<PAGE> 1
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, 1996
- ----- 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)
1845 Henry Avenue, South St. Paul, Minnesota 55075-3541
- -------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number including area code: (612) 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: $1,731,414.
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 December 9, 1996 was approximately $1,762,740.
Number of shares outstanding as of December 9, 1996: 4,454,474.
Index for exhibits is located on page 28. This document contains 29 pages.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Definitive Proxy Statement to be used in connection
with the election of directors at the 1997 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
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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 is engaged in the design, development, manufacturing,
marketing and distribution of parachute recovery systems for use with
recreational ("Sport Aviation") and general aviation ("GARD") aircraft.
In 1993, the Company received Federal Aviation Administration ("FAA")
approval of the GARD-150 product for installation on FAA-certified Cessna
150/152 aircraft.
Beginning in 1994, the Company established project engineering as a
separate profit center. The Company sought and established relationships
with outside sources for research and development funding in order to
continue its efforts towards long-term product development and expansion.
During 1994, the Company began receiving outside funding for certain
research and development projects including two projects that are ongoing
at the present time.
One of the ongoing projects calls for the development of a larger version
of the GARD-150 system for use in a new certified general aviation
aircraft. This particular aircraft, if successfully certified, will be
the first general aviation aircraft to have the Company's product
included as standard equipment.
The other ongoing project revolves around the continuation of the
Company's Small Business Innovation Research grant (SBIR) through NASA.
The purpose of the grant is to perform research of low-cost, lightweight
aircraft emergency recovery systems. The Company received a Phase I
grant during 1994. All work under this Phase I grant was completed
during fiscal year 1995. With the completion of Phase I, the Company
applied for and received a Phase II grant to continue on with the
research that it began in the first phase. The Phase II grant, which
began in March 1996, is for a maximum of $581,000 over a period of 24
months.
In June 1996, the Company received a development contract for a recovery
system for a prototype unmanned aircraft being developed by a military
contractor. The contract, which covers an 18 month period and a maximum
amount of $117,000, calls for the development and delivery of a series of
recovery devices both for use in testing, and possibly in future
production models. This project is a development project for the
government contractor and may or may not be successful.
It is the intention of the Company to continue to look for additional
contract engineering opportunities as well as to applying for other
government funding through the SBIR program as well as other NASA
sponsored programs.
(b) Narrative Description of Business
PRINCIPAL PRODUCTS:
The Company's principal product line is ballistically deployed parachute
recovery systems. The systems, in an 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.
Contract engineering services also deal with long-term product development
and expansion of the ballistically deployed parachute recovery systems.
3
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Item 1. Description of Business (Continued)
(b) Narrative Description of Business (Continued)
Sport Aviation Products:
These systems are used by unregistered aircraft such as ultralights, hang
gliders, paragliders and aircraft registered with the FAA as
experimental. The Company manufactures these products and sells them to
individuals and through dealers who also market and sell the aircraft and
related products.
General Aviation Recovery Device (GARD-150):
In 1985, the Company began developing a parachute recovery system for
general aviation aircraft. This system employs similar technology as the
Company's systems for lighter aircraft. In May 1993, this system, known
as the GARD-150, received a Supplemental Type Certificate (STC) from the
FAA which allows owners of Cessna 150/152 model aircraft to install the
system.
The Company 's sales and marketing efforts generated seven GARD-150
system sales to date. However, the GARD-150 gained media interest. The
media attention resulted in domestic and international television and
radio broadcasts as well as coverage in domestic and international
aviation and non-aviation magazines. Marketing efforts for the GARD-150
product have been suspended with the exception of the pursuit of
additional media coverage.
Contract Research and Development:
Following the receipt of the STC on the GARD-150 product, the Company was
approached by several aircraft manufacturers that expressed interest in
developing parachute systems for their aircraft. In 1994, the Company
received initial funding and signed letters of intent for two research
and development contracts for larger emergency parachute systems. One of
the projects is ongoing for a company that is developing a four place
composite, certified aircraft. If successfully certified, this aircraft
will be the first FAA certified aircraft to offer one of the Company's
recovery systems as standard equipment. The other project was for a
company that is developing three experimental category aircraft. This
second project was suspended in 1995. See Note 2 of Notes to Financial
Statements for further information.
The Company is also involved in the Small Business Innovation Research
grant (SBIR) program through NASA. The purpose of the grant is to
perform research of low-cost, lightweight aircraft emergency recovery
systems. The Company received a Phase I grant during 1994 which was
completed during fiscal year 1995. With the completion of Phase I, the
Company applied for a Phase II grant to continue on with the research
that it began in the first phase. The Phase II grant, which began in
March 1996, is for a maximum of $581,000 for a period of 24 months. See
Note 3 of Notes to Financial Statements for further information.
In June 1996, the Company received a development contract for a recovery
system for a prototype unmanned aircraft being developed by a military
contractor. The contract, which covers an 18 month period and a maximum
amount of $117,000, calls for the development and delivery of a series of
recovery devices both for use in testing, and possibly in future
production models. This project is a development project for the
government contractor and may or may not be successful. See Note 4 of
Notes to Financial Statements for further information.
The successful completion of any of these projects cannot be assured.
Also, there can be no assurance that if these projects are completed,
that they will produce revenues for the Company or that they will produce
technology that can be applied to other similar aircraft or products, or
that if produced, will be successfully marketed and sold.
4
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Item 1. Description of Business (Continued)
(b) Narrative Description of Business (Continued)
MANUFACTURING OPERATIONS AND SUPPLIERS:
Assembly of the Company's product line is performed by the Company's
personnel in a South St. Paul, Minnesota facility, using component parts
made to its specifications. Parachutes and ballistic devices are each
purchased from certain key vendors. Other components are purchased from
a variety of suppliers. 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.
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 rocket charge deployment aspect
of the system 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" deployed as part of a ballistic parachute system on an
ultralight aircraft. The two employees have 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 product. Current
development projects also utilize the reefing device as a integral design
component.
When the Company completes development of additional ballistic parachute
recovery systems, it intends to apply for patents for such systems.
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
sales efforts have been expanded to increase its presence in new and
existing markets as a means of reducing this seasonality.
DEPENDENCE ON A SINGLE CUSTOMER:
During the fiscal years ended September 30, 1996 and 1995, 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.
BACKLOG OF ORDERS:
As of September 30, 1996 and 1995, the Company had a backlog of orders
totaling approximately $294,000 and $150,000, respectively. The 1996
backlog is expected to be filled during fiscal year 1997.
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Item 1. Description of Business (Continued)
(b) Narrative Description of Business (Continued)
RESEARCH AND DEVELOPMENT:
A summary of research and development is as follows:
1996 1995
--------- ---------
Total research and development
expenditures $ 164,762 $ 109,361
Revenues recognized under contract
research and development
relationships (119,747) (90,448)
--------- ---------
Research and development, net $ 45,015 $ 18,913
========= =========
The sources of the outside funding included: current development of a
recovery system for the planned to be certified aircraft; the SBIR grant;
and the unmanned aircraft recovery system as discussed in Notes 2, 3 and
4 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. 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 Company has expanded its contract research and development activities
to include an expansion in the certified general aviation market. At
present, the Company is unaware of any other manufacturer with the FAA
Supplemental Type Certificate necessary for the Cessna 150/152 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 for any other FAA
certified aircraft.
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, 1996, the Company had 14 full-time and 2 part-time
employees at its South St. Paul facility.
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Item 2. Description of Property
Through the end of fiscal year 1996, the Company leased 10,000 square
feet of a 30,000 square foot commercial building at Fleming Field Airport
in South St. Paul, Minnesota. Beginning October 1, 1996, the Company
signed a lease for a stand alone 13,000 office and production facility
located on the same airport in South St. Paul, Minnesota. The building
is a World War II training hangar which included a small office structure
inside the facility. The Company renovated and expanded the office area
and added rest room facilities. The move of the production facility and
offices was completed at the end of November 1996. (See Note 10 of Notes
to Financial Statements).
Item 3. Legal Proceedings
The Company is not currently involved in any legal proceedings.
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.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Market Information
Effective May 12, 1992, the Company's common stock was deleted from the
NASDAQ listings and there is currently no established trading market for
the stock. The stock is listed on the pink sheets and the electronic
bulletin board on the over the counter market. Stock trading has been
sporadic since that date. Exact trading prices are not known since there
is no mechanism in place to report the trading prices. However, several
stock tracking services, residing on the Internet, 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 current asking price would be $0.69 and the
current bid price would be $0.69.
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 and discussions
with brokers familiar with the Company's common stock. These estimates
represent inter-dealer prices, without retail markup, markdown, or
commission, and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stock:
-------------
1996 High $0.25 $0.50 $1.38 $1.19
Low $0.06 $0.06 $0.25 $0.69
1995 High $0.13 $0.13 $0.13 $0.25
Low $0.06 $0.06 $0.06 $0.06
</TABLE>
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Item 5. Market for Common Equity and Related Stockholder Matters (Continued)
(b) Holders
As of December 9, 1996, the Company estimates there were approximately
1,200 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.
8
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Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS:
Fiscal year 1996 was the third consecutive year of profitability for the
Company. The primary contributing factor was the Company's ability to generate
outside funding to offset the majority of research and development
expenditures. This was in part due to the receipt of the SBIR grant, as well
as the several contract research and development projects. These sources
generated $119,747 in outside funding that was taken as an offset to R&D
expenses. This compares with $90,448 in outside funding for research and
development that was generated from all sources in fiscal year 1995.
Sales for fiscal year 1996 were up 52% over 1995. The increase in sales is
attributable to continuing improvement in ultralight aircraft sales for both
currently existing aircraft designs as well as those of new manufacturers. In
addition, the Company believes that the SCI agreement has stimulated an
increase in the Company's sales. The sales plans that were implemented in the
second and third quarters of the previous fiscal year have also contributed by
expanding the Company's dealer base and expanding sales to the existing
dealers. The Company believes that sales volumes from the ultralight and
experimental aircraft markets for fiscal year 1997 will continue at levels at
least as that of fiscal year 1996.
The Company anticipates revenue contributions from current and planned research
and development projects which are expected to be completed or nearing
completion in fiscal year 1997. The actual contribution cannot be determined
at this time, but revenues are planned for sale of systems for larger
experimental aircraft and possibly from the Company's contract research and
development projects.
Gross margins for the current fiscal year also improved by 4.2% up to 37.7%
from 33.5%. The improvement was generated by increases in labor and overhead
efficiencies resulting from the higher and more efficient sales volumes for the
year. In addition, minor pricing and discount adjustments implemented in the
early part of the second quarter contributed to the current year margin
increases.
Selling, general and administrative expenses went down as a percentage of
sales. The actual dollar increase in expenses was a result of several factors
including the addition of sales personnel during the second quarter of the
prior fiscal year, increased support staff costs due to the increased sales
volumes, and increased travel expenses and legal fees. Additional increases in
this category are expected for fiscal year 1997 as the Company expands its
marketing efforts in current and future markets, makes adjustments in
administrative expenditures.
The gross expenditures for research and development increased by approximately
$55,000 which represented increases in payroll costs and expenses that were
specifically associated with the outside funded projects. As noted earlier,
this increase was offset in part by the increase in outside funding from
$90,448 in 1995 to $119,747 in 1996.
The other income and expense category increased as a direct result of the
covenant not to compete agreement entered into by the Company in October of the
current fiscal year.
LIQUIDITY AND CAPITAL RESOURCES:
Management intends to continue to improve the Company's operations and cash
flows in 1996 by continuing to monitor and enhance cost saving plans adopted in
the prior years and implementation of new ones. The following outlines
management's plans:
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Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES: (CONTINUED)
The Company's focus on research and development has shifted over the past
several years. Following the completion of the GARD-150 project, it became the
intention of the Company to find outside sources for research and development
funding in order to continue its efforts towards long-term product development
and expansion. In 1994, the Company received initial funding and signed letters
of intent for two research and development contracts for larger emergency
parachute systems. One of the projects is ongoing and that company is
developing a four place composite, certified aircraft. The other project was
for a company developing three experimental category aircraft consisting of two
place, five place and seven place composite aircraft. This second project was
suspended in 1995. The successful completion of either of these projects cannot
be assured. With the signing of these two agreements, the Company believes that
it has begun the process of possibly expanding its research and development
efforts into a profit center for the Company through outside funding. In
addition, the receipt of outside funding has increased the Company's
opportunities to develop products for expanded applications throughout the
general aviation and experimental aircraft markets. It will always be the
intention of the Company to retain the rights to any developed technology and
the rights to manufacture any related products.
In December 1994, the Company was awarded a Phase I, Small Business Innovation
Research grant (SBIR) through NASA for use in the research of low-cost,
lightweight aircraft emergency recovery systems. The $70,000 grant was used to
provide a feasibility study to determine whether or not future funding through
NASA in the form of a Phase II grant is warranted. The Phase I research was
completed in June 1995 and the Phase II grant was applied for as part of the
final report.
The Company signed a Phase II contract with NASA on March 8, 1996 and work on
that project commenced at that time. The total contract award was for a firm
fixed price grant of $581,875 for a period not to exceed 24 months. No
assurances can be made as to the future success of this project, or whether or
not all of the contract amount will be allocated and received over the life of
the contract.
The Company anticipates applying for additional grants over the coming fiscal
years through the SBIR program and other programs sponsored by NASA. No
assurances can be made as to the future success of the current grant nor the
likelihood of the receipt or success of any future grants.
In October 1995, the Company entered into a non-compete agreement with its only
domestic competitor, SCI. As a result of other sales efforts that were
underway, the exact benefit of the SCI transaction in terms of sales volumes
cannot be specifically determined. Although the agreement calls for debt
service over a ten year period, the Company believes that the agreement will
have a positive impact on both profitability and cash flow. This agreement, in
addition to other sales programs that have been implemented by the Company over
the past several years, should continue to strengthen the Company's revenues and
profitability into the future.
In July 1996, the Company received a purchase order from a defense subcontractor
for the development of a parachute recovery system for an unmanned aircraft that
is being developed for possible military use. The purchase order was for a
total of $117,814 and covers an 18 month period. The purchase order calls for
development funding of the recovery system as well as the delivery of completed
recovery systems. No assurances can be made as to the success of the
development project or if its completion will lead to future revenues. Also, no
assurances can be made that the project will proceed as intended in the purchase
order.
Management intends to fund all of its continuing operation out of its current
revenues with the exception of expanded research and development. 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
expenses at the necessary levels until further funding opportunities
materialize.
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Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES: (CONTINUED)
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
and 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.
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Item 7. Financial Statements and Supplementary Data
Pg.
(1) Financial Statements for the years ended
September 30, 1996 and 1995:
Independent Auditors' Report 13
Balance Sheets as of September 30, 1996 and 1995 14
Statements of Operations for the years ended September 30, 1996
and 1995 15
Statements of Shareholders' Equity for the years ended
September 30, 1996 and 1995 16
Statements of Cash Flows for the years ended September 30,
1996 and 1995 17
Notes to Financial Statements 18
(2) Financial Statement Schedules of Supplemental Information are no longer
required under Regulation S-B.
12
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INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Ballistic Recovery Systems, Inc.
South St. Paul, Minnesota
We have audited the accompanying balance sheet of Ballistic Recovery Systems,
Inc. as of September 30, 1996 and the related statement of operations,
shareholders' equity, and cash flows for the year 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 audit. The financial statements for the year ended September 30, 1995, were
audited by other accountants who have ceased operations. They expressed an
unqualified opinion on them in their report dated November 13, 1995, but they
have not performed any audit procedures since that date.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 audit provides a reasonable basis for our
opinion.
In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial position of Ballistic Recovery Systems,
Inc. as of September 30, 1996 and the results of operations and cash flow for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ Callahan, Johnston & Associates, LLC
Callahan, Johnston & Associates, LLC
Minneapolis, Minnesota
November 19, 1996
13
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PART II - Item 7. Financial Statements
BALLISTIC RECOVERY SYSTEMS, INC.
BALANCE SHEETS
September 30, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash $ 117,343 $ 16,977
Accounts receivable - net of allowance for doubtful
accounts of $12,500 and $5,000, respectively 73,793 66,038
Inventories 307,213 175,354
Prepaid expenses 4,197 2,969
----------- -----------
Total current assets 502,546 261,338
----------- -----------
Furniture and fixtures 75,747 67,005
Less accumulated depreciation (59,901) (53,061)
----------- -----------
Furniture and equipment - net 15,846 13,944
----------- -----------
Other assets:
Patents less accumulated amortization of
$6,552 and $5,866, respectively 5,112 5,799
Covenant not to compete less accumulated
amortization of $34,782 344,656 ---
Total other assets 349,768 5,799
----------- -----------
Total assets $ 868,160 $ 281,081
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 60,923 $ 61,563
Customer deposits 126,017 75,183
Accrued payroll 26,314 20,099
Other accrued liabilities 117,747 62,114
Deferred research and development funding --- 7,789
Line-of-credit borrowings 25,000 ---
Current portion of covenant not to compete 31,334 ---
----------- -----------
Current liabilities 387,335 226,748
----------- -----------
Long-term covenant not to compete, less current portion 314,325 ---
----------- -----------
Shareholders' equity:
Common stock ($.01 par value; 10,000,000 shares authorized;
4,454,474 shares issued and outstanding) 44,545 44,545
Additional paid-in capital 2,620,282 2,620,282
Accumulated deficit (2,498,327) (2,610,494)
----------- -----------
Total shareholders' equity 166,500 54,333
----------- -----------
Total liabilities and shareholders' equity $ 868,160 $ 281,081
=========== ===========
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements.
14
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BALLISTIC RECOVERY SYSTEMS, INC.
STATEMENTS OF OPERATIONS
Years Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Sales $1,731,414 $1,137,134
Cost of sales 1,078,789 756,115
---------- ----------
Gross profit 652,625 381,019
Selling, general and administrative 411,244 307,641
Research and development, net (Notes 2, 3 and 4) 45,015 18,913
---------- ----------
Income from operations 196,366 54,465
Other income (expense):
Interest expense (41,617) (9,167)
Covenant amortization (34,782) ---
Other - net (7,500) 505
---------- ----------
Income before income taxes 112,467 45,803
Income taxes 300 300
---------- ----------
Net income $ 112,167 $ 45,503
========== ==========
Primary earnings per share $ 0.02 $ 0.01
========== ==========
Weighted average number of shares outstanding 6,379,492 4,454,474
========== ==========
Fully diluted earnings per share $ 0.02 $ 0.01
========== ==========
Weighted average number of shares outstanding 6,379,492 6,294,752
========== ==========
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements.
15
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BALLISTIC RECOVERY SYSTEMS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Years Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Common Stock
--------------------- Additional Share-
Number of Paid-in Accumulated holders'
Shares Amount Capital Deficit Equity(Deficit)
--------- -------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance 9/30/94 4,416,324 $44,164 $2,610,377 ($2,655,997) ($ 1,456)
Issuance of stock in
lieu of director fees 38,150 381 9,905 -- 10,286
Net income -- -- -- 45,503 45,503
--------- ------- ---------- ----------- --------
Balance 9/30/95 4,454,474 $44,545 $2,620,282 ($2,610,494) $ 54,333
Net income -- -- -- 112,167 112,167
--------- ------- ---------- ----------- --------
Balance 9/30/96 4,454,474 $44,545 $2,620,282 ($2,498,327) $166,500
========= ======= ========== =========== ========
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements.
16
<PAGE> 17
BALLISTIC RECOVERY SYSTEMS, INC.
STATEMENTS OF CASH FLOW
Years Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activity:
Net income $ 112,167 $ 45,503
Adjustments to reconcile net income to net cash
from operating activity:
Depreciation and amortization 7,527 7,137
Amortization of discount on debt --- 986
Amortization of covenant not to compete 34,782 ---
Inventory valuation reserve 10,000 ---
Provision for bad debts 7,500 ---
(Increase) decrease in:
Accounts receivable (15,255) (45,695)
Inventories (141,859) (26,145)
Prepaid expenses (1,227) 496
Increase (decrease) in:
Accounts payable (640) (10,135)
Customer deposits 50,834 50,249
Accrued expenses 54,059 (29,984)
--------- --------
Net cash flows from operating activities 117,888 (7,588)
--------- --------
Cash flows from investing activities:
Capital expenditures (8,743) (9,445)
--------- --------
Net cash flows from investing activities (8,743) (9,445)
--------- --------
Cash flows from financing activities:
Net borrowing under line-of-credit agreement 25,000 ---
Principal payments on debt --- (19,128)
Principal payments on covenant not to compete (33,779) ---
--------- --------
Net cash flows from financing activities (8,779) (19,128)
--------- --------
Increase (decrease) in cash 100,366 (36,161)
Cash - beginning of year 16,977 53,138
--------- --------
Cash - end of period $ 117,343 $ 16,977
========= ========
</TABLE>
See Independent Auditors' Report and Notes to Financial Statements.
17
<PAGE> 18
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
1. Summary of Significant Accounting Policies
Nature of Business
Ballistic Recovery Systems, Inc. (the "Company") designs, manufactures and
distributes ballistic recovery parachute systems used on recreational
aircraft and has received approval for the production and distribution of
recovery systems for Cessna 150/152 model general aviation aircraft. The
Company's products are sold both domestically and internationally. The
Company has also been successful in its efforts to receive outside funding
to expand its research and development activities through research grants
and contract R&D services.
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.
Accounts Receivable
The Company sells predominantly 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). 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.
Two customers account for 78% of accounts receivable at
September 30, 1996.
Inventories
Inventories are recorded at the lower of cost (determined on a first-in
basis) or market. 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 periodically receives 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.
18
<PAGE> 19
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
1. Summary of Significant Accounting Policies (Continued)
Furniture and Equipment
Furniture and equipment is stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the related
assets, ranging from five 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.
Earnings Per Share
Earnings per common share is determined using the treasury stock method.
Under this method, earnings per share is determined by dividing net income
by the weighted average number of common shares and common equivalent
shares outstanding during the year. Options are considered common
equivalent shares only when the average market price of the common stock
obtainable on exercise during the period exceeds the exercise price of the
options.
Income Taxes
Timing differences relate primarily to: allowances for doubtful accounts;
inventory valuation allowances; and accrued expenses not currently
deductible. A deferred tax asset has not been reflected for future benefit
of the Company's net operating loss carry forwards, net of the timing
differences, due to concerns over its eventual realization.
Research and Development Costs
Research and development costs are charged to expense as incurred.
Advertising Expenses
Advertising expenses are recognized in the period incurred. Advertising
expenses totaled $26,774 in 1996 and $26,751 in 1995.
19
<PAGE> 20
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
2. Research and Development Funding and Income Recognition
In 1994, the Company received initial funding and signed letters of intent
for two research and development contracts for larger emergency parachute
systems. One of the projects is ongoing for a companies is developing a
four place composite, certified aircraft. If successfully certified, this
aircraft will be the first FAA certified aircraft to offer one of the
Company's recovery systems as standard equipment. The other project was
for a company is developing three experimental category aircraft. This
second project was suspended during fiscal year 1995. Both of the
companies are privately held.
Under these two contracts, $23,304 and $20,712 was reflected as an offset
to research and development expenses and is netted in the expense for 1996
and 1995, respectively. At the end of fiscal year 1996, the Company had a
receivable due under the first contract of $5,278, and at the end of
fiscal year 1995, the Company recorded a deferred research and development
funding liability for $7,789.
Additional funding, although not guaranteed, is expected to be received on
a monthly basis over the next 12 to 18 months as the research and
development progresses. Although exact time lines and production volumes
are uncertain, it is expected that manufacturing of production units will
commence at the end of the funding time line.
The Company will retain the developed technology for the parachute systems
in general and the outside companies will retain the developed technology
that is specific to their individual aircraft. In order to retain the
developed technology, the Company will offer the company with the ongoing
project, a discount on future purchases of completed systems which will
total 110% of the advanced amount.
The other company's project has been suspended and future work with this
company is not certain. The Company did not establish a liability for the
$51,515 taken as an offset to expense to date under these projects due to
the uncertainty of the future of the project and the future viability of
the products to be developed. In addition, the Company feels that the
establishment of a reserve for a potential future obligation would be
misleading to the financial statements as presented. Any future purchase
discounts that will be earned upon completion of the project will be
offset against any future sales made to that company.
The Company expects to be able to utilize the developed technology for
applications on a wide range of aircraft. The future applications will
depend on a complete review of market conditions, product acceptance and
available funding.
3. Small Business Innovation Research Grant (SBIR)
In December 1994, the Company was awarded a Phase I, Small Business
Innovation Research grant (SBIR) through NASA for use in the research of
low-cost, lightweight aircraft emergency recovery systems. The $69,736
grant over a six month period was used by the Company to expand its
research in the area of lightweight fabrics and components for use in
recovery systems. The Phase I was completed in June 1995 and a proposal
for Phase II funding was submitted at that time. The $69,736 grant was
recognized as an offset to research and development expenses during fiscal
year 1995.
20
<PAGE> 21
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
3. Small Business Innovation Research Grant (SBIR) (Continued)
The Company signed a Phase II contract with NASA on March 8, 1996 and work
on that project commenced at that time. The total contract award was for
a firm fixed price grant of $581,875 for a period not to exceed 24 months.
Of the total contract price, the Company has received an allocation of
$300,000 at this time. Future allocations are expected throughout the
term of the contract, but it is not guaranteed as the allocations are
part of the federal budget process.
For the year ended September 30, 1996, the Company recognized $82,321 as
an offset to research and development expenditures for work performed on
the Phase II project. As of September 30, 1996, the Company had
established a receivable for $43,186 for this contract.
4. Additional Contract Research and Development
In June 1996, the Company received a purchase order from a defense
subcontractor for the development of a parachute recovery system for an
unmanned aircraft that is being developed for possible military use. The
purchase order, with revisions, is for a total of $117,814 and covers an
18 month period. The purchase order calls for development funding for the
recovery system as well as the delivery of completed recovery systems.
$14,123 has been recognized as an expense offset under this purchase order
as of September 30, 1996, of which the total amount is reflected as a
receivable as of that date. No assurances can be made as to the success
of the development project or if its completion will lead to future
revenues. Also, no assurances can be made that the project will proceed
as intended in the purchase order.
5. Covenant Not to Compete / Long-Term Debt
On October 26, 1995 the Company entered into an agreement with the
president and majority shareholder of Second Chantz Aerial Survival
Equipment, Inc. (SCI), the Company's sole US competitor, whereby:
1. SCI ceased all business activities, and
2. 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 contains 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% as
follows:
<TABLE>
<CAPTION>
Future Present
Dollars Dollars
-------- --------
<S> <C> <C>
Cash at signing $ 5,000 $ 5,000
Parachute systems 15,000 15,000
Non-interest bearing four year note 80,000 63,732
4% ten year note: principal 400,000 295,706
interest 84,362 ---
-------- --------
$584,362 $379,438
======== ========
</TABLE>
21
<PAGE> 22
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
5. Covenant Not to Compete / Long-Term Debt (Continued)
The non interest bearing note calls for monthly payments of $1,500 for
forty six months (February 1996 to November 1999). 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.
Future payments under this agreement are as follows:
<TABLE>
<CAPTION>
Future Present
Dollars Dollars
-------- --------
<S> <C> <C>
1997 $ 77,184 $ 43,747
1998 66,436 34,960
1999 66,436 39,005
2000 62,436 39,935
2001 48,436 29,204
Thereafter 197,781 158,808
-------- -------
$496,961 $345,659
======== ========
</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.
6. Other Financial Information
Inventories
Inventories consisted of the following at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials $195,291 $166,544
Work in process 50,146 18,125
Finished goods 86,776 5,685
Less valuation reserve (25,000) (15,000)
-------- --------
Total Inventories $307,213 $175,354
======== ========
</TABLE>
Depreciation Expense
Depreciation expense totaled $6,840 in 1996 and $6,451 in 1995.
22
<PAGE> 23
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
6. Other Financial Information (Continued)
Major Customers
During the fiscal years ended September 30, 1996 and 1995, 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.
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 41% in 1996 and 44% in 1995.
Major Suppliers
During the fiscal years ended September 30, 1996 and 1995, the Company
purchased its rockets and parachutes from certain key vendors. 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.
7. Line-of Credit Borrowings
In December 1995, the Company negotiated a $35,000 line-of-credit for use
in operations. The line-of-credit was established on a annual renewal
basis which expires in mid-December 1996. The line calls for a variable
interest rate of 2% over prime. At September 30, 1996, the outstanding
balance under the line was $25,000. The Company expects that the line
will be renewed following the review of its fiscal year 1996 results with
the bank.
8. Income Taxes
Below is a reconciliation between expected income tax expense that would
result from applying domestic federal statutory rates to pretax income and
income tax expense as recorded in the financial statements for the years
ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
Amount Percent Amount Percent
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Expected income tax expense $ 16,800 15.0% $ 6,800 15.0%
State income taxes, net of federal
tax benefit 1,600 1.5 700 1.5
Benefit of net operation loss (18,400) (16.5) (7,500) (16.5)
State minimum fee 300 0.1 300 0.1
-------- ------ ------- -----
Income tax expense $ 300 0.1% $ 300 0.1%
======== ====== ======= =====
</TABLE>
The net deferred tax asset consists primarily of net operating loss carry
forwards, capital loss carry forwards and recognition of loss on disposal
of intangible asset. Below is a summary of the net deferred tax asset at
September 30:
23
<PAGE> 24
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
8. Income Taxes (Continued)
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
Current Deferred Total Current Deferred Total
-------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Federal $ 25,000 $ 593,000 $ 618,000 $ 16,000 $ 636,000 $ 652,000
State 10,000 40,000 50,000 7,000 76,000 83,000
-------- --------- --------- --------- --------- ---------
35,000 633,000 668,000 23,000 712,000 735,000
Valuation
allowance (35,000) (633,000) (668,000) (23,000) (712,000) (735,000)
-------- --------- --------- --------- --------- ---------
Net deferred tax
asset $ --- $ --- $ --- $ --- $ --- $ ---
======== ========= ========= ========= ========= =========
</TABLE>
The Company has net operating loss and research and development credit
carry forwards available to offset future taxable income. If not
utilized, these carry forwards will expire as follows:
<TABLE>
<CAPTION>
Net Operating Loss
---------------------- R & D
Year Federal Minnesota Credits
----- ---------- --------- -------
<S> <C> <C> <C>
2001 $ 357,000 $ -- $ 4,000
2002 519,000 -- 4,000
2003 713,000 164,000 5,000
2004 132,000 50,000 --
2005 113,000 13,000 --
2006 457,000 97,000 --
2007 181,000 182,000 --
---------- -------- -------
Total $2,472,000 $506,000 $13,000
========== ======== =======
</TABLE>
9. Common Stock
Stock Options
In fiscal 1988, the Company adopted a non qualified stock option plan that
authorizes the grant to officers and other employees of non qualified
stock options for a maximum of 200,000 shares. Under the terms of the
plan, the options become exercisable in annual increments of one-third of
the shares covered by the option, beginning one year after grant, the
exercise price of each option must be at least 85% of the fair market
value of the stock as of the date of grant, and the maximum term of each
option is 10 years. In fiscal 1991, the Board of Directors authorized, and
the shareholders approved at the annual meeting, an increase in the number
of shares available under the plan to 400,000.
24
<PAGE> 25
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
9. Common Stock (Continued)
Stock Options (Continued)
In fiscal 1990, the Company adopted a stock option plan for non employee
directors. The plan is authorized to grant options for a maximum, in the
aggregate, of 300,000 shares of the Company's common stock to non employee
directors. Under the plan, an option to purchase 10,000 shares of common
stock, at an exercise price equal to the fair market value of the stock on
the date of grant, is to be granted each year on the next business day
following the annual shareholders meeting or April 1, whichever is later,
to each non employee director then in office. Each option becomes
exercisable in increments of 25% per quarter during the year of service
and terminates 10 years following the date of grant.
In addition to options issued pursuant to the above-described plans, the
Company has issued options to various officers, employees and others.
Transactions during 1996 and 1995, for the plans and other issuances above
were as follows:
<TABLE>
<CAPTION>
Number Option Price
Of Shares Range per Share
--------- ---------------
<S> <C> <C>
Balance at September 30, 1994 1,807,428 $0.25 to $0.8125
Granted 285,000 $025 to $0.4375
Canceled (50,000) $0.5625
Exercised (7,150) $0.3125 to $0.453
---------
Balance at September 30, 1995 2,035,278 $0.25 to $0.8125
Granted 140,000 $0.25 to $0.8125
Canceled (62,760) $0.4375 to $0.8125
---------
Balance at September 30, 1996 2,112,518 $0.25 TO $0.8125
=========
At September 30, 1996:
Options vested and exercisable 1,925,018
Shares available for options 369,650
</TABLE>
10. Commitments and Contingencies
Leases
Beginning October 1, 1996, the Company signed a lease for a different
production facility located on the same airport in South St. Paul,
Minnesota. Total rental expense for operating leases during 1996 and 1995
was $19,632 and $19,632, respectively.
25
<PAGE> 26
BALLISTIC RECOVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
10. Commitments and Contingencies (Continued)
Leases (Continued)
Future minimum lease payments required on non cancelable operating leases
at September 30, 1996 are as follows:
1997 $ 31,472
1998 28,200
1999 28,200
2000 28,200
2001 28,200
Thereafter 35,250
--------
$179,522
========
11. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Cash paid for:
Interest $41,617 $9,326
Income taxes 300 300
</TABLE>
Summary of non cash activity:
- On October 26, 1995, the Company entered into a covenant not to compete
agreement as described in Note 5. Consideration for this agreement
included $374,438 in non cash consideration.
- In 1995, common stock was issued in lieu of directors fees of $10,286.
26
<PAGE> 27
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.
27
<PAGE> 28
PART IV
Item 13. Exhibits, Lists and Reports on Form 8-K.
(a) Exhibits
Page Exhibit
Number Number Description
------ ------- -----------
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 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.
10.2 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.
10.3 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.
(b) The Company did not file any Current Reports on Form 8-K during the fourth
quarter ended September 30, 1996.
28
<PAGE> 29
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.
Signature Title Date
- -------------------- -------- -----------------
/s/ Darrel D. Brandt Director December 20, 1996
- --------------------
Darrel D. Brandt
/s/ Boris Popov Director December 20, 1996
- --------------------
Boris Popov
/s/ Robert L. Nelson Director December 20, 1996
- --------------------
Robert L. Nelson
/s/ Thomas H. Adams Director December 20, 1996
- --------------------
Thomas H. Adams
29
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-30-1996
<CASH> 117,343
<SECURITIES> 0
<RECEIVABLES> 86,293
<ALLOWANCES> 12,500
<INVENTORY> 307,213
<CURRENT-ASSETS> 502,546
<PP&E> 75,747
<DEPRECIATION> 59,901
<TOTAL-ASSETS> 868,160
<CURRENT-LIABILITIES> 387,335
<BONDS> 314,325
0
0
<COMMON> 44,545
<OTHER-SE> 121,955
<TOTAL-LIABILITY-AND-EQUITY> 868,160
<SALES> 1,731,414
<TOTAL-REVENUES> 1,731,414
<CGS> 1,078,789
<TOTAL-COSTS> 1,078,789
<OTHER-EXPENSES> 456,259
<LOSS-PROVISION> 7,500
<INTEREST-EXPENSE> 41,617
<INCOME-PRETAX> 112,467
<INCOME-TAX> 300
<INCOME-CONTINUING> 112,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,167
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
