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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)
		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended     June 30, 2002                 or
		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.

(602) 631-4005

Indicate by check mark whether the registrant:

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

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SIMULA, INC.

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SIMULA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
June 30, 2002 and December 31, 2001

See notes to consolidated financial statements.

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SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operation

See notes to consolidated financial statements.

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SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Shareholders’ Deficit
Six Month Period Ended June 30, 2002

See notes to consolidated financial statements.

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SIMULA, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows
Six Month Periods Ended June 30, 2002 and 2001

See notes to consolidated financial statements.

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SIMULA, INC.
NOTES TO INTERIM 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.

         We have prepared the accompanying interim consolidated financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. 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 months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. Such interim financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2001 Form 10-K.

Note 2 – Inventories

         At June 30, 2002 and December 31, 2001, inventories consisted of the following:

Note 3 – Debt

         On June 30, 2002, we were not in compliance with certain non-monetary financial covenants under our Revolving Line of Credit (the “RLC”) and Senior Secured Note. On August 19, 2002, we received waivers of the non-compliance at June 30, 2002 and entered into amendments under our RLC and Senior Secured Note. The amendments modified future financial covenant requirements effective September 30, 2002. In addition to other remedies, the amendment under our Senior Secured Note provides for a significant fee if we are unable to meet our debt leverage ratio requirement at June 30, 2003.

Note 4 – Other Intangible Assets

         In January 2002, we adopted Statement of Financial Accounting Standards (SFAS) No. 142 “Goodwill and Other Intangible Assets.” SFAS No. 142 specifies that goodwill and certain intangible assets with indefinite lives no longer be amortized but instead be subject to periodic impairment testing. Intangible assets with finite lives will continue to be amortized over their respective useful lives and will be tested for impairment in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement, adopted January 1, 2002, supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of Accounting Principles Board (APB) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.”

At June 30, 2002, all of our intangible assets with finite lives were principally comprised of technology patents with a total cost of $4,460,923 and accumulated amortization of $1,084,195. Intangible asset amortization expense for

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SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

the three months and six months ended June 30, 2002 was approximately $74,000 and $148,000, respectively. Estimated amortization expense for the five succeeding fiscal years is as follows:

Note 5 – Research and Development

         Our research and development efforts arise from funded development contracts and proprietary research and development. The Company previously tracked such costs excluding intercompany research and development activity on an annual basis only and included them in total selling, general and administrative expenses. As of fiscal year 2002, research and development costs are segregated and intercompany research and development activity is eliminated. Accordingly, comparative quarterly information is not available. Amounts arising from such efforts were as follows:

Note 6 – Restructuring

         In December 1999, we adopted a plan of restructuring that included the divestiture of our commercial airline seat manufacturing operation. At June 30, 2002, there was $979,056 of remaining liability, which principally relates to lease obligations associated with the closed facility and other contracts as a part of that restructuring. A summary of the change in accrued restructuring is as follows:

Note 7 – Contingencies

         On April 25, 2002, the purchaser of our rail and mass transit seating business filed for Chapter 7 Bankruptcy. Although the purchaser assumed all obligations at the time of the sale in August 1999, we remain liable as guarantor under the facility lease and certain equipment operating leases. Because of the bankruptcy proceedings, their proximity, ongoing liquidation activities and certain mitigation defenses available to us, we are not yet able to reasonably estimate our liability, if any, under these guarantees at this time. Therefore, we have not

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SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

recorded a loss provision for any settlement that may be required under our guarantees in our financial statements as of June 30, 2002.

Note 8 – Derivative Instruments

         We have foreign currency exposure related to buying and selling in currencies other than the local currencies of our operating units. Our most significant foreign currency exchange exposure relates to the Euro. The magnitude of the exposure varies over time and we enter into agreements by which we seek to manage certain foreign exchange exposure in accordance with established policy guidelines. These arrangements primarily hedge cash flows for forecasted transactions involving receivables and payables. We have hedged transactions through September 16, 2002 and currently do not anticipate any existing gains or losses currently classified in Other Comprehensive Income to be reclassified into earnings.

         The derivative instruments previously discussed contain an element of risk that counterparties may be unable to meet the terms of the agreements. However, limiting the counterparties to major banks that meet established credit guidelines minimizes such risk. We may place collateral for these financial instruments primarily dependent upon the instruments time to maturity. Management does not expect to incur any losses as a result of counterparty default.

Note 9 – Income Taxes

         SFAS No. 109 “Accounting for Income Taxes” requires the recording of a deferred tax asset valuation allowance if the weight of available evidence indicates that some or all of the deferred tax asset will not be realized. Such evidence includes our historical operating performance including our ability to continue as a going concern and tax planning strategies.

         We increased our deferred tax valuation allowance $0.8 million in 2001, $0.7 million in 2000, $0.1 million in 1999 because certain tax credits and operating loss carry forwards, primarily related to states in which we no longer have operations, are unlikely to be utilized. At December 31, 2001, we had approximately $93.0 million of net operating loss carry forwards, which expire through 2021.

         We have incurred losses for each of the past six years. These losses were primarily related to certain unprofitable businesses and charges and write-offs related to the disposition of those businesses and debt refinancings. Our operating plan, which has been adopted by the Board of Directors, supports our ability to generate sufficient taxable income to utilize the available net operating losses prior to their expiration. This plan is based on programs and contracts currently in hand. In addition, should we be required to sell assets or liquidate certain business operations, management believes estimated gains would be sufficient to utilize our existing deferred tax assets.

         Accordingly, although realization of the net deferred tax assets is not assured, management believes that it is more likely than not that all of the net deferred tax assets related primarily to federal operating loss carry forwards will be realized. Because of our federal and certain state net operating loss carryforwards, we are not a significant cash taxpayer. The amount of net deferred tax assets considered realizable, however, could be reduced in the near term based on changing conditions.

Note 10 – Segment Reporting

         We are a holding company for wholly owned subsidiaries, which operate in two primary business segments. Our Aerospace and Defense segment includes operations that design and manufacture crash resistant components, energy absorbing devices, and ballistic armor principally for branches of the United States armed forces. Our Commercial Products segment includes operations encompassing inflatable restraints and related technology for automobiles and polymer materials. Our remaining segment, entitled Other, represents general corporate operations and technology licensing.

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SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

         For the three-month periods ended June 30, 2002 and 2001, inter-segment sales were insignificant, and total intercompany sales of $20,685 and $221,190, respectively, have been eliminated.

         For the six-month periods ended June 30, 2002 and 2001, inter-segment sales were insignificant, and total intercompany sales of $47,478 and $1,164,377, respectively, have been eliminated.

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SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS