PARITZ & COMPANY, P.A.
DHB INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
WITH
ACCOUNTANTS' REVIEW REPORT
SEPTEMBER 30, 2001
Board of Directors
DHB Industries, Inc. and Subsidiaries
We have reviewed to the pro forma adjustments reflecting the transactions
described in Note 1 and the application of those adjustments to the historical
amounts in the accompanying pro forma balance sheet of DHB Industries, Inc. and
Subsidiaries as of September 30, 2001. These historical financial statements are
derived from the historical unaudited financial statements of DHB Industries,
Inc. and Subsidiaries which were reviewed by us. Such pro forma adjustments are
based on management's representations as discussed in Note 1. Our review was
conducted in accordance with standards established by the American Institute of
Certified Public Accountants. All information contained in the accompanying
financial statement is the representation of management of DHB Industries, Inc.
and Subsidiaries.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards, the
objective of which is an expression of an opinion regarding the financial
statement taken as a whole. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have had been had the
transactions occurred at an earlier date. However, the pro forma financial
statement is not necessarily indicative of the related effects on the financial
position that would have been attained had the above mentioned transactions
occurred at an earlier date.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statement in order for it to be in
conformity with generally accepted accounting principles.
January 24, 2002
Hackensack, New Jersey
DHB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
============================================================================================================================
UNAUDITED PRO FORMA PRO FORMA
SEPTEMBER 30, 2001 ADJUSTMENTS SEPTEMBER 30, 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 191,869 $ 450,000 $ 641,869
Accounts receivable, less allowance -
for doubtful accounts of $719,705 9,926,917 - 9,926,917
Inventories 21,518,141 - 21,518,141
Prepaid expenses and other current assets 1,583,345 2,033,345
----------- ---------- -----------
TOTAL CURRENT ASSETS 33,220,272 450,000 33,670,272
----------- ---------- -----------
PROPERTY AND EQUIPMENT, NET 1,902,395 450,000 1,902,395
----------- ---------- -----------
OTHER ASSETS:
Investments in non-marketable securities 941,750 - 941,750
Deferred tax assets 409,300 - 409,300
Deposits and other assets 297,809 - 297,809
----------- ---------- -----------
TOTAL OTHER ASSETS 1,648,859 - 1,648,859
----------- ---------- -----------
TOTAL ASSETS $36,771,526 $ 450,000 $37,221,526
=========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $13,684,746 $ - $13,684,746
Accrued expenses and other current liabilities 2,310,528 - 2,310,528
Current maturities of long-term debt 881,260 - 881,260
----------- ---------- -----------
TOTAL CURRENT LIABILITIES 16,876,534 - 16,876,534
----------- ---------- -----------
LONG-TERM LIABILITIES:
Revolving credit agreement-financial institution 8,206,363 - 8,206,363
Long-term debt, net of current maturities 1,051,196 - 1,051,196
Note payable - stockholder 10,000,000 (3,000,000) 7,000,000
----------- ---------- -----------
TOTAL LONG-TERM DEBT 19,257,559 (3,000,000) 16,257,559
----------- ---------- -----------
TOTAL LIABILITIES 36,134,093 (3,000,000) 33,134,093
----------- ---------- -----------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $6.00 par value
5,000,000 shares authorized
500,000 shares issued and outstanding 3,000,000 3,000,000
Common stock, $.001 par value,
100,000,000 shares authorized.
31,396,947 shares issued and outstanding 31,397 150 31,547
Additional paid-in capital 23,769,036 449,850 24,218,886
Accumulated deficit (23,097,295) - (23,097,295)
Other comprehensive income (65,705) - (65,705)
----------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY 637,433 3,450,000 4,087,433
----------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,771,526 $ 450,000 $37,221,526
=========== ========== ===========
See accountants' review report
DHB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2001
(Unaudited)
================================================================================
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet has been derived from the
unaudited consolidated balance sheet contained in the Company's
Form 10-Q and is presented for comparative purposes. All amounts
are subject to year-end adjustments and audit, but the Company
believes all adjustments, consisting only of normal and
recurring adjustments necessary to present fairly the financial
condition for the interim period, have been made.
Footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted in accordance with published rules
and regulations of the Securities and Exchange Commission. This
consolidated financial statement should be read in conjunction
with the audited consolidated financial statements and notes
thereto included in the Company's Form 10-K for the most recent
fiscal year.
2. PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statement gives effect to
the following transactions as if they had occurred as of
September 30, 2001.
(1) Convertible Preferred Stock
On December 14, 2001, the Company authorized the issuance of
500,000 shares of Convertible Preferred Stock to the
Chairman of the Board and principal shareholder of the
Company, at a price of $6 per share. Payment for these
shares was received on January 14, 2002, by the
reclassification of part of the stockholder's loan payable
account. Annual cumulative dividends at a rate of 12% per
annum, accruing from the date of issuance, are payable in
cash. The Convertible Preferred Stock is redeemable by the
Company on December 15, 2002 or any December 15th
thereafter, unless such redemption shall result in the
shareholders' equity of the Company falling below
$5,000,000.
(2) Warrants
On December 11, 2001, an unrelated party exercised 150,000
warrants at $3 per share for the common stock of the
Company.