI, and that JBSI did not make required
disclosures under Section 15(b) of the Exchange Act. The SEC further alleged
that David Brooks exercised "de facto control" of certain aspects of JBSI's
operations and that David Brooks and Jeffrey Brooks aided and abetted the
reporting violations of JBSI. Pursuant to the settlement of these charges,
without admitting or denying such allegations, David Brooks, Jeffrey Brooks and
JBSI were assessed an aggregate civil fine of $405,000 and were enjoined from
future violations of Section 15(b) and 15(f) of the Exchange Act; David Brooks
was barred from having any direct or indirect interest in, or acting as a
director, officer or employee of, any broker, dealer, municipal securities
dealer, investment advisor, or investment company (provided that David Brooks is
able to apply to become so associated after a five-year period); Jeffrey Brooks
is prohibited from acting in a supervisory capacity with respect to any employee
or any broker, dealer, municipal securities dealer, investment company or
investment advisor for a period of one year; and JBSI was required to institute
and maintain procedures pursuant to Section 15(f) of the Exchange Act. Mr. David
Brooks is not under any prohibition from serving as an officer or director of
any public company other than a registered broker-dealer or an investment
company.

Mary Kreidell, age 44, has served as Treasurer, Secretary, and a
Director of the Company since its inception. Mrs. Kreidell became a Certified
Public Accountant in 1991. She worked for Israeloff, Trattner & Co. CPA'S, P.C.,
a certified public accounting firm, for four years prior thereto.
<PAGE>
Leonard Rosen, age 58, is a founder of PACA and has served as its
President since its inception in 1975. He is actively involved in all facets of
PACA's operations, from production to sales. Mr. Rosen has experience in the
apparel industry for over 35 years. He worked closely in the research and
development of ballistic-resistant soft body armor and helmets with the Federal
Government, including serving as a charter member of the committee that
conceived the National Institute of Justice "0l" Standard for ballistic body
armor.

Sandra Hatfield, age 44, has been President of Point Blank since
October 1996. For more than 5 years prior thereto, she was the Vice President of
Production at PACA.

Michael Bell, age 43, became the President of NDL in March 1997. He
worked for Converse, Inc. for five years prior to and held the position of Chief
Executive Officer prior to his leaving.

Joseph Giaquinto, age 34, has been President of NDL's Flex Aid division
since March, 1995. For more than 7 years prior thereto, he was a Vice President
of Sales for Tru-Fit Marketing, of Boston, Massachusetts.

Patrick J. Garvey, age 61, is the Director of Canal Enterprises for the
N.Y. State Thruway Authority and its wholly owned subsidiary, the N.Y. State
Canal Corp (development for commercial shipping and economic development
initiatives). Prior to joining the Thruway Authority in 1993, he served for more
than seven years as the Commander of Camp Smith in Peekskill, N.Y. and as
Legislative Assistant to the Adjunct General of N.Y. Mr. Garvey is also a
retired Colonel in the United States Marine Corps Reserve.

Gary Nadelman, age 45, has been the president of Synari, Inc., of New
York, NY, a privately held manufacturer and distributor of women's sportswear
and other apparel, for more than 5 years.

Morton A. Cohen, age 61, has over ten years experience in venture
capital and over twenty- five years experience in the public securities
industry, both as a securities analyst and a investment banker. Also, he has
successfully managed several emerging growth companies. Mr. Cohen has been
Chairman, President and Chief Executive Officer of Clarion Capital Corp. since
1982. Mr. Cohen served as Governor of the Montreal Stock Exchange, is a
Chartered Financial Analyst and holder of a M. B.A. from the Wharton School of
Business of the University of Pennsylvania. Mr. Cohen was a member of the Small
Business Investment Advisory of Small Business Investment Companies and is a
member of the Small Business Investment Advisory Council. He is the Chairman of
Monitek Technologies, Inc. (NASDAQ), Chairman of Cohesant Technologies (NASDAQ)
and Director of Gothic Energy (NASDAQ) and a director of Zemex Corp (NYSE).

Because of the relatively small size of the Company, the loss of a
senior executive may have a materially adverse effect upon the Company until a
suitable replacement can be found.
<PAGE>
Executive Compensation.

Summary Compensation Table. The following table sets forth certain
summary information regarding the compensation of the Company's Chief Executive
Officer and each of its other executive officers whose total salary and bonus
for the year ended December 31, 1996 and 1995, exceeded $100,000:
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ------------
Securities
underlying
Name and Principal Options/
Position Year Salary(1) Bonus Other SAR's(4)
- -------- ---- --------- ----- ----- --------
<S> <C> <C> <C> <C> <C>
David Brooks,(2) 1996 191,667
Chairman, CEO 1995 39,583

Joseph Giaquinto 1996 100,000
President of Flex Aid 1995 50,962 0 0 0

Leonard Rosen,(3) 1996 135,000 0 0 0
President of PACA 1995 125,000
- ------------------
(1) Although certain officers receive certain perquisites such as auto
allowances and expense allowances, the value of such perquisites did
not exceed the lesser of $50,000 or 10% of the respective officers'
salary and bonus.

(2) Certain warrants were awarded to Mrs. Terry Brooks in 1994 and Mr.
David Brooks in 1996 and 1997; See "Employment Agreements" and "Certain
Transactions."

(3) Mr. Rosen is the lessor of PACA's premises in Norris, Tennessee. See
"Properties" and "Certain Transactions." The Company does not consider
the lease payments to be compensation, because they are not in excess
of the fair market value of the lease.

(4) In October 1995, the Company adopted a plan (the "1995 Stock Option
Plan" or the "Plan") pursuant to which the Board of Directors or a
committee (the "committee") of the Board is authorized to award up to
3,500,000 shares of Common Stock, after giving effect to the 50% stock
dividend paid on July 16, 1996, to selected officers, employees,
agents, consultants and other persons who render services to the
Company. The options may be issued on such terms and conditions as
determined by the Board or Committee, and may be issued so as to
qualify as incentive stock options under Internal Revenue Code Section
422A. The directors who are authorized to award options are not
eligible to receive options under the Plan. The Company has filed a
registration statement with respect to the Plan, and shares ("Option
Shares") of Common Stock acquired under the Plan are eligible for
resale by non-affiliates without further registration under the Act;
Option Shares acquired by affiliates of the Company are subject to the
registration requirements of the Act. No shares have been issued under
this plan.
</TABLE>
<PAGE>
Employment Agreements. Mr. Brooks, the CEO and Chairman of the Board of
DHB Capital Group Inc. is employed pursuant to a five year employment agreement
which was entered into April 1, 1996. Pursuant to the agreement Mr. Brooks
receives an annual salary of $250,000 through April 1997 with annual increases
of $25,000. The terms of Mr. Brooks's contract provide for 750,000 warrants per
year exercisable at $2.33 for five years. In addition, Mr. Brooks receives an
annual bonus of ten percent of the net profit. As the Company has businesses in
Florida and requires Mr. Brooks to spend considerable time there, this contract
include provisions for certain of his Florida living expenses. Subsequent to the
execution of the employment contract, Mr. Brooks voluntarily relinquished his
right to the provision in his employment contract for the annual bonus of ten
percent of net profit.

Mr. Rosen is employed pursuant to a five-year employment agreement with
PACA which was entered into at the time the Company acquired PACA, i.e.,
November 6, 1992. Pursuant to the agreement, Mr. Rosen receives annual salaries
ranging from $115,000 in 1993 to 155,000 in 1997 plus certain fringe benefits.

NDL's executive, Mr. Giaquinto, has a three year employment contract
providing for an annual base salary of $100,000 and options to purchase 49,500
shares of common stock at a price of $1.33 per share exercisable at the rate of
not more than 16,500 shares per year.

NDL's and OPI's President, Mr. Bell, has a three year employment
agreement commencing March 7, 1997 and providing for an annual base salary of
$100,000 and options to purchase 150,000 shares of common stock at $2.00 per
share at a rate of not more than 50,000 shares per year plus certain fringe
benefits.

Stock Options. In April 1997 and April 1996, the Company granted
750,000 stock warrants per year exercisable at $2.33 for five years to the CEO,
David Brooks, in connection with his employment contract. In March 1997, the
Company granted 150,000 stock warrants exercisable at $2.00 per share, 50,000 of
which vest each contract year of Mr. Bell's employment contract. No additional
stock options, warrants or similar securities, rights or interests to any of the
executive officers of the Company listed in the Summary Compensation Table
above, and no options, warrants or similar securities, rights or interests were
exercised by any such executive officers. In 1994, a warrant was issued to Mrs.
Terry Brooks in exchange for loans by Mrs. Brooks and her pledging of certain
assets to secure the Company's indebtedness to the Bank. See "Certain
Transactions."

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

To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater-than-ten-percent beneficial owners were complied with.
<PAGE>
Personal Liability and Indemnification of Directors

The Company's Certificate of Incorporation and By-Laws contain
provisions which reduce the potential personal liability of directors for
certain monetary damages and provide for indemnity of directors and other
persons. The Company is unaware of any pending or threatened litigation against
the Company or its directors that would result in any liability for which such
director would seek indemnification or similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors' liability
insurance is available only at considerable cost and with low dollar amounts of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors, although the
Company may attempt to acquire such insurance in the future. The Company
believes that the substantial increase in the number of lawsuits being
threatened or filed against corporations and their directors and the general
unavailability of directors' liability insurance to provide protection against
the increased risk of personal liability resulting from such lawsuits have
combined to result in a growing reluctance on the part of capable persons to
serve as members of boards of directors of public companies. The Company also
believes that the increased risk of personal liability without adequate
insurance or other indemnity protection for its directors could result in
overcautious and less effective direction and management of the Company.
Although no directors have resigned or have threatened to resign as a result of
the absence of such insurance or other indemnity protection from liability, it
is uncertain whether the Company's directors would continue to serve in such
capacities if improved protection from liability were not provided.

The provisions regarding personal liability do not abrogate a
director's fiduciary duty to the Company and its shareholders, the personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.

The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing"profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
<PAGE>
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future,
although the Company may attempt to obtain such insurance.

The provision regarding personal liability of officers and directors
diminish the potential rights of action which might otherwise be available to
shareholders by limiting the liability of officers and directors to the maximum
extent allowable under applicable state law and by affording indemnification
against most damages and settlement amounts paid by a director of the Company in
connection with any shareholder derivative action. However, the provisions do
not have the effect of limiting the right of a shareholder to enjoin a director
from taking actions in breach of his fiduciary duty, or to cause the Company to
rescind actions already taken, although as a piratical matter courts may be
unwilling to grant such equitable remedies in circumstances in which such
actions have already been taken. Also, because the Company does not presently
have director's liability insurance and because there is no assurance that the
Company does not presently have directors' liability insurance and because there
is no assurance that the Company will procure such insurance or that, if such
insurance is procured, it will provide coverage to the extent directors would be
indemnified under such provisions, the Company may be forced to bear a portion
or all of the cots of a director's claims for indemnification under such
provisions. If the Company if forced to bear the costs for indemnification, the
value of the Company's stock may be adversely affected. In the opinion of the
SEC, indemnification for liabilities arising under the Securities Act of 1933 is
against public policy and therefore, is unenforceable.

PRINCIPAL SHAREHOLDERS

The following table sets forth the beneficial ownership of the
Company's Common Stock as of June 30, 1997, after giving effect to the Stock
Dividend, for (i) each person known by the Company to beneficially own more than
five percent of the shares of outstanding Common Stock, (ii) each of the
executive officers listed in the Summary Compensation Table in "Management
Executive Compensation" and (iii) all of the Company's executive officers and
directors as a group except as otherwise indicated, all shares are beneficially
owned, and investments and voting power is held by the persons named as the
owners.
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent Owned (1)
---------------- ------------------ -----------------
<S> <C> <C>
David H. Brooks 17,250,600 (2) 55%
11 Old Westbury Road
Old Westbury, New York 11568

Jeffrey Brooks (3) 2,353,500 8%
44 Coconut Row
Palm Beach, Florida 33480

Leonard Rosen 120,142 (4) *
148 Cedar Place
Norris, Tennessee
<PAGE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent Owned (1)
---------------- ------------------ -----------------
<S> <C> <C>
Michael Bell 95,000 (5) *
4031 NE 12th Terrace
Oakland Park, Florida 33334

Morton Cohen(6) 455,000 (6) *
1801 East Ninth Street, Suite 510
Cleveland, Ohio 44114

All officers and Directors 18,260,370 (7) 58%(8)
as a group (10 persons)

(1) Based upon 25,875,958 shares outstanding as of July 10, 1997, increased
by, with respect to Mr. Brooks, 3,750,000 shares acquirable by his wife
pursuant to a warrant to purchase 3,750,000 shares at a price per share
of $1.33 and the 1,500,000 warrants acquirable by Mr. Brooks at $2.33
as well as 75,000 warrants exercisable at $1.33 for each, Ms. Kreidell
and Mr. Rosen.

(2) Consists of 7,500,600 shares owned by Mr. Brooks and 4,500,000 owned by
his wife as custodian for his minor children, 3,750,000 shares which
may be acquired by Mrs. Brooks upon exercise of a warrant to purchase
such shares at a price per share of $1.33 and 1,500,000 shares which
may be acquired by Mr. Brooks at $2.33 per share upon exercise of a
warrant. Msrs. David H. Brooks and Jeffrey Brooks are brothers. Each
disclaims beneficial ownership of shares owned by the other.

(3) Messrs. David H. Brooks and Jeffrey Brooks are brothers. Each disclaims
beneficial ownership of shares owned by the other.

(4) Consists of 45,142 shares outstanding and 75,000 shares acquirable
under warrants awarded to Mr. Rosen; does not include 4,350 shares
owned by Mr. Rosen's wife, as to which Mr. Rosen disclaims beneficial
ownership.

(5) Michael Bell is the President of NDL and OPI.

(6) These shares are owned by Clarion Capital Corporation of which Morton
Cohen, a director of the Company, is the President, CEO and Chairman.

(7) Includes 5,250,000 shares acquirable by an officer and his wife
pursuant to a presently exercisable warrant.

(8) Based upon all shares outstanding as set forth in Footnote 1 above,
including 3,750,000 acquirable by Mrs. Terry Brooks and 1,500,000
acquirable by Mr. David Brooks.

* - Less than one (1%) percent
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company obtained funds for the cash payment required to carry out
the acquisition of the assets used to start up NDL, and for working capital for
NDL, from (i) the Company's working capital, (ii) the Loan, and (iii) term loans
of $1,140,000 from Mr. Brooks and term loans from Mrs. Brooks, bearing interest
at 9% per year. Presently the outstanding balance of this loan is $550,000
expiring November 1998 bearing interest at 12% per year. The interest paid on
this loan to date is $218,877. Under a collateral agreement [third party] (the
"Collateral Agreement") covering securities owned by Mr. David H. Brooks,
Chairman of the Board of the Company, and Mrs. Terry Brooks, his wife, Mr.
Brooks and Mrs. Brooks have pledged certain marketable securities to the Bank to
partially secure the Bank Loans and other obligations of the Company to the
Bank. In exchange for this, the Company has agreed to grant to Mrs. Brooks
5-year warrants to purchase 3,750,000 shares of Common Stock, at a price of
$1.33 per share. The warrants contain provisions for a one-time demand
registration, and piggyback registration rights. Mr. David Brooks also lent
$2,000,000 to the Company to provide the funds needed to purchase the Point
Blank Assets; the outstanding balance on that loan is now $750,000 at 12%
interest payable November 1998; the Company obtained funds to pay down the loan
by liquidating certain investments at a profit. The Company has paid for the
account of Mr. and Mrs. Brooks a total of $133,274 in interest on their loans to
the Company. Mr. and Mrs. Brooks have also pledged personal assets to BNY to
secure the Company's debt to that bank. The Company entered into an employment
agreement in April 1996 with Mr. Brooks, See - "Employment Agreements".

From January 1, 1996 through April 28, 1997, the Company sold 3,170,000
unregistered shares of Common Stock to approximately twenty people including
307,143 shares to Anna Brooks. Anna Brooks is the mother of Mr. David Brooks.

NDL, Point Blank and OPI operate at a 67,000 square foot office and
warehouse facility (the "Facility") located at 4031 N.E. 12th Terrace, Fort
Lauderdale, Florida 33334, which it leases from V.A.E. Enterprises ("V.A.E."), a
partnership controlled by Mrs. Brooks and beneficially owned by Mr. and Mrs.
Brooks' minor children, which purchased the Facility on or about January 1,
1995. The lease is a 5-year net-net lease; annual base rental is $480,000 and is
scheduled to increase by 4% per year. The Company, as lessee, is responsible for
all real estate taxes and other operating and capital expenses.

PACA leases 23,400 square feet of office, manufacturing and warehouse
space at 148 Cedar Place, Norris, Tennessee from Leonard Rosen, President of
PACA, at a present annual rental of $43,200, plus real estate taxes of
approximately $4,800 annually. The space is occupied pursuant to a five-year
lease which expires October 31, 1997, with an option to acquire the property for
$500,000. In the opinion of management, the rental is fair and reasonable and is
approximately at the same rate that could be obtained from an unaffiliated
lessor for property of similar type and location. In the opinion of management,
PACA's facilities are adequate for its current needs and for its needs in the
foreseeable future.

On May 27, 1997, the Company sold 1,775,000 shares of Common Stock at $2.00 per
share to five investors including 250,000 shares to Anna Brooks, the mother of
Mr. David Brooks, 125,000 shares to Cary Chasin an employee of the Company, and
200,000 shares to Clarion Capital Corporation of which Morton Cohen, a director
of the Company, is the Chairman, President and Chief Executive Officer. All of
these shares are being offered for sale pursuant to this Prospectus. See
"Selling Shareholders".
<PAGE>
DESCRIPTION OF SECURITIES

The following is a summary of certain provisions of the Certificate of
Incorporation, as amended, and rights accorded to holders of Common Stock
generally and as a matter of law, and does not purport to be complete. It is
qualified in its entirety by reference to the Company's Restated Certificate of
Incorporation, the Company's By-Laws, and the Delaware General Corporation Law.
See "Special Notice Regarding Reincorporation in Delaware" and "Business -
History."

Common Stock

General. Under the Company's Delaware charter and applicable law, the
Board of Directors has broad authority and discretion to issue convertible
preferred stock, options and warrants, which, if issued in the future, may
impact the rights of the holders of the Common Stock.

Cash Dividends. Holders of Common Stock may receive dividends if, as
and when dividends are declared on Common Stock by the Company's Board of
Directors. If the Board of Directors hereafter authorizes the issuance of
preferred shares, and such preferred shares carry any dividend preferences,
holders of Common Stock may have no right to receive dividends unless and until
dividends have been declared and paid. At the present time, there is no
preferred stock authorized or outstanding. The ability of the Company to
lawfully declare and pay dividends on Common Stock is also limited by certain
provisions of applicable state corporation law. It is not expected that
dividends will be declared on the Common Stock in the foreseeable future.

Distributions in Liquidation. If the Company is liquidated, dissolved
and wound up for any reason, distribution of the Company's assets upon
liquidation would be made first to the holders of preferred shares, if any, and
then to the holders of the Common Stock. If the Company's net assets upon
liquidation were insufficient to permit full payment to the holders of shares of
preferred stock, if any, then all of the assets of the Company would be
distributed pro rata to the holders of shares of preferred stock and no
distribution will be made to the holders of the Common Stock. There are no
shares of preferred stock authorized, issued or outstanding at this time. A
consolidation or merger of the Company with or into any other company, or the
sale of all or substantially all of the Company's assets, is not deemed a
liquidation, distribution or winding up for this purpose.

Voting Rights. Each share of Common Stock is entitled to one vote on
all matters to be voted on at meetings of the shareholders of the Company,
including the election of directors. The holders of Common Stock will be
entitled to elect all of the Company's directors. Holders of Common Stock do not
have any cumulative voting rights or preemptive rights.

Preferred Shares

The Company's Delaware charter authorizes the Board of Directors to
issue up to 5,000,000 shares of preferred stock, $0.001 par value of the
Company, in such amounts and with such rights to dividends, voting, conversion,
redemption and other terms as the Board may determine. At this thine, no
preferred stock is authorized, issued or outstanding. The Company had previously
issued Class A convertible preferred stock, but all outstanding preferred shares
were converted prior September 30, 1995.
<PAGE>
SELLING SHAREHOLDERS

An aggregate of up to 1,850,000 Shares of Common Stock may be offered by Selling
Shareholders. The following table sets forth certain information with respect to
persons for whom the Company is registering the Shares for resale to the public.
The table reflects such person's ownership of the Common Stock as of July 10,
1997, without giving effect to sales of any shares pursuant to Rule 144 under
the Act. The Company will not receive any proceeds from the sale of the Shares.
There are no material relationships between any of the Selling Shareholders and
the Company or any of its predecessors or affiliates, nor have any such material
relationships existed within the past three years, except as noted.
<TABLE>
<CAPTION>
Beneficial Ownership as of Maximum Beneficial Ownership After
July 10, 1997 to be Sold Offering if Maximum is sold
in this
Selling Shareholder Amount Percent(1) Offering Amount Percent(2)
- ------------------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Anna Brooks(3) 1,083,526 * 250,000 833,526 *

Robert Bender 1,000,000 4 1,000,000 0

Cary Chasin(4) 125,000 * 125,000 0

Clarion Capital
Corporation(5) 455,000 * 275,000 180,000 *

Frank Lagano 200,000 * 200,000 0

* - Less than one percent.

(1) Calculated by dividing the number of shares owned by each respective
Selling Shareholder by the sum of (i) all shares of Common Stock issued
and outstanding as of July 10, 1997, i.e., 25,875,958 shares, and (ii)
5,412,500 shares of Common Stock which may hereafter be issued pursuant
to warrant awarded to certain executive officers of the Company, or
their affiliates.

(2) Some of the Selling Shareholders are offering shares for sale under a
prospectus which is part of a different Registration Statement. The
amounts in this column does not give effect to the possible sale of
those shares.

(3) Anna Brooks is the Mother of Mr. David Brooks, Chairman and CEO of the
Company.

(4) Cary Chasin is an employee of the Company.

(5) Morton Cohen, Chairman, President and CEO of Clarion is a Director of
the Company.
</TABLE>
<PAGE>
PLAN OF DISTRIBUTION

The sale of the Shares by the Selling Shareholders may be effected from
time to time in transactions (which may include block transactions by or for the
account of the Selling Shareholders) in the over-the-counter market or in
negotiated transactions, a combination of such methods of sale, or otherwise.
Sales may be made at fixed prices which may be changed, at market prices
prevailing at the time of sale, or at negotiated prices.

Selling Shareholders may effect such transactions by selling their
shares of Common Stock directly to purchasers, through broker-dealers acting as
agents for the Selling Shareholders or to broker-dealers who may purchase shares
as principals and thereafter sell their shares from time to time in the
over-the-counter market, in negotiated transactions, or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions, or commissions from the Selling Shareholders, and/or the purchasers
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions).

The Selling Shareholders, and broker-dealers, if any, acting in
connection with such sale might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act and any commission received by
them and any profit on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.

No sales or distributions other than as described herein may be effected until
after this Prospectus shall have been appropriately amended or supplemented.

LEGAL MATTERS

The validity of the securities offered hereby has been passed upon for
the Company by Opton Handler, Feiler & Landau, LLP 52 Vanderbilt Avenue New
York, New York 10017.

EXPERTS

The audited financial statements of the Company as of December 31, 1996
and 1995, and for each of the years then ended, which are included in this
Prospectus, have been so included in reliance on the reports of Capraro,
Centofranchi, Kramer & Co., P.C., as independent certified public accountants,
appearing elsewhere herein, and upon the authority of such firm as experts in
auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in such
Amendment and the exhibits thereto. For further information with respect to the
Company and the Shares offered hereby, reference is made to such Amendment and
exhibits, which may be obtained from the Commission at its principal office in
Washington, D.C., upon payment of charges prescribed by the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Amendment, each such statement being qualified all respects by
such reference.
<PAGE>
INDEX TO THE FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS

Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996

Unaudited Consolidated Statements of Operations for the three months ended
March 31, 1997 and 1996

Unaudited Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996

Unaudited Consolidated Notes to the Financial Statements

Audited Financials for the Year Ended December 31, 1996 Index

<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
MARCH 31, 1997 DECEMBER 31, 1996
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ..................................... $ 340,970 $ 1,249,655
Marketable securities ......................................... 2,655,740 1,342,027
Accounts receivable, less allowance for doubtful
accounts of $303,320 .................................... 4,914,543 3,499,535
Inventories ................................................... 8,154,263 7,290,205
Prepaid expenses and other current assets ..................... 861,427 255,218
------------ ------------
Total Current Assets ........................... $ 16,926,943 $ 13,636,640

PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $592,849 and $522,907, respectively ..... 1,926,244 1,834,777

OTHER ASSETS
Intangible assets, net ...................................... 871,718 214,213
Investments in non-marketable securities .................... 2,316,750 2,316,750
Deferred tax assets ......................................... 819,300 819,300
Deposits and other assets ................................... 360,820 338,739
------------ ------------
Total Other Assets ............................. 4,368,588 3,689,002
------------ ------------
TOTAL ASSETS ................................... $ 23,221,775 $ 19,160,419
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable ................................................ $ 1,400,000 $ 1,400,000
Current maturities of long term debt ........................ 63,895 61,664
Accounts payable ............................................ 4,920,161 3,019,804
Accrued expenses and other current liabilities .............. 217,255 243,763
State income taxes payable .................................. 36,934 11,011
------------ ------------
Total Current Liabilities ...................... $ 6,638,245 $ 4,736,242

LONG TERM LIABILITIES
Long term debt, net of current maturities .................... 144,302 144,091
Due to shareholders .......................................... 1,300,000 1,300,000
------------ ------------
Total Long Term Debt ........................... 1,444,302 1,444,091
------------ ------------
Total Liabilities .............................. 8,082,547 6,180,333
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
MARCH 31, 1997 DECEMBER 31, 1996
ASSETS
<S> <C> <C>
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock .................................................. 24,043 23,146
Additional paid-in capital .................................... 19,742,887 17,956,030
Common stock subscription receivable .......................... (227,500) (227,500)
Retained earnings (Deficit) ................................... (4,407,540) (4,771,590)
Foreign currency translation adjustment ....................... 7,338 --
------------ ------------
Total Stockholders' Equity ............ 15,139,228 12,980,086
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................... $ 23,221,775 $ 19,160,419
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31,
(continued)
1997 1996
------------ ------------
<S> <C> <C>
Net sales ................................................ $ 7,144,676 $ 7,044,626

Cost of sales ............................................ 4,762,894 5,094,536
------------ ------------

Gross Profit ....................................... 2,381,782 1,950,090

Selling, general and administrative expenses ............ 1,925,056 1,707,026
------------ ------------

Income(Loss) before other income (expense) ......... 456,726 243,064
------------ ------------

Other Income (Expense)
Interest expense ................................... (63,830) (68,886)
Interest Income .................................... 13,459 354
Dividend income .................................... 12,617 1,890
Other income ....................................... 21,131 --
Foreign currency translation ....................... (4,544) --
Realized gain (loss) on marketable securities ...... 229,941 (13,985)
Unrealized gain (loss) on marketable securities .... (288,450) 548,443
------------ ------------

Total Other Income (Expenses) ............. (79,676) 467,816
------------ ------------

Income (loss) before income tax expense .................. 377,050 710,880

Income taxes expense ..................................... 13,000 130,219
------------ ------------

Net Income ............................................... $ 364,050 $ 580,661

Retained Earnings (Deficit) - Beginning ............ (4,771,590) 101,939
------------ ------------

Retained Earnings (Deficit) - End .................. ($ 4,407,540) $ 682,600
============ ============

Earnings (loss) per common share
Primary ................................... $ 0.015 $ 0.027
============ ============
Fully Diluted ............................. $ 0.015 $ 0.027
============ ============
Weighted average number of common share outstanding:
Primary ................................... 25,078,097 21,185,556
============ ============
Fully Diluted ............................. 25,078,097 21,707,556
============ ============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,

1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net Income ............................................ $ 364,050 $ 580,661
----------- -----------

Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............... 88,027 62,771
Stock return in settlement of lawsuit ....... (21,131) --
Stock issued to purchase lease .............. 279,388 --
Stock issued in settlement of a lawsuit 150,000 --
Changes in assets and liabilities
(Increase) Decrease in:
Accounts receivable .......................... (1,292,927) (329,971)
Marketable securities ........................ (1,313,713) (424,404)
Inventories .................................. (489,475) 1,404,527
Prepaid expenses and other current assets .... (606,209) (4,338)
Deposits and other assets .................... (22,081) (63,093)
Increase (decrease) in:
Accounts payable ............................. 1,860,367 (1,002,972)
Accrued expenses and other current liabilities (29,550) (4,369)
State income taxes payable ................... 349 89,041
----------- -----------
Total Adjustments .................................. (1,396,955) (272,808)
----------- -----------

Net cash used by operating activities ................. (1,032,905) (307,853)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Payments made for property and equipment ........... (118,458) (485,999)
Payments of capitalized acquisition cost ........... -- --
----------- -----------

Net Cash used by investing activities ................. (118,458) (485,999)
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(continued)

1997 1996
----------- -----------
<S> <C> <C>

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt ............... (13,910) --
Foreign currency exchange .......................... 7,338 --
Net proceeds from sale of common stock ............. 100,000 437,500
----------- -----------

Net cash provided by financing activities ............. 93,428 437,500
----------- -----------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ....... (1,057,935) 259,354

CASH AND CASH EQUIVALENTS - BEGINNING ................. 1,398,905 475,108
----------- -----------

CASH AND CASH EQUIVALENTS - END ....................... $ 340,970 $ 734,462
=========== ===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION/REPORTING ENTITIES

The consolidated financial statements of DHB Capital Group, Inc. and
Subsidiaries (the "Company") are unaudited and reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim period. The
consolidated Company includes the following entities:

DHB Capital Group, Inc.
DHB Capital Group Inc. ("DHB") was incorporated on October 22, 1992 under the
laws of the State of New York. DHB was organized to seek, acquire and finance,
as appropriate, one or more operating companies. On February 15, 1995, the
holders of the common stock approved a re-incorporation of DHB as a Delaware
corporation, through a merger with a newly formed Delaware corporation.

DHB Armor Group, Inc.
On August 8, 1995, the Company formed a new Delaware Corporation which is a
wholly-owned subsidiary of the Company. The subsidiary, DHB Armor Group, Inc.,
("Armor"), now wholly owns PACA, Point Blank Body Armor, Inc., ("Point Blank"),
and Zunblindage S.A.

Protective Apparel Corporation of America
Protective Apparel Corporation of America ("PACA") was organized in 1975 and
is engaged in the development, manufacture and distribution of bullet and
projectile resistant garments, including bullet resistant vests,
fragmentation vests, bomb projectile blankets and tactical load bearing
vests. In addition, PACA distributes other ballistic protection devices
including helmets and shields. PACA is dependent upon a few suppliers for the
raw materials utilized to manufacture its products.

Point Blank Body Armor, Inc.
In August 1995, the Company, through a wholly-owned subsidiary known as USA
Fitness & Protection Corp, a Delaware Corporation, acquired from a trustee in
bankruptcy certain assets of Point Blank Body Armor, L.P. and an affiliated
company ("Old Point Blank"). Prior to the filing of the petition in
bankruptcy, Old Point Blank had been a leading U.S. manufacturer of
bullet-resistant garments and related accessories. After acquiring the Old
Point Blank, USA Fitness & Protection Corp., amended its articles of
incorporation to change their name to Point Blank Body Armor, Inc. ("Point
Blank").

Zunblindage S.A.
On February 28, 1997, the Company, through DHB Armor Group, acquired all of
the outstanding stock of Zunblindage S.A. a privately held Belgian
corporation in exchange for a total of 666,000 shares of the Company's
registered common stock. Zunblindage is engaged in the manufacture and
distribution and marketing in the European theater and the Middle East
regions.

NDL Products, Inc.
On December 20, 1994, the Company through a newly organized, wholly-owned
subsidiary, DHB Acquisition, Inc., ("Acquisition") purchased certain assets from
a debtor-in-possession, N.D.L. Products, Inc. On February 21, 1995, Acquisition
changed its corporate name to NDL Products, Inc. NDL manufactures and
distributes specialized protective athletic apparel and equipment.
<PAGE>
Orthopedic Products, Inc.
On March 22 and March 26, 1996, the Company acquired OPI, a Florida Corporation
engaged in the manufacturing and distribution of orthopedic products to the
medical industry.

Intelligent Data Corp.
On April 1, 1994, the Company acquired Intelligent Data Corp. ("ID"). ID was
engaged in the development of sophisticated telecommunication systems. At the
end of 1996, the Company wrote down the net assets of this subsidiary.

DHB Media Group, Inc.
On April 15, 1994, DHB Media Group, Inc. ("Media"), a wholly-owned subsidiary of
the Company acquired all of the outstanding common stock of Royal Acquisition
Corp. Royal Acquisition Corp.'s primary assets were a film library. At the end
of 1996 the Company wrote down the net assets of this subsidiary.

PRINCIPLES OF CONSOLIDATION

All material intercompany transactions have been eliminated in the consolidated
financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant estimates include
those relating to the valuation of inventories and non-marketable securities,
and collectibility of receivables.

MARKETABLE/NON-MARKETABLE SECURITIES

Securities which are classified as "trading securities" are recorded in the
Company's balance sheet at fair market value, with the resulting unrealized gain
or loss recognized as income in the current period. Securities which are
classified as "available for sale" are also reported at fair market value,
however, the unrealized gain or loss on these securities is listed as a separate
component of shareholder's equity.
<PAGE>
DHB CAPITAL GROUP INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Non-marketable securities, such as investments in privately-held companies are
carried at historical cost, if necessary, reduced by a valuation allowance to
net realizable value.

EARNINGS PER SHARE

INCOME TAXES

The Company files a consolidated Federal tax return, which includes all of the
domestic subsidiaries. Accordingly, Federal income taxes are provided on the
consolidated group's taxable income if and when the consolidated group has
taxable income after utilizing available carryforward losses. State income taxes
are provided on a separate company basis.

2. SUPPLEMENTAL CASH FLOW INFORMATION
1997 1996
--------- ------
Cash paid for:
Interest $59,525 $34,496
Income taxes $12,007 $33,301

During the year three months ended March 31, 1997 and 1996, the Company had
non-cash investing activities when it issued common stock to acquire all of the
outstanding common stock of Zunblindage in February 1997 and OPI March 1996.

3.OTHER INCOME

The Company initiated a lawsuit against the former shareholders of OPI alleging
misrepresentation and injunctive relief seeking to enforce a covenant not to
compete. This case was settled in mediation in favor of the Company. It resulted
in the return of 38,625 shares of the Company's common stock which was
subsequently retired. Approximately 8,500 shares or $17,000 related to the
breech of the covenant not to compete and is recorded as other income in the
financial statements for the three months ended March 31, 1997. The balance
resulted in the reduction of the acquisition cost of OPI.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
AUDITED FINANCIAL STATEMENTS

CONTENTS

INDEPENDENT AUDITORS' REPORT

Consolidated Balance Sheets as of December 31, 1996

Consolidated Statements of Operations for the years ended
December 31, 1996 and 1995

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996 and 1995

Consolidated Statements of Cash Flows for the years ended December 31,
1996 and 1995

Consolidated Notes to the Financial Statements

Schedule II Valuation and Qualifying Accounts
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors of
DHB Capital Group Inc.

We have audited the accompanying consolidated balance sheet of DHB Capital Group
Inc. and Subsidiaries as of December 31, 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1996 and 1995. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DHB Capital Group Inc. and
Subsidiaries as of December 31, 1996 and the results of its operations and its
cash flows for the years ended December 31, 1996 and 1995, in conformity with
generally accepted accounting principles.

Capraro, Centofranchi, Kramer & Co., P.C.
South Huntington, New York
March 21, 1997
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996

ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents ................................. $ 1,249,655
Marketable securities ..................................... 1,342,027
Accounts receivable, less allowance for doubtful
accounts of $303,320 ................................ 3,499,535
Inventories ............................................... 7,290,205
Prepaid expenses and other current assets ................. 255,218
------------
Total Current Assets ....................... $ 13,636,640

PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation and amortization of $522,907 ........... 1,834,777

OTHER ASSETS
Intangible assets, net .................................. 214,213
Investments in non-marketable securities ................ 2,316,750
Deferred tax assets ..................................... 819,300
Deposits and other assets ............................... 338,739
------------
Total Other Assets ......................... 3,689,002
------------
TOTAL ASSETS ............................... $ 19,160,419
============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable ............................................ $ 1,400,000
Current maturities of long term debt .................... 61,664
Accounts payable ........................................ 3,019,804
Accrued expenses and other current liabilities .......... 243,763
State income taxes payable .............................. 11,011
------------
Total Current Liabilities .................. $ 4,736,242

LONG TERM LIABILITIES
Long term debt, net of current maturities ................ 144,091
Due to shareholders ...................................... 1,300,000
Total Long Term Debt ....................... 1,444,091
------------
Total Liabilities .......................... 6,180,333
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(continued)

<S> <C>
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock .............................................. 23,146
Additional paid-in capital ................................ 17,956,030
Common stock subscription receivable ...................... (227,500)
Retained earnings (Deficit) ............................... (4,771,590)
------------
Total Stockholders' Equity ........ 12,980,086
------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................ $ 19,160,419
============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,

1996 1995
------------ ------------
<S> <C> <C>
Net sales ................................................ $ 23,378,698 $ 14,494,094

Cost of sales ............................................ 19,027,741 9,088,617
------------ ------------

Gross Profit ....................................... 4,350,957 5,405,477

Selling, general and administrative expenses ............ 8,668,950 5,140,399
------------ ------------

Income(Loss) before other income (expense) ......... (4,317,993) 265,078
------------ ------------

Other Income (Expense)
Interest expense, net of interest income ........... (327,347) (303,615)
Dividend income .................................... 24,350 1,710
Payment to rescind restrictive covenant ............ -- (250,000)
Write-down of net assets in Subsidiaries ........... (529,578) --
Loss on holding of equity investments .............. (1,000,000) --
Realized gain on marketable securities ............. 381,337 675,743
Unrealized gain on marketable securities ........... 69,168 347,481
------------ ------------

Total Other Income (Expenses) ............. (1,382,070) 471,319
------------ ------------

Income (loss) before income tax (benefit) .......... (5,700,063) 736,397

Income taxes (benefit) ............................. (834,191) 491,922
------------ ------------

Net Income (loss) .................................. $ (4,865,872) $ 244,475
============ ============
Earnings (loss) per common share

Primary ................................... ($ 0.20) $ 0.01
============ ============
Fully Diluted ............................. ($ 0.20) $ 0.01
============ ============

Weighted average number of common share outstanding:
Primary ................................... 24,879,521 21,167,754
============ ============
Fully Diluted ............................. 24,879,521 21,689,754
============ ============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994

Number of Number of
Preferred Par Common Par
shares Value shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Balance- December 31, 1994 ................... 64,062 $ 641 11,498,202 $ 11,498
Net income for the year ended
December 31, 1995........................... -- -- -- --
Sale of common stock.......................... -- -- 1,955,000 1,955
Conversion of preferred stock into
common stock ............................... (42,187) (422) 84,374 84
Exercise of stock warrants ................... -- -- 303,750 304
Restatement - 50% Common Stock Dividend ...... -- -- 6,920,665 6,921
------------ ------------ ------------ ------------
Balance- December 31, 1995 ............. 21,875 $ 219 20,761,991 $ 20,762

Net income for the year ended
December 31, 1996........................... -- -- -- --
Issuance of stock to purchase subsidiary...... -- -- 180,000 180
Stock issued to buy out subsidiary lease...... -- -- 6,000 6
Sale of common stock.......................... -- 1,345,000 1,345
Conversion of preferred stock into
Common stock .............................. (21,875) (219) 43,750 44
Common stock - 50% dividend................... -- -- 717,833 718
Preferred Dividend-common stock- ............. -- -- 7,934 8
Fee for services regarding the stock dividend. -- -- (5,000) --
Stock issued for services- ................... -- -- 83,500 83
------------ ------------ ------------ ------------
Balance - December 31, 1996.......... 0 $ 0 23,146,008 23,146
============ ============ ============ ============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additional Common Stock
Paid-in Subscription Retained
Capital Receivable Earnings Total
------- ---------- -------- -----
<C> <C> <C> <C>

Balance- December 31, 1994 ................... $ 7,310,391 -- $ (142,537) 7,179,993
Net income for the year ended
December 31, 1995........................... -- -- 244,475 244,475
Sale of common stock.......................... 3,863,045 (437,500) -- 3,427,500
Conversion of preferred stock into
common stock ............................... 338 -- -- --
Exercise of stock warrants ................... 949,696 950,000
Restatement - 50% Common Stock Dividend ...... -- -- (6,921) --
------------ ------------ ------------ ------------
Balance- December 31, 1995 ............. $ 12,123,470 ($ 437,500) $ 95,017 $ 11,801,968

Net income for the year ended
December 31, 1996........................... -- -- ($ 4,865,872) ($ 4,865,872)
Issuance of stock to purchase subsidiary...... 578,820 -- -- 579,000
Stock issued to buy out subsidiary lease...... 79,994 -- -- 80,000
Sale of common stock.......................... 4,806,154 210,000 -- 5,017,499
Conversion of preferred stock into
Common stock .............................. 175 -- -- --
Common stock - 50% dividend................... -- -- (718) --
Preferred Dividend-common stock............... (5,000) -- -- (5,000)
Fee for services regarding the stock dividend-
Stock issued for services..................... 372,147 -- -- 372,500
------------ ------------ ------------ ------------
Balance - December 31, 1996.......... $ 17,956,030 $ (227,500) $ (4,771,590) $ 12,980,095
============ ============ ============ ============

See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,

1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) ....................................... $(4,865,872) $ 244,475
----------- -----------

Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................... 343,564 254,956
Reserve for accounts receivable .................. 233,320 --
Reserve for inventory ............................ 700,000 --
Valuation of non-marketable securities ........... 1,000,000 --
Write-down of net assets of subsidiaries ......... 529,578 --
Stock issued for services ................... 452,500 --
Deferred income taxes ............................ (843,000) 440,000
Changes in assets and liabilities (Increase) Decrease in:
Accounts receivable ............................... 86,716 (1,276,870)
Marketable securities ............................. 487,829 127,431
Inventories ....................................... (134,006) (3,093,118)
Prepaid expenses and other current assets ......... (46,708) 148,538
Deposits and other assets ......................... (177,918) (76,962)
Increase (decrease) in:
Accounts payable .................................. 172,114 2,336,854
Accrued expenses and other current liabilities .... (57,304) 34,854
State income taxes payable ........................ (39,772) 22,282
----------- -----------
Total Adjustments ....................................... 2,706,913 (1,082,035)
----------- -----------

Net cash used by operating activities ...................... (2,158,959) (837,560)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of assets of subsidiary,
net of cash acquired ................................... -- (2,000,000)
Payments to acquire non-marketable securities ........... -- (575,000)
Payments made for property and equipment ................ (1,123,739) (1,632,980)
Payments of capitalized acquisition cost ................ -- (14,277)
----------- -----------

Net Cash provided (used) by investing activities ........... (1,123,739) (4,222,257)
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(continued)

1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of note payable- bank ........................ (1,150,000) --
Proceeds from issuance of long-term debt ................ 243,573 --
Proceeds(Repayments) of due to shareholder .............. (590,000) 750,000
Principal payments on long-term debt .................... (37,818) --
Dividends Paid .......................................... (7,656) --
Net proceeds from sale of common stock .................. 5,599,146 4,377,500
----------- -----------

Net cash provided (used) by financing activities ........... 4,057,245 5,127,500
----------- -----------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ............ 774,547 67,683

CASH AND CASH EQUIVALENTS - BEGINNING ...................... 475,108 407,425
----------- -----------

CASH AND CASH EQUIVALENTS - END ............................ $ 1,249,655 $ 475,108
=========== ===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION/REPORTING ENTITIES

The consolidated financial statements of DHB Capital Group, Inc. and
Subsidiaries (the "Company") include the following entities:

DHB Armor Group, Inc.
On August 8, 1995, the Company formed a new Delaware Corporation which is a
wholly-owned subsidiary of the Company. The subsidiary, DHB Armor Group, Inc.,
("Armor"), now wholly owns PACA and Point Blank Body Armor, Inc., ("Point
Blank").

Point Blank Body Armor, Inc.
In August 1995, the Company, through a wholly-owned subsidiary known as USA
Fitness & Protection Corp, a Delaware Corporation, acquired from a trustee in
bankruptcy certain assets of Point Blank Body Armor, L.P. and an affiliated
company ("Old Point Blank"), for a cash payment of $2,000,000, free of all
liabilities. Prior to the filing of the petition in bankruptcy, Old Point
Blank had been a leading U.S. manufacturer of bullet-resistant garments and
related accessories. After acquiring the Old Point Blank, USA Fitness &
Protection Corp., amended its articles of incorporation to change their name
to Point Blank Body Armor, Inc. ("Point Blank").

NDL Products, Inc.
On December 20, 1994, the Company through a newly organized, wholly-owned
subsidiary, DHB Acquisition, Inc., ("Acquisition") purchased certain assets from
a debtor-in-possession, N.D.L. Products, Inc. for $3,080,000. Acquisition did
not assume any continuing obligations of the debtor-in-possession, nor did the
management of the debtor-in-possession continue. On February 21, 1995,
Acquisition changed its corporate name to NDL Products, Inc. NDL manufactures
and distributes specialized protective athletic apparel and equipment.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

Orthopedic Products, Inc.
On March 22 and March 26, 1996, the Company exchanged a total of 180,000 shares
of its registered common stock to acquire 100% of the common stock of OPI, a
Florida Corporation engaged in the manufacturing and distribution of orthopedic
products to the medical industry. This transaction was accounted for as a
purchase, and resulted in an excess purchase price over the fair value of
identifiable assets acquired and liabilities assumed which was allocated to
goodwill. Fifty thousand of these shares are restricted as follows: 25,000
shares cannot be sold until March 22, 1997 and 25, 000 shares cannot be sold
until March 22, 1998.

Intelligent Data Corp.
On April 1, 1994, the Company acquired 4,530,000 common shares (60.4% interest)
and 1,100,000 preferred shares of stock in Intelligent Data Corp. ("ID"), in
exchange for 425,000 shares of the Company's common stock. ID was engaged in the
development of sophisticated telecommunication systems. At the end of 1996, the
Company wrote down the net assets of the investment.

DHB Media Group, Inc.
On April 15, 1994, DHB Media Group, Inc. ("Media"), a wholly-owned subsidiary of
the Company acquired all of the outstanding common stock of Royal Acquisition
Corp. in exchange for 100,000 shares of the Company's common stock, for a
purchase price of $300,000. Subsequent negotiations resulted in the reduction of
the acquisition cost by $36,550. Royal Acquisition Corp.'s primary assets were a
film library. At the end of 1996 the Company wrote down the net assets of the
investment.

PRINCIPLES OF CONSOLIDATION

All material intercompany transactions have been eliminated in the consolidated
financial statements.

USE OF ESTIMATES

REVENUE RECOGNITION

Revenue is recognized on product sales upon shipment to the customer.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company includes cash on
deposit, money market funds and amounts held by brokers in cash accounts to be
cash equivalents.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

MARKETABLE/NON-MARKETABLE SECURITIES

Non-marketable securities, such as investments in privately-held companies are
carried at historical cost, if necessary, reduced by a valuation allowance to
net realizable value.

INVENTORIES

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

PROPERTY, EQUIPMENT AND DEPRECIATION

Property and equipment is stated at cost. Major expenditures for property and
those which substantially increase useful lives are capitalized. Maintenance,
repairs, and minor renewals are expensed as incurred. When assets are retired or
otherwise disposed of, their costs and related accumulated depreciation are
removed from the accounts and resulting gains or losses are included in income.
Depreciation is provided by both straight-line and accelerated methods over the
estimated useful lives of the assets.

INTANGIBLE ASSETS

Goodwill is being amortized on a straight-line basis over ten years. The amount
allocated to on-going government contracts is being amortized over the life of
the individual contracts, which are typically 1-5 years. Patents are being
amortized on a straight-line basis over 17 years. Other intangible assets are
being amortized on a straight-line basis over their estimated lives, typically
5-15 years. When the assets are retire or otherwise disposed of, their cost and
related accumulated amortization are removed from the accounts and the resulting
gains or losses are included in income. Accumulated amortization was $440,424
and $429,297 as of December 31, 1996 and 1995, respectively.

EARNINGS PER SHARE

The computation of earnings per common share is based on the weighted average
number of outstanding common shares outstanding during the period. Primary
earnings per share and fully diluted earnings per share amounts assume the
conversion of the Cumulative Convertible Preferred Stock, and the exercise of
the stock warrants.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

INCOME TAXES

The Company files a consolidated Federal tax return, which includes all of the
subsidiaries. Accordingly, Federal income taxes are provided on the taxable
income of the consolidated group. State income taxes are provided on a separate
company basis, if and when taxable income, after utilizing available carryfoward
losses, exceeds certain levels.

DEFERRED INCOME TAXES

Deferred taxes arise principally from net operating losses and capital losses
available for carryfoward against future years taxable income, and the
recognition of unrealized gains(losses) on marketable securities for financial
statement purposes, which are not taxable items for income tax purposes.

2. SUPPLEMENTAL CASH FLOW INFORMATION
1996 1995
---- ----
Cash paid for:
Interest $535,859 $261,829
Income taxes $33,301 $ 35,774

Additionally, during, the year ended December 31, 1996 and 1995 the Company had
a non-cash financing activity of and $227,000 and $437,500 respectively for a
stock subscription receivable.

During the year ended December 31, 1996, the Company had a non-cash investing
activity when it issued common stock to acquire all of the outstanding common
stock of OPI.

3. MARKETABLE SECURITIES/NON-MARKETABLE SECURITIES

Following is a comparison of the cost and market value of marketable securities
included in current assets:
1996 1995
----------- ---------

Cost $ 1,272,859 $ 1,482,375
Unrealized gain (loss) 69,168 347,481
----------- ---------
Market value $ 1,342,027 $ 1,829,856
=========== ===========

The Company's portfolio value of trading securities has been pledged as
collateral for the bank loans (see Note 6). However, the bank has placed no
restrictions on the Company's ability to trade freely in their portfolio.

The Company's investments in non-marketable securities is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

1996 1995
---------- ----------
<S> <C> <C>
Darwin Molecular Corporation (a)
(approximately 3.9% interest) ..................... $1,000,000 $1,000,000

Zydacron, Inc. .....................................
(approximately 3.1% interest) ...................... 941,750 941,750

Pinnacle Diagnostics, Inc. (b)
(approximately 16.7% interest) ..................... -- 500,000

FED Corporation
(approximately 2.9% interest) ...................... 375,000 375,000

Solid Manufacturing Co. - 10% convertible debentures
(approximately 9.5% interest, if converted) (c) .... -- 500,000
---------- ----------
Totals .................................... $2,316,750 $3,316,750
========== ==========

(a) On December 18th, 1996 Chiroscience Group plc, acquired Darwin
Molecular Corp. The Company received 394,000 shares of
Chiroscience, a publicly traded company located in England, in
exchange for its Darwin shares. These shares are restricted until
June 1997.

(b) The Company recorded a valuation allowance for the entire
investment in Pinnacle as a result of the insolvency of the
company.

(c) The Company recorded wrote off the entire investment in Solid
Mfg. as a result of Solid filing for Bankruptcy.
</TABLE>
All of these investments are included under the caption "Investment in
non-marketable securities" on the balance sheet.

4. INVENTORIES
<TABLE>
<CAPTION>
Inventories are summarized as follows: 1996 1995
----------- -----------
<S> <C> <C>
Finished products ..................... $ 3,128,256 $ 3,844,506
Work-in process ....................... 997,308 1,209,849
Raw materials and supplies ............ 3,854,641 2,801,844
----------- -----------
7,990,205 7,856,199
Valuation Allowance ................... (700,000) --
----------- -----------

Total ........................ $ 7,290,205 $ 7,856,199
=========== ===========
</TABLE>
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
Estimated useful
life-years
----------
<S> <C> <C>
Land - $ 47,500
Building 39 427,500
Machinery and equipment 5-10 1,022,985
Furniture and fixtures 5-7 273,451
Computer equipment 5-7 69,647
Transportation equipment 3-5 144,361
Leasehold improvements 5-31.5 372,240
---------
2,357,684
Less: accumulated depreciation
and amortization 522,907
----------
Net property and equipment $1,834,777
==========
</TABLE>
6. NOTES PAYABLE- FINANCIAL INSTITUTIONS

At December 31, 1996, The Company had a term loan of $1,400,000 from the Bank of
New York which matures in April 1997, bearing interest at 6.3125% per year.
There is no assurance that the Company will be able to roll over such loans as
they become due. The Company expects to renew this loan, at prevailing interest
rates, when it becomes due. This loans is secured by substantially all of the
Company's marketable securities portfolio value, and certain personal
investments of the majority shareholder. Both of these loans require monthly
payments of interest only.

7. LONG TERM DEBT

Long term debt consist of:
<TABLE>
<CAPTION>
<S> <C>
9.71% note payable, due in monthly installments of $1,876, including
interest, with a final payment due June 1999.
Equipment with an original cost of $89,943 is pledged as collateral. $ 49,757

9.0%, note payable, due in monthly principal only installments of $3,600 per
month, with interest accruing and final payment due September 2001. 155,998
--------
205,755
Less current maturities 61,664
--------
Long term debt $144,091
========
</TABLE>
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

As of December 31, 1996, the annual maturities of long-term debt outstanding for
the next five years as follows:
1997 60,285
1998 57,281
1999 44,989
2000 43,200
--------
Total $205,755
========

8. DUE TO SHAREHOLDER

The amount due to shareholder represent notes payable which bear interest at
12%, payable November 1998.

9. RELATED PARTY TRANSACTIONS

DHB:
DHB leased its office location from a relative of the former president of DHB.
Included in DHB's statement of income (loss) for the years ended December 31,
1995 is $16,514 of rent paid or accrued under this lease, respectively (see note
10). Effective January 1996, the Company vacated the premises and purchased a
building for use as the corporate headquarters.

PACA:
PACA leases its location (see note 10) from the President of PACA. Included in
the statement of income (loss) for the years ended December 31, 1996 and 1995 is
$48,000 of rent paid under this lease for each period.

NDL and POINT BLANK and OPI:
NDL Products, Inc., Point Blank Body Armor Inc and Orthopedic Products, Inc.
lease their facilities from a partnership indirectly owned by relatives of the
majority shareholder of DHB (note 11). Included in the statement of income
(loss) for the year ended December 31, 1996 and 1995 is $480,000 and $300,000,
respectively, of rent paid or accrued under the lease.

ID:
ID leased its office location from a relative of the former President of DHB.
Included in DHB's statement of income (loss) for the year ended December 31,
1995 is $5,511 of rent paid or accrued under this lease, respectively (see note
10). The premises were vacated in April, 1995.

10. COMMITMENTS AND CONTINGENCIES

LEASES

PACA:
PACA is obligated under a lease for its manufacturing facility with a related
party (note 9). This lease expires October 31, 1997, and provides for minimum
annual rentals of $43,200, plus increases based on real estate taxes and
operating costs.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

NDL Products, Inc., Point Blank Body Armor, Inc. and Orthopedic Products, Inc.
NDL Products, Inc., Point Blank Body Armor, Inc. and Orthopedic Products Inc.,
are obligated under a lease for its facilities with a related party (note 9).
The lease commenced January 1, 1995 and expires December, 1999. The lease
provides for minimum annual rentals of $300,000 for the initial year and then
$480,000 the following year with scheduled increases of 4% per year thereafter,
plus real estate taxes, operating costs and capital expenditures.

The following is a schedule by year of future minimum lease obligations under
noncancellable leases as of December 31,1996.

1997 $ 542,400
1998 562,368
1999 583,135
------------
Total minimum obligation $ 1,687,903
===========

Total rental expense under cancelable and noncancelable operating leases was
$615,859 and $420,269 for the years ended December 31, 1996 and 1995,
respectively. OPI was located at different premise when the Company purchased
OPI. Included in the rental expense above is the value the Company's common
stock issued in lieu of a cash payment of $80,000 to buyout the remaining
portion of OPI's lease at their previous location.

EMPLOYMENT AGREEMENT

Mr. Brooks, the CEO and Chairman of the Board of DHB Capital Group Inc. is
employed pursuant to five year employment agreement which was entered into April
1, 1996. Pursuant to the agreement Mr. Brooks receives an annual salary of
$250,000 through April 1997 with annual increases of $25,000. The terms of Mr.
Brooks's contract provide for 750,000 warrants per year exercisable at $2.33 for
five years. In addition, Mr. Brooks receives an annual bonus of ten percent of
the net profit. As the Company has businesses in Florida and requires Mr. Brooks
to spend considerable time there, this contract includes provisions for certain
of his Florida living expenses. Subsequent to the execution of this employment
agreement, Mr. Brooks voluntarily relinquished his right to the provision
regarding an annual bonus of 10%.

Concurrent with the purchase of PACA, the President of PACA was given a
five year employment agreement. This agreement calls for annual salaries ranging
from $115,000 in 1993 to $155,000 in 1997, plus certain fringe benefits. During
the year ended December 31, 1995, Joseph Giaquinto, an officer of NDL, was given
a three year employment contract. This agreement calls for an annual base
salaries of $100,000. In March 1997, Michael C. Bell, President of NDL and OPI,
was given a three year employment contract with an annual base salary of
$100,000, plus certain fringe benefits.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

LITIGATION

In August 1996, the Company commenced a lawsuit against the former shareholders
of OPI for breach of their employment contracts, negligent misrepresentation and
injunctive relief seeking to enforce a covenant not to compete. The legal
counsel handling the case for the Company have advised that it is too early to
reliably predict the outcome of the case.

In June 1996, the Company commenced a lawsuit against the former president of
NDL for breach of his employment agreement. On December 13, 1996 the defendant
filed a counterclaim against the Company asserting Breach of Contract. The legal
counsel handling the case for the Company have advised that it is too early to
reliably predict the outcome of the case.

The Company is party to other litigation matters and claims which are normal in
the course of operations, and while the results of the litigation and claims
cannot be predicted with certainty, management believes, based on advice of
counsel, the final outcome of such matters will not have a materially adverse
effect on the consolidated financial position.

11. CAPITAL STOCK
<TABLE>
<CAPTION>
1996 1995
---- -----
Capital stock is as follows:
<S> <C> <C>
DHB:
Class A Preferred stock, 10% convertible, $.01 par value,
1,500,000 shares authorized (see amendment below)

Shares issued and outstanding ........................... -- 21,875
Par Value ............................................... $ -- $ 219

Common stock, $.001 par value,
100,000,000 shares authorized,
Shares issued and outstanding ........................... 23,146,008 20,761,995
============ ===========

Par Value ............................................... $ 23,146 $ 20,762
============ ===========
</TABLE>

Amendment to Certificate of Incorporation:
On December 30, 1996 at a Special Meeting of the Stockholders, an amendment to
the Company's Certificate of Incorporation was approved, increasing the number
of authorized shares of Common Stock from 25,000,000 shares to 100,000,000
shares. This amendment became effective on December 31, 1996.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

12. PRIVATE PLACEMENTS

Common Stock:
During April, June, July, and November 1996 the Company sold 1,345,000 shares of
common stock in private placements for proceeds of $4,807,500. Out of these
proceeds $1,150,000 was used to repay the line of credit and $590,000 was used
to repay one of the shareholder loans.

During June, July, and August, 1995 the Company sold 1,955,000 shares of common
stock in private placements for proceeds of $3,910,000. Out of these proceeds
$45,000 of direct expenses were paid.

13. STOCK WARRANTS

During 1995, various warrants which would have expired in November, 1995 from
the Company's original private placement were exercised by certain shareholders.
These shareholders were issued 303,750 shares of the Company's common stock for
net proceeds of $950,000. All remaining warrants for the original private
placement have expired.

In December, 1994, in consideration for monies loaned to the Company, the Board
of Directors granted Mrs. Terry Brooks, a related party, stock warrants to
purchase 3,750,000 shares of common stock for $1.33 per share for a five year
period commencing December 19, 1994. In June, 1993, the board of directors
granted stock warrants to certain individuals and organizations with 127,500
warrant still outstanding. The term of these warrants have been extended two
years, therefore they expire June 1998.

14. STOCK DIVIDEND

On July 1, 1996, the Board of Directors of the Company declared a 50% Stock
Dividend payable July 16, 1996, to shareholders of record as of July 15, 1996.
As a result thereof, the number of outstanding shares of the Common stock has
been increased by 7,638,498 shares. The weighted average number of shares and
earnings per share have been restated to give effect to the 50% stock dividend.

During 1996 year-end, the Board of Directors declared a preferred stock dividend
of 7,944 common shares with a market value of $3.77 per share for the years
ended December 31, 1995 and 1994. All earnings per share data has been restated
giving retroactive effect to the intended stock dividend.

15. INCOME TAXES

Components of income taxes are as follows:
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Current:
Federal .................................. $ 0 $ 5,400
State .................................... 8,809 58,922
Benefit of net operating loss carryfoward 0 (12,400)
----------- -----------
Total current ....................... 8,809 51,922
----------- -----------
Deferred:
Federal .................................. (1,686,000) 451,500
State .................................... (562,000) 60,300
Less: valuation allowance ................ 1,406,000 (71,800)
----------- -----------

Total deferred ...................... (843,000) 440,000
----------- -----------

Total income taxes (benefit) ................. $ (834,191) $ 491,922
=========== ===========
</TABLE>
The composition of the federal and state deferred taxes at December 31, 1996 was
arrived at as follows:
<TABLE>
<CAPTION>
Federal State
----------- -----------
<S> <C> <C>
Operating Loss ................................ $ 1,056,000 $ 244,000
Allowance for Doubtful Accounts ............... 100,000 21,000
Valuation Allowance - Inventory ............... 231,000 49,000
Valuation Allowance - Non marketable securities 330,000 70,000
Net write down of investment in subsidiaries .. 175,000 37,000
Unrealized gain on Marketable Securities ...... (23,000) (4,600)
----------- -----------
Subtotal ............................. 1,869,000 396,400
Less: Valuation Allowance ..................... 1,198,300 247,800
----------- -----------
Net Deferred Taxes ................... $ 670,700 $ 148,600
=========== ===========
</TABLE>
The Valuation Allowance changed from $75,900 at December 31, 1995 to $1,446,100
at December 31, 1996, for a increase of $1,370,200.

At December 31, 1996 the Company has net operating losses for carryfoward
against future years' taxable income of approximately $3.2 million for tax
purposes, which would expire in 2012. The deferred tax asset of $819,300 on the
balance sheet represents the future benefit of the operating loss carryforwards
offset by a valuation allowance. The deferred tax assets for the future benefit
of the net operating losses carryforward have been partially reduced by a
valuation allowance as the Company estimates that its' future taxable earnings
will not be sufficient to offset all of the operating losses.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

15. SUBSEQUENT EVENTS

As of February 20, 1997, the Company exchanged a total of 666,000 shares of its
registered common stock to acquire 100% of the common stock of a privately held
Belgian corporation, Zunblindage S.A. Zunblindage is engaged in the manufacture
and distribution of bullet resistant equipment, apparel and related products and
specializes in sales distribution and marketing in the European theater and
Middle East regions. This transaction was accounted for as a purchase.
Subsequent to the year-end and the execution of the employment agreement with
Mr. Brooks, the CEO and Chairman of the Board of DHB Capital Group Inc. Mr.
Brooks voluntarily relinquished his right to the provision in his employment
contract for the annual bonus of 10% of net profit.

In March 1997, the Company renewed its' shareholder loan with Mr. Brooks which
was payable in April 1997. The new term loan payable in November 1998 bearing
interest at 12% per year.
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
SCHEDULE II TO THE FINANCIAL STATEMENTS
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1996

Balance Additions
at charged to Balance
beginning costs and at end
of year expenses of year
------- -------- -------
<S> <C> <C> <C>
1996

Allowances deducted from related balance
sheet accounts:

Accounts Receivable ........................ $ 70,000 $ 233,320 $ 303,320

Inventories ................................ $ 0 $ 700,000 $ 700,000

Investment in Non-marketable securities .... $ 0 $1,000,000 $1,000,000

Net Write down of Investment in subsidiaries $ 0 $ 529,578 $ 529,578

</TABLE>
<PAGE>
PART II
Information Not Required in Prospectus

Item 24. Indemnification of Directors and Officers.

The certificate of incorporation of DHB Capital Group Inc., a Delaware
corporation (the "Company"), Article Tenth, eliminates the personal liability of
directors to the Company or its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that such elimination of personal
liability of the director of the Company does not apply to (a) any breach of the
director's duty of loyalty to the Company or its stockholders, (b) acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (c) actions prohibited under Section 174 of the Delaware
General Corporation Law, i.e., the liabilities imposed upon directors who vote
for or assent to the unlawful payment of dividends, unlawful repurchase or
redemption of stock, unlawful distribution of assets of the Company to the
shareholders without the prior payment or discharge of the Company's debts or
obligations, or unlawful making or guaranteeing of loans to directors), or (d)
any transaction from which the director derived an improper personal benefit.
Article Ninth of the certificate of incorporation provides for the Company to
indemnify its corporate personnel, directors and officers to the fullest extent
permitted by the Delaware General Corporation Law, as amended from time to time.

Item 25. Other Expenses of Issuance and Distribution.

Item Amount
---- ------

Securities and Exchange Commission filing fee $1,315
Blue Sky fees and expenses 0
Printing and engraving costs 0
Legal fees and expenses 3,000
Accounting fees and expenses 0
Transfer agent and registrar's fees 0
Miscellaneous 1,185
-----

TOTAL $5,500

Item 26. Recent Sales of Unregistered Securities.

Information responsive to Item 26 is incorporated by reference to Item
26 in the following prior filings with the Commission: Registration Statement
No. 33-70678, filed 10/22/93, pages II-6 and II-7; Post-effective Amendment No.
1 of Registration Statement No. 33-70678, filed 10/17/94, page II-1; and
Post-effective Amendment No. 2 of Registration Statement No. 33-70678, filed
8/3/95, page II-1.

In the period from July 1, 1995, through June 30, 1997, the Company
sold an aggregate of 3,350,000 shares to 16 investors at an average price of
$2.44 per share after giving effect to the 50 % Stock Dividend the Total
Proceeds were $8,357,500.* On May 27, 1997, the Company sold an aggregate of
1,775,000 shares of Common Stock to five investors at $2.00 per share for total
proceeds of $3,550,000.*

* - The above securities were issued in reliance on the exemption from
registration under Section 4(2) as not involving any public offering. Claims of
such exemptions are based upon the following: (i) all of the purchasers in such
<PAGE>
transactions were sophisticated investors with the requisite knowledge and
experience in financial and business matters to evaluate the merits and risk of
an investment in the Company, were able to bear the economic risk of an
investment in the Company, had access to or were furnished with the kinds of
information that registration under the Act would have provided and acquired
securities for their own accounts in transactions not involving any general
solicitations or advertising, and not with a view to the distribution thereof,
and (ii) a restrictive legend was placed on each certificate evidencing the
securities; (iii) each purchaser acknowledged in writing that the knew the
securities were not registered under the Act or any State securities laws, and
are "RESTRICTED SECURITIES" as that term defined in Rule 144 under the Act, that
the securities may not be offered for sale, sold or otherwise transferred within
the United States except pursuant to an Effective Registration Statement under
the Act and any applicable State securities laws, or pursuant to any exemption
from registration under the Act, the availability of which is to be established
to the satisfaction of the Company.

Item 27. Exhibits.

The following table lists all exhibits to the Registration Statement as
amended hereby. Substantially all such exhibits are incorporated herein by
reference to registration statements, reports, and amendments thereof previously
filed by the Registrant, as more fully set forth below. Documents to be filed
hereafter, if any, are marked with an asterisk (*).
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C> <C>
2.1 Securities Purchase Agreement dated November 6, 1992, between the Company, E.S.C. Industries, Inc.,
The Thunder Group, Inc. and Protective Apparel Corporation of America Note 1

3.1 Certificate of Incorporation of DHB Capital Group Inc., a New York corporation (hereinafter, "DHB-
New York") Note 1

3.2 Certificate of Amendment to the Certificate of Incorporation of DHB-New York filed November 5,
1992 Note 1

3.3 Restated and amended Certificate of Incorporation of DHB New York dated February 10, 1993 Note 1

3.4 By-laws of DHB-New York Note 2

3.5 Certificate of Incorporation of DHB Capital Group Inc., a Delaware corporation (hereinafter, "DHB
Delaware"), filed with the Delaware Secretary of State on or about September 1, 1994 Note 2

3.5(a) Certificate of Amendment to Certificate of Incorporation of DHB Capital Group Inc filed
December 31, 1996 Note 10

3.6 By-laws of DHB Delaware Note 2

3.7 Plan of merger of DHB-New York into DHB-Delaware Note 2

3.8 Certificate of Ownership and Merger, Merging DHB-New York into DHB-Delaware, pursuant to
Section 253 of the General Corporation Law of the State of Delaware, filed in the Office
of the Secretary of State of Delaware on or about April 17, 1995 Note 2

4.1 Specimen Common Stock Certificate Note 1
<PAGE>
<S> <C> <C>
4.2 Specimen Class A Preferred Stock Certificate Note 1

4.3 Form of Warrant Agreement with respect to the Redeemable Warrant together with list of purchasers Note 1

5.1 Opinion and Consent of Counsel Note 12

7.1 Opinion regarding Liquidation Preference Note 1

10.1 Employment Agreement dated November 6, 1992 between Protective Apparel Corporation of America
and Leonard Rosen Note 1

10.2 Lease dated November 6, 1992, between Protective Apparel Corporation of America and Leonard Rosen
in Norris, Tennessee Note 1

10.3 Domestic and International Non-Competition Agreement dated March 12, 1990 between the Company
and American Body Armor & Equipment, Inc. (the "American Body Armor Non-competition
Agreement") Note 1

10.4 GSA Contracts dated January 21, 1991 and March 19, 1992 Note 1

10.5 Indemnification Agreements between certain officers of E.S.C. Industries, Inc., Protective Apparel
Corporation of America and the Company regarding Certain Liabilities in Connection with the
Acquisition of Protective Apparel Corporation of America Note 1

10.6 Warrant to purchase 2,000,000 shares of common stock of The Thunder Group, Inc. Note 1

10.7 Registration Rights Agreement between the Company and the Thunder Group, Inc. Note 1

10.8 Loan Agreement dated November 6, 1992, between the Company and E.S.C. Industries, Inc. Note 1

10.9 Security Agreement dated November 6, 1992 of TL Fasteners Corp. Note 1

10.10 Promissory Note between the Company and David Brooks dated November 6, 1992 Note 1

10.11 Loan and Security between the Company and Protective Apparel Corporation of American dated
December 7, 1992 Note 1

10.12 Chase Manhattan Bank, N.A. ("Chase") Loan dated November 24, 1992 Note 1

10.13 Form of Registration Rights Agreement between the Company and participants in the Company's
private placement Note 1

10.14 Form of Unit Purchase Option Note 1

10.15 Agreement between the Company, Jeffrey Brooks Securities, Inc., Jeffrey Brooks, Paul Kazak and Jason
Chang dated September 13, 1993 Note 3

10.16 Agreement between the Company, Jeffrey Brooks Securities, Inc., Jeffrey Brooks, Paul Kazak and Jason
Chang dated September 17, 1993 Note 3

10.17 Promissory note, general security agreement and related loan documents dated Sptember 15, 1993
between the Company, PACA and Chase Note 4

10.18 Subscription agreement dated March 17, 1994 (the "ID Subscription Agreement"), between the
Company and Intelligent Data Corporation, a Nevada corporation ("ID"), regarding the
purchase by the Company of shares of the common stock and preferred stock of ED Note 5

10.19 Amendment dated March 30, 1994, of the ID Subscription Agreement Note 5

<PAGE>
<S> <C> <C>
10.20 Shareholders' agreement dated March 17, 1994, among the Company, ID, and
shareholders of ID Note 5 10.21 Employment agreement dated March 17, 1994,
between ID and Sam Balabon, including written
termination thereof Note 5

10.22 Bill of sale dated December 20, 1994, made by N.D.L. Products, Inc., a Delaware corporation,
and its subsidiaries, N.D.L. International, Inc., Dr. Bonesavers, Inc., Grid, Inc.,
Hitman, Inc., and FlexAid, Inc., each being a Florida corporation, to
DHB Acquisition, Inc., covering the NDL Assets Note 6

10.23 Order Determining Successful Bidder, etc., dated December 20, 1994, In Re N.D.L. Products, Debtor,
of the United States Bankruptcy Court, Southern District of Florida, Case No. 9421458-BKC-
RBR, Chapter 11 (Lead Case), jointly administered with Case Nos. 94-21459 through 94-
21463 Note 6

10.24 Term loan to the Registrant in the amount of $1,150,000 due September 19, 1995, from The Chase
Manhattan Bank, N.A., of New York, New York (the "Secured Lender"), bearing interest at
7.2% per year Note 7

10.25 Collateral Agreement [Third Party] dated October 18, 1994, made by Mr. David H. Brooks in favor of
the Secured Lender Note 7

10.26 Agreement dated August 4, 1995, terminating the American Body Armor Non-Competition Agreement Note 9

10.27 Bill of sale dated August 3, 1995, made by the Trustee in Bankruptcy of Point Blank Body Armor, L.P. Note 8

10.28 Order Authorizing Sale at Auction dated July 25, 1995, In Re Point Blank Body Armor, L.P., Debtor,
of the United States Bankruptcy Court, Eastern District of New York, Case Nos. 895-83336-2D
and 895-83335-2D Note 8

10.29 1995 Stock Option Plan Note 9

10.30 Stock Purchase Agreement with respect to the outstanding capital stock of Orthopedic Products, Inc.,
dated as of March 22, 1996 Note 11

10.31 Definitive Merger Agreement with The Lehigh Group Inc and Plan of Reorganization Note 12

10.32 Employment Agreement with Michael Bell dated March 7, 1997. Note 12

24.1 Consent of Counsel (contained in their opinion, Exhibit 5.1) Note 10

24.2 Consent of Capraro, Centofranchi, Kramer & Co., P.C., independent auditors, included in
Part II of the Registration Statement Note 12

</TABLE>

Notes to Exhibit Table:

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

2. Incorporated by reference to the Company's Definitive Proxy Material
filed with the Commission in connection with the Special Meeting in
Lieu of Annual Meeting of Shareholders of the Company held on February
15, 1995.
<PAGE>
3. Incorporated by reference to the Company's Registration Statement on
Form SB-2, No. 33-70678, which became effective on December 29, 1993.

4. Incorporated by reference to the Company's Quarterly Report on Form
10-QSB for the quarter ended June 30, 1993.

5. Incorporated by reference to Post-Effective Amendment No. 1 of the
Company's two Registration Statements on Form SB-2, Nos. 33-59764 and
33-70678, which became effective on October 17, 1994.

6. Incorporated by reference to the Current Report on Form 8-K dated
December 20, 1994.

7. Incorporated by reference to Amendment No. 1 dated March 2, 1995, of
the Current Report on Form 8- K dated December 20, 1994.

8. Incorporated by reference to the Current Report on Form 8-K dated
August 3, 1995.

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

10. Filed with Post-Effective Amendment No. 3 of the Registration
Statement.

11. Incorporated by reference to the Current Report on Form 8-K dated March
22, 1996, including the amendments thereof.

12. Filed herewith

Item. 28 Undertakings.

The Company hereby undertakes as follows:

1. The Company shall file, during any period in which it offers or
sells securities, a post-effective amendment to this registration statement to:

(a) include any prospectus required by section 10(a)(3) of the
Securities Act;

(b) reflect in the prospectus any facts or events which
individually or together, represent fundamental change in the information in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total value of securities
offered would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
the Registration Fee" table in the effective registration statement;

2. The Company shall, for determining liability under the Securities
Act, treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
<PAGE>
3. The Company shall file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.

4. (a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.

(b) If a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of the issue.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm, Capraro, Centofranchi, Kramer
& Co., P.C., under the caption "Experts," and to the use of our report dated
March 21, 1997, on the consolidated balance sheet of DHB Capital Group, Inc. and
Subsidiaries, as of December 31, 1996, and the related consolidated statements
of income (loss), stockholders' equity (deficit) and cash flows for the years
ended December 31, 1996 and 1995, in this Registration Statement on Form SB-2
dated July 10, 1997, and the related Prospectus.

/s/Capraro, Centofranchi, Kramer & Co., P.C.
----------------------------------------------
Capraro, Centofranchi, Kramer & Co., P.C.

South Huntington, New York
July 14, 1997
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing form SB-2 and has authorized this registration
statement (No. 33-_____) to be signed on its behalf by the undersigned,
thereunto duly authorized, in Old Westbury, New York, on July 10, 1997.

Dated July 10, 1997 DHB Capital Group Inc.

/S/ David Brooks
----------------
David Brooks
Chairman of the Board, CEO, and
Principal Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment of
the registration statement has been signed by the following persons in the
capacities and at the dates indicated:

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

/S/David H. Brooks Chairman of the Board July 10, 1997
- -------------------
David H. Brooks

/S/Mary Kreidell Treasurer/Director July 10, 1997
- ---------------- Principal Financial Officer
Mary Kreidell

/S/Gary Nadelman Director July 10, 1997
- ----------------
Gary Nadelman

/S/Morton Cohen Director July 10, 1997
- ---------------
Morton Cohen

OPTON HANDLER, FEILER & LANDAU, LLP
Attorneys at Law
52 Vanderbilt Avenue
New York, New York 10017-3808

July 15, 1997
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549

Re: DHB Capital Group, Inc.
Registration Statement on Form SB-2

Dear Sirs:

In connection with the above referenced Registration Statement filed by DHB
Capital Group, Inc., a Delaware corporation (the "Company") with the Securities
and Exchange Commission (the "Commission"), relating to the sale of 1,850,000
shares of Common Stock of the Company, par value $.001 per share, (the "Common
Stock") by Selling Shareholders:

We have reviewed the Certificate of Incorporation and By-Laws of the Company, as
amended, records of certain of the Company's corporate proceedings as reflected
in the company's minute books and have examined such authorities and statutes as
we have deemed relevant to the opinions set forth hereinafter.

Based upon the foregoing, it is our opinion that:

The shares of Common Stock all of which are issued and outstanding will be, when
sold in accordance with the terms and conditions set forth in the Prospectus
constituting a part of the Registration Statement, will be legally issued, fully
paid and non-assessable.

We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to us under the heading "Legal Matters" in the
Prospectus which forms a part thereof.

Very truly yours,

OPTON HANDLER, FEILER & LANDAU, LLP

BY: /s/Peter Landau
---------------
Peter Landau

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 7th day of
March, 1997, by and between NDL Products, Inc. a Florida Corporation
having its principal office located at 4031 N.E. 12th Terrace, Oakland
Park, Florida 33334 (hereinafter called "Employer"), and Michael C.
Bell, who resides in Andover, Massachusetts (hereinafter called
"Employee").

R E C I T A L S:

A. Employer is in the business of the manufacture and
distribution of sports, fitness and medical protective gear
and equipment.

B. Employer desires to employ Employee and Employee desires to be
employed by Employer, upon the terms and conditions
hereinafter set forth.

In consideration of the mutual covenants hereinafter set
forth, it is hereby agreed as follows:

1. EMPLOYMENT AND DUTIES: Employer agrees to employ Employee as Chief Executive
Officer and Chief Operating Officer of NDL Products, Inc. and Employee agrees to
serve Employer in such capacity and to engage in those duties which might
reasonably be required of a Chief Executive Officer and Chief Operating Officer
including, but not limited to, supervisory responsibility for day to day sales
operations of Employer and generally do all things for the best interests of the
Employer, subject to the direction of Employer's Board of Directors. Employee
shall also serve as Chief Executive Officer and Chief Operating Officer of
Orthopedic Products, Inc. ("OPI"), a sister company of Employer engaged in the
manufacture and sale of orthopedic products and the distribution of general
medical supplies to orthopedists, orthopedic clinics, hospitals and sports
medicine centers. Employee shall serve in this capacity at no additional
compensation or benefits than set forth in paragraph 7 below.

2. TERM: Employee's employment hereunder shall be for a period of three (3)
years unless sooner terminated pursuant to Section 8 hereof (the "Term")
commencing upon the date first above written (the ":Commencement Date").
Employer shall have the option of extending this Agreement for an additional
three (3) year period upon the same terms and conditions contained herein. The
Employer shall notify the Employee not later than six (6) months prior to the
expiration of the initial three year term and no later than thirty (30) days
from the receipt of such notice, Employee shall advise Employer, in writing, of
his acceptance or rejection of such extension of this agreement.

3. DEVOTION OF ATTENTION: Throughout the Term of his employment, Employee shall
devote his full time and attention during normal business hours, and at such
times after normal business hours as may reasonably be necessary to carry out
the duties commensurate with Employee;'s position, to the business affairs of
the Employer and OPI.
<PAGE>
4. NON-DISCLOSURE
4.1 Acknowledgement and Purposes Employee acknowledges that he will,
during the Term of this Agreement, learn and have access to, Confidential
Information relating to the business and affairs of Employer and OPI. As used in
this Agreement, Confidential Information shall mean trade secrets concerning
Employer's and OPI's operations, future plans, projected and historical sales,
marketing, costs, production, growth and distribution, any customer lists,
customer information, or information relating to the products or service,
whether patentable or not, concerning the business of Employer and OPI as
conducted at any time prior to the termination of this Agreement.

Employer and OPI are engaged in highly competitive businesses and
their competitive position depends in great measure upon their ability to
develop or acquire and maintain the confidentiality of Confidential Information;
and they may have expended and are likely to continue to expend considerable
efforts and resources in the development or acquisition of Confidential
Information. Based upon the foregoing, Employee recognizes that the unauthorized
disclosure of Confidential Information in violation of the terms hereof is
likely to result in serious and irreparable harm to Employer and OPI.

4.2 Restrictions on the Use of Confidential Information Employee agrees
and covenants as follows:

(a) All documents and other materials made or compiled by
Employee during the Term of this Agreement and any
copies thereof, whether or not containing
Confidential Information are and shall be the
property of Employer and OPI and shall be delivered
to Employer and OPI by Employee upon request by
Employer or OPI. Employee will treat as trade secrets
all Confidential Information acquired by him prior to
or during the Term of this Agreement, and will not
use any such Confidential Information for his own
benefit nor discuss it or any part of it to any other
person, firm or corporation (other than Employer and
OPI) (i) without the prior written consent of
Employer or OPI; or (ii) unless such disclosure is
required by law or in response to a legal order; or
(iii) unless such Confidential Information has become
generally available to the public other than through
the breach by Employee of the terms hereof.

(b) All ideas, reports and other creative works conceived
by Employee during the Term of this Agreement and
relating to Confidential Information shall be
disclosed to Employer or OPI and shall be the sole
property of Employer or OPI.

5. COVENANT NOT TO COMPETE
5.1 Acknowledgement and Purposes. Employer and OPI are and will be
engaged in the businesses associated with the manufacture of sports medicine,
fitness and related products and orthopedic products in the United States and
throughout the world. Employee acknowledges that said business of Employer and
OPI is international in scope and that Employer and OPI compete with other
organizations that could be located in any part of the World.
<PAGE>
5.2 Covenants Employee covenants and agrees that during the Term of
this Agreement and for a period of six (6) months from the termination of this
Agreement including any extension thereof, Employee will not directly or
indirectly, engage or invest in, own, manage, operate, control or participate in
the ownership, management, operation or control of, be employed, associated or
in any manner connected with or render services or advice to, any business the
services of which compete, in whole or in part, with the services or activities
of Employer or OPI described in Paragraph 5.1 above, within these geographical
territories; provided, that Employee may invest in less than one percent (1%) of
any class of securities of any enterprise (but without otherwise participating
in the activities of such enterprise) if such securities are listed on any
regional or national securities exchange or have been registered under Section
12 (g) or Section 15 (d) of the Securities Exchange Act of 1934, as amended.

(a) Whether for his own account or for the account of any
other person, during the Term of this Agreement
including extensions and for a period of six (6)
months from the termination of this Agreement
pursuant to Section 8 hereof, Employee will not
solicit the business of any person known to him to be
in conflict with Employer or OPI without Employer's
or OPI's consent, which consent Employer or OPI may
withhold in the absolute discretion, whether or not
Employee had personal contact with such person during
or by reason of his employment with the Employer and
OPI prior to or during the Term of this Agreement.

(b) Whether for his own account or the account of any
other person, during the Term of this Agreement,
including extensions and for a period of six (6)
months from the termination of the Agreement,
Employee will not, without the Employer's or OPI's
consent, which consent Employer or OPI may withhold
in its absolute discretion, (i) solicit, employ or
otherwise engage as an employee, independent
consultant or otherwise, any person who is or was an
employee of Employer or OPI at any time during the
employment of Employee by Employer and OPI prior to
or during the Term of this Agreement including
extensions, or in any manner induce or attempt to
induce any employee of Employer or OPI to terminate
his or her relationship with Employer or OPI, or (ii)
interfere with the relationship of Employer or OPI
with any person, including any person who at any time
during the employment of Employee by Employer and OPI
prior to or during the Term of this Agreement
including extensions was an employee, a customer, a
vendor, a supplier or a consultant of, or to Employer
or OPI.
<PAGE>
6. DISCLOSURE AND ASSIGNMENT Employee will disclose fully to Employer or OPI all
inventions, formulas, processes, improvements and ideas, whether or not
patentable, made or conceived by Employee in whole or in part, alone or with
others, at any time during the Term, any extension and within one year
thereafter and which relate to the then present or planned business or Employer
or OPI. Employee will also (i) assign to Employer or OPI all such inventions,
formulas, processes, improvement and ideas and all Employee's rights thereto and
(ii) sign all documents reasonably requested by Employer or OPI to enable
Employer or OPI to obtain patents thereon in the United States of America and
such foreign countries as Employer or OPI may designate, and otherwise assist
Employer and OPI, at the latter's expense, in obtaining such patents and in
protecting, maintaining and defending same.

7. COMPENSATION AND BENEFITS Employee shall receive the following compensation
and benefits for services rendered by him during the Term of this Agreement:

7.1 Salary Effective as of the Commencement Date, Employee's annual
compensation shall be at the rate of One Hundred Thousand ($ 100,000) per annum
payable in accordance with the regular payroll practices of Employer.

7.2 Common Stock of DHB (unregistered)

(a) 50,000 shares to be issued upon the execution of this
agreement. These shares shall be non refundable and
non-cancellable

(b) 90,000 shares to be issued for each year of this
Agreement, 45,000 shares of which shall vest on the
1st day of each year of this Agreement and 45,000
shares of which shall vest and on the 181st day of
each year. 180,000 of such shares shall be issued
upon the execution of the Agreement, 135,000 shares
of which shall bear a legend indicating that
ownership rights with respect to such shares shall
vest in accordance with the above provision and are
subject to termination and return to Employer if
Employee's employment hereunder terminates prior to
vesting. An additional 90,000 shares subject to the
aforesaid vesting and restrictions shall be issued on
the 1st day of the third year of the Agreement.

Employee shall have the right to "put" these shares
to the Company at $ 2.00 per share between the 355th
and 365th day of each year of this Agreement to the
extent such shares are vested. This right does not
carry over to the following year and expires to the
extent not exercised in each year of this Agreement.

(c) Warrants or Options to purchase 150,000 shares
exercisable at $ 2.00 per share are herewith granted
to Employee but shall vest at the rate of 50,000 upon
the completion of each year of this Agreement.

The shares issued or issuable pursuant to (a) (b) and
(c) above will be registered pursuant to the
Securities Act of 1933 as soon as possible after
vesting either as individual stock grants pursuant to
Form S-8 or pursuant to demand registration rights in
any other applicable form of Registration Statement.
<PAGE>
DHB will use its best efforts to issue the shares
contemplated by (a) (b) and (c) above in a manner and
at such time so that such issuance will not cause a
"short swing" profit to Employee, pursuant to Section
16 of the Securities Exchange Act of 1934.

7.3 Bonus Employee will be entitled to a bonus at the discretion of the
Board of Directors of Employer or the Boards' Compensation Committee. The bonus
would be payable in DHB Common Stock and would be registered as soon as possible
either pursuant to Form S-8, or in any other pending or contemplated
Registration Statement.

7.4 Vacation During the term hereof, Employee shall be entitled to such
vacations during each calendar year as the Board of Directors shall specify, but
in no event shall Employee be entitled to less than two (2) weeks of paid
vacation during each year of employment.

7.5 Fringe Benefits In addition to all the other compensation to be
provided to Employee pursuant to this Paragraph 7, Employee shall be entitled to
receive or to participate in any fringe benefits which are or may be provided by
Employer to its officers and/or employees, including, but not limited to,
insurance, health, welfare and retirement plans. Employee shall not be entitled
to an automobile allowance.

7.6 Business Expenses Employer may, in its discretion, reimburse
Employee toward all reasonable expenses incurred by Employee in the course of
his employment hereunder, including, without limitation, travel and
entertainment expenses. It is acknowledged that Employee might incur additional
business expenses for which he will not be reimbursed by Employer. Employee
shall not be entitled to an automobile allowance.

7.7 Relocation Expense Employee shall be entitled to one-half (1/2) of
the expenses for realtors commissions in the sale of his Andover, Massachusetts
residence, and all moving expenses to Florida.

8. TERMINATION This Agreement shall terminate upon the expiration of the Term or
for the following causes:

8.1 Causes for Termination This Agreement shall terminate:

(a) If during the Term of this Agreement Employee is
unable, by reason of physical or mental disability,
to carry out or perform the duties required of him
hereunder for a period of at least two (2)
consecutive months. In such event, Employer shall
have the option, exercisable at such time or at any
later time during the continuance of such disability,
to terminate, upon written notice, the employment of
Employee hereunder, as of the date specified in such
notice, which date shall be no sooner than thirty
(30) days after the date when notice is given. During
the term of any disability of Employee prior to any
termination of his employment pursuant to this
Paragraph 8.1 Employee shall be entitled to his
regular compensation as provided in Paragraph 7
above. If there should be any dispute between the
parties as to Employee's physical or mental
<PAGE>
disability, the dispute shall be settled by the
opinion of an impartial, reputable physician agreed
upon for such purpose by the parties or their
representatives. The certificate of such physician as
to the matter in dispute shall be final and binding
upon the parties;

(b) Upon the death of Employee;

(c) By written notice for "Specified Cause." As used
herein, the term for "Specific Cause" means (i) the
material misappropriation of assets of the Company or
perpetration of a fraud against the Company by the
Employee; (ii) the conviction of Employee of any
crime involving moral turpitude which constitutes a
felony in the jurisdiction involved and with respect
to which appeals have been exhausted; (iii)
Employee's failure, other than because of temporary
illness, to devote his full business time and efforts
to the pursuit in good faith and with due diligence
of the active businesses and purposes of Employer and
OPI; (iv) habitual intoxication which impairs the
performance of his duties or illegal use of habit
forming substances which adversely affects the
reputation, goodwill or business position of the
Employer or OPI, (vi) the willful failure of the
Employee to carry out any reasonable and lawful
direction of the Board of Directors of the Employer;
(vii) or the willful violation or breach of any
material provision of this Agreement. The Company
will not terminate Employee's employment during the
Term for "Specified Cause" as hereinabove defined in
subparagraphs (iii), (iv), (v), (vi) or (vii), unless
(a) he has first received written notice stating with
specificity the nature of the breach of such
provisions and affording him an opportunity to
correct the act or acts complained of within 20 days
of the actual receipt of notice thereof by Employee,
and (b) Employee has failed to correct such act or
acts, or, in the case of an act that cannot be
corrected within such 20 days, failed to commence and
continue in good faith to correct such act.

(d) In the event that Employer determined, in its sole
and absolute discretion, to discontinue its
operations. Such termination shall be effective
thirty (30) days following the giving of notice by
Employer to Employee of such termination;

(e) In the event of a material breach of any provision of
this Agreement by Employer, Employee shall have the
option, upon written notice, to terminate his
employment with Employer as of the date specified in
such notice, but not less than sixty (60) days from
the date of such notice, except if such material
breach arises from the non-payment of compensation.
<PAGE>
9. Severance Upon termination of this Agreement, pursuant to Paragraphs 8.1 (a)
(b) (d) or (e), Employee shall be entitled to receive accrued salary, vacation
pay or other accrued payments and accrued issuances of stock pursuant to
Paragraphs 7(a) and (b) to the date of such termination, as well as salary and
stock issuances pursuant to Paragraphs 7 (a) and (b) for the six month period
following the date of termination.

10. ASSIGNMENT Employee shall have no right or power to assign or otherwise
transfer this Agreement, or any of his rights, duties or interest herein, and
any such purported assignment shall be null, void and of no effect.

11. BINDING EFFECT Subject to Paragraph 6 above, this Agreement shall be binding
upon the parties and their respective heirs, legal representatives, successors
and assigns.

12. REMEDIES Employee hereby acknowledges that in the event of a breach or
threatened breach by him of the provisions of this Agreement, Employer would
suffer irreparable harm for which there would be no adequate remedy at law.
Accordingly,. Employee agrees that in such event, in addition to any other
remedies which Employer may have in law or in equity for money damages or other
relief, Employer shall be entitled to temporary and/or injunctive relief,
without the necessity of posting bond or proving damages, to enforce the
provisions hereof.

13. ENFORCEABILITY If any provision of this Agreement would be deemed to be
invalid or unenforceable for any reason, including, without limitation, the
geographic or business cope or the duration hereof, such provision shall be
construed in such a way as to make it valid and enforceable to the maximum
extent possible. Any invalidity or unenforceability of any provision of this
Agreement shall attach only to such provision and shall not effect or render
invalid or unenforceable any other provision of this Agreement or any other
agreement or instrument.

14. AGREEMENT TO PERFORM NECESSARY ACTS Each party agrees to perform any further
acts and execute and delivery any further documents which may be reasonably
necessary to carry out the provision of this Agreement.

15. NOTICES All notices, requests, demand and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed sufficiently given when served personally on the party to whom notice is
to be given one (1) business day after delivery to a reputable overnight
courier, four (4) business days if mailed to the party to whom notice is to be
given, by first class mail, registered or certified,m return receipt requested,
postage prepaid, or when sent by telecopy with a copy following by hand or
overnight courier or mailed, registered or certified, return receipt requested,
postage prepaid, and properly addressed as follows:

To Employer: NDL Products, Inc.
4031 N.E. 12th Terrace
Oakland Park, Florida 33334

With a copy to: DHB Capital Group, Inc.
11 Old Westbury Rd
Old Westbury, New York 11568

To Employee Michael C. Bell
c/o NDL Products, Inc.
4031 N.E. 12th Terrace
Oakland Park, Florida 33334
<PAGE>
Either party may change his or its address (and in the case of the
Employer, the name of the person(s) to whose attention communications hereunder
shall be directed) from time to time by serving notice thereof upon the other
party as provided herein. The provisions of paragraphs 4 and 5 above shall
survive the termination of Employers employment with Employer regardless of the
date, cause or manner of such termination, and neither the termination of
employment nor the termination of this Agreement shall impair or otherwise
affect Employers obligation to strictly observe the terms and conditions of
paragraphs 4 and 5.

16. ENTIRE AGREEMENT: This Agreement constitutes the full and complete agreement
and understanding between the parties hereto and supersedes any and all similar
agreements heretofore executed.

17. LAW APPLICABLE Should any questions arise at any time as to the validity,
construction, interpretation or performance of this Agreement, it shall be
construed and enforced in accordance with the laws of the State of Florida.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day
and year first above written.

Employer:
NDL PRODUCTS, INC.

By: ________________________________
Name: ________________________________
Title: ________________________________

Employee:
--------------------------------
MICHAEL C. BELL
Address: ________________________________
________________________________

<PAGE>

DHB Capital Group, Inc., hereby agrees to be bound by the provisions of the
within Employment Agreement relating to the issuance, delivery and registration
of shares of its Common Stock and Options or Warrants to purchase shares of its
Common Stock

DHB CAPITAL GROUP, INC.

By: /s/David H. Brooks
------------------
Name: DAVID H. BROOKS
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER