SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Amendment No. 1 to

FORM 10-Q/A

(Mark One)


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

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from to

		Commission file number 1-12410

Simula, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Arizona		86-0320129

(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


7822 South 46th Street, Phoenix, Arizona		85044

(Address of Principal Executive Offices)		(Zip Code)

(602) 643-7233

(Registrant’s Telephone Number, Including Area Code)

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

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

Indicate by check mark whether the registrant:

(1)

has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.


Yes	þ			No	o

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


Yes	o			No	þ

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


Class	Outstanding at June 30, 2003

Common Stock, $.01 par value		13,017,688

TABLE OF CONTENTS


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

SIMULA, INC.

TABLE OF CONTENTS


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

EXPLANATORY NOTE

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

SIMULA, INC. AND SUBSIDIARIES

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


			2003			2002

			(As restated see Note 14)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	193,199		$	147,842
	Contract and trade receivables – Net (including costs and estimated earnings in excess of billings of $8,207,578 and $14,216,255, respectively)			17,545,914			20,446,665
	Inventories			2,823,143			3,953,837
	Prepaid expenses and other			673,005			1,402,252
	Current assets of discontinued operations			10,492,818			9,115,864

		Total current assets		31,728,079			35,066,460
PROPERTY, EQUIPMENT, and LEASEHOLD IMPROVEMENTS -Net				6,253,145			7,737,356
DEFERRED FINANCING COSTS				1,290,344			2,419,054
INTANGIBLES – Net				1,389,482			1,311,857
OTHER ASSETS				473,295			436,102
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS				7,731,094			7,908,655

TOTAL			$	48,865,439		$	54,879,484

LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
	Revolving line of credit		$	9,555,525		$	11,283,393
	Trade accounts payable			4,089,792			3,555,552
	Other accrued liabilities			6,230,352			6,355,349
	Deferred revenue			60,000			60,000
	Accrued restructuring costs			1,133,984			1,140,444
	Advances on contracts			532,180			940,752
	Current portion of long-term debt			61,892,822			29,988,315
	Current liabilities of discontinued operations			6,115,989			6,374,093

		Total current liabilities		89,610,644			59,697,898
DEFERRED REVENUE				450,000			480,000
DEFERRED LEASE COST				1,003,152			807,156
LONG-TERM DEBT – Less current portion				259,709			32,313,087
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS				3,928			9,582

		Total liabilities		91,327,433			93,307,723

SHAREHOLDERS’ DEFICIT
	Preferred stock, $.05 par value – authorized 50,000,000 shares; none outstanding
	Common stock, $.01 par value – authorized 50,000,000 shares; issued 13,017,688 and 13,014,395, respectively			130,433			130,144
	Additional paid-in-capital			62,772,245			62,715,713
	Accumulated deficit			(100,935,281	)		(97,412,354	)
	Accumulated other comprehensive loss			(4,429,391	)		(3,861,742	)

		Total shareholders’ deficit		(42,461,994	)		(38,428,239	)

TOTAL			$	48,865,439		$	54,879,484

See notes to unaudited consolidated financial statements.

SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operation


	Three Month Period Ended						Six Month Period Ended
	June 30,						June 30,

	2003			2002			2003			2002

	(As restated see Note 14)						(As restated see Note 14)
REVENUE	$	17,217,418		$	21,604,622		$	32,421,836		$	41,409,757
COST OF REVENUE		10,592,174			13,912,320			20,392,147			26,693,028

GROSS MARGIN		6,625,244			7,692,302			12,029,689			14,716,729
ADMINISTRATIVE EXPENSES (Note 14)		3,831,138			3,539,983			7,269,757			6,850,569
RESEARCH AND DEVELOPMENT		544,343			308,900			1,129,289			713,559
RESTRUCTURING CHARGES		298,090			—			598,921			—

OPERATING INCOME		1,951,673			3,843,419			3,031,722			7,152,601
INTEREST EXPENSE		3,084,321			2,572,693			5,756,971			5,114,616
OTHER EXPENSE (Note 7)		1,000,000			—			1,000,000			—

(LOSS) INCOME BEFORE INCOME TAXES		(2,132,648	)		1,270,726			(3,725,249	)		2,037,985
INCOME TAX EXPENSE		—			559,047			17,011			839,501

(LOSS) INCOME BEFORE DISCONTINUED OPERATIONS		(2,132,648	)		711,679			(3,742,260	)		1,198,484
(LOSS) INCOME FROM DISCONTINUED OPERATIONS		(68,387	)		(202,424	)		219,333			(315,869	)

NET (LOSS) INCOME	$	(2,201,035	)	$	509,255		$	(3,522,927	)	$	882,615

(LOSS) INCOME PER COMMON SHARE – Basic (LOSS) INCOME BEFORE DISCONTINUED OPERATIONS		(.16	)		0.06			(.29	)		0.09
(LOSS) INCOME FROM DISCONTINUED OPERATIONS		(.01	)		(0.02	)		.02			(0.02	)

(LOSS) INCOME PER COMMON SHARE – Basic	$	(.17	)	$	0.04		$	(.27	)	$	0.07

(LOSS) INCOME PER COMMON SHARE – Diluted
(LOSS) INCOME BEFORE DISCONTINUED OPERATIONS		(.16	)		0.06			(.29	)		0.09
(LOSS) INCOME FROM DISCONTINUED OPERATIONS		(.01	)		(0.02	)		.02			(0.02	)

(LOSS) INCOME PER COMMON SHARE – Diluted	$	(.17	)	$	0.04		$	(.27	)	$	0.07

See notes to unaudited consolidated financial statements.

SIMULA, INC. AND SUBSIDIARIES

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


										Accumulated
	Common Stock				Additional					Other			Total
					Paid-in		Accumulated			Comprehensive			Shareholders’			Comprehensive
	Shares		Amount		Capital		Deficit			Loss			Deficit			Loss

Balance, January 1, 2003		13,014,395	$	130,144	$	62,715,713	$	(97,412,354	)	$	(3,861,742	)	$	(38,428,239	)	$	—
Net loss (Note 14)								(3,522,927	)					(3,522,927	)		(3,522,927	)
Issuance of common shares		3,293		289		56,532								56,821			—
Currency translation adjustment											(567,649	)		(567,649	)		(567,649	)

Balance, June 30, 2003 (Note 14)		13,017,688	$	130,433	$	62,772,245	$	(100,935,281	)	$	(4,429,391	)	$	(42,461,994	)	$	(4,090,576	)

See notes to unaudited consolidated financial statements.

SIMULA, INC. AND SUBSIDIARIES

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


					2003			2002

					(As restated See Note 14)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net (loss) income				$	(3,522,927	)	$	882,615
	Adjustment to reconcile net (loss) income to net cash provided by
	operating activities:
			Depreciation and amortization			1,781,135			1,620,366
			Deferred income taxes			—			574,481
			Capitalized interest			795,875			749,860
			Loss (gain) on disposal of assets			175,959			(971	)
			Restructuring charge			598,921			—
			Currency translation adjustment			(567,649	)		(143,057	)
			Bad debt expense			—			310,874
			Non-cash equity compensation			—			74,779
			Write down of intangibles			99,754			—
	Changes in net assets and liabilities:
			Contract and trade receivables – net of advances			2,492,179			(624,287	)
			Inventories			1,130,694			638,125
			Prepaid expenses and other			729,247			220,360
			Other assets			(37,193	)		16,045
			Trade accounts payable			534,240			(408,365	)
			Deferred revenue			(30,000	)		(693	)
			Deferred lease costs			195,996			210,246
			Accrued restructuring costs			(605,381	)		(334,875	)
			Other accrued liabilities			(124,999	)		(941,144	)
			Net assets of discontinued operations			(1,463,151	)		(1,891,326	)

				Net cash provided by operating activities		2,182,700			953,033

CASH FLOWS FROM INVESTING ACTIVITIES:
			Purchase of property and equipment			(742,401	)		(766,077	)
			Costs incurred to obtain intangibles			(330,311	)		(67,321	)
			Proceeds from sale of property, equipment and intangibles			1,551,162			—

				Net cash provided by (used in) investing activities		478,450			(833,398	)

CASH FLOWS FROM FINANCING ACTIVITIES:
			Net borrowings under line of credit			(1,727,868	)		143,095
			Principal payments under other debt arrangements			(944,746	)		(89,895	)
				Issuance of Common Stock		56,821			101,205

				Net cash (used in) provided by financing activities		(2,615,793	)		154,405

NET INCREASE IN CASH AND CASH EQUIVALENTS						45,357			274,040
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD						147,842			461,502

CASH AND CASH EQUIVALENTS, END OF PERIOD					$	193,199		$	735,542

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
		Interest Paid			$	3,784,118		$	3,749,175

		Income Taxes Paid			$	76,668		$	394,418

See notes to unaudited consolidated financial statements.

Note 1 — Basis of Presentation

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

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

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

Note 2 — Recently Issued Accounting Standards

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

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

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

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

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

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

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

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

Note 3 – Earnings per share

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


	Three Months Ended					Six Months Ended
	June 30,					June 30,

	2003			2002		2003			2002

	(As restated					(As restated
	see Note 14)					see Note 14)
Net (loss) earnings available to common shareholders	$	(2,201,035	)	$	509,255	$	(3,522,927	)	$	882,615

Basic weighted average shares outstanding		13,020,980			12,910,428		13,017,688			12,901,694
Effect of dilutive securities		—			360,011		—			321,852

Diluted weighted average shares outstanding		13,020,980			13,270,439		13,017,688			13,223,546

Basic per share amounts	$	(0.17	)	$	0.04	$	(0.27	)	$	0.07

Diluted per share amounts	$	(0.17	)	$	0.04	$	(0.27	)	$	0.07

Note 4 – Stock Based Compensation

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2003			2002			2003			2002

	(As restated						(As restated
	see Note 14)						see Note 14)
Net (loss) income – as reported	$	(2,201,035	)	$	509,255		$	(3,522,927	)	$	882,615

Deduct: Total stock based employee compensation expense determined under fair value based method		(211,481	)		(115,334	)		(476,141	)		(1,413,659	)

Net (loss) income – pro forma	$	(2,412,516	)	$	393,921		$	(3,999,068	)	$	(531,044	)

(Loss) income per share: basic and diluted as reported	$	(0.17	)	$	0.04		$	(0.27	)	$	0.07

(Loss) income per share: basic and diluted – pro forma	$	(0.19	)	$	0.03		$	(0.31	)	$	(0.04	)

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2002			2003			2002

Dividend yield	None			None			None			None
Expected volatility		116	%		96	%		116	%		98	%
Risk-free interest rate		3.6	%		3.6	%		3.6	%		3.6	%
Expected lives		3.25			3.25			3.25			3.25

Note 5 – Inventories

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


		2003			2002

Raw Materials		$	2,802,905		$	3,298,676
Work in Progress			370,238			636,980
Finished Goods			—			258,181
Inventory Reserve			(350,000	)		(240,000	)

	Total Inventories	$	2,823,143		$	3,953,837

Note 6 – Property, Equipment and Leasehold Improvements

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


		2003			2002

Land		$	481,888		$	816,888
Buildings and leasehold improvements			2,640,798			3,885,263
Equipment			12,939,670			13,229,244

Total			16,062,356			17,931,395
Less accumulated depreciation and amortization			(9,809,211	)		(10,194,039	)

	Property, equipment and leasehold improvements - net	$	6,253,145		$	7,737,356

Note 7 – Debt

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

Note 8 – Other Intangible Assets

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


		2003			2002

Patents and licenses		$	1,626,068		$	1,686,456
Other			132,669			566,010

Total			1,758,737			2,252,466
Less accumulated amortization			(369,255	)		(940,609	)

	Intangibles – net	$	1,389,482		$	1,311,857

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


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

Note 9 – Research and Development

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


			Three Months Ended						Six Months Ended
			June 30,			June 30,			June 30,			June 30,
			2003			2002			2003			2002

Research and development expenses			$	544,343		$	308,900		$	1,129,289		$	713,559

Funded contracts:
	Revenue funded by customers		$	180,928		$	771,092		$	471,578		$	1,829,104
	Research and development expenses
		classified as cost of such revenue		(99,531	)		(462,105	)		(267,310	)		(1,236,402	)

Income of funded contracts			$	81,397		$	308,987		$	204,268		$	592,702

Note 10 — Restructuring

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


	Facility			Other
	Closure			Contracts			Severance			Total

Balance at December 31, 2002	$	535,285		$	331,941		$	273,218		$	1,140,444
First quarter 2003 restructuring		—			—			300,831			300,831
Second quarter 2003 restructuring					39,647			258,443			298,090
Reclassification of charges		294,279			(294,279	)		—			—
Cash payments		(117,721	)		(2,040	)		(485,620	)		(605,381	)

Balance at June 30, 2003	$	711,843		$	75,269		$	346,872		$	1,133,984

Note 11 – Derivative Instruments

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

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

Note 12 – Subsequent Events

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

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


			June 30, 2003		December 31, 2002

Receivables and other			$	6,893,021	$	6,999,476
Inventory and other				3,599,797		2,116,388

		Current Assets of Discontinued Operations		10,492,818		9,115,864

Property, Equipment and Leaseholds, net				3,708,729		4,035,891
Intangibles, net				2,279,009		2,222,621
Other assets				1,743,356		1,650,143

		Long Term Assets of Discontinued Operations		7,731,094		7,908,655

Total Assets of Discontinued Operations			$	18,223,912	$	17,024,519

Trade accounts payable			$	2,916,718	$	2,615,033
Other accrued liabilities and other				3,199,271		3,759,060

		Current Liabilities of Discontinued Operations		6,115,989		6,374,093

Deferred Income				3,928		9,582

	Long Term Liabilities of Discontinued Operations			3,928		9,582
Total Liabilities of Discontinued Operations			$	6,119,917	$	6,383,675

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



	Three Month Period Ended						Six Month Period Ended
	2003		2002			2003		2002

Revenues		9,456,837		8,576,869			18,565,287		17,874,023
(Loss) income before income taxes		104,613		(376,100	)		485,322		(564,628	)

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

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

Note 13 – Segment Reporting

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

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


			2003


			Aerospace
			Defense		Other			Total

					(As restated see Note 14)			(As restated see Note 14)
Revenue:
	Contract revenue		$	16,899,461	$	—		$	16,899,461
	Product sales:
		Other		—		32,378			32,378
	Technology sales and royalties			—		285,579			285,579

Total revenue			$	16,899,461	$	317,957		$	17,217,418

Operating income (loss)			$	2,828,710	$	(877,037	)	$	1,951,673


			2002

			Aerospace and
			Defense		Other			Total

Revenue:
	Contract revenue		$	21,083,449	$	—		$	21,083,449
	Product sales:
		Other		—		84,249			84,249
	Technology sales and royalties			—		436,924			436,924

Total revenue			$	21,083,449	$	521,173		$	21,604,622

Operating income (loss)			$	3,871,454	$	(28,035	)	$	3,843,419

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


			2003


			Aerospace
			Defense		Other			Total

					(As restated see Note 14)			(As restated see Note 14)
Revenue:
	Contract revenue		$	31,939,045	$	—		$	31,939,045
	Product sales:
		Other		—		36,287			36,287
	Technology sales and royalties			—		446,504			446,504

Total revenue			$	31,939,045	$	482,791		$	32,421,836

Operating income (loss)			$	4,773,583	$	(1,741,861	)	$	3,031,722


			2002

			Aerospace and
			Defense		Other			Total

Revenue:
	Contract revenue		$	40,373,195	$	—		$	40,373,195
	Product sales:
		Other		—		187,014			187,014
	Technology sales and royalties			—		849,548			849,548

Total revenue			$	40,373,195	$	1,036,562		$	41,409,757

Operating income (loss)			$	7,386,334	$	(233,733	)	$	7,152,601

Note 14 — Restatement:

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


	June 30, 2003

		As Previously
		Reported			As Restated

Prepaid expense and other		$	1,266,895		$	673,005
Total current assets			32,321,969			31,728,079
Total assets			49,459,329			48,865,439
Accumulated deficit			(100,341,391	)		(100,935,281	)
Total shareholders’ deficit			(41,868,104	)		(42,461,994	)
Total liabilities and shareholders’ deficit			49,459,329			48,865,439


	For the Three Months Ended
	June 30, 2003

		As Previously
		Reported			As Restated

Administrative Expenses		$	3,381,305		$	3,831,138
Operating Income			2,401,506			1,951,673
Loss Before Income Taxes			(1,682,815	)		(2,132,648	)
Loss Before Discontinued Operations			(1,682,815	)		(2,132,648	)
Net loss			(1,751,202	)		(2,201,035	)
Net loss per share — basic		$	(.13	)	$	(.17	)
Net loss per share — diluted		$	(.13	)	$	(.17	)


	For the Six Months Ended
	June 30, 2003

		As Previously
		Reported			As Restated

Administrative Expenses		$	6,675,867		$	7,269,757
Operating Income			3,625,612			3,031,722
Loss Before Taxes			(3,131,359	)		(3,725,249	)
Loss Before Discontinued Operations			(3,148,370	)		(3,742,260	)
Net loss			(2,929,037	)		(3,522,927	)
Net loss per share — basic		$	(.23	)	$	(.27	)
Net loss per share — diluted		$	(.23	)	$	(.27	)

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

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

Results of Operations

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

CONSOLIDATED


	Three Months Ended												Six Months Ended
	June 30,												June 30,

										Percent												Percent
(In thousands)	2003			2002			Change			Inc (Dec)			2003			2002			Change			Inc (Dec)

	(As restated See Note 14)						(As restated See Note 14)			(As restated See Note 14)			(As restated See Note 14)						(As restated See Note 14)			(As restated See Note 14)

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

AEROSPACE & DEFENSE


	Three Months Ended												Six Months Ended
	June 30,												June 30,

																						Percent
										Percent												Inc
(In thousands)	2003			2002			Change			Inc (Dec)			2003			2002			Change			(Dec)

Revenue	$	16,899		$	21,083		$	(4,184	)		(19	%)	$	31,939		$	40,373		$	(8,434	)		(20	%)
Gross margin		6,464			7,312			(848	)		(11	%)		11,817			14,022			(2,205	)		(15	%)
Gross margin as a percentage of revenue		38	%		34	%								36	%		34	%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

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

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

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

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

Research and Development

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

Forward Looking Information and Risks and Uncertainties in our Business

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

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

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

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

•		our ability to complete the pending acquisition by Armor Holdings, Inc.;

•		our relationship with our senior lenders and on-going compliance with loan terms and covenants;

•		our relationship with significant customers and maintenance of preferred supplier relationships with them that are renegotiated frequently;

•		our leveraged status and the level and cost of our debt;

•		the continued reduction of our fixed expenses;

•		ability to monetize assets including through sales of certain assets or technologies at a favorable price;

•		our ability to continue to provide design and manufacturing services, products and new product applications that compare favorably on the basis of time to introduction, cost, and performance with those of our competitors;

•		the level and makeup of military expenditures;

•		contract mix and shifting production and delivery schedules among our market segments;

•		the amount of resources available for independent research and development;

•		proof of concept and production validation of certain of our new technologies and proposed products, as well as our financial ability to establish manufacturing capacity for such products; and

•		technological changes introduced by competitors and customers.

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

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Currency Exchange Rate Risk

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

Item 4. Controls and Procedures

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

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

PART II — OTHER INFORMATION

Item 6. Exhibits and Reports

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


No.	Description	Reference
3.1	Articles of Incorporation of Simula, Inc., as amended and restated		(2	)

3.2	Bylaws of Simula, Inc., as amended and restated		(1	)

4.7	Indenture dated April 1, 1997, in connection with the Company’s issuance of the 8% Senior Subordinated Convertible Notes due May 1, 2004.		(6	)

10.11	1992 Stock Option Plan, as amended effective September 15, 1998.		(3	)

10.12	1992 Restricted Stock Plan		(1	)

10.21	1994 Stock Option Plan, as amended effective September 15, 1998.		(3	)

10.26	Simula, Inc. Employee Stock Purchase Plan		(2	)

10.27	Outside Directors Equity Plan		(9	)

10.37	Simula, Inc. 1999 Incentive Stock Option Plan		(4	)

10.41	Financing Agreement with The CIT Group/Business Credit, Inc. dated December 30,1999.		(5	)

10.41A	Amendment Number Three to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated September 26, 2001.		(7	)

10.41B	Amendment Number Five to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated June 30, 2002.		(10	)

10.41C	Amendment Number Seven to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated October 22, 2002.		(10	)

10.41D	Amendment Number Nine to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated March 25, 2003.		(11	)

10.41E	Waiver to Certain Financial Covenants to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated April 9, 2003.		(11	)

10.45	Loan Agreement between the Company and Allied Capital Corporation dated September 26, 2001.		(7	)

10.45A	Waiver and Amendment No. 1 to Loan Agreement between the Company and Allied Capital Corporation dated August 19, 2002.		(10	)

10.45B	Consent and Amendment No. 2 to Loan Agreement between the Company and Allied Capital Corporation dated March 25, 2003.		(11	)

10.46	Employment Agreement between the Company and Bradley P. Forst dated November 12, 2001, effective October 1, 2000.		(7	)

10.48	Employment Agreement between the Company and Joseph Coltman dated December 13, 2001, effective October 13, 2000.		(8	)

10.50	Retention Agreement between the Company and John A. Jenson dated December 20, 2002.		(11	)

31.1	Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K		*

31.2	Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K		*

32.1	Certification of Chief Executive Officer pursuant to item 601(b)(32) of Regulation S-K		*

32.2	Certification of Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K		*

Filed herewith

	(1)		Filed with Registration Statement on Form S-18, No. 33-46152-LA, under the Securities Act of 1933, effective April 13, 1992.

	(2)		Filed with Definitive Proxy on May 15, 1996, for the Company’s Annual Meeting of Shareholders held on June 20, 1996.

	(3)		Filed with report on Form 10-Q for the quarter ended September 30, 1998.

	(4)		Filed with Definitive Proxy on May 14, 1999, for the Company’s Annual Meeting of Shareholders held on June 17, 1999.

	(5)		Filed with report on Form 10-K for the year ended December 31, 1999.

	(6)		Filed with report on Form 10-Q for the quarter ended March 31, 2000.

	(7)		Filed with report on Form 10-Q for the quarter ended September 30, 2001.

	(8)		Filed with report on Form 10-K for the year ended December 31, 2001.

	(9)		Filed with Registration Statement on Form S-8, effective March 28, 2002.

	(10)		Filed with report on Form 10-Q for the quarter ended September 30, 2002.

(11)

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

(b) Reports on Form 8-K:

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

SIGNATURES

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


		SIMULA, INC.

DATE: November 5, 2003		/s/ John A. Jenson

		John A. Jenson Chief Financial Officer

EXHIBIT INDEX


No.	Description	Reference
3.1	Articles of Incorporation of Simula, Inc., as amended and restated		(2	)

3.2	Bylaws of Simula, Inc., as amended and restated		(1	)

4.7	Indenture dated April 1, 1997, in connection with the Company’s issuance of the 8% Senior Subordinated Convertible Notes due May 1, 2004.		(6	)

10.11	1992 Stock Option Plan, as amended effective September 15, 1998.		(3	)

10.12	1992 Restricted Stock Plan		(1	)

10.21	1994 Stock Option Plan, as amended effective September 15, 1998.		(3	)

10.26	Simula, Inc. Employee Stock Purchase Plan		(2	)

10.27	Outside Directors Equity Plan		(9	)

10.37	Simula, Inc. 1999 Incentive Stock Option Plan		(4	)

10.41	Financing Agreement with The CIT Group/Business Credit, Inc. dated December 30,1999.		(5	)

10.41A	Amendment Number Three to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated September 26, 2001.		(7	)

10.41B	Amendment Number Five to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated June 30, 2002.		(10	)

10.41C	Amendment Number Seven to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated October 22, 2002.		(10	)

10.41D	Amendment Number Nine to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated March 25, 2003.		(11	)

10.41E	Waiver to Certain Financial Covenants to Financing Agreement between the Company and The CIT Group/Business Credit, Inc. dated April 9, 2003.		(11	)

10.45	Loan Agreement between the Company and Allied Capital Corporation dated September 26, 2001.		(7	)

10.45A	Waiver and Amendment No. 1 to Loan Agreement between the Company and Allied Capital Corporation dated August 19, 2002.		(10	)

10.45B	Consent and Amendment No. 2 to Loan Agreement between the Company and Allied Capital Corporation dated March 25, 2003.		(11	)

10.46	Employment Agreement between the Company and Bradley P. Forst dated November 12, 2001, effective October 1, 2000.		(7	)

10.48	Employment Agreement between the Company and Joseph Coltman dated December 13, 2001, effective October 13, 2000.		(8	)

10.50	Retention Agreement between the Company and John A. Jenson dated December 20, 2002.		(11	)

31.1	Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K		*

31.2	Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K		*

32.1	Certification of Chief Executive Officer pursuant to item 601(b)(32) of Regulation S-K		*

32.2	Certification of Chief Financial Officer pursuant to item 601(b)(32) of Regulation S-K		*

Filed herewith

	(1)		Filed with Registration Statement on Form S-18, No. 33-46152-LA, under the Securities Act of 1933, effective April 13, 1992.

	(2)		Filed with Definitive Proxy on May 15, 1996, for the Company’s Annual Meeting of Shareholders held on June 20, 1996.

	(3)		Filed with report on Form 10-Q for the quarter ended September 30, 1998.

	(4)		Filed with Definitive Proxy on May 14, 1999, for the Company’s Annual Meeting of Shareholders held on June 17, 1999.

	(5)		Filed with report on Form 10-K for the year ended December 31, 1999.

	(6)		Filed with report on Form 10-Q for the quarter ended March 31, 2000.

	(7)		Filed with report on Form 10-Q for the quarter ended September 30, 2001.

	(8)		Filed with report on Form 10-K for the year ended December 31, 2001.

	(9)		Filed with Registration Statement on Form S-8, effective March 28, 2002.

	(10)		Filed with report on Form 10-Q for the quarter ended September 30, 2002.

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

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SIMULA INC 10-Q/A