<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
(Mark One)

   X    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
------- Act of 1934 (Fee Required)

        For the fiscal year ended September 30, 2000

------- Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 (No Fee Required)

        For the transition period from __________ to __________

Commission File number 0-15318
                      --------

                        BALLISTIC RECOVERY SYSTEMS, INC.
                        --------------------------------
                 (Name of Small Business Issuer in its Charter)

        MINNESOTA                                       41-1372079
        ---------                                       ----------
(State or other jurisdiction of                         (IRS Employer ID Number)
incorporation or organization)

300 AIRPORT ROAD, SOUTH ST. PAUL, MINNESOTA               55075-3541
-------------------------------------------               ----------
(Address of Principal Executive Offices)                  (Zip Code)

Issuer's telephone number including area code: (651) 457-7491
                                              ---------------

Securities registered pursuant to Section 12(b) of the Act: None
                                                           -----

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.01
                                                                 Par Value
                                                              ----------------
                                                              (Title of Class)

Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 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: X  Yes     No
                                                                  ---     ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Registration S-B contained in this form, and no disclosure will be contained, to
the best of the Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X .
                              ---

State Issuer's revenues for the most recent fiscal year:  $2,353,876.

Based upon the average bid and asked prices of the Issuer's Common Stock, the
aggregate market value of the Common Stock held by Non-affiliates of the Issuer
as of November 10, 2000 was approximately $1,808,000.

Number of shares outstanding as of November 10, 2000:   5,905,798.


   Index for exhibits is located on page 32. This document contains 34 pages.

                                       1
<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE


Portions of the Company's Definitive Proxy Statement to be used in connection
with the election of directors at the 2001 annual shareholders meeting (the
"Proxy Statement") are incorporated by reference into Part III, Items 9-12 as
follows:


Part of From 10-K                            Portion of Proxy Statement
-----------------                            --------------------------

1.      Part III, Item 9.                    1.     Proposal 1: Election
        Directors and Executive                     of Directors.
        Officers of the Registrant.

2.      Part III, Item 10.                   2.     Proposal 1: Executive
        Executive Compensation.                     Compensation.

3.      Part III, Item 11.                   3.     Common Stock Ownership of
        Security Ownership of                       Principal Shareholders and
        Certain Beneficial                          Management.
        Owners and Management.

4.      Part III, Item 12.                   4.     Certain Relationships and
        Certain Relationships and                   Related Transactions.
        Related Transactions.


                                       2
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Ballistic Recovery Systems, Inc. (the "Company") was incorporated in 1980 under
the laws of the State of Minnesota.

(a)     BUSINESS DEVELOPMENT

        The Company designs, manufactures and markets emergency parachute
        recovery systems for use with recreational and general aviation
        aircraft. The Company believes it is the only US manufacturer of whole
        aircraft recovery systems. In addition, the Company has designed systems
        for use with various military and civilian unmanned aircraft markets.

        Since its inception, the Company has delivered over 15,000 systems that
        have been installed on recreational and general aviation aircraft. To
        date, the Company has documented 134 lives saved through the use of its
        systems in actual in-air emergencies.

        The recreational aviation market presently accounts for approximately
        69% of the Company's revenues. The Company has been expanding its
        efforts in the general aviation market, and during fiscal year 1999, the
        Company began delivery of systems for a newly certified aircraft known
        as the Cirrus Design SR20 (SR20). For fiscal year 2000, general aviation
        sales accounted for approximately 31% of revenues and the Company
        believes that general aviation aircraft can offer revenue growth
        potential for the Company.

        The SR20 aircraft received Federal Aviation Administration (FAA)
        certification in October 1998 and includes the Company's parachute
        system as a standard equipment feature. The SR20 system was the second
        such system certified by the FAA for installation in general aviation
        aircraft. The development of the system for the SR20 was a joint effort
        between the Company and Cirrus Design Corporation under an agreement
        that began in 1994 and culminated with FAA certification in late 1998.
        Under terms of the agreement, the Company retained all rights to the
        developed technology.

        During fiscal year 2000, the Company began development and testing to
        receive certification of a parachute recovery system for the next
        generation Cirrus Design aircraft called the SR22. The SR22 is a heavier
        and faster version of the SR20 and will use similar technology for the
        parachute system. Certification testing and FAA approval of the
        parachute system as a standard feature on the SR22 is expected to
        completed by the end of calendar year 2000 with production beginning in
        early calendar year 2001.

        In early 1993, the Company received FAA approval for the GARD-150
        product for installation on FAA certified Cessna 150/152 aircraft. At
        the close of fiscal year 2000, the Company signed an agreement to
        reintroduce theGARD-150 product under an exclusive marketing agreement.

        At the end of fiscal year 1999, the Company began marketing efforts to
        receive funding for the development of a parachute system for the Cessna
        172 aircraft. Subsequent to the close of fiscal year 2000, the Company
        signed an agreement with an individual investor to provide for a
        substantial portion of the funding needed to develop and certify the
        Cessna 172 parachute system. The Company will begin the development and
        certification process by the end of calendar year 2000. The process is
        expected to take 12 to 18 months from commencement. In conjunction with
        the start of the development and certification process, the Company
        intends to solicit additional funding for the project from up to 50
        additional Cessna 172 owners. To date, the Company has received signed
        contracts with deposits from four owners of Cessna 172 aircraft as well
        as contract requests from over 100 additional prospects.

                                       3
<PAGE>

        Over the past several years, the Company has established various funding
        sources for its research and development. Outside funding for research
        and development activities is an ongoing objective for the Company,
        however, no assurances can be made that the Company will be successful
        in this regard.

        During fiscal year 1999, work was completed under the Company's Small
        Business Innovation Research grant (SBIR) through NASA. The purpose of
        the grant was to perform research on low-cost, lightweight aircraft
        emergency recovery systems. The grant, which began in March 1996, was
        for a maximum of $582,000 over the 36 month contract period.

        Also during fiscal year 1999, the Company completed a development
        contract for a recovery system for a prototype-unmanned aircraft being
        developed by a government contractor. The contract, with a maximum
        amount of $150,000, began in 1996 and called for the development and
        delivery of a series of recovery devices for use in testing.

(b)     NARRATIVE DESCRIPTION OF BUSINESS

        PRINCIPAL PRODUCTS:

        The Company's principal product line is whole aircraft emergency
        parachute recovery systems. The systems, in an in-air emergency
        situation, may be activated by the pilot releasing a parachute that is
        designed to open quickly, slow the decent of the aircraft, and lower it
        safely to the ground to prevent or reduce human injury and damage to the
        aircraft.

        RECREATIONAL AVIATION PRODUCTS:

        Recreational aviation products include products designed and
        manufactured for use on unregistered aircraft such as ultralights and
        aircraft registered with the FAA as experimental. The Company
        manufactures these products and sells them directly to individuals and
        through dealers and distributors who also market and sell the aircraft
        and related products.

        GENERAL AVIATION PRODUCTS:

        The Company entered the general aviation market in the mid 1980's when
        it began development of an emergency parachute recovery system for the
        Cessna 150/152 series of aircraft. In 1993, this system, known as the
        GARD-150, received a Supplemental Type Certificate (STC) from the FAA
        that allows owners of Cessna 150/152 model aircraft to install the
        system. Media attention for this new product resulted in domestic and
        international television and radio broadcasts as well as coverage in
        domestic and international aviation and non-aviation magazines. The
        Company believes that the successful completion of the product for the
        Cessna 150/152, which generated media attention for both the product and
        the Company, created interest in the Company's product by outside
        companies. The GARD-150 was not successfully marketed as a product by
        the Company, and resulted in low sales volumes. However, at the close of
        fiscal year 2000, the Company signed an agreement to reintroduce the
        GARD-150 product under an exclusive marketing agreement with Charles F.
        Parsons (d.b.a. Millennium Aerospace). See Note 2 of Notes to Financial
        Statements for further information.

        Another product developed for the general aviation market is for Cirrus
        Design Corporation, a privately held company that has developed and
        certified a four-place all composite general aviation aircraft. The
        aircraft, known as the Cirrus Design SR20 (SR20), was successfully
        certified on October 23, 1998. This is the first FAA certified aircraft
        to offer one of the Company's recovery systems as standard equipment.
        The Company began delivering systems for the SR20 during fiscal year
        1999 and continuing throughout fiscal year 2000. The SR20 is in serial
        production and production is scheduled to increase throughout the next
        several fiscal years as the customer accelerates its manufacturing
        processes for of the aircraft. See Note's 2 and 3 of Notes to Financial
        Statements for further information.

                                       4
<PAGE>

        During fiscal year 2000, the Company began development and certification
        efforts for the next generation of Cirrus Design aircraft called the
        SR22. The SR22 is a heavier and faster version of the SR20 and utilizes
        much of the same parachute technology developed for the SR20. The
        system, which is expected to be completed by the end of calendar year
        2000, will be certified as a standard equipment component of the
        aircraft when it receives its FAA certification. This will become the
        third of the Company's products that has received FAA certification. See
        Note 2 of Notes to Financial Statements for further information.

        At the end of fiscal year 1999, the Company began efforts to generate
        interest in a recovery system for the certified Cessna 172 aircraft. The
        Company began a marketing and media campaign designed to solicit
        purchase commitments from owners of Cessna 172 aircraft which would in
        turn provide partial or complete funding for the development and
        certification of the system. Subsequent to the close of fiscal year
        2000, the Company signed an agreement relating to and received funding
        for a substantial portion of the development costs for this project. In
        addition, the Company will continue to solicit direct commitment from
        owners of Cessna 172 aircraft. To date, the Company has received four
        signed purchase commitments and requests for contracts from over 100
        additional prospects. The Company plans to continue its efforts during
        fiscal year 2001 with plans to receive additional project funding from
        up to 50 Cessna 172 owners. See Note's 2 and 12 of Notes to Financial
        Statements for further information.

        CONTRACT RESEARCH AND DEVELOPMENT:

        Contract research and development has allowed the Company to expand its
        product line and expertise in whole aircraft recovery systems. It has
        been and will continue to be a goal of the Company to receive outside
        funding for its research and development activities.

        The Company completed a project through the Small Business Innovation
        Research grant (SBIR) program administered by NASA. The purpose of the
        grant was to perform research on low-cost, lightweight aircraft
        emergency recovery systems. The Company received initial funding during
        its fiscal year 1995 through a Phase I grant, and received subsequent
        funding through a Phase II grant beginning in fiscal year 1996. The
        Phase II grant, which began in March 1996, was for a maximum of $582,000
        and was completed during the Company's fiscal year 1999. The Company was
        paid the complete $582,000 of the grant allocation. The purpose of the
        grant was not only to provide research in areas of interest to NASA, but
        also to develop products that can be commercialized by the small
        business entity. The Company hopes that the research will lead to
        products that have both military and civilian applications complimenting
        or enhancing the Company's current product line. See Note 2 of Notes to
        Financial Statements for further information.

        Also during fiscal year 1999, the Company completed work under a
        development contract for a recovery system for a prototype-unmanned
        aircraft being developed by a government contractor. The contract that
        began in 1996 was for a maximum amount of $150,000, and called for the
        development and delivery of a series of recovery devices both for use in
        testing, and possibly in future production models. The Company was paid
        the complete $150,000 of the contract amount. See Note 2 of Notes to
        Financial Statements for further information.

        MANUFACTURING OPERATIONS AND SUPPLIERS:

        The Company's personnel in a South St. Paul, Minnesota facility, using
        components manufactured to its specifications perform assembly of the
        Company's product line. The parachutes utilized by the Company are
        purchased from a certain key supplier. The Company manufactures its own
        ballistic devices. Other components are purchased from a variety of
        suppliers or internally produced. The Company routinely searches for new
        vendors and feels alternate sources can be found should any of these
        vendors be unable to meet the Company's needs. In addition, the Company
        possesses or can acquire the expertise necessary for internal production
        of all key components.

                                       5
<PAGE>

        PATENTS:

        On August 26, 1986, United States Patent No. 4,607,814 was issued to the
        founder of the Company, for an explosively deployed parachute system for
        ultralight aircraft. The patent, which with the payment of continuing
        maintenance fees, is effective until 2003 and has been assigned to the
        Company. This patent does not cover the solid fuel extraction device
        aspect of the systems currently being sold by the Company.

        On September 5, 1989, United States Patent No. 4,863,119 was issued to
        the Company on behalf of two of the Company's employees for a "Parachute
        Reefing Device" as part of a parachute recovery system. The two
        employees assigned the patent to the Company, which with the payment of
        continuing maintenance fees is effective until 2006. This patented
        feature is utilized in the Company's sport aviation line as well as in
        its general aviation products. Current development projects also utilize
        the reefing device as an integral design component.

        On May 2, 2000, United States Patent No. 6,056,241 was issued to the
        Company on behalf of one of the Company's employees for a "Thin Film
        Parachute with Continuous Lateral Reinforcing Fibers ". The employee
        assigned the patent to the Company, which with the payment of continuing
        maintenance fees is effective until 2017. The Company in connection with
        its NASA SBIR grant program that was completed during fiscal year 1999
        developed this patented process. The Company does not have a current
        application for the patented process, but the Company hopes that the
        patented process can be used in both military and civilian applications
        complimenting or enhancing the Company's current product line.

        When the Company completes development of additional ballistic parachute
        recovery systems, it intends to apply for patents for such systems if
        possible. There can be no assurance, however, that any patents will be
        granted or, if granted that they will be of material benefit to the
        Company.

        SEASONALITY:

        Typically, the Company experiences seasonality in its sports aviation
        line. The second and third quarters have the highest sales as this
        product line is marketed to recreational pilots who tend to fly their
        aircraft during the warmer months and equip their aircraft with a
        recovery system near the beginning of the flying season. The Company's
        expansion in the general aviation market through the production of
        systems for the Cirrus Design SR20 will began to lessen the impact of
        seasonality on the Company during fiscal year 2000. This trend is
        expected to continue as the Company increases its deliveries in the
        general aviation market over the next several years.

        DEPENDENCE ON A SINGLE CUSTOMER:

        During the fiscal year ended September 30, 2000, the Company was
        dependent on one customer, Cirrus Design Corporation, for 31.5% of the
        Company's total sales. During the fiscal year ended September 30, 1999,
        the Company was not dependent on any single customer that accounted for
        more that 10% of its sales. The Company primarily distributes its
        products through dealers and distributors who in turn sell to the end
        consumer. The Company believes that in the event that any individual
        dealers or distributors cease to represent the Company's products, that
        alternative dealers or distributors can be established.


                                       6
<PAGE>

        BACKLOG OF ORDERS:

        As of September 30, 2000 and 1999, the Company had a backlog of orders
        totaling approximately $6,381,000 and $241,000, respectively. The 2000
        backlog includes over $6.2 million of orders for the Cirrus Design SR20.
        This backlog is expected to be filled within 24 months. Due to the
        probable introduction of the Cirrus Design SR22, which will also include
        the Company's product, it is likely that some of the current position
        holders for the SR20 will convert over to the SR22. This will result in
        sales by the Company of systems for that model of aircraft, but could
        result in the cancellation of a portion of the SR20 backlogged orders.
        The Company expected to fund the build out and sale of the backlogged
        orders through cash flow provided by the sale of those orders. The
        Company cautions readers who may utilize published bookings and backlog
        information as tools to forecast the Company's revenue during a given
        timeframe since certain purchase orders may be subject to cancellation
        and/or delivery schedule revision.

        RESEARCH AND DEVELOPMENT:

        A summary of research and development is as follows:

<TABLE>
<CAPTION>
                                                        2000         1999
                                                        ----         ----
<S>                                                   <C>         <C>
        Total research and development expenditures   $235,280    $218,500

        Revenues recognized under contract research
             and development relationships             (49,261)    (97,138)
                                                      --------    --------

        Research and development, net                 $186,019    $121,362
                                                      ========    ========
</TABLE>

        The source for the 2000 outside funding was from Cirrus Design as part
        of a cost sharing agreement for the development and certification of the
        SR22 parachute system. The sources of the 1999 outside funding included
        the SBIR grant, and the unmanned aircraft recovery system as discussed
        in Note 2 of the Notes to Financial Statements.

        COMPETITION:

        The Company sells its ballistically deployed parachute recovery systems
        in the United States and internationally. The Company entered into a
        covenant not to compete agreement on October 26, 1995 with Second Chantz
        ("SCI"), whom the Company believes was the only domestic competitor for
        ballistically deployed parachute systems for the domestic sport aviation
        market. Several foreign companies have or are attempting to introduce
        new competitive products into the international sport aviation market.
        Competition is strong in the German market based on price, but the
        Company believes that it continues to make relatively strong sales in
        that market. At present, none of the foreign companies have successfully
        entered the domestic market. The Company believes its current systems
        were the first in the market and that its products and service are
        superior to its competitors.

        The FAA as part of the Cirrus Design SR20 has certified the Company's
        product, which is standard equipment on that aircraft. This is the first
        whole aircraft recovery system ever certified by the FAA as standard
        equipment. At present, there are no other manufacturers with the FAA
        Supplemental Type Certificate or FAA certification under a
        manufacturer's Type Certificate necessary to install a recovery system
        for the general aviation market. The Company is unaware of any other
        manufacturer performing contract or self-funded research and development
        activities in an effort to obtain Supplemental Type Certificates or Type
        Certificates for any other FAA certified aircraft.

                                       7
<PAGE>

        Many companies with resources and capabilities greater than those of the
        Company could develop, manufacture and market a parachute recovery
        system competitive with that of the Company, although the Company
        believes that such development and approval could take several years to
        complete.

        ENVIRONMENTAL COMPLIANCE:

        The Company believes that it is in compliance with all current federal
        and state environmental laws.

        EMPLOYEES:

        As of September 30, 2000, the Company had 14 full-time employees at its
        South St. Paul facility.

ITEM 2. DESCRIPTION OF PROPERTY

        The Company leases a stand-alone 13,000 square foot office and
        production facility located at Fleming Field Airport in South St. Paul,
        Minnesota. The building is a World War II training hangar, which the
        Company renovated. (See Note 10 of Notes to Financial Statements).

ITEM 3. LEGAL PROCEEDINGS

        The Company was named in a lawsuit based on a claim from a former
        supplier of the Company. The Company has made a counter claim against
        such supplier for damages sustained by the Company. The Company believes
        that its counter claim is valid and that the potential for future
        liability in this matter is not material to the Company's financial
        position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of security holders through a
        solicitation of proxies or otherwise during the fourth quarter.

                                       8
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

(a)     MARKET INFORMATION

        The Company was formerly listed on the NASDAQ stock exchange after going
        public in 1986. However, NASDAQ delisted the Company in 1992 following a
        change in the listing requirements. The stock is listed on the pink
        sheets and the electronic bulletin board on the over the counter market
        under the trading symbol of BRSI or BRSI.OB. Several Internet stock
        tracking services show the Company's trading volumes with bid and ask
        prices as far back as August 1995. Based on information provided by
        these Internet stock-tracking services, the Company believes that the
        asking price would be $0.75 and the bid price would be $0.6875 as of
        September 30, 2000.

        The following table sets forth the estimated high and low bid prices for
        the periods indicated. The estimated bid prices shown are based on
        information from several Internet stock-tracking services. These figures
        are estimates or averages and do not necessarily represent actual
        transactions.

<TABLE>
<CAPTION>
                                 First      Second    Third       Fourth
                                 Quarter    Quarter   Quarter    Quarter
                                 -------    -------   -------    -------

               Common Stock:
               -------------
<S>            <C>               <C>        <C>       <C>         <C>
               2000   High       $2.19      $1.56     $1.38       $0.88
                      Low        $1.25      $1.00     $0.75       $0.63

               1999   High       $1.19      $0.94     $0.75       $3.00
                      Low        $0.56      $0.44     $0.44       $0.50

</TABLE>

(b)     HOLDERS

        As of November 10, 2000, the Company estimates there were approximately
        1,600 beneficial owners of the Company's common stock.

(c)     DIVIDENDS

        No dividends have been paid on the Company's securities and it is not
        anticipated that any dividends will be paid in the near future.


                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BUSINESS OVERVIEW:

Fiscal year 1999 marked the first time that a parachute system was delivered to
a customer that was installed as standard equipment on a certified general
aviation aircraft. The Cirrus Design SR20 (SR20) is the first in a series of
aircraft to be manufactured by Cirrus Design Corporation (Cirrus) that has
chosen to offer the Company's product as a standard feature. As of mid-November
2000, Cirrus has firm orders for 462 aircraft that will all include the
Company's parachute systems (Cirrus has delivered 76 aircraft though that time).
Cirrus expects to be able to fill this backlog of orders during the next 24
months. Future production volumes for the aircraft, and therefore, the Company's
parachute systems, will be dictated by ultimate market demands.

During fiscal year 2000, the Company began testing and development of the next
generation of aircraft offered by Cirrus. The SR22 is the next in what is
expected to be an expanding line of aircraft for Cirrus. Testing and
certification of the system is expected as part of the aircraft certification by
the end of calendar year 2000. As of mid-November, Cirrus had firm orders for
188 aircraft that will include the Company's parachute system. The Company
understands that Cirrus expects to be able to fill this backlog of orders during
the next 24 months. As with the SR20, future production volumes for the
aircraft, and therefore, the Company's parachute systems, will be dictated by
ultimate market demands.

During the prior fiscal year the Company moved into a period of transition from
research and development to production and market development. This was a result
of the Company's shift from its position of being able to sell its research and
development capabilities to a need to expend capital and resources to get the
developed products and technologies on the market and to look for new
applications for those products and technologies. That shift resulted in a
reduction in operating profits for the prior fiscal year, but the Company made
strides to improve the bottom line in addition to improving gross revenues
during the current fiscal year.

The Company anticipated being able to expand its product line to include other
certified and uncertified aircraft as the recovery system gains further market
acceptance. The Company has been in discussions with the US military and several
domestic and foreign companies that have expressed interest in utilizing the
Company's newly developed technology. No assurance can be made as to the future
benefits that will be derived from these discussions.

At the end of July 1999, the Company announced a program that is intended to
lead to the introduction of a parachute recovery system for the Cessna 172
aircraft. The Cessna 172 is one of the most popular general aviation aircraft
with approximately 36,000 planes manufactured. Twenty-eight thousand Cessna
172's are estimated to be in active service in the United States at this time.
Subsequent to the close of fiscal year 2000, the Company entered into an
agreement that will provide $200,000 towards the funding that will be needed to
develop and certify this system. In addition, the Company is asking up to 50
Cessna 172 owners to make deposits towards the purchase of a recovery system.
Once certified, the Company will begin manufacturing and delivery of units. The
Company expects to be successful in its solicitation, development and
certification efforts, but no assurances can be made of its success or the
long-term financial benefits to the Company. As of the beginning of November
2000, the Company has received signed contracts with deposits from four owners
of 172 aircraft as well as contract requests from over 100 additional prospects.


                                       10
<PAGE>

Another long-standing outside research and development project was for a
research grant under the SBIR program administered by NASA. Under the project,
the Company explored the possibilities of developing a new fabric for parachute
manufacturing that would reduce the weight and volume of currently existing
parachute recovery systems. Final testing was completed in February 1999 and
final reports and test articles were submitted to NASA on March 8, 1999. As a
result of the project, the Company applied for and received a patent for the new
manufacturing method that was developed. The Company hopes to be able to utilize
the developed technology for a wide range of applications. This expectation is
based on the Company's belief in its ability to further develop the technology
either on its own or through cooperative efforts with outside companies or
agencies. The future applications will depend on a complete review of market
conditions, product acceptance and available funding. The Company has had
discussions with a foreign company that are ongoing and began discussions with a
domestic company that has expressed interest in the developed technology for
currently existing military applications. No assurance can be made as to the
future benefits that will be derived from these discussions.

RESULTS OF OPERATIONS:

Year ended September 30, 2000 compared to September 30, 1999

SALES

Sales in 2000 were $2,353,876, an increase of $555,576 or 30.9% from the
$1,798,300 reported in 1999. The increase is primarily attributed to the
Company's new general aviation product. In 2000, revenues derived from the
Company's general aviation product accounted for 31.5% of revenues as compared
to 8.4% during the prior year. The Company's primary customer for its general
aviation product, Cirrus, is expected to continue to increase its manufacturing
volumes for its current aircraft in addition to introduce a new aircraft during
2001. As a result, the Company is forecasting further growth in 2001 in its
general aviation revenues. However, volume projections and timing of those
volumes is uncertain at this time.

The Company's sport aviation business has maintained levels consistent with that
of the prior year. Within the sport aviation business, the international markets
for the Company's products have been affected by a number of factors. These
factors include a strong US currency that raises the cost of the Company's
exports, increased competition in Europe, and increasing government regulations
that make it more challenging to transport the Company's product abroad. This
has resulted in weaker sales internationally than in previous years. In
addition, certain markets may be reaching a saturation point for the Company's
sport aviation product. The Company has expanded its efforts to improve
international business for its sport aviation products, but there can be no
assurances that these efforts will produce increased sales for the Company.

GROSS MARGIN

Gross margin as a percentage of revenues was 38.4% compared to 38.6% in 1999.
Despite increases in raw materials and labor costs, the consistent gross margin
is the result of leveraging the Company's operations personnel and manufacturing
overhead over a larger revenue base. The Company's gross margin percentage has
varied each year, and each quarter, in both a positive and negative fashion due
to a variety of factors including customer and specific product mix, inventory
provisions, and volume related efficiencies. Such variations will probably
continue to impact gross margin percentages in future reporting periods.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative costs were up in actual dollars in 2000
compared to 1999 but decreased as a percent of sales by 3.4%. The dollar
increase is primarily due to increased advertising and shareholder related
expenditures, and bonuses. Expenditures in this category are expected to
increase as the Company accelerates its efforts to expand the general aviation
market while strengthening the sport and recreational market sales.

                                       11
<PAGE>

RESEARCH AND DEVELOPMENT

Outside funding has offset a portion of research and development costs for both
years. Net research and development costs were higher in 2000, but still
remained a relatively low 7.9% of sales compared to 6.7% in 1999. The gross
dollars spent on research and development held relatively constant between the
two years. Research and development is an integral part of the growth strategy
for the Company, and will continue to play an important role in the Company's
success. This role will include not only that of future product developments,
but in the exploitation of currently developed products for additional
applications. The Company will continue to look for sources for further outside
funding of research and development, but there can be no assurances that the
Company will be successful in those efforts.

INCOME BEFORE INCOME TAXES

For 2000, income before income taxes was $78,715 or 3.3% of revenues compared to
$5,229 or 0.3% of revenues in 1999. As the Company expands into different
aircraft markets and expands its product applications, market conditions will
determine ultimate sales levels and profitability.

INCOME TAXES EXPENSE (BENEFIT)

A benefit was recorded in prior fiscal years and was a result of the valuation
of the Company's net operating loss carryforwards. The benefit was recorded
based on the Company's ability to demonstrate that there was a reasonable
likelihood of being able to utilize the carryforwards to offset State and
Federal taxes on future taxable income. No provision was recorded in the current
or previous fiscal years due to the level of profitability attained in
conjunction with past provisions already recorded. If the Company continues to
demonstrate its ability to utilize even more of the carryforwards, consideration
will be given to the recording of additional benefits.

LIQUIDITY AND CAPITAL RESOURCES:

Management intends to fund all of its continuing operation out of its current
revenues with the exception of its contract research and development projects.
The Company has also established a line-of-credit for use in operations as
required. Management believes that the current business operation is adequate to
support the ongoing operations of the Company during the next twelve-month
period and will maintain and adjust expenses as necessary to improve
profitability. The Company will continue to look for sources for contract
research and development projects, but there can be no assurances that the
Company will be successful in its efforts.

Subsequent to the close of fiscal year 2000, the Company entered into an
agreement, which will provide for a substantial portion of the funding necessary
to develop and certify a parachute recovery system for the Cessna 172 aircraft.
The agreement provides funding that will be utilized to offset a portion of the
expenditures necessary for that project. In addition, the Company will continue
to seek funding from individual Cessna 172 owners that will be required to make
non-refundable deposits towards the future delivery of the product. The Company
is confident that the development and certification of the Cessna 172 system
will be completed within 12 to 18 months, but there can no assurance that the
system will receive certification or if certified, will obtain adequate funding
or sell in volumes that will have a material impact on the Company.

The Company anticipates a need to make capital improvements to its current
production facility as well as expenditures to increase inventory levels as a
result of the production of general aviation units for the recovery system that
was recently certified. It is currently the intention of the Company to fund the
expenditures through current operations as well as revenues generated by those
units.

                                       12
<PAGE>

With the receipt of certification on October 23, 1998, the Cirrus Design SR20
aircraft became the first FAA certified aircraft to offer one of the Company's
parachute systems as standard equipment. The aircraft is in serial production
and the Company delivered 66 units during fiscal year 2000 as compared to 14
units during fiscal year 1999. The Company is currently building parachute
systems under an open 100-unit purchase order, which is expected to be filled
within the next 12 months. Although certified, there can be no assurances that
this aircraft will actually be produced in volumes that will have a material
effect on the Company.

The Company is currently completing development and required certification
testing for the Cirrus Design SR22. Certification of the aircraft, which
includes the Company's parachute system, is expected to be received by the end
of calendar year 2000. If successfully certified, the customer will begin
production in early calendar year 2001. Production volumes and ultimate customer
demand will dictate the actual impact on the Company's financial results.

The Company completed work on its Small Business Innovation Research grant
(SBIR) through NASA on March 8, 1999. The purpose of the grant was to perform
research of low-cost, lightweight aircraft emergency recovery systems. The Phase
II grant, which began in March 1996, was for a maximum of $582,000. The Company
is currently looking for applications of the developed technology and is in
discussions with a domestic company that is interested in the technology for
their current military products.

The Private Securities Litigation Reform Act of 1995 provides "safe harbor" for
forward-looking statements. Certain information included in this Form 10-KSB and
other materials filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral statements or other
written statements made or to be made by the Company) contain statements that
are forward-looking, such as statements relating to plans for research projects,
anticipated Cirrus delivery orders and schedules, development, certification and
financing of the Cessna 172 system, other business development activities as
well as other capital spending, financial sources, and the effects of
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, the elimination of funding for
new research and development projects, the decline in unregistered aircraft
sales, potential product liability claims, dependence on discretionary consumer
spending, dependence on existing management, general economic conditions,
changes in federal or state laws or regulations.



                                       13
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<TABLE>
<CAPTION>

                                                                                   Pg.
<S>                                                                                <C>
(1)     Financial Statements for the years ended September 30, 2000 and 1999:

        Independent Auditors' Report                                               15

        Balance Sheets as of September 30, 2000 and 1999                           16

        Statements of Operations for the years ended September 30, 2000
        and 1999                                                                   17

        Statements of Shareholders' Equity for the years ended
        September 30, 2000 and 1999                                                18

        Statements of Cash Flows for the years ended September 30,
        2000 and 1999                                                              19

        Notes to Financial Statements                                              20

</TABLE>

(2)     Financial Statement Schedules of Supplemental Information are no longer
        required under Regulation S-B.

                                       14
<PAGE>

                      CALLAHAN, JOHNSTON & ASSOCIATES, LLC
                  CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
                          7850 Metro Parkway, Suite 207
                              Minneapolis, MN 55425
                        (952) 858-7207 Fax (952) 858-7202






                          INDEPENDENT AUDITORS' REPORT


Shareholders and Board of Directors
Ballistic Recovery Systems, Inc.
South St. Paul, Minnesota

We have audited the accompanying balance sheets of Ballistic Recovery Systems,
Inc. as of September 30, 2000 and 1999 and the related statements of operations,
shareholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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
an assessment of the accounting principles used and significant estimates made
by management, as well as an evaluation of the overall financial statement
presentation. We believe that our audits provide 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 Ballistic Recovery Systems,
Inc. as of September 30, 2000 and 1999, and the results of operations, cash
flows and changes in shareholders' equity for the years then ended, in
conformity with generally accepted accounting principles.


/s/ Callahan, Johnston & Associates, LLC

Callahan, Johnston & Associates, LLC
Minneapolis, Minnesota
November 10, 2000

                                       15
<PAGE>

                            PART II - Item 7. Financial Statements

                                 BALLISTIC RECOVERY SYSTEMS, INC.
                                        BALANCE SHEETS
                                 September 30, 2000 and 1999

<TABLE>
<CAPTION>
                       ASSETS                                                          2000             1999
                                                                                       ----             ----
<S>                                                                               <C>              <C>
Current assets:
    Cash                                                                          $    33,858      $   181,902
    Accounts receivable - net of allowance for doubtful
        accounts of $2,500 and $2,500, respectively                                    98,391           59,074
    Inventories                                                                       846,109          340,355
    Deferred tax asset - current portion                                               25,000           25,000
    Prepaid expenses                                                                       --            6,398
                                                                                  -----------      -----------
        Total current assets                                                        1,003,358          612,729
                                                                                  -----------      -----------

Furniture, fixtures and leasehold improvements                                        170,004          165,550
    Less accumulated depreciation                                                    (116,339)        (104,158)
                                                                                  -----------      -----------
        Furniture, fixtures and leasehold improvements - net                           53,665           61,392
                                                                                  -----------      -----------

Other assets:
    Patents less accumulated amortization of
        $7,308 and $8,611, respectively                                                 4,356            3,054
    Deferred tax asset - long-term portion                                            275,000          275,000
    Other intangible assets less accumulated amortization of
        $25,699 and $15,419, respectively                                              25,699           35,978
    Covenant not to compete less accumulated
        amortization of $186,557 and $148,613, respectively                           192,881          230,825
                                                                                  -----------      -----------
        Total other assets                                                            497,936          544,857
                                                                                  -----------      -----------

Total assets                                                                      $ 1,554,959      $ 1,218,978
                                                                                  ===========      ===========

        LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                              $   143,990      $    58,580
    Customer deposits                                                                  74,693           94,257
    Accrued payroll                                                                    35,039           35,958
    Other accrued liabilities                                                          65,738           67,450
    Line-of-credit borrowings                                                         220,600               --
    Current portion of bank note                                                       16,874           15,312
    Current portion of covenant not to compete                                         29,204           26,175
                                                                                  -----------      -----------
        Current liabilities                                                           586,138          297,732
                                                                                  -----------      -----------

Long-term bank note and covenant, less current portions                               161,198          207,275
                                                                                  -----------      -----------

Shareholders' equity:
    Common stock ($.01 par value; 10,000,000 shares authorized; 5,905,798 and
        5,859,449 shares, respectively, issued
        and outstanding)                                                               59,058           58,595
    Additional paid-in capital                                                      2,646,236        2,631,762
    Accumulated deficit                                                            (1,897,671)      (1,976,386)
                                                                                  -----------      -----------
        Total shareholders' equity                                                    807,623          713,971
                                                                                  -----------      -----------
Total liabilities and shareholders' equity                                        $ 1,554,959      $ 1,218,978
                                                                                  ===========      ===========
</TABLE>

   The Accompanying Notes are an Integral Part of these Financial Statements.

                                       16
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                            STATEMENTS OF OPERATIONS
                     Years Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>

                                                             2000             1999
                                                             ----             ----
<S>                                                   <C>              <C>
Sales                                                 $ 2,353,876      $ 1,798,300
Cost of sales                                           1,450,963        1,104,914
                                                      -----------      -----------

Gross profit                                              902,913          693,386

Selling, general and administrative                       523,113          460,750
Research and development, net (Note 2)                    186,019          121,362
                                                      -----------      -----------

Income from operations                                    193,781          111,274

Other income (expense):
    Interest expense                                      (37,261)         (42,158)
    Intangible amortization                               (48,223)         (48,223)
    Other - net                                           (28,582)         (15,364)
                                                      -----------      -----------

Income before income taxes                                 79,715            5,529

Income taxes expense (benefit) (Notes 1 and 8)              1,000              300
                                                      -----------      -----------

Net income                                            $    78,715      $     5,229
                                                      ===========      ===========


Basic earnings per share                              $      0.01      $      0.00
                                                      ===========      ===========

    Weighted average number of shares outstanding       5,896,026        5,731,131
                                                      ===========      ===========

Diluted earnings per share                            $      0.01      $      0.00
                                                      ===========      ===========

    Weighted average number of shares outstanding       6,109,802        6,057,733
                                                      ===========      ===========

</TABLE>


   The Accompanying Notes are an Integral Part of these Financial Statements.

                                       17
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                     Years Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>
                                   Common Stock
                                   ------------           Additional                           Share-
                           Number of                         Paid-in         Accumulated     holders'
                              Shares          Amount         Capital      Equity(deficit)      Equity
                              ------          ------         -------      ---------------      ------
<S>                         <C>           <C>             <C>              <C>              <C>
Balance 9/30/98             5,696,927     $    56,969     $ 2,622,888      ($1,981,615)     $   698,242

Issuance of stock in
lieu of director fees           4,844              49           3,951               --            4,000

Stock options
exercised                      14,616             146           6,354               --            6,500

Net stock issued
under cashless
transaction                   143,062           1,431          (1,431)              --               --

Net income                         --              --              --            5,229            5,229
                          -----------     -----------     -----------      -----------      -----------

Balance 9/30/99             5,859,449     $    58,595     $ 2,631,762      ($1,976,386)     $   713,971


Issuance of stock in
lieu of director fees           3,334              33           3,967               --            4,000

Stock options
exercised                      25,000             250          10,687               --           10,937

Net stock issued
under cashless
transaction                    18,015             180            (180)              --               --

Net income                         --              --              --           78,715           78,715
                          -----------     -----------     -----------      -----------      -----------

Balance 9/30/00             5,905,798     $    59,058     $ 2,646,236      ($1,897,671)     $   807,623
                          ===========     ===========     ===========      ===========      ===========

</TABLE>


   The Accompanying Notes are an Integral Part of these Financial Statements.

                                       18
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                             STATEMENTS OF CASH FLOW
                     Years Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>

                                                             2000           1999
                                                             ----           ----
<S>                                                     <C>            <C>
Cash flows from operating activity:
    Net income                                          $  78,715      $   5,229
    Adjustments to reconcile net income to net cash
    from operating activity:
        Depreciation and amortization                      21,158         33,513
        Amortization of covenant not to compete            37,944         37,944
        Inventory valuation reserve                        (2,000)        12,000
        Stock issued in lieu of board fees                  4,000          4,000
         (Increase) decrease in:
            Accounts receivable                           (39,317)       342,748
            Inventories                                  (503,754)       (99,642)
            Prepaid expenses                                6,398         (3,200)
        Increase (decrease) in:
            Accounts payable                               85,410       (107,579)
            Customer deposits                             (19,564)        21,077
            Accrued expenses                               (2,631)       (10,460)
                                                        ---------      ---------

    Net cash flows from operating activities             (333,641)       235,630
                                                        ---------      ---------

Cash flows from investing activities:
    Capital expenditures                                   (4,454)        (5,411)
                                                        ---------      ---------

    Net cash flows from investing activities               (4,454)        (5,411)
                                                        ---------      ---------

Cash flows from financing activities:
    Net borrowing under line-of-credit agreement          220,600        (35,884)
    Exercise of stock options                              10,937          6,500
    Principal payments on debt                            (15,312)       (13,853)
    Principal payments on covenant not to compete         (26,174)       (25,180)
                                                        ---------      ---------

    Net cash flows from financing activities              190,051        (68,417)
                                                        ---------      ---------

Increase (decrease) in cash                              (148,044)       161,802
Cash  - beginning of year                                 181,902         20,100
                                                        ---------      ---------

Cash - end of period                                    $  33,858      $ 181,902
                                                        =========      =========

</TABLE>

   The Accompanying Notes are an Integral Part of these Financial Statements.

                                       19
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    NATURE OF BUSINESS

    Ballistic Recovery Systems, Inc. (the "Company") designs, manufactures and
    distributes rocket deployed whole-aircraft emergency parachute systems for
    use on recreational aircraft and certain models of general aviation
    aircraft. The emergency parachute systems are intended to be used in the
    event of an in-air emergency and are designed to bring down the entire
    aircraft and its occupants under a parachute canopy.

    The Company has also been successful in its efforts to expand its product
    line through the use of company sponsored development and outside
    engineering contracts. The Company has completed development of an emergency
    recovery system for a four-place general aviation aircraft, known as the
    Cirrus Design SR20 (SR20). This aircraft was certified by the Federal
    Aviation Administration (FAA) in October 1998 and features the Company's
    parachute as standard equipment. The SR20 is in serial production and the
    Company began delivering the first parachute systems to the customer during
    fiscal year 1999 with deliveries continuing throughout fiscal year 2000. The
    Company began development of an emergency parachute system for the next
    generation of Cirrus Design aircraft known as the SR22. Development and
    certification is expected to be completed by the end of calendar year 2000
    with deliveries beginning during the first quarter of calendar year 2001. In
    September 2000, the Company entered into an agreement to bring production of
    its system for the Cessna 150/152 model aircraft . The Company expects this
    system to be produced and distributed in early calendar year 2001.
    Subsequent to fiscal year 2000, the Company also entered into a contract to
    develop and market a product for the Cessna 172 model of aircraft. The
    development and certification for the Cessna 172 is expected to take 12 to
    18 months to complete. The Company's products are sold both domestically and
    internationally.

    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 reported amounts of revenues and expenses during the
    reporting period. Actual results could differ from those estimates.

    CASH CONCENTRATIONS

    Bank balances periodically exceeded federally insured levels during 2000 and
    1999.

    ACCOUNTS RECEIVABLE

    The Company sells to domestic and foreign companies. The Company grants
    uncollateralized credit to some customers, but the majority of sales are
    prepaid or shipped cash on delivery (COD). In addition, the Company's
    research and development projects are billed to its customers on an
    uncollateralized credit basis with terms of between net 15 and net 30 days.
    The estimated loss that management believes is probable is included in the
    allowance for doubtful accounts. Due to uncertainties in the collection
    process, however, it is at least reasonably possible that management's
    estimate will change during the next year. That amount cannot be estimated.

                                       20
<PAGE>

                                BALLISTIC RECOVERY SYSTEMS, INC.
                                  NOTES TO FINANCIAL STATEMENTS
                             YEARS ENDED SEPTEMBER 30, 2000 AND 1999


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    LEGAL MATTER

    The Company was named in a lawsuit based on a claim from a former supplier
    of the Company. The Company made a counter claim against the vendor for
    damages sustained by the Company. The Company believes that its counter
    claim is valid and that the potential for future liability in this matter is
    not material to the Company's financial position. Nevertheless, it is at
    least reasonably possible that a judgment could be entered against the
    Company, although that amount, if any, cannot be estimated. Resolution of
    this matter is expected within the next year.

    CUSTOMER CONCENTRATION

    One major customer, Cirrus Design Corporation, represented 31.5% of the
    Company's total sales in fiscal year 2000. This customer also accounted for
    68.2% of accounts receivable at September 30, 2000. During the fiscal year
    ended September 30, 1999, the Company was not dependent on any single
    customer that accounted for more that 10% of its sales. The Company
    primarily distributes its products through dealers and distributors who in
    turn sell to the end consumer. The Company believes that in the event that
    any individual dealers or distributors cease to represent the Company's
    products, that alternative dealers or distributors can be established.

    INVENTORIES

    Inventories are recorded at the lower of cost (determined on a first-in
    basis) or market. 35.4% of the inventory on hand at September 30, 2000
    related to unique components used in products for the Company's major
    customer as referred to above. The estimated loss that management believes
    is probable is included in the inventory valuation allowance. Due to
    uncertainties, however, it is at least reasonably possible that management's
    estimate will change during the next year. That amount cannot be estimated.

    CUSTOMER DEPOSITS

    The Company requires order deposits from most of its domestic and
    international customers. These deposits represent either partial or complete
    down payments for orders. These down payments are recorded as customer
    deposits. The deposits are recognized as revenue when the product is
    shipped.

    FIXED ASSETS

    Fixed assets are stated at cost. Depreciation is computed using the
    straight-line method over the estimated useful lives of the related assets,
    ranging from three to seven years. When assets are retired or otherwise
    disposed of, the cost and related accumulated depreciation are removed from
    the accounts and the resulting gain or loss is recognized in income for the
    period. The cost of maintenance and repairs is expensed as incurred;
    significant renewals and betterments are capitalized. Deduction is made for
    retirements resulting from renewals or betterments.

    INTANGIBLES

    Patents are recorded at cost and are being amortized on a straight-line
    method over 17 years. The covenant not to compete is recorded at cost and is
    being amortized using the straight-line method over the ten-year term of the
    agreement. Other intangible assets are recorded at cost and are being
    amortized on a straight-line method over five years.

                                       21
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    STOCK-BASED CONSIDERATION

    The Company has applied the fair value based method of accounting for
    employee and non-employee stock-based consideration and/or compensation in
    accordance with FASB Statement 123.

    COMPREHENSIVE INCOME

    SFAS No. 130 establishes standards for the reporting and disclosure of
    comprehensive income and its components which will be presented in
    association with a company's financial statements. Comprehensive income is
    defined as the change in a business enterprise's equity during a period
    arising from transactions, events or circumstances relating to non-owner
    sources, such as foreign currency translation adjustments and unrealized
    gains or losses on available-for-sale securities. It includes all changes in
    equity during a period except those resulting from investments by or
    distributions to owners. For the fiscal years ended September 30, 2000 and
    1999, net income and comprehensive income were equivalent.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    SFAS No. 107, "Disclosures About Fair Value of Financial Instruments"
    requires disclosure of the estimated fair value of financial instruments as
    follows:

        SHORT-TERM ASSETS AND LIABILITIES:

        The fair values of cash, accounts receivable, accounts payable, accrued
        liabilities, and short-term debt approximate their carrying values due
        to the short-term nature of these financial instruments.

        LONG-TERM DEBT:

        The fair value of long-term debt approximate their carrying value
        because the terms are equivalent to borrowing rates currently available
        to the company for debt with similar terms and maturities.

    EARNINGS PER SHARE

    The company has implemented FASB 128: Earnings Per Share. Basic EPS excludes
    dilution and is computed by dividing net income by the weighted-average
    number of common shares outstanding for the year. Diluted EPS reflects the
    potential dilution from stock options and is computed using the treasury
    stock method. Under the treasury stock method stock options are assumed to
    have been exercised at the beginning of the period if the exercise price
    exceeds the average market price during the period.

<TABLE>
<CAPTION>
                                        Shares               Days                  Weighted
        Dates Outstanding           Outstanding          Outstanding            Average Shares
        -----------------           -----------          -----------            --------------
<S>                                 <C>                  <C>                    <C>
        10/1/99 to 9/30/00            5,859,449              365                  5,859,449
        11/17/99 to 9/30/00              15,158              317                     13,165
        11/22/99 to 9/30/00              25,000              312                     21,370
        1/12/00 to 9/30/00                2,857              261                      2,043
        9/30/00                           3,334                0                          0
                                                                                  ---------

        Weighted-Average Shares for basic EPS                                     5,896,026

</TABLE>

                                       22
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    EARNINGS PER SHARE (CONTINUED)

<TABLE>
<S>                                                                           <C>
        Incremental shares from assumed exercise of options                     213,776
                                                                              ---------

        Adjusted Weighted-Average Shares for diluted EPS                      6,109,802
                                                                              =========

        Income available to common stockholders                               $  78,715
                                                                              =========

</TABLE>

    INCOME TAXES

    Timing differences relate primarily to: allowances for doubtful accounts;
    inventory valuation allowances; and accrued expenses not currently
    deductible. Beginning in fiscal year 1997 and continuing to the present, a
    deferred tax asset, net of a valuation reserve, is reflected for future
    benefit of the Company's net operating loss carry forwards and net timing
    differences.

    RESEARCH AND DEVELOPMENT COSTS

    Research and development costs are charged to expense as incurred.

    ADVERTISING EXPENSES

    Non-direct response advertising expenses are recognized in the period
    incurred. Non-direct response advertising expenses totaled $45,804 in 2000
    and $30,642 in 1999.

    At the end of fiscal year 1999 the Company commenced a direct response
    advertising effort to receive funding for the development of a parachute
    system for the Cessna 172 aircraft. Costs of this direct response
    advertising of $4,523 were capitalized in fiscal year 1999. These
    capitalized costs were expensed during fiscal year 2000 as the program took
    on a new direction.

2.  NEW PRODUCT DEVELOPMENT, RESEARCH AND DEVELOPMENT FUNDING AND INCOME
    RECOGNITION

    During fiscal year 1999 and continuing throughout fiscal year 2000, the
    Company began delivery of systems for a newly certified aircraft known as
    the Cirrus Design SR20 (SR20). The SR20 aircraft received Federal Aviation
    Administration (FAA) certification in October 1998 and includes the
    Company's parachute system as a standard equipment feature. The development
    of the system for the SR20 was a joint effort between the Company and Cirrus
    Design under an agreement that began in 1994 and culminated with FAA
    certification in late 1998. Under terms of the agreement, the Company has
    retained the developed technology for the parachute systems in general and
    the outside company has retained the developed technology that is specific
    to their individual aircraft. The Company shared in the costs to develop and
    certify the parachute system for this aircraft.

    During fiscal year 2000, the Company began development and testing for the
    next generation of Cirrus Design aircraft called the SR22. The SR22 is
    heavier and faster than the predecessor SR20. Development and certification
    is expected to be completed by the end of calendar year 2000 with deliveries
    beginning during the first quarter of calendar year 2001. The Company shared
    in the costs to develop the parachute system for this aircraft. The net
    amount of expenses incurred by the Company is reflected in Research and
    Development expenses in the financial statements.

                                       23
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999

2.  NEW PRODUCT DEVELOPMENT, RESEARCH AND DEVELOPMENT FUNDING AND INCOME
    RECOGNITION (CONTINUED)

    In September 2000, the Company entered into an agreement to bring back its
    product for the Cessna 150/152 model aircraft which is expected to be back
    on the market in early calendar year 2001. Under the agreement the Company
    will develop a new rocket motor that will be used for the product and once
    reintroduced, the product will be marketed under an exclusive marketing
    agreement with an outside company. All expenditures to reintroduce the
    product will be recorded as expense as incurred.

    During fiscal year 1999, the Company completed a project through the Small
    Business Innovation Research grant (SBIR) program administered by NASA. The
    purpose of the grant was to perform research on low-cost, lightweight
    aircraft emergency recovery systems. The Company received initial funding
    during its fiscal year 1995 through a Phase I grant, and received subsequent
    funding through a Phase II grant beginning in fiscal year 1996. The Phase II
    grant, which began in March 1996, was for a maximum of $582,000 and was
    completed during the Company's fiscal year 1999. The Company was paid the
    complete $582,000 of the grant allocation. The purpose of the grant was not
    only to provide research in areas of interest to NASA, but also to develop
    products that can be commercialized by the small business entity. The
    Company hopes that the research will lead to products that have both
    military and civilian applications complimenting or enhancing the Company's
    current product line. For the years ended September 30, 1999, the Company
    recognized $84,997 as an offset to research and development expenditures for
    work performed on the Phase II project.

    Also during fiscal year 1999, the Company completed work under a development
    contract for a recovery system for a prototype-unmanned aircraft being
    developed by a government contractor. The contract that began in 1996 was
    for a maximum amount of $150,000, and called for the development and
    delivery of a series of recovery devices both for use in testing, and
    possibly in future production models. The Company was paid the complete
    $150,000 of the contract amount. $4,704 has been recognized as an expense
    offset under this purchase order as of September 30, 1999.

    At the end of fiscal year 1999, the Company began efforts to generate
    interest in a recovery system for the certified Cessna 172 aircraft. The
    Company began a marketing and media campaign designed to solicit purchase
    commitments from owners of Cessna 172 aircraft which would in turn provide
    partial or complete funding for the development and certification of the
    system. To date, the Company has received four signed purchase commitments
    and requests for contracts from over 100 additional prospects. Subsequent to
    the conclusion of fiscal year 2000, the Company entered into an agreement
    that would provide a substantial portion of the funding needed to develop
    and certify a recovery system for the Cessna 172. This agreement, in
    addition to the direct solicitations is expected to provide adequate funding
    for the development. and certification, which is expected to take 12 to 18
    months from the end of calendar year 2000. The funding received will in part
    become an offset to research and development expenses in the future as
    expenses for the project are incurred.

3.  PURCHASE AND SUPPLY AGREEMENT

    On September 17, 1999, the Company entered into a Purchase and Supply
    Agreement with Cirrus Design Corporation (Cirrus), the manufactured of the
    SR20 aircraft that utilizes the Company's parachute system as standard
    equipment. Under the Agreement, Cirrus has been issued four warrants to
    acquire an aggregate of up to 1.4 million shares of restricted Company
    stock. In order to execute the warrants, Cirrus must meet certain purchase
    levels of the Company's emergency parachute systems for the SR20 aircraft
    over the subsequent five years. The purchase levels that must be achieved
    along with the corresponding number of shares under each warrant and warrant
    strike price are as follows:

                                       24
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


3.  PURCHASE AND SUPPLY AGREEMENT (CONTINUED)

<TABLE>
<CAPTION>
                                                  Exercise Price per
        Warr #    Exercise Period  Warrant Shares    Warrant Share     Purchase Commitment
        ------    ---------------  --------------    -------------     -------------------
<S>             <C>                <C>            <C>                <C>
         1      01-2002 to 02-2003    250,000            $1.00       250 units in calendar 2002
         2      01-2003 to 02-2004    250,000            $1.00       400 units in calendar 2003
         3      01-2003 to 02-2004    250,000            $1.25       400 units in calendar 2003
         4      01-2004 to 02-2005    650,000            $1.25       500 units in calendar 2004
</TABLE>

    If the minimum purchase levels are met, then Cirrus has the right to
    exercise the warrant during the exercise period for the stated exercise
    price. In the event that Cirrus does not meet the minimum purchase levels,
    Cirrus will forfeit the right to exercise the corresponding warrant.

    If Cirrus fulfills their purchase commitments and exercises their warrants,
    the impact on equity may be as follows (Assumes equity contributions based
    on the exercise of all warrants near the end of the exercise period):

<TABLE>
<CAPTION>
         Fiscal Year            Equity Contribution
         -----------            -------------------
<S>                             <C>
            2003                   $    250,000
            2004                        562,500
            2005                        812,500
                                   ------------
            Total                  $  1,625,000
                                   ============

</TABLE>

4.  COVENANT NOT TO COMPETE

    On October 26, 1995 the Company entered into an agreement with the president
    and majority shareholder of Second Chantz Aerial Survival Equipment, Inc.
    (SCI), whereby SCI ceased all business activities, and SCI's president and
    majority shareholder entered into a ten year covenant not to compete with
    the Company.

    In exchange for the above the Company agreed to make payments on the
    covenant not to compete. The agreement did not involve a stock or asset
    purchase. In addition, the Company did not agree to assume any liabilities
    of SCI or its president. The payments required under this agreement contain
    a non-interest-bearing portion and a portion that bears interest at a rate
    below the Company's incremental borrowing rate. Under generally accepted
    accounting principles the future payments have been discounted at the
    Company's incremental borrowing rate of 11.0% resulting in a resulting in a
    present dollar valuation of $379,438 on the $584,362 future dollar
    valuation. The carrying amount of this debt approximates fair value because
    the interest rate approximates the Company's incremental borrowing rate.

    The non interest bearing note was paid off in December 1997. The 4% ten year
    note calls for monthly payments of $4,036 (November 1995 to October 2005).
    Payments under this agreement are unsecured.

    The present value of the Company's obligation under this agreement was
    recorded as an intangible asset and is being amortized over ten years as
    shown in the accompanying financial statements.

                                       25
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999

4.  COVENANT NOT TO COMPETE (CONTINUED)

    Future payments under this agreement are as follows:

<TABLE>
<CAPTION>
                                  Future    Present
                                 Dollars    Dollars
                                 -------    -------
<S>                              <C>        <C>
        2001                      48,436     29,204
        2002                      48,436     32,584
        2003                      48,436     36,354
        2004                      48,436     40,561
        2005                      48,436     45,255
        Thereafter                 4,036      3,999
                               ---------  ---------
                                $246,216   $187,957
                               =========  =========
</TABLE>

    The Company also granted SCI's president an option to purchase 50,000 shares
    of the Company's common stock at an exercise price of $.25. This option has
    a ten-year life and vests 20% per year over five years.

5.  LONG-TERM DEBT

    On November 5, 1996, the Company signed a note payable with the bank in the
    amount of $70,030. The purpose of the loan was to pay for renovations to the
    current production facility that the company took possession of on October
    1, 1996. The note calls for interest at a rate 2% over the bank's index
    rate, which was 8.25% at the time of signing. The index rate was 9.75% as of
    September 30, 2000, which computes to a total interest rate of 11.75%. The
    note has scheduled payments over a sixty-month period of $1,501 per month.
    The scheduled maturity date of the note is November 5, 2001. However, the
    note has a demand provision, which can be exercised by the bank at any time,
    but no demand for payment in full is expected during the term of the note.
    The balance on the loan at September 30, 2000 was $19,318. The carrying
    amount of this debt approximates fair value because the interest rate
    changes with market rates. This loan is secured by all of the Company's
    assets.

    Future maturities on long-term debt at September 30, 2000 are as follows:

<TABLE>
<S>                   <C>
        2001          $16,873
        2002            2,445
                        -----

                      $19,318
                      =======
</TABLE>

6.  OTHER FINANCIAL INFORMATION

    INVENTORIES

    Inventories consisted of the following at September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                  2000       1999
                                  ----       ----
<S>                             <C>        <C>
    Raw materials               $219,175   $230,455
    Work in process              506,281     88,837
    Finished goods               120,653     21,063
                                --------   --------
        Total Inventories       $846,109   $340,355
                                ========   ========
</TABLE>

                                       26
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999

6.  OTHER FINANCIAL INFORMATION (CONTINUED)

    DEPRECIATION EXPENSE

    Depreciation expense totaled $22,630 in 2000 and $22,547 in 1999.

    LONG-LIVED ASSETS

    In accordance with SFAS 121, Accounting For The Impairment Of Long-Lived
    Assets And For Long-Lived Assets To Be Disposed Of, the Company reviews its
    long-lived assets and intangibles related to those assets periodically to
    determine potential impairment by comparing the carrying value of the
    long-lived assets outstanding with estimated future cash flows expected to
    result from the use of the assets, including cash flows from disposition.
    Should the sum of the expected future cash flows be less than the carrying
    value, the Company would recognize an impairment loss. An impairment loss
    would be measured by comparing the amount by which the carrying value
    exceeds the fair value of the long-lived assets and intangibles. To date,
    management has determined that no impairment of long-lived assets exists.

    EXPORT SALES

    The Company's international sales are made through independent
    representatives in various foreign countries. International sales as a
    percentage of total sales were 11% in 2000 and 24% in 1999.

    MAJOR SUPPLIERS

    During the fiscal years ended September 30, 2000 and 1999, the Company
    purchased its parachutes from a certain key vendor. The Company manufactures
    its own ballistic devices. The Company routinely searches for new suppliers
    and feels alternate sources can be found should any of these suppliers be
    unable to meet the Company's needs.

    RELATED PARTY

    The Company contracts with an officer/shareholder of the Company to
    coordinate its advertising. Total advertising expenses were $50,327 for
    fiscal year 2000, with $34,888 of this total being paid to this individual.
    Total advertising expenses for 1999 were $30,642. The advertising rates
    charged are at or below current market rates. The Company owed this related
    party $20,358 as of September 30, 2000 and $53,696 as of September 30, 1999.

    PROFIT SHARING PLAN

    The Company adopted a defined contribution profit sharing plan in fiscal
    year 2000, which covers most of its employees. The Company contribution to
    this plan totaled $5,974 in 2000.

7.  LINE-OF CREDIT BORROWINGS

    Since February 28, 2000, the Company has been operating under a $250,000
    line-of-credit for use in operations. The line-of-credit was established on
    an annual renewal basis and is secured by all of the Company's assets. The
    latest line-of-credit expires February 28, 2001. The line calls for a
    variable interest rate of 1.5% over the bank's index rate. At September 30,
    2000, the Company had balance due of $220,600 under the line, which carried
    an interest rate of 11.25%. The previous line-of-credit was for $150,000 and
    was in place for the first portion of fiscal year 1999. The Company expects
    to renew the line each year following the review of its financial results
    and projections with the bank.

                                       27
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


8.  INCOME TAXES

    Income taxes consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                                 2000         1999
                                                                 ----         ----
<S>                                                           <C>          <C>
          Current:
            Federal                                           $    --      $    --
            State                                                  --           --
            State alternative minimum tax and minimum fee      (1,000)        (300)
                                                              -------      -------
                                                               (1,000)        (300)
                                                              -------      -------
          Deferred:
            Federal                                                --           --
            State                                                  --           --
                                                              -------      -------
                                                                   --           --
                                                              -------      -------

          Income tax benefit (expense)                        $(1,000)     $  (300)
                                                              =======      =======
</TABLE>

    The reconciliation between expected federal income tax rates is as follows:

<TABLE>
<CAPTION>
                                                           2000         2000           1999         1999
                                                         Amount      Percent        Amount       Percent
                                                       --------      -------       --------      -------

<S>                                                    <C>           <C>           <C>           <C>
          Expected federal tax                         $(26,800)       (34.0%)     $ (1,800)       (34.0%)
          Surtax exemption                                8,300         10.5            800         15.3
          State income tax, net
            of federal tax
            benefit                                      (5,100)        (6.5)          (300)        (5.7)
          Valuation and utilization
            of net operating loss
            carryforwards                                23,600         30.0          1,300         24.5
          State AMT                                        (700)         (.9)            --           --
          State minimum fee                                (300)         (.4)          (300)        (5.7)
                                                       --------       ------       --------       ------

                                                       $ (1,000)        (1.3)%     $   (300)        (5.7)%
                                                       ========       ======       ========       ======

</TABLE>

        Differences between accounting rules and tax laws cause differences
        between the bases of certain assets and liabilities for financial
        reporting purposes and tax purposes. The tax effects of these
        differences, to the extent they are temporary, are recorded as deferred
        tax assets and liabilities under SFAS 109, and consisted of the
        following:

<TABLE>
<CAPTION>
                                                                     2000            1999
                                                                  ----------      ----------
<S>                                                               <C>             <C>
          Deferred tax assets:
            Allowance for doubtful accounts                       $    1,000      $    1,000
            Inventory valuation allowance                             20,000          21,000
            Section 263A adjustment                                   28,500          12,000
            Depreciation of leaseholds                                (7,100)         (4,000)
            Amortization of fuel formulations                          4,100            -
            Vacation accrual                                           5,200           5,400
            Other accruals                                           (10,000)          2,600
            Net operating loss carryforwards                         871,000         942,000
                                                                  ----------       ---------

</TABLE>

                                       28
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


8.      INCOME TAXES (CONTINUED)

<TABLE>
<S>                                              <C>            <C>
          Gross deferred tax asset                 912,700        980,000
          Valuation allowance                     (612,700)      (680,000)
                                                 ---------      ---------

          Net deferred tax asset                   300,000        300,000
          Deferred tax liability                        --             --
                                                 ---------      ---------
          Net deferred tax asset (liability)     $ 300,000      $ 300,000
                                                 =========      =========

          Current deferred tax asset             $  25,000      $  25,000
          Long-term deferred tax asset             275,000        275,000
                                                 ---------      ---------

          Net deferred tax asset (liability)     $ 300,000      $ 300,000
                                                 =========      =========

</TABLE>

        The recognized deferred tax asset is based upon expected utilization of
        the net operating loss carryforwards and reversal of certain timing
        differences. The Company has assessed its past earnings history and
        trends, sales backlog, budgeted sales, and expiration dates of
        carryforwards and has determined that it is more likely than not that
        $300,000 of deferred tax assets will be utilized. The remaining
        valuation allowance of $612,700 at September 30, 2000 is maintained on
        deferred tax assets which the Company has not determined to be more
        likely than not realized at this time.

        At September 30, 2000, the Company has carryforwards available to offset
        future taxable income as follows:

<TABLE>
<CAPTION>

                     Federal        Federal            State
                   Regular NOL      AMT NOL             NOL
                   -----------      -------             ---

<S>                <C>            <C>             <C>
          2003     $       --     $   10,000      $      --
          2004        474,000        512,000             --
          2005        713,000        706,000             --
          2006        132,000        126,000             --
          2007        113,000        106,000             --
          2008        457,000        450,000             --
          2009        181,000        175,000        110,000
          2013          9,000          7,000          8,000
                   ----------     ----------      ---------

                   $2,079,000     $2,095,000      $ 118,000
                   ==========     ==========      =========
</TABLE>

9.  COMMON STOCK

    STOCK OPTIONS

    The Company has issued options to various directors, officers, employees and
    others on a discretionary basis.

                                       29
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


9.  COMMON STOCK (CONTINUED)

    STOCK OPTIONS (CONTINUED)

    Transactions during 2000 and 1999, for these issuances were as follows:

<TABLE>
<CAPTION>
                                              Number      Option Price
                                           of Shares      Range per Share
                                           ---------      ---------------

<S>                                       <C>             <C>
     Balance at September 30, 1998           699,362      $0.25 to $0.75

     Granted                                  60,000             $0.50
     Exercised                               (14,616)     $0.25 to $0.56
     Converted to stock under cashless
          transaction                       (190,134)     $0.25 to $0.75
                                          ----------

     Balance at September 30, 1999           554,612      $0.25 to $0.75

     Granted                                  87,500      $0.50 to $1.25
     Exercised                               (25,000)            $0.44
     Converted to stock under cashless
          transaction                        (22,850)     $0.25 to $0.56
     Expired                                (122,000)     $0.43 to $0.56
                                          ----------

     Balance at September 30, 2000           472,262      $0.25 to $1.25
                                          ==========


     At September 30, 2000:
         Options vested and exercisable      432,262
         Shares available for options            -0-

</TABLE>

10. COMMITMENTS AND CONTINGENCIES

    LEASES

    The Company leases its production facility on an airport in South St. Paul,
    Minnesota. Total rental expense for operating leases during 2000 and 1999
    was $36,017 and  $32,307, respectively.

    Future minimum lease payments required on non-cancelable operating leases at
    September 30, 2000 are as follows:

<TABLE>

<S>                   <C>
    2001              $34,224
    2002               34,224
    2003                8,556
                      -------

                      $77,004
                      =======

</TABLE>

                                       30
<PAGE>

                        BALLISTIC RECOVERY SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999


11.SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                  2000       1999
                                  ----       ----
<S>                              <C>        <C>
    Cash paid for:
         Interest                $37,262    $42,158
         Income taxes              1,000        325

</TABLE>

    Summary of non cash activity:

    -   Common stock was issued in lieu of director's fees of $4,000 and $4,000,
        for 2000 and 1999, respectively.

    -   Options to acquire 5,000 shares, 17,850 shares and 190,134 shares of the
        Company's common stock were converted into 2,857 shares, 15,158 shares
        and 143,063 shares of the Company's common stock in a cashless
        transaction on January 12, 2000, November 17, 1999 and July 20, 1999,
        respectively.

    -   Stock options for common stock were exercised in lieu of director's fees
        of $1,500 for 1999.

12.SUBSEQUENT EVENT

   Upon satisfaction of contingencies on November 2, 2000, an agreement between
   the Company and Charles F. Parsons (d.b.a. Millennium Aerospace) dated
   October 26, 2000 became effective. The purpose of the agreement was to
   provide specific funding for a parachute recovery system for the Cessna 172
   model aircraft to be developed and certified by the Company. The Agreement
   called for an investment by Parsons of $200,000. The investment took the form
   of an equity infusion valued at $110,000 for 200,000 restricted shares of the
   Company's Common Stock and $90,000 for research and development. The funding
   will be used towards research and development for the BRS GARD-172 product,
   which is expected to be carried out over the next 12 to 18 months. Following
   completion of the product, the Company will seek Federal Aviation
   Administration (FAA) approval, which will allow the product to be installed
   on certified Cessna 172 series aircraft. Once certified by the FAA, the
   Company will begin production and distribution of the product and Parsons
   will market and distribute the product.

                                       31
<PAGE>

                               PART II (Continued)

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

        There have been no disagreements with the Company's independent
        certified public accountants on accounting principles or practices or
        financial statement disclosures.


                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

        The information required by this item is incorporated by reference from
        the Proxy Statement.

ITEM 10.EXECUTIVE COMPENSATION

        The information required by this item is incorporated by reference from
        the Proxy Statement.

ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The information required by this item is incorporated by reference from
        the Proxy Statement.

ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information required by this item is incorporated by reference from
        the Proxy Statement.



                                     PART IV


ITEM 13.EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

        (a)    EXHIBITS

<TABLE>
<CAPTION>
               Page          Exhibit
               Number        Number         Description
               ------        ------         -----------
<S>                          <C>            <C>
                             3.1            Company's Articles of Incorporation,
                                            as amended, appear as Exhibit 3.1 to
                                            the Company's Registration Statement
                                            on Form S-1 (No. 33-21843) filed May
                                            12, 1988 ("Form S-1") and are
                                            incorporated herein by reference.

                             3.2            Company's Restated Bylaws as
                                            amended, were filed as Exhibit 3.2,
                                            under Form 8, Amendment No. 1 ("1990
                                            Amendment") to the Company's Report
                                            on Form 10-K for the fiscal year
                                            ended September 30, 1990 (the "1990
                                            10-K") and are incorporated herein
                                            by reference.

                             10.1           Purchase and Supply Agreement dated
                                            September 17, 1999 between the
                                            Company and Cirrus Design
                                            Corporation appears as exhibit 10.1
                                            to the Company's Report on Form 8-K
                                            filed September 20, 1999 and is
                                            incorporated herein by reference.

</TABLE>

                                       32
<PAGE>

                               PART IV (CONTINUED)


ITEM 13.EXHIBITS, LISTS AND REPORTS ON FORM 8-K (CONTINUED).

        (a)    EXHIBITS (CONTINUED)

<TABLE>
<CAPTION>
               Page          Exhibit
               Number        Number         Description
               ------        ------         -----------
<S>                          <C>            <C>
                             10.2           Covenant not to Compete Agreement
                                            dated October 26, 1995 between the
                                            Company and the President and
                                            majority shareholder of Second
                                            Chantz Aerial Survival Equipment,
                                            Inc. appears as Exhibit 10.1 to the
                                            Company's Report on Form 10-KSB for
                                            the fiscal year ended September 30,
                                            1995 and is incorporated herein by
                                            reference.

                             10.3           Non-qualified Stock Option Plan
                                            appears as Exhibit 10-1 to Amendment
                                            No. 1 to the Form S-1 and is
                                            incorporated herein by reference.

                             10.4           Stock Option Plan for Non-employee
                                            Directors dated February 12, 1990
                                            appears as Exhibit 10.5 to the 1989
                                            10-K and is incorporated herein by
                                            reference.

                             27             Financial  Data Schedule for the
                                            2000 10KSB is incorporated herein by
                                            reference.

</TABLE>

(b)     The Company did not file any Current Reports on Form 8-K during the
        fourth quarter ended September 30, 2000.

                                       33
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                        BALLISTIC RECOVERY SYSTEMS, INC.

By     /s/ Mark B. Thomas
  -----------------------
        Mark B. Thomas
        Principal Executive Officer, Principal Financial Officer and Principal
        Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

Signature                          Title                        Date
---------                          -----                        ----
<S>                              <C>                      <C>
 /s/ Darrel D. Brandt            Director                 November 30, 2000
---------------------------
Darrel D. Brandt

 /s/ Boris Popov                 Director                 November 30, 2000
---------------------------
Boris Popov

 /s/ Robert L. Nelson            Director                 November 30, 2000
---------------------------
Robert L. Nelson

 /s/ Thomas H. Adams             Director                 November 30, 2000
---------------------------
Thomas H. Adams

/s/ Mark B. Thomas               Director                 November 30, 2000
---------------------------
Mark B. Thomas

</TABLE>

                                       34