~~The~~See accompanying notes ~~are an integral part of these unaudited~~to condensed consolidated financial statements (unaudited)

~~The~~See accompanying notes ~~are an integral part of these unaudited~~to condensed consolidated financial ~~statements.~~

~~The~~See accompanying notes ~~are an integral part of these unaudited~~to condensed consolidated financial statements (unaudited)

3. Revenue Recognition: ASC Topic 606, “Revenue from Contracts with Customers”

Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration we expect to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps:

1)1)

Identify the contract, or contracts, with a customer

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer ~~exists when (i)~~that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and (iii) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

2)2)

Identification of the performance obligations in the contract

At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

3)3)

Determination of the transaction price

The transaction price is the amount that an entity allocates to the performance obligations identified in the contract and, therefore, represents the amount of revenue recognized as those performance obligations are satisfied. The transaction price is the amount ~~that~~of consideration to which an entity ~~allocates~~expects to be entitled in exchange for transferring promised goods or services to a customer.

Allocation of the transaction price to the performance obligations ~~identified~~ in the contract and, therefore, represents the amount of revenue recognized as those performance obligations are satisfied. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

~~Allocation of the transaction price to the performance obligations in the contract~~

Once a contract and associated performance obligations have been identified and the transaction price has been determined, ASC 606 requires an entity to allocate the transaction price to each performance obligation identified. This is generally done in proportion to the standalone selling prices of each performance obligation (i.e., on a relative standalone selling price basis). As a result, any discount within the contract generally is allocated proportionally to all of the separate performance obligations in the contract. The Company is applying the right to invoice practical expedient to recognize revenue. As a result, the entity bypasses the steps of determining the transaction price, to each performance obligation identified. This is generally done in proportion to the standalone selling prices of each performance obligation (i.e., on a relative standalone selling price basis). As a result, any discount within the contract generally is allocated proportionally to all of the separate performance obligations in the contract. The Company is applying the right to invoice practical expedient to recognize revenue. As a result, the entity bypasses the steps of determining the transaction price, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as ~~it will recognize revenue as~~ billed by multiplying the price assigned to the good or service, by the units.

Recognition of revenue when, or as, we satisfy a performance obligation

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service byto a customer. Control transfers either over time or at a point in time. Revenue is recognized when control of the ~~units.~~

~~Table of Contents~~

~~Recognition of revenue when, or as,~~promised services is transferred to our customers, in an amount that reflects the consideration we ~~satisfy a performance obligation~~expect to be entitled to in exchange for those services.

Aircraft modifications are performed under fixed-price contracts. Revenue isfrom fixed-priced contracts are recognized ~~when or as performance obligations are satisfied~~on the percentage-of-completion method, measured by ~~transferring control of a promised good or service~~the direct labor incurred compared to a customer. Control transfers either over time or at a point in time. Revenue is recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.total estimated direct labor.

Aircraft modifications are performed under fixed-price contracts. Revenue from fixed-priced contracts are recognized on the percentage-of-completion method, measured by the direct labor incurred compared to total estimated direct labor.

Revenue from Avionics products are recognized when shipped. Payment for these Avionics products is due within 30 days of the invoice date after shipment. Revenue from Gaming Management and other Corporate/Professional Services is recognized as the service is rendered.

Regarding warranties and returns, our products are special order and are not suitable for return. Our products are unique upon installation and tested prior to their release to the customer and acceptance by the customer. In the rare event of a warranty claim, the claim is processed through the normal course of business and may include additional charges to the customer. In our opinion, any future warranty work would not be material to the consolidated financial statements.

Gaming revenue is the gross gaming win as reported by the Kansas Lottery casino reporting systems, less the mandated payments by and for the State of Kansas. Electronic games-slots and table games revenue is the ~~gross~~aggregate of gaming ~~win as reported by~~wins and losses. Liabilities are recognized for chips and "ticket-in, ticket-out" coupons in the ~~Kansas Lottery casino reporting systems, less the mandated payments by~~customers' possession, and for accruals related to anticipated payout of progressive jackpots. Progressive gaming machines, which contain base jackpots that increase at a progressive rate based on the ~~State~~number of ~~Kansas. Electronic games-slots~~coins played, are deducted from revenue as the value of jackpots increase. Food, beverage, and ~~table games~~other revenue is recorded when the ~~aggregate of gaming wins~~service is received and losses. Liabilities are recognized for chips and "ticket-in, ticket-out" coupons in the customers' possession, and for accruals related to anticipated payout of progressive jackpots. Progressive gaming machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are deducted from revenue as the value of jackpots increase. Food, beverage, and other revenue is recorded when the service is received and paid.

4. Disaggregation of Revenue

In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.

	Three Months Ended July 31, 2021
	Professional Services		Aerospace Products		Total
Geographical Markets
North America	$	9,726	$	7,443	$	17,169
Europe		0		842		842
Asia		0		88		88
Australia and Other		0		46		46
	$	9,726	$	8,419	$	18,145

Major Product Lines
Casino Gaming Revenues	$	8,589	$	0	$	8,589
Casino Non-Gaming Revenues		1,066		0		1,066
Professional Services		71		0		71
Aircraft Modification		0		5,782		5,782
Aircraft Avionics		0		875		875
Special Mission Electronics		0		1,762		1,762
	$	9,726	$	8,419	$	18,145

Contract Types / Revenue Recognition Timing
Percentage of completion contracts	$	0	$	5,275	$	5,275
Goods or services transferred at a point of sale		9,726		3,144		12,870
	$	9,726	$	8,419	$	18,145


	Three Months Ended July 31, 2020
	Professional Services		Aerospace Products		Total
Geographical Markets
North America	$	5,352	$	6,059	$	11,411
Europe		0		889		889
Asia		0		0		0
Australia and Other		0		689		689
	$	5,352	$	7,637	$	12,989

Major Product Lines
Casino Gaming Revenues	$	4,798	$	0	$	4,798
Casino Non-Gaming Revenues		509		0		509
Professional Services		45		0		45
Aircraft Modification		0		4,793		4,793
Aircraft Avionics		0		915		915
Special Mission Electronics		0		1,929		1,929
	$	5,352	$	7,637	$	12,989

Contract Types / Revenue Recognition Timing
Percentage of completion contracts	$	0	$	3,121	$	3,121
Goods or services transferred at a point of sale		5,352		4,516		9,868
	$	5,352	$	7,637	$	12,989

5. Accounts receivable, net, contract asset and contract liability:

Accounts Receivables, net, contract asset and contract liability were as follows (in thousands):

	July 31,		April 30,
	2021		2021
Accounts Receivable, net	$	2,957	$	1,961
Contract Asset		578		421
Contract Liability		2,804		5,798

Accounts receivable, net consist of $2,957 and $1,961 from customers as of July 31, 2021 and April 30, 2021, respectively. At July 31, 2021 and April 30, 2021, the allowance for doubtful accounts was $143 and $143, respectively.

Contract assets are net of progress payments and performance based payments from our customers as well as advance payments from customers totaling $578 and $421 as of July 31, 2021 and April 30, 2021. Contract assets increased $157 during the quarter ended July 31, 2021, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the quarter ended July 31, 2021 for which we have not yet billed our customers. There were no significant impairment losses related to our contract assets during the quarter ended July 31, 2021. We expect to bill our customers for the majority of the July 31, 2021 contract assets during fiscal year end 2022.

Contract liabilities decreased $3.0 million during the quarter ended July 31, 2021, primarily due to revenue recognized on these performance obligations in excess of payments received.

6. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our consolidated financial statements. Significant estimates include assumptions about percentage-of-completion, collection of accounts receivable, the valuation, and recognition of stock-based compensation expense, valuation for deferred tax assets and useful life of fixed assets.

5.7. Inventories: Inventories are priced at the lower of cost, determined on a ~~first-in, first-out~~first-in, first-out basis, or net realizable value. Inventories include material, labor and factory overhead required in the production of our products.

Inventory obsolescence is examined on a regular basis. When determining our estimate of obsolescence, we consider inventory that has been inactive for five years or longer and the probability of using that inventory in future production. The obsolete inventory generally consists of Falcon and Learjet parts and electrical components. At July 31, ~~2020~~2021 and April 30, ~~2020~~2021, the estimate of obsolete inventory was ~~$685~~$691 and ~~$685~~$691 respectively.

6.8. Research and Development: We invested in research and development activities. The amount invested in the three months ended July 31, ~~2020~~ 2021 and ~~2019~~2020 was ~~$763~~$326 and ~~$397~~$763 respectively.

7.9. Debt: At July 31, ~~2020~~2021, the Company was utilizing a promissory note in the form of a line of credit totaling ~~$5,000.~~$2,000. The unused line at July 31, ~~2020~~2021 was ~~$5,000~~.$2,000. The interest rate on this promissory note is 3.65%. The line of credit is due on demand and is collateralized by the first and second positions on all assets of the Company.

At July 31, ~~2020~~2021, there was ~~one~~1 note collateralized by all of BHCMC's assets and compensation due under the State Management contract with a balance of $33,680 (net of unamortized deferred finance costs of $299). The interest rate on this note is 5.32%. This note matures in December 2027, with a balloon payment of $19,250.

At July 31, 2021, there was 1 note collateralized by all of BHCMC's assets and compensation due under the State Management contract with a balance of $6,126 (net of unamortized deferred finance costs of $58). The interest rate on this note is 5.83%. This note matures in December 2025.

At July 31, 2021, there was 1 note with an interest rate of 6.25% collateralized by aircraft security agreements totaling ~~$1,567~~.$991. This note was used for the purchase and modifications of collateralized aircraft. This note matures in January 2023.

At July 31, ~~2020~~2021, there is ~~one~~1 note totaling ~~$217~~$197 collateralized by real estate in Dodge City, Kansas. The interest rate on this note is 6.25%. This note matures in June 2024.

At July 31, ~~2020~~2021, there is ~~one~~1 note collateralized by equipment with a balance of ~~$37~~.$16. The interest rate on this note is 4.5%. This note matures in April 2022.

At July 31, ~~2020~~2021, there is a note payable collateralized by real estate with a balance of ~~$1,387~~.$1,227. The interest rate on this note is at LIBOR plus 1.75%. This note matures in March 2029.

At July 31, ~~2020~~2021, there is a note payable collateralized by real estate with a balance of ~~$636~~.$562. The interest rate on this note is at LIBOR plus 1.75%. This note matures in March 2029.

In May 2020, the Company received a Paycheck Protection Program (PPP) loan for $2,001. ~~Funds~~In June 2021, the Company received notice of forgiveness from the loan may only be used for payroll costs, costs to continue group health care benefits, rent and utilities. The loan and accrued interest are forgivable as long as the borrower uses the proceeds for eligible purposes. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the entire loan amount for qualifying expenses. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, we cannot assure if and when a portion or all of the loan will be forgiven.Small Business Administration.

We are not in default of any of our notes as of July 31, ~~2020~~2021.

We believe that our current banks will provide the necessary capital for our business operations. However, we continue to maintain contact with other banks that have an interest in funding our working capital needs to continue our growth in operations in 2021 and beyond.

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8.10. Other Assets: Our other asset account includes assets of $5,500 related to the Kansas Expanded Lottery Act Management Contract privilege fee, ~~$5,868~~$5,966 of gaming equipment we were required to pay for ownership by the State of Kansas Lottery, ~~and~~ JET autopilot intellectual property of $1,417 and miscellaneous other assets of ~~$914.~~$907. BHCMC expects the ~~$5,500~~$5,500 privilege fee to have a value over the remaining life of the initial Management Contract with the State of Kansas which will end in December 2024. The State of Kansas approved a renewal management contract and an amendment to the current management contract for our Professional Services company BNSC via BHCMC. The renewal will take effect December 15, 2024, and continue to 2039, another 15 years. The Managers Certificate asset for use of gaming equipment is being amortized over a period of three years based on the estimated useful life of gaming equipment. The JET intellectual property is being amortized over a period of fifteen years.

9.11. Stock Options and Incentive Plans:

In November 2016, the shareholders approved and adopted the Butler National Corporation 2016 Equity Incentive Plan. The maximum number of shares of common stock that may be issued under the Plan is 12.5 million.

On April 12, 2019, the Company granted 2.5 million restricted shares to employees. These shares have voting rights at date of grant and become fully vested and nonforfeitable on April 11, 2024. The restricted shares were valued at $0.38 per share, for a total of $950. On March 17, 2020, the Company granted 5.0 million restricted shares to employees. These shares have voting rights at date of grant and become fully vested and non-forfeitable on March 16, 2025. The restricted shares were valued at $0.41 per share, for a total of $2.0 million. The deferred compensation related to these grants will be expensed on the financial statements over the five year vesting period. NoNaN other equity awards have been made under the plan.

For the three months ended July 31, 2021 and July 31, 2020 ~~and~~ ~~July 31, 2019~~, the Company expensed $148 and $150, ~~and $47,~~ respectively.

~~10.~~12. Stock Repurchase Program

The Board of Directors approved a stock purchase program authorizing the repurchase of up to $4,000 of its common stock. The timing and amount of any share repurchases will be determined by Butler National’s management based on market conditions and other factors. The program is currently authorized through May 1, ~~2021.~~2022.

The table below provides information with respect to common stock purchases by the Company through July 31, ~~2020~~2021.

Period
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Program authorization
$ 500
Shares purchased in prior periods
878,814 $ 0.26 878,814 $ 275
Increase in program authorization April 2018 (b)
- $ - - $ 525
Quarter ended October 31, 2018 (a)
480,805 $ 0.30 480,805 $ 381
Quarter ended January 31, 2019 (a)
186,727 $ 0.34 186,727 $ 317
Quarter ended April 30, 2019 (a)
580,705 $ 0.38 580,705 $ 94
Increase in program authorization April 2019 (c)
- $ - - $ 1,569
Quarter ended July 31, 2019 (a)
120,821 $ 0.35 120,821 $ 1,526
Increase in program authorization October 2019 (d)
- $ - - $ 3,301
Quarter ended October 31, 2019 (a)
206,050 $ 0.46 206,050 $ 3,206
Quarter ended January 31, 2020 (a)
267,468 $ 0.70 267,468 $ 3,019
Quarter ended April 30, 2020 (a)
25 $ 0.41 25 $ 3,019
Quarter ended July 31, 2020 (a)
212,000 $ 0.51 212,000 $ 2,911
Total
2,933,415 $ 0.37 2,933,415

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Shares purchased in prior periods		2,721,415	$	0.36		2,721,415	$	3,019
Quarter ended July 31, 2020 (a)		212,000	$	0.51		212,000	$	2,911
Quarter ended October 31, 2020 (a)		152,915	$	0.50		152,915	$	2,835
Quarter ended January 31, 2021 (a)		0	$	0		0	$	2,835
Quarter ended April 30, 2021 (a)		17,303	$	0.65		17,303	$	2,823
Quarter ended July 31, 2021 (a)		0	$	0		0	$	2,823
Total		3,103,633	$	0.38		3,103,633

(a)	These shares of common stock were purchased through a private transaction
~~(b)~~	~~Board of Directors increased program authorization from $500 to $750~~
~~(c)~~	~~Board of Directors increased program authorization from $750 to $2,225~~
~~(d)~~	~~Board of Directors increased program authorization from $2,225 to $4,000~~

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~~Table of Contents~~

~~11.~~13. Lease Right-to-Use

On May 1, 2019, the Company adopted ASU ~~2016-02~~2016-02 Leases – Topic 842. ASU ~~2016-02~~2016-02 requires that on the balance sheet a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.

We lease ~~the casino as well as hangar~~hangars and office space with initial lease terms of two, five ~~twenty-five~~, and fifty years.

	July 31, 2020		July 31, 2021
Right-to-use assets	$	44,349
Lease right-to-use assets			$	3,099
Less accumulated depreciation		3,559		488
Total	$	40,790	$	2,611

Future minimum lease payments for assets under capital leases at July 31, ~~2020~~2021 are as follows:

2022	$	246
2023		251
2024		242
2025		103
2026		106
Thereafter		7,093
Total minimum lease payments		8,041
Less amount representing interest		5,209
Present value of net minimum lease payments		2,832
Less current maturities of lease liability		100
Lease liability, net of current maturities	$	2,732

2021
$ 5,245
2022
5,246
2023
5,300
2024
5,342
2025
5,255
Thereafter
58,299
Total minimum lease payments
84,687
Less amount representing interest
41,589
Present value of net minimum lease payments
43,098
Less current maturities of lease liability
1,200
Lease liability, net of current maturities
$ 41,898

14. Segment Reporting and Sales by Major Customer:

Industry Segmentation

Current Activities- The Company focuses on 2 primary activities, Professional Services and Aerospace Products.

Aerospace Products:

Aircraft Modifications principally includes the modification of customer and company owned business-size aircraft for specific operations or special missions such as addition of aerial photography capabilities and ISR modifications. We provide these services through our subsidiary, Avcon Industries, Inc. ("Aircraft Modifications" or "Avcon").

Special mission electronics principally includes the manufacture, sale, and service of electronics upgrades for classic weapon control systems used on commercial and military aircraft and vehicles. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona.

Butler Avionics sells, installs and repairs aircraft avionics equipment (airplane radio equipment and flight control systems). These systems are flight display systems which include intuitive touchscreen controls with large display that enhance pilot situational awareness and give users unprecedented access to high-resolution terrain mapping, graphical flight planning, geo-referenced charting, traffic display, satellite weather and much more. Butler Avionics is also recognized nationwide for its troubleshooting and repair work particularly on autopilot systems.

Professional Services:

Butler National Service Corporation ("BNSC") provides management services to the Boot Hill Casino, a "state-owned casino".

BCS Design, Inc. provides licensed architectural services. These services include commercial and industrial building design.

Three Months Ended July 31, 2021	*Gaming*		*Aircraft Modification*		*Aircraft Avionics*			*Special Mission Electronics*		*Other*			*Total*
Revenues from customers	$	9,655	$	5,782	$	875		$	1,762	$	71		$	18,145
Interest expense		548		55		0			6		5			614
Depreciation and amortization		578		45		2			33		44			702
Operating income (loss)		3,544		1,143		(19	)		503		(1,149	)		4,022

Three Months Ended July 31, 2020	*Gaming*			*Aircraft Modification*		*Aircraft Avionics*		*Special Mission Electronics*		*Other*			*Total*
Revenues from customers	$	5,307		$	4,793	$	915	$	1,929	$	45		$	12,989
Interest expense		502			67		0		8		11			588
Depreciation and amortization		928			46		2		32		35			1,043
Operating income (loss)		(610	)		916		200		599		(977	)		128

Our Chief Operating Decision Maker (CODM) does not evaluate operating segments using asset or liability information.

Major Customers: Revenue from major customers (10 percent or more of consolidated revenue) were as follows:

	*Three Months Ended July 31, 2021*			*Three Months Ended July 31, 2020*
Aerospace Products – one customer in the three months ended July 31, 2021, one customer in the three months ended July 31, 2020		10.7	%		11.4	%
Professional Services		0			0

In three months ended July 31, 2021 the Company derived 35.0% of total revenue from 5 Aerospace customers. The top customer provided 10.7% of total revenue while the next top four customers ranged from 3.8% to 9.7%.

15. COVID- 19 Overview:

~~12. COVID-19 Overview:~~

The pandemic caused by the disease ~~COVID-19~~COVID-19 was first reported in Wuhan, China in December 2019 and has since spread throughout the world. Financial markets have been volatile in 2020 and 2021, primarily due to uncertainty with respect to the severity and duration of the pandemic.

The pandemic ~~has~~ resulted in federal, state and local governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions or bans, business curtailments, school closures, and other protective measures.

Our aerospace segment qualified as “essential” under applicable federal guidance and state orders. The facilities have continued operations. We are enforcing social distancing and enhanced health, safety and sanitization measures in accordance with guidelines from the Center for Disease Control (the “CDC”).

~~We have also implemented necessary procedures and support to enable a significant portion of our Olathe headquarters personnel to work remotely.~~

Our professional services operations at the Boot Hill Casino & Resort was forced to close from March 18, 2020 thru May 21, 2020. The casino reopened to the public on May 22, 2020 with reduced hours to allow for extra time for cleaning and sanitizing in accordance with CDC guidelines and a limited number of games and food
offerings. We are also continuing to enforce social distancing measures throughout the ~~casino.~~casino and are subject to state mandated restrictions. Since reopening the Boot Hill Casino & Resort we have experienced lower customer headcount, which has been ~~partially~~ off-set by a larger net revenue per customer. ~~We are experiencing, and expect to continue experiencing, lower demand for our professional services and increased costs and other challenges related to COVID-19 that adversely affects our business.~~

BHCMC, LLC, a subsidiary in the professional services segment, received a loan in the principal amount of $2.0 million (the “SBA Loan”) under the Paycheck Protection Program (“PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The intent and purpose of the PPP is to support companies during the COVID-19 pandemic by providing funds for certain specified business expenses, with a focus on payroll. We have used the proceeds from the SBA Loan to maintain our payroll and retain casino staff. With the assistance of the SBA Loan, we believe we have sufficient liquidity at this time to maintain our business operations during this difficult time.

The ~~COVID-19~~COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020 and continues to impact ~~us in fiscal 2021.~~us. We face numerous uncertainties in estimating the direct and indirect effects on our present and future business operations, financial condition, results of operations, and liquidity. Due to several rapidly changing variables related to the ~~COVID-19~~COVID-19 pandemic, we cannot reasonably estimate future economic trends and the timing of when stability will return.

As schools, businesses and the economy in general have slowly reopened, and vaccinations rates in our operating territory improve and new infections decline, we have continued to see improvements in customer headcount. However, the unpredictable nature of the pandemic could again lead to closures, decreased traffic and demand, and increased COVID-19- related operating expenses, for the foreseeable future. While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to emerge from the pandemic.

16. Extension of the Shareholder Rights Plan:

On July 22, 2021, the Company extended the shareholder rights plan between the Company and UMB Bank, N.A. as rights agent dated as of August 2, 2011 (the “Rights Plan”). The Rights Plan is intended to protect the interests of the Company’s stockholders and enable them to realize the full potential value of their investment by reducing the likelihood that any person or group gains control of the Company, through open market accumulation or other tactics, without appropriately compensating all stockholders. Pursuant to the Rights Plan, the Company issued, by means of a dividend, 1 preferred share purchase right (a "Right") for each outstanding share of our Common Stock to shareholders of record on the close of business on August 2, 2011. Shares issued after August 2, 2011 also include one Right. Until triggering event, these Rights will trade with, and be represented by, the shares of our Common Stock. The Rights will generally become exercisable only if any person (or any persons acting as a group) acquires 15% or more of our outstanding Common Stock (the “Acquiring Person”) in a transaction not approved by the Board, subject to certain exceptions.

If the Rights become exercisable, all holders of Rights, other than the Acquiring Person, will be entitled to acquire shares of the Company’s common stock at a 50% discount. In such situation, Rights held by the Acquiring Person would become void and will not be exercisable.

Each Right entitles the registered holder to purchase from the Company one two-hundredth of a share of Series C Participating Preferred Stock, par value $5.00 per share (the “Preferred Shares”), of the Company at a price of $10 per one two-hundredth of a Participating Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment. Unless a triggering event occurs, the value of the Right is considered de minimis.

Unless earlier redeemed, terminated or exchanged pursuant to the terms of the Rights Plan, or the Rights Plan is extended, the Rights will expire at the close of business on August 2, 2031. The Board may terminate the Rights Plan before that date if the Board determines that there is no longer a threat to shareholder value.

~~13.~~17. Subsequent Events:

The Company evaluated its July 31, ~~2020~~2021 financial statements for subsequent events through the filing date of this report. The Company is not aware of any subsequent events that would require recognition or disclosure in the financial statements.

~~Table of Contents~~

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

THROUGHOUT THIS ITEM 2 ALL NON TABULAR FINANCIAL RESULTS ARE PRESENTED IN THOUSANDS OF U.S. DOLLARS EXCEPT WHERE MILLIONS OF DOLLARS IS INDICATED.

Forward-Looking Statements

Statements made in this report, other reports and proxy statements filed with the Securities and Exchange Commission, communications to stockholders, press releases, and oral statements made by representatives of the Company that are not historical in nature, or that state the Company or management intentions, hopes, beliefs, expectations or predictions of the future, may constitute "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements can often be identified by the use of forward-looking terminology, such as "could," "should," "will," "intended," "continue," "believe," "may," "expect," "hope," "anticipate," "goal," "forecast," "plan," "guidance" or "estimate" or the negative of these words, variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties, and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020~~,2021, and elsewhere herein or in other reports filed with the SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.

The forward-looking statements in this report are only predictions and actual events or results may differ materially. In evaluating such statements, a number of risks, uncertainties and other factors could cause actual results, performance, financial condition, cash flows, prospects and opportunities to differ materially from those expressed in, or implied by, the forward-looking statements. These risks, uncertainties and other factors include those set forth in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020~~,2021, including the following factors:

	●	the geographic location of our casino;
	●	customer concentration risk;

●

~~extensive regulation across our industries;~~executive officers are family members;

●

~~evolving government regulations and law;~~industrial business cycles;

●

~~the geographic location of our casino;~~fixed-price contracts;

●

~~customer concentration risk;~~development, production, testing and marketing of new products;

●

loss of key personnel;

●

risks associated with ~~the potential acquisition of land at the Boot Hill Casino;~~international sales;

●

~~industrial business cycles;~~future acquisitions and investments;

●

~~market competition;~~change of control restrictions;

●

~~marketability restrictions of our common stock;~~cyber-security threats;

●

~~stock dilution caused by the annual employer match to~~extensive regulation across our ~~401(k) plan;~~industries;

	●	evolving government regulations and law;
	●	changes in regulations of financial reporting;

●

the ~~possibility~~stability of ~~a reverse-stock split;~~credit markets;

●

~~executive officers are family members;~~potential impairment losses;

●

marketability restrictions of our common stock;

●

the possibility of a reverse-stock split;

●

stock dilution caused by the annual employer match to our 401(k) plan;

●

market competition;

●

acts of terrorism and war;

	●	~~non-renewal of certain casino management contracts;~~inclement weather and natural disasters;
	●	~~changes in regulations of financial reporting;~~pandemics or other national health crisis (including COVID-19);

●

~~fluctuating fuel and energy costs;~~

●

~~fixed-price contracts;~~fluctuating fuel and energy costs;

●

~~development, production, testing and marketing of new products;~~

●

~~the stability of credit markets;~~

●

~~cyber-security threats;~~

●

~~acts of terrorism and war;~~

●

~~inclement weather and natural disasters;~~

	●	~~pandemics or other national health crisis;~~
	●	~~loss of key personnel;~~

●

~~risks associated with international sales;~~

●

~~future acquisitions and investments;~~

●

~~change of control restrictions;~~

●

~~potential impairment losses;~~

●

extensive taxation;

Except as expressly required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. Results of operations in any past period should not be considered indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of the Company's common stock.

Investors should also be aware that while the Company, from time to time, communicates with securities analysts; it is against its policy to disclose any material non-public information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of Butler National Corporation.

~~Table of Contents~~

Management Overview

Management is focused on increasing long-term shareholder value from increased cash generation, earnings growth, and prudently managing capital expenditures. We plan to do this by continuing to drive increased revenue from product and service innovations, strategic acquisitions, and targeted marketing programs.

We have two separate reporting segments: Aerospace Products and Professional Services. Aerospace Products and Professional Services do not share the same customers and suppliers and have substantially distinct businesses. The Aerospace Products operating segment provides products and services in the aerospace industry. Companies in Aerospace Products derive their revenue from system design, engineering, manufacturing, integration, installation, repairing, overhauling, servicing and distribution of aerostructures, avionics, aircraft components, accessories, subassemblies and systems. The Professional Services operating segment provides services in the gaming industry. Professional Services companies manage a gaming and entertainment facility and provide architectural and engineering services. These reporting segments operate through various subsidiaries and affiliates listed in the Company’s fiscal year ~~2020~~2021 Annual Report on Form 10-K.

Aerospace Products. The Aerospace Products segment includes the manufacture, sale and service of electronic equipment and systems and technologies to enhance and support products related to aircraft. Additionally, we also operate several Federal Aviation Administration (the "FAA") Repair Stations. Companies in Aerospace Products concentrate on Learjet, Beechcraft King Air, Cessna turbine engine, Cessna multi-engine piston and Dassault Falcon 20 aircraft. Specifically, the design, distribution and support for products for older aircraft, or “Classic” aircraft are areas of focus for companies in Aerospace Products.

Products. The products that the companies within this group design, engineer, manufacture, integrate, install, repair and service include:

●	Aerial surveillance products	●	GARMIN GTN Global Position System Navigator with Communication Transceiver

●	Aerodynamic enhancement products	●	J.E.T autopilot products

●	Airspeed and altimeter systems	●	Electrical systems and switching equipment

●	Avcon Fins	●	Noise suppression systems

●	ADS-B (transponder) systems	●	Rate gyroscopes

●	Conversion of passenger configurations to cargo	●	Replacement vertical accelerometers

●	Cargo/sensor carrying pods	●	Provisions for external stores

●	Electronic navigation instruments, radios and transponders	●	Attitude heading reference systems

Modifications. The companies in Aerospace Products have authority pursuant to Federal Aviation Administration Supplemental Type Certificates (“STCs”) and Parts Manufacturer Approval (“PMA”), to build required parts and subassemblies and to make applicable installations. Companies in Aerospace Products perform modifications in the aviation industry including:

●	Aerial photograph capabilities	●	Extended tip fuel tanks

●	Aerodynamic improvements	●	Radar systems

●	Avionics systems	●	ISR – Intelligence Surveillance Reconnaissance

●	Cargo doors	●	Special mission modifications

●	Conversion from passenger to freighter configuration	●	Stability enhancements

●	Extended doors	●	Traffic collision avoidance systems

Special Mission Electronics. We supply defense-related, commercial off-the-shelf products to various commercial entities and government agencies and subcontractors in order to update or extend the useful life of aircraft with older components and technology. These products include:

●	Cabling	●	HangFire Override Modules

●	Electronic control systems	●	Test equipment

●	~~Electronic control systems~~Gun Control Units for Apache and Blackhawk helicopters	●	~~Test equipment~~

●	Gun Control Units for ~~Apache and Blackhawk helicopters~~	●	~~Gun Control Units for~~ land and sea based military vehicles

~~Table of Contents~~

Professional Services. The Professional Services segment includes the management of a gaming facility and related dining and entertainment facilities in Dodge City, Kansas. Boot Hill Casino and Resort features approximately 645 slot machines and 20 table games. Due to COVID-19, Boot Hill Casino and Resort currently operates 520 slot machines and 16 table games. Companies in Professional Services also provide licensed architectural services, including commercial and industrial building design, and engineering services.

Boot Hill. Butler National Service Corporation (“BNSC”), via BHCMC, LLC (“BHCMC”), a company in Professional Services, has managed The Boot Hill Casino and Resort in Dodge City, Kansas (“Boot Hill”) since 2009 pursuant to the Lottery Gaming Facility Management Contract, by and among BNSC, BHCMC and the Kansas Lottery, originally dated December 8, 2009, as subsequently amended (“Boot Hill Agreement”). As required by Kansas law, all games, gaming equipment and gaming operations at Boot Hill are owned and operated by the Kansas Lottery.

Architectural and Engineering Services. Companies in Professional Services provide licensed architectural, including commercial and industrial building design, and engineering services.

COVID-19 Overview

The pandemic caused by the disease COVID-19 was first reported in Wuhan, China in December 2019 and has since spread throughout the world. Financial markets have been volatile in 2020 and 2021, primarily due to uncertainty with respect to the severity and duration of the pandemic.

~~We have also implemented necessary procedures and support to enable a significant portion of our Olathe headquarters personnel to work remotely.~~

Our professional services operations at the Boot Hill Casino & Resort was forced to close from March 18, 2020 thru May 21, 2020. The casino reopened to the public on May 22, 2020 with reduced hours to allow for extra time for cleaning and sanitizing in accordance with CDC guidelines and a limited number of games and food
offerings. We are also continuing to enforce social distancing measures throughout the ~~casino.~~casino and are subject to state mandated restrictions. Since reopening the Boot Hill Casino & Resort we have experienced lower customer headcount, which has been ~~partially~~ off-set by a larger net revenue per customer. ~~We are experiencing, and expect to continue experiencing, lower demand for our professional services and increased costs and other challenges related to COVID-19 that adversely affects our business.~~

The COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020 and continues to impact ~~us in fiscal 2021.~~us. We face numerous uncertainties in estimating the direct and indirect effects on our present and future business operations, financial condition, results of operations, and liquidity. Due to several rapidly changing variables related to the COVID-19 pandemic, we cannot reasonably estimate future economic trends and the timing of when stability will return.

Results Overview

The three months ended July 31, 2021 revenue increased 40% to $18.1 million compared to $13.0 million in the three months ended July 31, 2020. In the three months ended July 31, 2021 the professional services revenue was $9.7 million compared to $5.4 million in the three months ended July 31, 2020, ~~revenue~~ ~~decreased24%~~ to ~~$13.0~~ ~~million compared to~~ ~~$17.0~~ ~~million in~~ an increase of 82%. In the three months ended July 31, ~~2019. In~~2021 the Aerospace Products revenue was $8.4 million compared to $7.6 million in the three months ended July 31, 2020, ~~the professional services revenue was~~ ~~$5.4~~ ~~million compared to~~ ~~$8.1~~ ~~million in the~~ an increase of 10%.

The three months ended July 31, ~~2019~~, 2021 net income increased to $2.9 million compared to a ~~decrease~~net loss of ~~34%. In~~$15 in the three months ended July 31, ~~2020~~ ~~the Aerospace Products revenue was~~ ~~$7.6~~ ~~million compared to~~ ~~$8.9~~ ~~million in the~~ 2020. The three months ended July 31, ~~2019~~, ~~a decrease~~2021, operating income increased to $4.0 million from an operating income of ~~14%~~.

~~The~~ $128 in the three months ended July 31, ~~2020~~ ~~net income (loss)~~ ~~decreased~~ ~~to a~~ ~~$15~~ ~~net loss compared to a net income of~~ ~~$2.1~~ ~~million in the~~ ~~three months ended July 31, 2019. The~~ ~~three months ended July 31, 2020, operating income~~ ~~decreased~~ to ~~$128, from an operating income of~~ ~~$3.5~~ ~~million in the~~ ~~three months ended July 31, 2019~~.2020.

RESULTS OF OPERATIONS

THREE MONTHS ENDING JULY 31, 2021 COMPARED TO THREE MONTHS ENDING JULY 31, 2020

(dollars in thousands)	Three Months Ended July 31, 2021		Percent of Total Revenue			Three Months Ended July 31, 2020		Percent of Total Revenue			Percent Change 2020-2021
Revenue:
Professional Services	$	9,726		54	%	$	5,352		41	%		82	%
Aerospace Products		8,419		46	%		7,637		59	%		10	%
Total revenue		18,145		100	%		12,989		100	%		40	%

Costs and expenses:
Costs of Professional Services		3,701		20	%		3,410		26	%		9	%
Cost of Aerospace Products		6,012		33	%		5,100		39	%		18	%
Marketing and advertising		1,204		7	%		953		7	%		26	%
Employee benefits		575		3	%		585		5	%		-2	%
Depreciation and amortization		702		4	%		1,043		8	%		-33	%
General, administrative and other		1,929		11	%		1,770		14	%		9	%
Total costs and expenses		14,123		78	%		12,861		99	%		10	%
Operating income	$	4,022		22	%	$	128		1	%		3042	%

1317

~~RESULTS OF OPERATIONS~~

~~THREE MONTHS ENDING JULY 31, 2020 COMPARED TO THREE MONTHS ENDING JULY 31, 2019~~

(dollars in thousands)
Three Months Ended July 31, 2020 Percent of Total Revenue Three Months Ended July 31, 2019 Percent of Total Revenue Percent Change 2019-2020
Revenue:

Professional Services
$ 5,352 41 % $ 8,116 48 % -34 %
Aerospace Products
7,637 59 % 8,900 52 % -14 %
Total revenue
12,989 100 % 17,016 100 % -24 %

Costs and expenses:

Costs of Professional Services
3,410 26 % 3,850 23 % -11 %
Cost of Aerospace Products
5,100 39 % 4,969 29 % 3 %
Marketing and advertising
953 7 % 1,104 7 % -14 %
Employee benefits
585 5 % 547 3 % 7 %
Depreciation and amortization
1,306 10 % 1,239 7 % 5 %
General, administrative and other
1,507 12 % 1,786 10 % -16 %
Total costs and expenses
12,861 99 % 13,495 79 % -5 %
Operating income
$ 128 1 % $ 3,521 21 % -96 %

Revenue:

Revenue ~~decreased24%~~increased 40% to ~~$13.0~~$18.1 million in the three months ended July 31, ~~2020~~,2021, compared to ~~$17.0~~$13.0 million in the three months ended July 31, ~~2019~~.2020. See "Operations by Segment" below for a discussion of the primary reasons for the ~~decrease~~increase in revenue.

●

Professional Services derives its revenue from (a) professional management services in the gaming industry through Butler National Service Corporation ("BNSC") and BHCMC, LLC ("BHCMC"), and (b) professional architectural, engineering and management support services. Revenue from Professional Services ~~decreased34%~~increased 82% for the three months to ~~$5.4~~$9.7 million at July 31, ~~2020~~2021 compared to ~~$8.1~~$5.4 million at July 31, ~~2019~~.2020.

●

Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue ~~decreased14%~~increased 10% for the three months to ~~$7.6~~$8.4 million at July 31, ~~2020~~2021 compared to ~~$8.9~~$7.6 million at July 31, ~~2019~~.2020.

Costs and expenses:

Costs and expenses related to Professional Services and Aerospace Products include the cost of engineering, labor, materials, equipment utilization, control systems, security and occupancy.

Costs and expenses ~~decreased~~5%increased 10% in the three months ended July 31, ~~2020~~2021 to ~~$12.9~~$14.1 million compared to ~~$13.5~~$12.9 million in the three months ended July 31, ~~2019~~.2020. Costs and expenses were ~~99%~~78% of total revenue in the three months ended July 31, ~~2020~~,2021, as compared to ~~79%~~99% of total revenue in the three months ended July 31, ~~2019~~.2020.

Costs of Professional Services ~~decreased11%~~increased 9% in the three months ended July 31, ~~2020~~2021 to ~~$3.4~~$3.7 million compared to ~~$3.9~~$3.4 million in the three months ended July 31, ~~2019~~.2020. Costs were ~~26%~~20% of total revenue in the three months ended July 31, ~~2020~~,2021, as compared to ~~23%~~26% of total revenue in the three months ended July 31, ~~2019~~.2020.

Costs of Aerospace Products increased 3% 18% in the three months ended July 31, ~~2020~~2021 to ~~$5.1~~$6.0 million compared to ~~$5.0~~$5.1 million for the three months ended July 31, ~~2019~~.2020. Costs were ~~39%~~33% of total revenue in the three months ended July 31, ~~2020~~,2021, as compared to ~~29%~~39% of total revenue in the three months ended July 31, ~~2019~~.2020.

~~Table of Contents~~

Marketing and advertising expenses ~~decreased14%~~increased 26% in the three months ended July 31, ~~2020~~,2021, to ~~$1.0~~$1.2 million compared to ~~$1.1~~$1.0 million in the three months ended July 31, ~~2019~~.2020. Expenses were 7% of total revenue in the three months ended July 31, ~~2020~~,2021, as compared to 7% of total revenue in the three months ended July 31, ~~2019~~.2020. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

Employee benefits expenses as a percent of total revenue was 5%3% in the three months ended July 31, ~~2020~~,2021, compared to 3%5% in the three months ended July 31, ~~2019~~.2020. These expenses ~~increased~~7%decreased 2% to ~~$585~~$575 in the three months ended July 31, ~~2020~~,2021, from ~~$547~~$585 in the three months ended July 31, ~~2019~~.2020. These expenses include the employers' share of all federal, state and local taxes, paid time off for vacation, holidays and illness, employee health and life insurance programs and employer matching contributions to retirement plans.

Depreciation and amortization expenses as a percent of total revenue was ~~10%~~4% in the three months ended July 31, ~~2020~~,2021, compared to 7%8% in the three months ended July 31, ~~2019~~.2020. These expenses ~~increased~~5%decreased 33% to ~~$1.3~~$702 in the three months ended July 31, 2021 from $1.0 million in the three months ended July 31, ~~2020~~ ~~from~~ ~~$1.2~~ ~~million in the three months ended~~ ~~July 31, 2019~~.2020. These expenses include depreciation related to owned assets being depreciated over various useful lives and amortization of intangible items including the Kansas privilege fee related to the Boot Hill Casino being expensed over the initial term of the gaming contract with the State of Kansas. BHCMC, LLC depreciation and amortization expense for the three months ended July 31, ~~2020~~2021 was ~~$928~~$578 compared to ~~$938~~$928 in the three months ended July 31, ~~2019~~.2020.

General, administrative and other expenses as a percent of total revenue was ~~12%~~11% in the three months ended July 31, ~~2020~~,2021, compared to ~~10%~~14% in the three months ended July 31, ~~2019~~.2020. These expenses ~~decreased16%~~increased 9% to ~~$1.5~~$1.9 million in the three months ended July 31, ~~2020~~,2021, from ~~$1.8~~$1.8 million in the three months ended July 31, ~~2019~~.2020.

Other ~~income (expense):~~expense:

Interest expense was ~~$588~~$614 in the three months ended July 31, ~~2020~~,2021, compared with interest expense of ~~$1.1~~ ~~million~~$588 in the three months ended July 31, ~~2019~~.2020. Interest related to obligations of BHCMC, LLC was ~~$502~~$548 in the three months ended July 31, ~~2020~~2021 compared to ~~$1.0~~$502 million in the three months ended July 31, ~~2019~~.2020.

Operations by Segment

We have two operating segments, Professional Services and Aerospace Products. The Professional Services segment includes revenue contributions and expenditures associated with casino management services and professional architectural, engineering and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft.

The following table presents a summary of our operating segment information for the three months ended July 31, ~~2020~~2021 and July 31, ~~2019~~:2020:

(dollars in thousands)	Three Months Ended July 31, 2020			Percent of Total Revenue			Three Months Ended July 31, 2019		Percent of Total Revenue			Percent Change 2019-2020			Three Months Ended July 31, 2021		Percent of Total Revenue			Three Months Ended July 31, 2020			Percent of Total Revenue			Percent Change 2020-2021
Professional Services				��
Revenue
Boot Hill Casino	$	5,307			99	%	$	8,069		99	%		-34	%	$	9,655		99	%	$	5,307			99	%		82	%
Management/Professional Services		45			1	%		47		1	%		-4	%		71		1	%		45			1	%		58	%
Revenue		5,352			100	%		8,116		100	%		-34	%		9,726		100	%		5,352			100	%		82	%

Costs of Professional Services		3,410			64	%		3,850		48	%		-11	%		3,701		38	%		3,410			64	%		9	%
Expenses		2,733			51	%		3,017		37	%		-9	%		3,031		31	%		2,733			51	%		11	%
Total costs and expenses		6,143			115	%		6,867		85	%		-11	%		6,732		69	%		6,143			115	%		10	%
Professional Services operating income (loss) before noncontrolling interest in BHCMC, LLC	$	(791	)		-15	%	$	1,249		15	%		-163	%	$	2,994		31	%	$	(791	)		-15	%		N/A

(dollars in thousands)
Three Months Ended July 31, 2020 Percent of Total Revenue Three Months Ended July 31, 2019 Percent of Total Revenue Percent Change 2019-2020
Aerospace Products

Revenue
$ 7,637 100 % $ 8,900 100 % -14 %

Costs of Aerospace Products
5,100 67 % 4,969 56 % 3 %
Expenses
1,618 21 % 1,659 18 % -2 %
Total costs and expenses
6,718 88 % 6,628 74 % 1 %

Aerospace Products operating income $ 919 12 % $ 2,272 26 % -60 %

~~Table of Contents~~

~~Professional Services~~

●

~~Revenue from Professional Services~~ ~~decreased34%~~ ~~for the three months ended~~ ~~July 31, 2020~~ to ~~$5.4~~ ~~million compared to~~ ~~$8.1~~ ~~million for the three months ended~~ ~~July 31, 2019. The decrease resulted from Boot Hill Casino & Resort being forced to close from March 18, 2020 thru May 21, 2020 due to COVID-19.~~

~~In the three months ended~~ ~~July 31, 2020~~ ~~Boot Hill Casino received gross receipts for the State of Kansas of~~ ~~$7.2~~ ~~million compared to~~ ~~$10.3~~ ~~million for the three months ended~~ ~~July 31, 2019. Mandated fees, taxes and distributions reduced gross receipts by~~ ~~$2.4~~ ~~million resulting in gaming revenue of~~ ~~$4.8~~ ~~million for the three months ended~~ ~~July 31, 2020, compared to a reduction to gross receipts of~~ ~~$3.3~~ ~~million resulting in gaming revenue of~~ ~~$7.0~~ ~~million for the three months ended~~ ~~July 31, 2019. Non-gaming revenue at Boot Hill Casino decreased to~~ ~~$509~~ ~~for the three months ended~~ ~~July 31, 2020, compared to~~ ~~$1.0~~ ~~million for the three months ended~~ ~~July 31, 2019~~.

The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed architectural services. Professional Services revenue excluding Boot Hill Casino ~~decreased~~4% to ~~$45~~ ~~for the three months ended~~ ~~July 31, 2020, compared to~~ ~~$47~~ ~~for the three months ended~~ ~~July 31, 2019~~.

●

~~Costs of Professional Services~~ ~~decreased11%~~ ~~in the three months ended~~ ~~July 31, 2020~~ to ~~$3.4~~ ~~million compared to~~ ~~$3.9~~ ~~million in the three months ended~~ ~~July 31, 2019. Costs were~~ ~~64%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2020, as compared to~~ ~~48%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2019~~.

●

~~Expenses~~ ~~decreased~~9% ~~in the three months ended~~ ~~July 31, 2020~~ to ~~$2.7~~ ~~million compared to~~ ~~$3.0~~ ~~million in the three months ended~~ ~~July 31, 2019. Expenses were~~ ~~51%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2020, as compared to~~ ~~37%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2019~~.

(dollars in thousands)

Three Months Ended July 31, 2021

Percent of Total Revenue

Three Months Ended July 31, 2020

Percent of Total Revenue

Percent Change 2020-2021

Aerospace Products

										●	~~Revenue~~ ~~decreased14%~~ to ~~$7.6~~ ~~million in the three months ended~~ ~~July 31, 2020, compared to~~ ~~$8.9~~ ~~million in the three months ended~~ ~~July 31, 2019. The~~ ~~decrease~~ ~~in revenue is primarily due to~~ ~~a decrease~~ ~~in avionics business of~~ ~~$2.4~~ ~~million and~~ ~~an increase~~ ~~in aircraft modification business of~~ ~~$1.1~~ ~~million. We have invested in the development of several STCs. These STCs are state of the art avionics and we are aggressively marketing both domestically and internationally.~~
Revenue	$	8,419	100	%	$	7,637	100	%	10	%

Costs of Aerospace Products		6,012	71	%		5,100	67	%	18	%
Expenses		1,379	17	%		1,618	21	%	-15	%
Total costs and expenses		7,391	88	%		6,718	88	%	10	%

Aerospace Products operating income	$	1,028	12	%	$	919	12	%	12	%

●

Professional Services

~~Costs of Aerospace Products~~ ~~increased~~3% ~~in the three months ended~~ ~~July 31, 2020~~ to ~~$5.1~~ ~~million compared to~~ ~~$5.0~~ ~~million~~
●
Revenue from Professional Services increased 82% for the ~~three months ended~~ ~~July 31, 2019. Costs were~~ ~~67%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2020, as compared to~~ ~~56%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2019~~.

●

~~Expenses~~ ~~decreased~~2% ~~in the three months ended~~ ~~July 31, 2020~~ to ~~$1.6~~ ~~million compared to~~ ~~$1.7~~ ~~million in the three months ended~~ ~~July 31, 2019. Expenses were~~ ~~21%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2020, as compared to~~ ~~18%~~ ~~of segment total revenue in the three months ended~~ ~~July 31, 2019~~.

~~Employees~~

~~Other than persons employed by our gaming subsidiaries there were~~ ~~112~~ ~~full time and~~ 5 ~~part time employees on~~ ~~July 31, 2020, compared to~~ ~~102~~ ~~full time and~~ 5 ~~part time employees on~~ ~~July 31, 2019. As of~~ ~~September 4, 2020, staffing is~~ ~~110~~ ~~full time and~~ 5 ~~part time employees. Our staffing at Boot Hill Casino & Resort on~~ ~~July 31, 2020~~ ~~was~~ ~~175~~ ~~full time and~~ 66 ~~part time employees compared to~~ ~~192~~ ~~full time and~~ 67 ~~part time employees on~~ ~~July 31, 2019. At~~ ~~September 4, 2020~~ ~~there are~~ ~~170~~ ~~full time and~~ 64 ~~part time employees. None of the employees are subject to any collective bargaining agreements.~~

~~Liquidity and Capital Resources~~

~~The ownership structure of BHCMC, LLC is now:~~

Members of

Board of

Equity

Income
Membership Interest

Managers

Ownership

(Loss) Sharing
Class A

3

20%

40%
Class B

4

80%

60%

Our wholly owned subsidiary, Butler National Service Corporation continues friendly discussions with the other member of BHCMC, LLC to explore the possible acquisition by Butler National Service Corporation of the other member's 20% equity interest in BHCMC, LLC. If and when a definitive agreement is reached, such definitive agreement and a press release concerning the acquisition will be issued to describe the terms of the agreement and the intentions of the members. We have not set a definitive timetable for our discussions and there can be no assurances that the process will result in any transaction being announced or completed. At present there is no disagreement between the members of BHCMC, LLC. We do not plan to disclose or comment on developments until further disclosure is deemed appropriate.

BHCMC, LLC, rents the casino building under the terms of a 25 year lease from BHC Development L.C. ("BHCD"). Butler National Service Corporation continues friendly discussions with BHC Development L.C. to explore the possible acquisition by Butler National Service Corporation of the casino building and related land. If and when a definitive agreement is reached, such definitive agreement and press release concerning the acquisition will be issued to describe the terms of the agreement and the intentions of the members. Butler National Corporation, its management, and its subsidiaries have no ownership interest in BHCI or BHCD.

~~Table of Contents~~

~~Analysis and Discussion of Cash Flow~~

~~During the~~ three months ended July 31, ~~2020~~ ~~our cash position increased by~~ ~~$817. Net loss was~~ ~~$454~~2021 to $9.7 million compared to $5.4 million for the three months ended July 31, ~~2020. Cash flows provided by operating activities was~~ ~~$2.5~~ ~~million for~~2020.

In the three months ended July 31, ~~2020. Non-cash activities consisting~~2021 Boot Hill Casino received gross receipts for the State of ~~depreciation and amortization~~ ~~provided$1.6~~Kansas of $12.6 million ~~while deferred compensation provided $150. Customer deposits~~ ~~increased~~ ~~our cash position by~~ ~~$4.7~~ ~~million. We reduced our lease liability by~~ ~~$276. Inventories~~ ~~decreased~~ ~~our cash position by~~ ~~$1.4~~ ~~million. Accounts receivable~~ ~~decreased~~ ~~our cash position by~~ ~~$1.0~~ ~~million. Gaming facility mandated payments~~ ~~decreased~~ ~~our cash position by~~ ~~$92. Prepaid expenses and other assets~~ ~~decreased~~ ~~our cash by~~ ~~$242. An increase in accounts payable, a decrease in accrued expenses, and an increase in other current liabilities~~ ~~decreased~~ ~~our cash by~~ ~~$381. Income tax payable~~ ~~decreased~~ ~~our cash position by~~ $6.

~~Cash~~ ~~used~~ ~~in investing activities was~~ ~~$2.0~~compared to $7.3 million for the three months ended July 31, ~~2020. We invested $229 to purchase aircraft, $635 towards STCs,~~2020. Mandated fees, taxes and ~~$1.1~~distributions reduced gross receipts by $3.8 million ~~on equipment and furnishings.~~

~~Cash~~ ~~provided~~ ~~by financing activities was~~ ~~$298~~resulting in gaming revenue of $8.6 million for the three months ended July 31, ~~2020. We~~2021, compared to a reduction to gross receipts of $2.5 million resulting in gaming revenue of $4.8 million for the three months ended July 31, 2020. Non-gaming revenue at Boot Hill Casino increased ~~our debt by $2.0 million. We made repayments on our debt~~to $1.1 million for the three months ended July 31, 2021, compared to $509 for the three months ended July 31, 2020.

The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed architectural services. Professional Services revenue excluding Boot Hill Casino increased 58% to $71 for the three months ended July 31, 2021, compared to $45 for the three months ended July 31, 2020.

●

Costs of ~~$1.6~~ ~~million. We purchased company stock~~Professional Services increased 9% in the three months ended July 31, 2021 to $3.7 million compared to $3.4 million in the three months ended July 31, 2020. Costs were 38% of ~~$108. The stock was acquired and placed~~segment total revenue in ~~treasury.~~the three months ended July 31, 2021, as compared to 64% of segment total revenue in the three months ended July 31, 2020.

●

Expenses increased 11% in the three months ended July 31, 2021 to $3.0 million compared to $2.7 million in the three months ended July 31, 2020. Expenses were 31% of segment total revenue in the three months ended July 31, 2021, as compared to 51% of segment total revenue in the three months ended July 31, 2020.

Aerospace Products

●

Revenue increased 10% to $8.4 million in the three months ended July 31, 2021, compared to $7.6 million in the three months ended July 31, 2020. The increase in revenue is primarily due to a decrease in avionics business of $207 and an increase in aircraft modification business of $1.0 million.

●

Costs of Aerospace Products increased 18% in the three months ended July 31, 2021 to $6.0 million compared to $5.1 million for the three months ended July 31, 2020. Costs were 71% of segment total revenue in the three months ended July 31, 2021, as compared to 67% of segment total revenue in the three months ended July 31, 2020.

●

Expenses decreased 15% in the three months ended July 31, 2021 to $1.4 million compared to $1.6 million in the three months ended July 31, 2020. Expenses were 17% of segment total revenue in the three months ended July 31, 2021, as compared to 21% of segment total revenue in the three months ended July 31, 2020.

Employees

Other than persons employed by our gaming subsidiaries there were 118 full time and 4 part time employees on July 31, 2021, compared to 112 full time and 5 part time employees on July 31, 2020. As of September 3, 2021, staffing is 114 full time and 5 part time employees. Our staffing at Boot Hill Casino & Resort on July 31, 2021 was 161 full time and 55 part time employees compared to 175 full time and 66 part time employees on July 31, 2020. At September 3, 2021 there are 167 full time and 54 part time employees. None of the employees are subject to any collective bargaining agreements.

Liquidity and Capital Resources

The ownership structure of BHCMC, LLC is now:

	Members of
	Board of	Equity	Income
Membership Interest	Managers	Ownership	(Loss) Sharing
Class A	3	20%	40%
Class B	4	80%	60%

Analysis and Discussion of Cash Flow

During the three months ended July 31, 2021 our cash position decreased by $1.4 million. Net income was $4.8 million for the three months ended July 31, 2021. Cash flows provided by operating activities was $860 for the three months ended July 31, 2021. Non-cash activities consisting of depreciation and amortization provided $1.3 million, while deferred compensation provided $148 and forgiveness of debt used $2.0 million. Contract assets decreased our cash position by $157. Contract liability decreased our cash position by $3.0 million. Inventories increased our cash position by $113. Accounts receivable decreased our cash position by $1.0 million. Gaming facility mandated payments decreased our cash position by $227. Prepaid expenses and other assets decreased our cash by $18. An increase in accounts payable, a decrease in accrued expenses, and an increase in other current liabilities increased our cash by $269. Income tax payable increased our cash position by $631.

Cash used in investing activities was $1.3 million for the three months ended July 31, 2021. We invested $115 towards STCs, and $1.1 million on equipment and furnishings.

Cash used by financing activities was $1.0 million for the three months ended July 31, 2021. We made repayments on our debt of $1.0 million. We made payments on our lease liability of $34.

Critical Accounting Policies and Estimates

We believe that there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amount of revenue and other significant areas involving management judgments and estimates. These significant accounting policies relate to revenue recognition, the use of estimates, long-lived assets, and Supplemental Type Certificates. These policies and our procedures related to these policies are described in detail below and under specific areas within this "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Revenue Recognition: See footnote 3 to the condensed consolidated financial statements.

Lease Right-to-Use: See footnote 1113 to the condensed consolidated financial statements.

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements.

Significant estimates include assumptions about percentage-of-completion, collection of accounts receivable, inventory obsolescence, the valuation of long-lived assets, including the STC’s, valuation for deferred tax assets and useful life of fixed and other long-term assets.

Long-lived Assets: The Company accounts for its long-lived assets in accordance with ASC Topic 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value.

Supplemental Type Certificates: Supplemental Type Certificates (STCs) are authorizations granted by the Federal Aviation Administration (FAA) for specific modification of a certain aircraft. The STC authorizes us to perform modifications, installations, and assemblies on applicable customer-owned aircraft. Costs incurred to obtain STCs are capitalized and subsequently amortized over a seven year life. The legal life of an STC is indefinite.

Changing Prices and Inflation

We have experienced upward pressure from inflation in fiscal year ~~2021~~.2022. From fiscal year ~~2020~~2021 to fiscal year ~~2021~~2022 most of the increases we experienced were in material costs. This additional cost may not be transferable to our customers resulting in lower income in the future. We anticipate fuel costs and possibly interest rates to rise in fiscal ~~2021~~2022 and ~~2022.~~2023.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 under the Securities Exchange Act of 1934 and are not required to provide the information required under this item.

~~Table of Contents~~

Item 4. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Our principal executive and financial officers have evaluated our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q and have determined that such disclosure controls and procedures are effective, based on criteria in the Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Evaluation of disclosure controls and procedures: Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this Form 10-Q, our Chief Executive Officer and our Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, ~~2020~~.2021. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of July 31, ~~2020~~.2021.

Internal Control Over Financial Reporting

Limitations on Controls

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial Reporting: In our opinion there were no changes in the Company's internal control over financial reporting during the three months ended July 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

1821

Table of Contents

PART II. OTHER INFORMATION

Item 1.			LEGAL PROCEEDINGS.
			As of July 31, ~~2020~~,2021, there are no significant known legal proceedings pending against us. We consider all such unknown proceedings, if any, to be ordinary litigation incident to the character of the business. We believe that the resolution of any claims will not, individually or in the aggregate, have a material adverse effect on the financial position, results of operations, or liquidity of the Company.

Item 1A.			RISK FACTORS.
			There are no other material changes to the risk factors disclosed under Item 1A of our Form 10-K for the fiscal year ended April 30, ~~2020~~.2021.

Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
			The table below provides information with respect to common stock purchases by the Company during the first quarter of fiscal ~~2021~~.2022.

Period
Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
May 1, 2020 - May 31, 2020
- $ - - $ 3,019,000
June 1, 2020 - June 30, 2020
- $ - - $ 3,019,000
July 1, 2020 - July 31, 2020
212,000 $ 0.51 212,000 $ 2,911,000
Total
212,000 $ 0.51 212,000

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
May 1, 2021 - May 31, 2021		-	$	-		-	$	2,823,000
June 1, 2021 - June 30, 2021		-	$	-		-	$	2,823,000
July 1, 2021 - July 31, 2021		-	$	-		-	$	2,823,000
Total		-	$	-		-

(a) Our Board of Directors authorized the repurchase of shares of Butler National common stock in the open market or otherwise, at an aggregate purchase price of $4,000,000. The timing and amount of any share repurchases will be determined by Butler National's management based on market conditions and other factors. The program is currently authorized through May 1, ~~2021.~~2022.

Item 3.		DEFAULTS UPON SENIOR SECURITIES.
		None.

Item 4.		MINE SAFETY DISCLOSURES.
		Not applicable.

Item 5.		OTHER INFORMATION.
		None.

Item 6.		EXHIBITS.

	3.1	Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.

	3.2	Bylaws, as amended, are incorporated by reference to Exhibit 3.2 of our Form 10-Q filed on March 14, 2013.

	4.1	Rights Agreement, dated August 2, 2011, by and between Butler National Corporation and UMB Bank, N.A., as Rights Agent, incorporated by reference to Exhibit 4.1 of our 10-Q filed on December 13, 2016.

	4.2	Amendment One to Rights Agreement between Butler National Corporation and UMB Bank, N.A. dated July 22, 2021, incorporated by reference to Exhibit 4.2 of our Form 8-K filed on July 26, 2021.

	10.1	Loan Agreement dated December 17, 2020 by BHCMC, L.L.C., BHCRE LLC, and Academy Bank, N.A.

	31.1	Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).

	31.2	Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).

	32.1	Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101	The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, ~~2020~~,2021, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of July 31, ~~2020~~2021 and April 30, ~~2020~~,2021, (ii) Condensed Consolidated Statements of Operations for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, and (v) the Notes to Consolidated Financial Statements, with detail tagging.

	104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2021, formatted in Inline XBRL (included as Exhibit 101)

1922

Table of Contents

SIGNATURES

Pursuant to the requirements 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.

	BUTLER NATIONAL CORPORATION
	(Registrant)

September ~~11, 2020~~10, 2021	/s/ Clark D. Stewart
Date	Clark D. Stewart
	(President and Chief Executive Officer)

September ~~11, 2020~~10, 2021	/s/ Tad M. McMahon
Date	Tad M. McMahon
~~Date~~	~~Tad M. McMahon~~
	(Chief Financial Officer)

2023

Table of Contents

Exhibit Index

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.

3.2	Bylaws, as amended, are incorporated by reference to Exhibit 3.2 of our Form 10-Q filed on March 14, 2013.

4.1	Rights Agreement, dated August 2, 2011, by and between Butler National Corporation and UMB Bank, N.A., as Rights Agent, incorporated by reference to Exhibit 4.1 of our 10-Q filed on December 13, 2016.

4.2	Amendment One to Rights Agreement between Butler National Corporation and UMB Bank, N.A. dated July 22, 2021, incorporated by reference to Exhibit 4.2 of our Form 8-K filed on July 26, 2021.

10.1	Loan Agreement dated December 17, 2020 by BHCMC, L.L.C., BHCRE LLC, and Academy Bank, N.A.

31.1	Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).

31.2	Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).

32.1	Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, ~~2020~~,2021, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of July 31, ~~2020~~2021 and April 30, ~~2020~~,2021, (ii) Condensed Consolidated Statements of Operations for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended July 31, ~~2020~~2021 and ~~2019~~,2020, and (v) the Notes to Consolidated Financial Statements, with detail tagging.

104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2021, formatted in Inline XBRL (included as Exhibit 101)

2124

Kansas		41-0834293
(State or other jurisdiction of incorporation or organization)		~~41-0834293~~
~~(State or other jurisdiction of incorporation or organization)~~		(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None	~~None~~

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

		PAGE NO.
Item 1	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – July 31, ~~2020~~2021 (unaudited) and April 30, ~~2020 (Audited)~~2021	3

	Condensed Consolidated Statements of Operations - Three Months Ended July 31, ~~2020~~2021 and ~~2019~~2020	4

	Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended July 31, ~~2020~~2021 and ~~2019~~2020	5

	Condensed Consolidated Statements of Cash Flows - Three Months Ended July 31, ~~2020~~2021 and ~~2019~~2020	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1115

Item 3	Quantitative and Qualitative Disclosures about Market Risk	1721

Item 4	Controls and Procedures	1821

	July 31, 2020			April 30, 2020			*July 31, 2021*			*April 30, 2021*
	(unaudited)						(unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	17,610		$	16,793		$	20,585		$	22,022
Accounts receivable, net of allowance for doubtful accounts		3,830			2,784			2,957			1,961
Inventories
Parts and raw materials		7,062			6,892			4,817			4,829
Work in process		2,925			1,661			3,570			3,657
Finished goods		53			62			68			82
Total inventory, net of allowance		10,040			8,615			8,455			8,568
Contract asset								578			421
Prepaid expenses and other current assets		1,862			1,620			1,521			1,496
Total current assets		33,342			29,812			34,096			34,468

PROPERTY, PLANT AND EQUIPMENT:
Lease right-to-use assets		44,349			44,349			3,099			3,099
Land and building		5,805			5,805
Construction in progress								1,484			1,170
Land								4,751			4,751
Building and improvements								39,762			39,747
Aircraft		8,740			8,511			9,138			9,138
Machinery and equipment		4,195			4,093			4,670			4,253
Office furniture and fixtures		9,544			8,533			11,074			10,699
Leasehold improvements		4,032			4,032			4,032			4,032
		76,665			75,323			78,010			76,889
Accumulated depreciation		(21,754	)		(20,577	)		(21,344	)		(20,519	)
Total property, plant and equipment		54,911			54,746			56,666			56,370
												��
SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $7,275 at July 31, 2020 and $7,029 at April 30, 2020)		6,872			6,483
SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $8,356 at July 31, 2021 and $8,041 at April 30, 2021)								8,011			8,211

OTHER ASSETS:
Other assets (net of accumulated amortization of $10,336 at July 31, 2020 and $10,153 at April 30, 2020)		3,363			3,546
Other assets (net of accumulated amortization of $11,060 at July 31, 2021 and $10,886 at April 30, 2021)								2,730			2,872
Total other assets		3,363			3,546			2,730			2,872
Total assets	$	98,488		$	94,587		$	101,503		$	101,921

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	2,852		$	2,228		$	3,976		$	5,972
Current maturities of lease liability		1,200			1,163			100			107
Accounts payable		1,356			962			2,316			1,893
Customer deposits		6,656			1,994
Contract liability								2,804			5,798
Gaming facility mandated payment		1,246			1,338			1,231			1,458
Compensation and compensated absences		1,756			2,571			1,628			1,862
Income taxes payable		200			206			843			212
Other current liabilities		314			274			345			265
Total current liabilities		15,580			10,736			13,243			17,567

LONG-TERM LIABILITIES
Long-term debt, net of current maturities		2,993			3,211			38,823			39,816
Lease liability, net of current maturities		41,898			42,211			2,732			2,759
Deferred tax liability, net		625			625			400			400
Total long-term liabilities		45,516			46,047			41,955			42,975
Total liabilities		61,096			56,783			55,198			60,542

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Butler National Corporation's stockholders' equity
Preferred stock, par value $5: Authorized 50,000,000 shares, all classes; Designated Classes A and B 200,000 shares; $100 Class A, 9.8%, cumulative if earned liquidation and redemption value; $100, no shares issued and outstanding		-			-
$1,000 Class B, 6%, convertible cumulative, liquidation and redemption value $1,000, no shares issued and outstanding		-			-
Common stock, par value $.01: authorized 100,000,000 shares issued 77,719,677 shares, and outstanding 74,186,262 shares at July 31, 2020 and issued 77,719,677 shares, and outstanding 74,398,262 shares at April 30, 2020		777			777
Preferred stock, par value $5: Authorized 50,000,000 shares, all classes; Designated Classes A and B 200,000 shares; $100 Class A, 9.8%, cumulative if earned liquidation and redemption value; $100, no shares issued and outstanding								0			0
$1,000 Class B, 6%, convertible cumulative, liquidation and redemption value $1,000, no shares issued and outstanding								0			0
Common stock, par value $.01: authorized 100,000,000 shares issued 79,070,382 shares, and outstanding 75,366,749 shares at July 31, 2021 and issued 79,070,382 shares, and outstanding 75,366,749 shares at April 30, 2021								790			790
Capital contributed in excess of par		15,750			15,600			17,048			16,900
Treasury stock at cost, 3,533,415 shares at July 31, 2020 and 3,321,415 shares at April 30, 2020		(1,821	)		(1,713	)
Treasury stock at cost, 3,703,633 shares at July 31, 2021 and 3,703,633 shares at April 30, 2021								(1,909	)		(1,909	)
Retained earnings		18,132			18,147			22,486			19,580
Total Butler National Corporation's stockholders' equity		32,838			32,811			38,415			35,361
Noncontrolling interest in BHCMC, LLC		4,554			4,993			7,890			6,018
Total stockholders' equity		37,392			37,804			46,305			41,379
Total liabilities and stockholders' equity	$	98,488		$	94,587		$	101,503		$	101,921

Item 1	Legal Proceedings	1922

Item 1A	Risk Factors	1922

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	1922

Item 3	Defaults Upon Senior Securities	1922

Item 4	Mine Safety Disclosures	1922

Item 5	Other Information	1922

Item 6	Exhibits	1922

Signatures		2023

Exhibit Index		2124

	THREE MONTHS ENDED						THREE MONTHS ENDED
	July 31,						July 31,
	2020			2019			2021			2020
REVENUE:
Professional Services	$	5,352		$	8,116		$	9,726		$	5,352
Aerospace Products		7,637			8,900			8,419			7,637
Total revenue		12,989			17,016			18,145			12,989

COSTS AND EXPENSES:
Cost of Professional Services		3,410			3,850			3,701			3,410
Cost of Aerospace Products		5,100			4,969			6,012			5,100
Marketing and advertising		953			1,104			1,204			953
Employee benefits		585			547			575			585
Depreciation and amortization		1,306			1,239			702			1,043
General, administrative and other		1,507			1,786			1,929			1,770
Total costs and expenses		12,861			13,495			14,123			12,861

OPERATING INCOME		128			3,521			4,022			128

OTHER INCOME (EXPENSE):
Interest expense		(588	)		(1,097	)		(614	)		(588	)
Gain on sale of airplane		-			529
Forgiveness of debt								2,001			0
Total other income (expense)		(588	)		(568	)		1,387			(588	)

INCOME BEFORE INCOME TAXES		(460	)		2,953
INCOME (LOSS) BEFORE INCOME TAXES								5,409			(460	)

PROVISION (BENEFIT) FOR INCOME TAXES
Provision (benefit) for income taxes		(6	)		762			631			(6	)

NET INCOME (LOSS)		(454	)		2,191			4,778			(454	)
Net (income) loss attributable to noncontrolling interest in BHCMC, LLC		439			(130	)		(1,872	)		439
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$	(15	)	$	2,061		$	2,906		$	(15	)

BASIC EARNINGS PER COMMON SHARE	$	0.00		$	0.03		$	0.04		$	0.00

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		74,386,184			68,270,565			75,366,749			74,386,184

DILUTED EARNINGS PER COMMON SHARE	$	0.00		$	0.03		$	0.04		$	0.00

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		74,386,184			68,270,565			75,366,749			74,386,184

	Shares of Common Stock		Common Stock		Capital Contributed in Excess of Par		Shares of Treasury Stock		Treasury Stock at Cost			Retained Earnings			Total Stock-holders’ Equity BNC			Non controlling Interest in BHCMC			Total Stock-holders’ Equity
Balance, April 30, 2020		77,719,677	$	777	$	15,600		3,321,415	$	(1,713	)	$	18,147		$	32,811		$	4,993		$	37,804

Stock repurchase		0		0		0		212,000		(108	)		0			(108	)		0			(108	)

Deferred compensation, restricted stock		-		0		150		-		0			0			150			0			150

Net Loss		-		0		0		-		0			(15	)		(15	)		(439	)		(454	)

Balance, July 31, 2020		77,719,677	$	777	$	15,750		3,533,415	$	(1,821	)	$	18,132		$	32,838		$	4,554		$	37,392

	Shares of Common Stock		Common Stock		Capital Contributed in Excess of Par		Shares of Treasury Stock		Treasury Stock at Cost			Retained Earnings		Total Stock-holders’ Equity BNC			Non controlling Interest in BHCMC		Total Stock-holders’ Equity
Balance, April 30, 2019		71,008,122	$	710	$	14,767		2,727,051	$	(1,387	)	$	13,913	$	28,003		$	6,341	$	34,344

Stock repurchase		-		-		-		120,821		(43	)		-		(43	)		-		(43	)

Deferred compensation, restricted stock		-		-		47		-		-			-		47			-		47

Net Income		-		-		-		-		-			2,061		2,061			130		2,191

Balance, July 31, 2019		71,008,122	$	710	$	14,814		2,847,872	$	(1,430	)	$	15,974	$	30,068		$	6,471	$	36,539

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
Program authorization							$	500
Shares purchased in prior periods		878,814	$	0.26		878,814	$	275
Increase in program authorization April 2018 (b)		-	$	-		-	$	525
Quarter ended October 31, 2018 (a)		480,805	$	0.30		480,805	$	381
Quarter ended January 31, 2019 (a)		186,727	$	0.34		186,727	$	317
Quarter ended April 30, 2019 (a)		580,705	$	0.38		580,705	$	94
Increase in program authorization April 2019 (c)		-	$	-		-	$	1,569
Quarter ended July 31, 2019 (a)		120,821	$	0.35		120,821	$	1,526
Increase in program authorization October 2019 (d)		-	$	-		-	$	3,301
Quarter ended October 31, 2019 (a)		206,050	$	0.46		206,050	$	3,206
Quarter ended January 31, 2020 (a)		267,468	$	0.70		267,468	$	3,019
Quarter ended April 30, 2020 (a)		25	$	0.41		25	$	3,019
Quarter ended July 31, 2020 (a)		212,000	$	0.51		212,000	$	2,911
Total		2,933,415	$	0.37		2,933,415

2021	$	5,245
2022		5,246
2023		5,300
2024		5,342
2025		5,255
Thereafter		58,299
Total minimum lease payments		84,687
Less amount representing interest		41,589
Present value of net minimum lease payments		43,098
Less current maturities of lease liability		1,200
Lease liability, net of current maturities	$	41,898