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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2023

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to _____________

 

Commission File Number 0-1678

 

BUTLER NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Kansas

 

41-0834293

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

One Aero Plaza, New Century, Kansas 66031

(Address of principal executive offices)(Zip Code)

 

Registrant's telephone number, including area code: (913) 829-4606

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None


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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☐

 

Accelerated filer

☐

Non-accelerated filer

☐

 

Smaller reporting company

☒

 

 

 

Emerging growth company

☐

 

 

 

  

   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

 

The number of shares outstanding of the Issuer's Common Stock, $0.01 par value, as of December 15, 2023 was 69,025,600 shares.

   

1
Table of Contents

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I. FINANCIAL INFORMATION

 

 

 

PAGE

NO. 

Item 1

Financial Statements (Unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets – October 31, 2023 (unaudited) and April 30, 2023

3

 

 

 
  Condensed Consolidated Statements of Operations - Three Months Ended October 31, 2023 and 2022 4
     
  Condensed Consolidated Statements of Operations - Six Months Ended October 31, 2023 and 2022 5
     
 

Condensed Consolidated Statements of Stockholders' Equity - Six Months Ended October 31, 2023 and 2022

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows - Six Months Ended October 31, 2023 and 2022

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

27

 

 

 

Item 4

Controls and Procedures

27

 

PART II. OTHER INFORMATION

 

Item 1

Legal Proceedings

27

 

 

 

Item 1A

Risk Factors

27

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

28

 

 

 

Item 3

Defaults Upon Senior Securities

28

 

 

 

Item 4

Mine Safety Disclosures

28

 

 

 

Item 5

Other Information

28

 

 

 

Item 6

Exhibits

28

 

 

 

Signatures

29

 

 

Exhibit Index

30

 

2
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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of October 31, 2023 and April 30, 2023

(in thousands except per share data) 

 

  

October 31, 2023

  

April 30, 2023

 
  

(unaudited)

     

ASSETS

        

CURRENT ASSETS:

        

Cash

 $18,324  $21,997 

Accounts receivable, net

  5,578   3,793 

Inventory, net

  9,239   8,947 

Contract asset

  1,755   1,893 

Prepaid expenses and other current assets

  1,932   3,532 

Total current assets

  36,828   40,162 
         

LEASE RIGHT-TO-USE ASSET, net

  2,986   3,081 
         

PROPERTY, PLANT AND EQUIPMENT, net

  60,136   59,067 
         

SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $11,165 at October 31, 2023 and $10,603 at April 30, 2023)

  9,044   8,722 
         

OTHER ASSETS:

        

Other assets (net of accumulated amortization of $12,642 at October 31, 2023 and $12,290 at April 30, 2023)

  1,146   1,401 

Deferred tax asset, net

  1,473   1,473 

Total other assets

  2,619   2,874 

Total assets

 $111,613  $113,906 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

        

CURRENT LIABILITIES:

        

Accounts payable

 $9,820  $5,320 

Current maturities of long-term debt

  4,858   4,987 

Current maturities of lease liability

  99   145 

Contract liability

  4,680   6,031 

Gaming facility mandated payment

  1,687   1,730 

Compensation and compensated absences

  1,485   6,722 

Income taxes payable

  1,599   228 

Other current liabilities

  528   214 

Total current liabilities

  24,756   25,377 
         

LONG-TERM LIABILITIES

        

Long-term debt, net of current maturities

  36,026   38,418 

Lease liability, net of current maturities

  3,339   3,330 

Total long-term liabilities

  39,365   41,748 

Total liabilities

  64,121   67,125 
         

COMMITMENTS AND CONTINGENCIES

          
         

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 79,871,211 shares, and outstanding 69,025,600 shares at October 31, 2023 and issued 80,871,211 shares, and outstanding 76,891,689 shares at April 30, 2023

  798   808 

Capital contributed in excess of par

  13,734   13,647 

Treasury stock at cost, 10,845,611 shares at October 31, 2023 and 3,979,522 shares at April 30, 2023

  (7,174)  (2,138)

Retained earnings

  40,134   34,464 

Total stockholders' equity

  47,492   46,781 

Total liabilities and stockholders' equity

 $111,613  $113,906 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

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BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED October 31, 2023 AND 2022 

(in thousands, except per share data)

(unaudited)

 

   

THREE MONTHS ENDED

  
   

October 31,

  
   

2023

    

2022

  

REVENUE:

                

Professional services

   $ 9,770     $ 9,745  

Aerospace products

     9,832       9,581  

Total revenues

     19,602       19,326  
                 

COSTS AND EXPENSES:

                

Cost of professional Services

     4,006       3,752  

Cost of aerospace products

     6,852       6,582  

Marketing and advertising

     1,361       1,368  

General, administrative and other

     3,785       3,622  

Total costs and expenses

     16,004       15,324  
                 

OPERATING INCOME

     3,598       4,002  
                 

OTHER INCOME (EXPENSE):

                

Interest expense

     (615 )     (707 )

Gain on sale of airplanes

     3,729       -  

Interest income

     70       -  

Total other income (expense)

     3,184       (707 )
                 

INCOME BEFORE INCOME TAXES

     6,782       3,295  
                 

PROVISION FOR INCOME TAXES:

                

Provision for income taxes

     1,831       612  
                 

NET INCOME

   $ 4,951     $ 2,683  
                 

BASIC EARNINGS PER COMMON SHARE

   $ 0.07     $ 0.03  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

     69,502,008       76,781,461  
                 

DILUTED EARNINGS PER COMMON SHARE

   $ 0.07     $ 0.03  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

     69,502,008       76,781,461  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

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BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE Six MONTHS ENDED October 31, 2023 AND 2022 

(in thousands, except per share data)

(unaudited)

 

   

SIX MONTHS ENDED

  
   

October 31,

  
   

2023

    

2022

  

REVENUE:

                

Professional Services

   $ 18,810     $ 18,707  

Aerospace Products

     17,976       15,922  

Total revenue

     36,786       34,629  
                 

COSTS AND EXPENSES:

                

Cost of Professional Services

     7,952       7,375  

Cost of Aerospace Products

     14,178       11,409  

Marketing and advertising

     2,639       2,699  

General, administrative and other

     7,282       7,519  

Total costs and expenses

     32,051       29,002  
                 

OPERATING INCOME

     4,735       5,627  
                 

OTHER INCOME (EXPENSE):

                

Interest expense

     (1,254 )     (1,430 )

Gain on sale of airplane

     4,169       -  

Gain on sale of building

     -       69  

Interest income

     117       -  

Total other income (expense)

     3,032       (1,361 )
                 

INCOME BEFORE INCOME TAXES

     7,767       4,266  
                 

PROVISION FOR INCOME TAXES

                

Provision for income taxes

     2,097       872  

Deferred income tax

     -       280  
                 

NET INCOME

     5,670       3,114  
                 

BASIC EARNINGS PER COMMON SHARE

   $ 0.08     $ 0.04  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

     72,005,204       76,618,873  
                 

DILUTED EARNINGS PER COMMON SHARE

   $ 0.08     $ 0.04  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

     72,005,204       76,618,873  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

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 BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE six MONTHS ENDED October 31, 2023 AND 2022 

(dollars in thousands) (unaudited)

 

   

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

  

Balance, April 30, 2022

     80,348,572     $ 803     $ 12,160       3,890,426     $ (2,077 )   $ 29,948     $ 40,834  
                                                         

Deferred compensation, restricted stock

     (75,000 )     -       132       -       -       -       132  
                                                         

Stock repurchase

     -       -       -       1,639       (2 )     -       (2 )
                                                         

Stock awarded to Director

     400,000       4       348       -       -       -       352  
                                                         

Net Income

     -       -       -       -       -       431       431  
                                                         

Balance, July 31, 2022

     80,673,572     $ 807     $ 12,640       3,892,065     $ (2,079 )   $ 30,379     $ 41,747  
                                                         

Deferred compensation, restricted stock

     -       -       146       -       -       -       146  
                                                         

Stock repurchase

     -       -       -       150       -       -       -  
                                                         

Net Income

     -       -       -       -       -       2,683       2,683  
                                                         

Balance, October 31, 2022

     80,673,572     $ 807     $ 12,786       3,892,215     $ (2,079 )   $ 33,062     $ 44,576  

 

   

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

  

Balance, April 30, 2023

     80,871,211     $ 808     $ 13,647       3,979,522     $ (2,138 )   $ 34,464     $ 46,781  
                                                         

Stock repurchase

     -       -       -       6,863,789       (5,035 )     -       (5,035 )
                                                         

Deferred compensation, restricted stock

     (1,300,000 )     (13 )     (236 )     -       -       -       (249 )
                                                         

Net Income

     -       -       -       -       -       719       719  
                                                         

Balance, July 31, 2023

     79,571,211     $ 795     $ 13,411       10,843,311     $ (7,173 )   $ 35,183     $ 42,216  
                                                         

Deferred compensation, restricted stock

     -       -       104       -       -       -       104  
                                                         

Stock repurchase

     -       -       -       2,300       (1 )     -       (1 )
                                                         

Stock award to Director

     300,000       3       219       -       -       -       222  
                                                         

Net Income

     -       -       -       -       -       4,951       4,951  
                                                         

Balance, October 31, 2023

     79,871,211     $ 798     $ 13,734       10,845,611     $ (7,174 )   $ 40,134     $ 47,492  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

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BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE six MONTHS ENDED October 31, 2023 AND 2022 

(in thousands)

(unaudited) 

 

   

SIX MONTHS ENDED

  
   

October 31,

  
   

2023

    

2022

  

CASH FLOWS FROM OPERATING ACTIVITIES:

                

Net income

   $ 5,670     $ 3,114  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     3,049       2,939  

Stock awarded to director

     222       352  

Deferred income tax expense

     -       280  

Gain on sale of airplanes

     (4,169 )     -  

Gain on sale of building

     -       (69 )

Deferred compensation, restricted stock

     (145 )     278  
                 

Changes in operating assets and liabilities:

                

Accounts receivable

     (1,785 )     (324 )

Inventory

     (764 )     (424 )

Contract assets

     138       228  

Prepaid expenses and other assets

     1,601       (1,557 )

Accounts payable

     4,500       (157 )

Contract liability

     (1,351 )     4,028  

Lease liability

     94       93  

Accrued liabilities

     (5,237 )     (408 )

Gaming facility mandated payment

     (43 )     52  

Income tax payable

     1,371       (814 )

Other liabilities

     314       238  

Net cash provided by operating activities

     3,465       7,849  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

                

Capital expenditures

     (4,354 )     (3,253 )

Proceeds from sale of airplanes

     4,904       -  

Proceeds from sale of building

     -       164  

Net cash provided by (used in) investing activities

     550       (3,089 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

                

Repayments of long-term debt

     (2,521 )     (2,614 )

Repayments on right-to-use lease liability

     (131 )     (129 )

Repurchase of common stock

     (5,036 )     (2 )

Net cash used in financing activities

     (7,688 )     (2,745 )
                 

NET INCREASE (DECREASE) IN CASH

     (3,673 )     2,015  
                 

CASH, beginning of period

     21,997       12,487  
                 

CASH, end of period

   $ 18,324     $ 14,502  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                

Interest paid

   $ 1,266     $ 1,423  

Income taxes paid

   $ 725     $ 1,686  
                 

NON CASH INVESTING AND FINANCING ACTIVITY:

                

Lease right-of-use assets purchased

   $ -     $ 541  

Lease liability for purchase of assets under lease

   $ -     $ 541  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

   

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BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

 

 

1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the annual report on Form 10-K for the fiscal year ended April 30, 2023. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and six months ended October 31, 2023 are not indicative of the results of operations that may be expected for the fiscal year ending April 30, 2024.

 

Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years. These reclassifications have no impact on the reported results of operations. Financial amounts are in thousands of dollars except per share amounts.

 

 

2. Net Income Per Share: Butler National Corporation (“the Company”) follows ASC 260 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net earnings per share would be excluded. 

 

 

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)

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 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)

Identify 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)

Determine 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 of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

 

 

4)

Allocate 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, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as billed by multiplying the price assigned to the good or service, by the units.

 

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5)

Recognize 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 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.

 

 

Aircraft modifications are performed under fixed-price contracts unless modified with a change order.  Significant payment terms are generally included in these contracts, requiring a 30% to 50% down payment on arrival of the aircraft and include milestone payments throughout the project.  Typically, contracts are less than one year in duration.  Revenue from fixed-priced contracts is recognized on the percentage-of-completion method, measured by the direct labor incurred compared to total estimated direct labor.  Direct labor best represents the progress on a contract.

 

 

Revenue from Aircraft Avionics and Special Mission Electronics are recognized when shipped. Payment for these Avionics products is due within 30 days of the invoice date after shipment.

 

 

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 aggregate of gaming wins 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. Effective September 1, 2022, sports wagering became legal in the State of Kansas. The company is currently managing sports wagering through DraftKings sports wagering platform. The Company shares a percentage of the gross sports wagering win with its platform partner. Revenue from Gaming Management and other Corporate/Professional Services is recognized as the service is rendered. Food, beverage, and other revenue is recorded when the service is received and paid.

 

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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 October 31, 2023

    

Three Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 9,770     $ 8,639     $ 18,409     $ 9,745     $ 8,298     $ 18,043  

Europe

     -       952       952       -       124       124  

Asia

     -       4       4             274       274  

Australia and Other

     -       237       237       -       885       885  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 7,298     $ -     $ 7,298     $ 7,744     $ -     $ 7,744  

Sportsbook Revenue

     1,314       -       1,314       825       -       825  

Casino Non-Gaming Revenue

     1,158       -       1,158       1,105       -       1,105  

Professional Services

     -       -       -       71       -       71  

Aircraft Modification

     -       6,082       6,082       -       5,878       5,878  

Aircraft Avionics

     -       778       778       -       523       523  

Special Mission Electronics

     -       2,972       2,972       -       3,180       3,180  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 5,401     $ 5,401     $ -     $ 5,624     $ 5,624  

Goods or services transferred at a point of sale

     9,770       4,431       14,201       9,745       3,957       13,702  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  

   

   

Six Months Ended October 31, 2023

    

Six Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 18,810     $ 14,184     $ 32,994     $ 18,707     $ 14,294     $ 33,001  

Europe

     -       1,619       1,619       -       306       306  

Asia

     -       358       358       -       411       411  

Australia and Other

     -       1,815       1,815       -       911       911  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 14,496     $ -     $ 14,496     $ 15,560     $ -     $ 15,560  

Sportsbook Revenue

     2,015       -       2,015       825       -       825  

Casino Non-Gaming Revenue

     2,247       -       2,247       2,182       -       2,182  

Professional Services

     52       -       52       140       -       140  

Aircraft Modification

     -       11,565       11,565       -       9,714       9,714  

Aircraft Avionics

     -       1,522       1,522       -       1,237       1,237  

Special Mission Electronics

     -       4,889       4,889       -       4,971       4,971  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 10,613     $ 10,613     $ -     $ 8,875     $ 8,875  

Goods or services transferred at a point of sale

     18,810       7,363       26,173       18,707       7,047       25,754  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  

 

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

 

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

 

  October 31,  April 30, 
  

2023

  

2023

 

Accounts Receivable, net

 $5,578  $3,793 

Contract Asset

  1,755   1,893 

Contract Liability

  4,680   6,031 

 

Accounts receivable, net consist of $5,578 and $3,793 from customers as of  October 31, 2023 and April 30, 2023, respectively. At October 31, 2023 and April 30, 2023, the allowance for doubtful accounts was $205 and $205, respectively.

 

Contract assets are net of progress payments and performance based payments from our customers totaling $1,755 and $1,893 as of October 31, 2023 and April 30, 2023. Contract assets decreased $138 during the six months ended October 31, 2023, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the six months ended October 31, 2023. There were no significant impairment losses related to our contract assets during the six months ended October 31, 2023. We expect to bill our customers for the majority of the October 31, 2023 contract assets during fiscal year end 2024.

 

Contract liabilities decreased $1,351 during the six months ended October 31, 2023, primarily due to the revenue recognized on these performance obligations being greater than the payments received.

 

 

6. Inventory

 

Inventories are priced at the lower of cost, determined on a 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. 

 

Inventory is comprised of the following, net of the estimate for obsolete inventory of $275 at  October 31, 2023 and $275 at April 30, 2023.

 

  

October 31, 2023

  

April 30, 2023

 

Parts and raw material

 $6,196  $5,704 

Work in process

  

2,981

   3,194 

Finished goods

  62   49 

Total Inventory, net of allowance

 $9,239  $8,947 

 
 

7. Property, Plant and Equipment

 

Property, plant and equipment is comprised of the following:

 

  October 31, 2023  

April 30, 2023

 

Land

  $4,751   $4,751 

Building and improvements

  49,401   47,867 

Aircraft

  4,046   8,515 

Machinery and equipment

  6,939   5,547 

Office furniture and fixtures

  14,327   13,881 

Leasehold improvements

  4,032   4,032 
   83,496   84,593 

Accumulated depreciation

  (23,360)  (25,526

)

Total property, plant and equipment

 $60,136  $59,067 

 

Property and Related Depreciation: Machinery and equipment are recorded at cost and depreciated over their estimated useful lives. Depreciation is provided on a straight-line basis. Depreciation expense was $2,347 for the six months ended October 31, 2023 and $2,153 for the six months ended October 31, 2022. Depreciation expense is included in cost of sales and general and administrative costs.

 

Description

 

Estimated useful life

Building and improvements

 

39 years or the shorter of the estimated useful life of the asset or the underlying lease term

Aircraft

 

5 years

Machinery and equipment

 

5 years

Office furniture and fixtures

 

5 years

Leasehold improvements

 

Shorter of the estimated useful life of the asset or the underlying lease term

 

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Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets retired are removed from the accounts and any resulting gains or losses are reflected as income or expense.

 
 

8. 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. 
 

 

9. Research and Development:

 

We invested in research and development activities. The amount invested in the six months ended October 31, 2023 and 2022 was $1,339 million and $1,632, respectively.

 
 

10. Debt: At  October 31, 2023 , the Company has a line of credit with Kansas State Bank in the form of a promissory note with an interest rate 8.4% totaling $2,000. The unused line at October 31, 2023  was $2,000. There were no advances made on the line of credit during the quarter ended  October 31, 2023. The line of credit is due on demand and is secured by a first and second position on all assets of the Company.

 

One note with Academy Bank, N.A. for $29,847 secured by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.32% payable over seven years with an initial twenty-year amortization and a balloon payment of $19,250 in December 2027. The second note with Academy Bank, N.A. for $8,766 is secured by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.75% payable in full over five years. These notes contain a covenant to maintain a debt service coverage ratio of 1.3 to 1.0. These notes also contain a liquidity covenant requiring the Company to maintain an aggregate sum of $1.5 million of unrestricted cash. We are in compliance with these covenants at October 31, 2023.

 

At October 31, 2023, there was a note payable with Bank of America, N.A. with a balance of $867. The interest rate on this note is at SOFR plus 1.75%.  The loan is secured by buildings and improvements having a net book value of $629.  This note matures in March 2029.

 

At October 31, 2023, there is a note payable with Bank of America, N.A. with a balance of $397.  The interest rate on this note is at SOFR plus 1.75%.  This loan is secured by buildings and improvements with a net book value of $680.  This note matures in March 2029.

 

At October 31, 2023, there was a note payable with Patriots Bank with an interest rate of 4.35% totaling $968.  This loan is secured by aircraft security agreements with a net book value of $847.  This note matures in March 2029.

 

At October 31, 2023, there is a note payable with an interest rate of 8.13% totaling $39 secured by equipment with a net book value of $39. This note matures in October 2025.

 

We are compliant with the covenants and obligations of each of our notes as of October 31, 2023, and December 15, 2023.

 

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11. Other Assets:

 

Our other asset account includes assets of $5,500 related to the Kansas Expanded Lottery Act Management Contract privilege fee, $6,744 of gaming equipment we were required to pay for ownership by the State of Kansas Lottery, JET autopilot intellectual property of $1,417 and miscellaneous other assets of $127. BHCMC expects the $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 assumed by 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 fully amortized.

 
 

12. 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.  

 

In July 2022, the Company granted a board member 400,000 shares under the plan. These shares were fully vested and non-forfeitable on the date of grant. These shares were valued at $0.88 per share, for a total of $352. The compensation related to this grant was expensed in fiscal year 2023. 

 

In October 2023, the Company granted a board member 300,000 shares under the plan.  These shares were fully vested and non-forfeitable on the date of the grant. These shares were valued at $0.74 per share, for a total of $222.  The compensation related to this grant was expensed in the current period.

 

For the six months ended October 31, 2023 the Company expensed $208 and received a benefit from the forfeiture of shares of $353 for a net benefit of $145.  For the six months ended  October 31, 2022, the Company expensed $278.

 

  

Number of Shares

  

Weighted Average Grant Date Fair Value

 

Total shares issued

  8,200,000  $0.43 

Forfeited, in prior periods

  (100,000) $0.40 

Forfeited, during the year ended April 30, 2023

  (875,000) $0.40 

Forfeited, during the six months ended October 31, 2023

  (1,300,000) $0.40 

Total

  5,925,000  $0.45 

 
 

13. Stock Repurchase Program:

 

In July 2023, the Board of Directors approved an increase in the size of the Company's stock repurchase program from $4 million to $9 million.  The program was established for the purpose of enabling Butler National Corporation (BNC) to flexibly repurchase its own shares in consideration of factors such as opportunities for strategic investment, BNC's financial condition and the price of its common stock as part of improving capital efficiency.  The program is currently authorized through July 31, 2025.

 

The table below provides information with respect to common stock purchases by the Company through October 31, 2023.

 

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

  3,290,426  $0.40   3,290,426  $2,655 

Quarter ended July 31, 2022 (a)

  1,639  $0.84   1,639  $2,653 

Quarter ended October 31, 2022 (a)

  150  $0.70   150  $2,653 

Quarter ended January 31, 2023 (a)

  85,307  $0.68   85,307  $2,595 

Quarter ended April 30, 2023 (a)

  2,000  $0.68   2,000  $2,594 

Increase in program authorization July 2023

  -  $-   -  $7,594 

Quarter ended July 31, 2023 (a)

  6,863,789  $0.73   6,863,789  $2,560 

Quarter ended October 31, 2023 (a)

  2,300  $0.73   2,300  $2,558 

Total

  10,245,611  $0.63   10,245,611     

 

(a)

These shares of common stock were purchased through a private transaction

 

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14. Lease Right-to-Use:

 

We lease hangars and office space with initial lease terms of five, forty-six, and fifty years.

 

  

October 31, 2023

 

Lease right-to-use assets

 $3,781 

Less accumulated depreciation

  795 

Total

 $2,986 

 

Future minimum lease payments for assets under finance leases at October 31, 2023 are as follows:

 

2024

 $214 

2025

  114 

2026

  117 

2027

  119 

2028

  122 

Thereafter

  12,767 

Total minimum lease payments

  13,453 

Less amount representing interest

  10,015 

Present value of net minimum lease payments

  3,438 

Less current maturities of lease liability

  99 

Lease liability, net of current maturities

 $3,339 

 

Finance lease costs at October 31, 2023 and  October 31, 2022 are as follows: 

 

  

October 31, 2023

  

October 31, 2022

 

Finance lease cost:

        

Amortization of right-of-use assets

 $95  $94 

Interest on lease liabilities

  94   93 

Total finance lease cost

 $189  $187 

 

  

October 31, 2023

  

October 31, 2022

 

Weighted average remaining lease term - Financing leases (in years)

  44   45 

Weighted average discount rate - Financing leases

  5.8%  5.8%

 

 

15. Acquisition:

 

In September 2023, the Company acquired KC Machine, a recognized provider of high quality precision machine parts for $2,860.  The purchase price was paid by a combination of $2,375 in cash, a $300 earned-out liability due in March 2024, and a final escrow liability due September 2024.  The present value of these liabilities is included in accounts payable at October 31, 2023.

 

The following table summarizes the purchase price and accounting for this transaction:

 

Purchase price summary:

    

Cash paid at closing

 $2,375 

Present value of final escrow liability

  228 

Present value of earn-out liability

  257 
  $2,860 
     

Accounting summary:

    

Building

 $1,510 

Equipment

  930 

Intangibles

  205 

Inventory

  230 

Other

  (15)
  $2,860 

  

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16. Segment Reporting and Sales by Major Customer:

 

Industry Segmentation

 

Current Activities - The Company focuses on two 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, mapping, environmental research, search and rescue, 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 civilian and military aircraft and vehicles. Ruggedized electrical fabrication is another recognized specialty. 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 October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,770  $6,082  $778  $2,972  $-  $19,602 

Interest expense

  532   58   -   16   9   615 

Depreciation

  689   88   4   32   27   840 

Operating income (loss)

  2,767   557   (105)  1,482   (1,103)  3,598 

 

 

Three Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,674  $5,878  $523  $3,180  $71  $19,326 

Interest expense

  622   66   -   11   8   707 

Depreciation

  608   58   3   36   51   756 

Operating income (loss)

  2,939   912   (249)  1,451   (1,051)  4,002 

 

 

Six Months Ended October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,758  $11,565  $1,522  $4,889  $52  $36,786 

Interest expense

  1,088   116   -   33   17   1,254 

Depreciation

  1,337   152   7   63   54   1,613 

Operating income (loss)

  5,081   (191)  (146)  2,203   (2,212)  4,735 

 

 

Six Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,567  $9,714  $1,237  $4,971  $140  $34,629 

Interest expense

  1,264   132   -   18   16   1,430 

Depreciation

  1,234   111   5   75   102   1,527 

Operating income (loss)

  5,581   966   (201)  2,067   (2,786)  5,627 

 

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

 

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

 

  

Six Months Ended October 31, 2023

  

Six Months Ended October 31, 2022

 

Aerospace Products – two customers in the six months ended October 31, 2023, two customers in the six months ended October 31, 2022

  27.5%  25.2%

Professional Services

  -   - 

 

In the six months ended October 31, 2023 the Company derived 34.4% of total revenue from five Aerospace customers. The top customer provided 15.7% of total revenue while the next top four customers ranged from 1.8% to 11.8%.

 
 

17. Subsequent Events:

 

The Company evaluated its October 31, 2023 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 consolidated financial statements.

 

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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, 2023, 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, 2023, including the following factors:

 

  ● customer concentration risk;
 

●

 dependence on government spending;
 

●

industry specific business cycles;
 

●

regulatory hurdles in the launch of new products;
 

●

loss of key personnel;
 

●

the geographic location of our casino;
 

●

fixed-price contracts;
 

●

international sales;
 

●

future acquisitions;
 

●

supply chain and labor issues;
  ● cyber security threats;
  ● fraud, theft and cheating at our casino;
  ● dependence on third-party platforms to offer sports wagering;
 

●

outside factors influence the profitability of sports wagering;
 

●

change of control restrictions;
  ● significant and expensive governmental regulation across our industries;
 

●

failure by the corporation or its stockholders to maintain applicable gaming licenses;
 

●

evolving political and legislative initiatives in gaming;
 

●

extensive and increasing taxation of gaming revenues;
 

●

changes in regulations of financial reporting;
 

●

the stability of economic markets;
 

●

potential impairment losses;
 

●

marketability restrictions of our common stock;
 

●

stock dilution;
  ● the possibility of a reverse-stock split;
 

●

market competition by larger competitors;
 

●

acts of terrorism and war;
  ● inclement weather and natural disasters; and
 

●

rising inflation.

 

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.

   

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General

 

Butler National Corporation (“Butler National” the “Company”, “we”, “us”, or “our”) was incorporated in 1960. Our companies design, engineer, manufacture, sell, integrate, install, repair, modify, overhaul, service and distribute a broad portfolio of aerostructures, aircraft components, avionics, accessories, subassemblies and systems (“Aerospace Products”). We serve a broad, worldwide spectrum of the aviation industry, including owners and operators, of private, commercial, regional, business and government aircraft.

 

In addition, our companies provide management services in the gaming industry, which includes owning the land and building for the Boot Hill Casino and Resort in Dodge City, Kansas (“Professional Services”).

 

Products and Services

 

The Company has two operating segments for financial reporting purposes: (a) Aerospace Products, whose companies’ revenues are derived from system design, engineering, manufacturing, sale, distribution, integration, installation, repairing, modifying, overhauling and servicing of aerostructures, avionics, aircraft components, accessories, subassemblies and systems; and (b) Professional Services, whose companies provide professional management services in the gaming industry, sports wagering, and professional architectural services.

 

Aerospace Products. The Aerospace Products segment includes the manufacture, sale and service of structural modifications, electronic equipment, and systems and technologies enhancing aircraft. Additionally, we operate Federal Aviation Administration (the “FAA”) Repair Stations. Companies in Aerospace Products concentrate on Learjets, Beechcraft King Air and Cessna Caravan turboprop aircraft.

 

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

 

●

Aerial mapping, search and rescue, environmental research

and surveillance products

●

GARMIN GTN Global Position System Navigator with Communication Transceiver
       

●

Aerodynamic enhancement products

●

Learjet J.E.T. autopilot products
       

●

Standby instrument systems

●

Electrical systems and switching equipment
       

●

Avcon stability enhancing airplane strakes

●

Rate gyroscopes
       

●

ADS-B (transponder) systems

●

Replacement vertical accelerometers
       

●

Cargo/sensor carrying pods and radomes

●

Provisions to allow carrying of external stores
       

●

Electronic navigation instruments, radios and transponders

●

Attitude and 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
       

●

Extended nose and wing tip bays

●

Stability enhancements
       

●

Environmental research capabilities

●

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:

 

●

Ruggedized military cabling

●

HangFire Override Modules
       

●

Electronic control systems

●

Test equipment
       

●

Gun Control Units for Apache and Blackhawk helicopters

●

Gun Control Units for land and sea based military vehicles

 

 

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Table of Contents

 

Professional Services. The Professional Services segment includes the management of a gaming and related dining and entertainment facility in Dodge City, Kansas. Boot Hill Casino and Resort features approximately 500 slot machines, 16 table games and a sportsbook. A Company in Professional Services also provides licensed architectural services, including commercial and industrial building design services.

 

Boot Hill. Butler National Service Corporation (“BNSC”), and BHCMC, LLC (“BHCMC”), companies in Professional Services, manage The Boot Hill Casino and Resort in Dodge City, Kansas (“Boot Hill”) pursuant to the Lottery Gaming Facility Management Contract, by and among BNSC, BHCMC and the Kansas Lottery, as subsequently amended (“Boot Hill Agreement”). As required by Kansas law, all games, gaming equipment and gaming operations, including sports wagering, at Boot Hill are owned and operated by the Kansas Lottery. On September 1, 2022, sports wagering became legal in the State of Kansas.  The Company entered into a provider contract with DraftKings for interactive/mobile sports wagering.  In addition to an online platform, the Company also features a DraftKings branded sports book at Boot Hill that opened on February 28, 2023.

 

Architectural Services. A Company in Professional Services provides licensed architectural, including commercial and industrial building design.  The Company is in the process of winding down its architectural business.

 

 

 

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Results Overview

 

The six months ended October 31, 2023 revenue increased 6% to $36.8 million compared to $34.6 million in the six months ended October 31, 2022. In the six months ended October 31, 2023 the Professional Services revenue was $18.8 million compared to $18.7 million in the six months ended October 31, 2022, an increase of 1%. In the six months ended October 31, 2023 the Aerospace Products revenue was $18.0 million compared to $15.9 million in the six months ended October 31, 2022, an increase of 13%.

 

The six months ended October 31, 2023 net income increased to $5.7 million compared to a net income of $3.1 million in the six months ended October 31, 2022.  The six months ended October 31, 2023, operating income decreased to $4.7 million from an operating income of $5.6 million in the six months ended October 31, 2022.

 

 

RESULTS OF OPERATIONS

 

six months ended October 31, 2023 COMPARED TO six months ended October 31, 2022

 

(dollars in thousands)

  

Six Months Ended October 31, 2023

    

Percent of Total Revenue

    

Six Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Revenue:

                                        

Professional Services

   $ 18,810       51 %   $ 18,707       54 %     1 %

Aerospace Products

     17,976       49 %     15,922       46 %     13 %

Total revenue

     36,786       100 %     34,629       100 %     6 %
                                         

Costs and expenses:

                                        

Costs of Professional Services

     7,952       22 %     7,375       21 %     8 %

Cost of Aerospace Products

     14,178       38 %     11,409       33 %     24 %

Marketing and advertising

     2,639       7 %     2,699       8 %     -2 %

General, administrative and other

     7,282       20 %     7,519       22 %     -3 %

Total costs and expenses

     32,051       87 %     29,002       84 %     11 %

Operating income

   $ 4,735       13 %   $ 5,627       16 %     -16 %

 

Revenue:

 

Revenue increased 6% to $36.8 million in the six months ended October 31, 2023, compared to $34.6 million in the six months ended October 31, 2022. See "Operations by Segment" below for a discussion of the primary reasons for the 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, and management support services. Revenue from Professional Services increased 1% for the six months to $18.8 million at October 31, 2023 compared to $18.7 million at October 31, 2022. The sports wagering platform brought in $2.0 million of revenue for the six months ended October 31, 2023 compared to $825 in the six months ended October 31, 2022. Furthermore, casino gaming revenue decreased $1.1 million due to a decrease in patron spend per visit.  We believe this was primarily due to increased inflation, competition in Oklahoma and drought conditions in our primary market area causing a decrease in discretionary spending.

 

 

●

Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue increased 13% for the six months to $18.0 million at October 31, 2023 compared to $15.9 million at October 31, 2022. The increase in revenue is mainly due to an increase in the aircraft modification business of $1.9 million.  The development of new STC's and our marketing efforts in both domestic and international markets support this increase.

 

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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 increased  11% to $32.1 million in the six months ended October 31, 2023 compared to $29.0 million in the six months ended October 31, 2022. Costs and expenses were 87% of total revenue in the six months ended October 31, 2023, as compared to 84% of total revenue in the six months ended October 31, 2022.  The increase is primarily due to an increase in material and labor costs.

 

Costs of Professional Services increased 8% in the six months ended October 31, 2023 to $8.0 million compared to $7.4 million in the six months ended October 31, 2022. Costs were 22% of total revenue in the six months ended October 31, 2023, as compared to 21% of total revenue in the six months ended October 31, 2022.  The increase is directly related to an increase in labor costs.

 

Costs of Aerospace Products increased 24% in the six months ended October 31, 2023 to $14.2 million compared to $11.4 million for the six months ended October 31, 2022. Costs were 38% of total revenue in the six months ended October 31, 2023, as compared to 33% of total revenue in the six months ended October 31, 2022.  The increase is directly related to an increase in material and labor costs.

 

Marketing and advertising expenses decreased 2% in the six months ended October 31, 2023, to $2.6 million compared to $2.7 million in the six months ended October 31, 2022. Expenses were 7% of total revenue in the six months ended October 31, 2023, as compared to 8% of total revenue in the six months ended October 31, 2022. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

 

General, administrative and other expenses as a percent of total revenue was 20% in the six months ended October 31, 2023, compared to 22% in the six months ended October 31, 2022. These expenses decreased 3% to $7.3 million in the six months ended October 31, 2023, from $7.5 million in the six months ended October 31, 2022. The decrease is primarily due to a stock award of $352 and cash compensation of $140 awarded to a board member expensed in July 2022 compared to a stock award of $222 to a board member expensed in October 2023.

 

Other expense:

 

Interest expense was $1,254 in the six months ended October 31, 2023, compared with interest expense of $1,430 in the six months ended October 31, 2022. 

 

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 six months ended October 31, 2023 and October 31, 2022:

 

(dollars in thousands)

  

Six Months Ended October 31, 2023

    

Percent of Total Revenue

    

Six Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Professional Services

                                        

Revenue

                                        

Boot Hill Casino

   $ 18,758       100 %   $ 18,567       99 %     1 %

Management/Professional Services

     52       0 %     140       1 %     -63 %

Revenue

     18,810       100 %     18,707       100 %     1 %
                                         

Costs of Professional Services

     7,952       42 %     7,375       39 %     8 %

Expenses

     7,039       38 %     7,068       38 %     0 %

Total costs and expenses

     14,991       80 %     14,443       77 %     4 %

Professional Services operating income

   $ 3,819       20 %   $ 4,264       23 %     -10 %

 

(dollars in thousands)

  

Six Months Ended October 31, 2023

    

Percent of Total Revenue

    

Six Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Aerospace Products

                                        

Revenue

   $ 17,976       100 %   $ 15,922       100 %     13 %
                                         

Costs of Aerospace Products

     14,178       79 %     11,409       71 %     24 %

Expenses

     2,882       16 %     3,150       20 %     -9 %

Total costs and expenses

     17,060       95 %     14,559       91 %     17 %
                                         

Aerospace Products operating income

   $ 916       5 %   $ 1,363       9 %     (33 )%

 

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Professional Services

 

 

●

Revenue from Professional Services increased 1% for the six months ended October 31, 2023 to $18.8 million compared to $18.7 million for the six months ended October 31, 2022.

In the six months ended October 31, 2023, Boot Hill Casino received gross receipts for the State of Kansas of $23.2 million compared to $24.5 million for the six months ended October 31, 2022. Mandated fees, taxes and distributions reduced gross receipts by $7.5 million resulting in gaming revenue of $15.7 million for the six months ended October 31, 2023, compared to a reduction to gross receipts of $7.7 million resulting in gaming revenue of $16.8 million for the six months ended October 31, 2022. Sportsbook revenue was $2.0 million in the six months ended October 31, 2023 compared to $825 in the six months ended October 31, 2022. Non-gaming revenue at Boot Hill Casino remained constant at $2.2 million for the six months ended October 31, 2023, compared to $2.2 million for the six months ended October 31, 2022.

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 to $52 for the six months ended October 31, 2023, compared to $140 for the six months ended October 31, 2022.  The Company is in the process of winding down its architectural business.

 

 

●

Costs of Professional Services increased 8% in the six months ended October 31, 2023 to $8.0 million compared to $7.4 million in the six months ended October 31, 2022. Costs were 42% of segment total revenue in the six months ended October 31, 2023, as compared to 39% of segment total revenue in the six months ended October 31, 2022.  The increase is directly related to an increase in labor costs.

  

 

●

Expenses remained constant in the six months ended October 31, 2023 to $7.0 million compared to $7.1 million in the six months ended October 31, 2022. Expenses were 38% of segment total revenue in the six months ended October 31, 2023, as compared to 38% of segment total revenue in the six months ended October 31, 2022.

 

Aerospace Products

 

 

●

Revenue increased 13% to $18.0 million in the six months ended October 31, 2023, compared to $15.9 million in the six months ended October 31, 2022.  The increase in revenue is mainly due to an increase in the aircraft modification business of $1.9 million.  The development of new STC's and our marketing efforts for them in both domestic and international markets support this increase.

 

 

●

Costs of Aerospace Products increased 24% in the six months ended October 31, 2023 to $14.2 million compared to $11.4 million for the six months ended October 31, 2022.  Costs were 79% of segment total revenue in the six months ended October 31, 2023, as compared to 71% of segment total revenue in the six months ended October 31, 2022. The increase is directly related to the increase in material and labor costs.

 

 

●

Expenses decreased 9% in the six months ended October 31, 2023 to $2.9 million compared to $3.2 million in the six months ended October 31, 2022.  Expenses were 16% of segment total revenue in the six months ended October 31, 2023, as compared to 20% of segment total revenue in the six months ended October 31, 2022. The decrease is primarily due to the stock award of $352 and cash compensation of $140 awarded to a board member expensed in July 2022 compared to a stock award of $222 to a board member expensed in October 2023.

   

 

 

Second QUARTER FISCAL 2023 COMPARED TO Second QUARTER FISCAL 2022

 

(dollars in thousands)

  

Three Months Ended October 31, 2023

    

Percent of Total Revenue

    

Three Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Revenue:

                                        

Professional Services

   $ 9,770       50 %   $ 9,745       50 %     -  

Aerospace Products

     9,832       50 %     9,581       50 %     3 %

Total revenue

     19,602       100 %     19,326       100 %     1 %
                                         

Costs and expenses:

                                        

Costs of Professional Services

     4,006       21 %     3,752       19 %     7 %

Cost of Aerospace Products

     6,852       35 %     6,582       34 %     4 %

Marketing and advertising

     1,361       7 %     1,368       7 %     -1 %

General, administrative and other

     3,785       19 %     3,622       19 %     5 %

Total costs and expenses

     16,004       82 %     15,324       79 %     4 %

Operating income

   $ 3,598       18 %   $ 4,002       21 %     -10 %

 

Revenue:

 

Revenue increased 1% to $19.6 million in the three months ended October 31, 2023, compared to $19.3 million in the three months ended October 31, 2022. See "Operations by Segment" below for a discussion of the primary reasons for the 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, and management support services. Revenue from Professional Services increased 1% for the three months to $9.8 million at October 31, 2023 compared to $9.7  million at October 31, 2022. The sports wagering platform brought in $1.3 million of revenue for the three months ended October 31, 2023 compared to $825 in the three months ended October 31, 2022.  Furthermore, casino gaming revenue decreased $446 due to a decrease in patron spend per visit.  We believe this was primarily due to increased inflation and drought conditions in our primary market area causing a decrease in discretionary spending.

 

 

●

Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue increased  3% for the three months to  $9.8 million at October 31, 2023 compared to $9.6 million at October 31, 2022. 

 

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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 increased   4% to $16.0 million in the three months ended October 31, 2023 compared to $15.3 million in the three months ended October 31, 2022. Costs and expenses were  82% of total revenue in the three months ended October 31, 2023, as compared to 79% of total revenue in the three months ended October 31, 2022.  The increase is primarily due to an increase in material and labor costs.

 

Costs of Professional Services increased  7% in the three months ended October 31, 2023 to $4.0 million compared to $3.8 million in the three months ended October 31, 2022. Costs were 21% of total revenue in the three months ended October 31, 2023, as compared to 19% of total revenue in the three months ended October 31, 2022.  The increase is directly related to an increase in labor costs.

 

Costs of Aerospace Products increased 4% in the three months ended October 31, 2023 to $6.9 million compared to $6.6 million for the three months ended October 31, 2022. Costs were 35% of total revenue in the three months ended October 31, 2023, as compared to 34% of total revenue in the three months ended October 31, 2022.  The increase is directly related to an increase in material and labor costs.

 

Marketing and advertising expenses decreased  1% in the three months ended October 31, 2023, to $1.4 million compared to $1.4 million in the three months ended October 31, 2022. Expenses were 7% of total revenue in the three months ended October 31, 2023, as compared to 7% of total revenue in the three months ended October 31, 2022. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

 

General, administrative and other expenses as a percent of total revenue was 19% in the three months ended October 31, 2023, compared to 19% in the three months ended October 31, 2022. These expenses increased 5% to $3.8 million in the three months ended October 31, 2023, from $3.6 million in the three months ended October 31, 2022.

 

Other expense:

 

Interest expense was $615 in the three months ended October 31, 2023, compared with interest expense of $707 in the three months ended October 31, 2022. 

 

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 October 31, 2023 and October 31, 2022:

 

(dollars in thousands)

  

Three Months Ended October 31, 2023

    

Percent of Total Revenue

    

Three Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Professional Services

                                        

Revenue

                                        

Boot Hill Casino

   $ 9,770       100 %   $ 9,674       99 %     1 %

Management/Professional Services

     -       0 %     71       1 %     -100 %

Revenue

     9,770       100 %     9,745       100 %     0 %
                                         

Costs of Professional Services

     4,006       41 %     3,752       39 %     7 %

Expenses

     3,696       38 %     3,740       38 %     -1 %

Total costs and expenses

     7,702       79 %     7,492       77 %     3 %

Professional Services operating income

   $ 2,068       21 %   $ 2,253       23 %     -8 %

 

(dollars in thousands)

  

Three Months Ended October 31, 2023

    

Percent of Total Revenue

    

Three Months Ended October 31, 2022

    

Percent of Total Revenue

    

Percent Change 2022-2023

  

Aerospace Products

                                        

Revenue

   $ 9,832       100 %   $ 9,581       100 %     3 %
                                         

Costs of Aerospace Products

     6,852       70 %     6,582       69 %     4 %

Expenses

     1,450       14 %     1,250       13 %     16 %

Total costs and expenses

     8,302       84 %     7,832       82 %     6 %
                                         

Aerospace Products operating income

   $ 1,530       16 %   $ 1,749       18 %     -13 %

 

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Professional Services

 

 

●

Revenue from Professional Services increased 1% for the three months ended October 31, 2023 to $9.8  million compared to $9.7 million for the three months ended October 31, 2022.

In the three months ended October 31, 2023 Boot Hill Casino received gross receipts for the State of Kansas of  $11.6 million compared to $12.3 million for the three months ended October 31, 2022. Mandated fees, taxes and distributions reduced gross receipts by $3.8 million resulting in gaming revenue of  $7.8 million for the three months ended October 31, 2023, compared to a reduction to gross receipts of $3.9 million resulting in gaming revenue of $8.4 million for the three months ended October 31, 2022. Sportsbook revenue was $1.3 in the three months ended October 31, 2023 compared to $825 in the three months ended October 31, 2022. Non-gaming revenue at Boot Hill Casino increased to $1.2 million for the three months ended October 31, 2023, compared to $1.1 million for the three months ended October 31, 2022.

The remaining Professional Services revenue includes professional management services in the gaming industry, and licensed architectural services.  Professional Services revenue excluding Boot Hill Casino decreased to $0 for the three months ended October 31, 2023, compared to $71 for the three months ended October 31, 2022. The Company is in the process of winding down its architecture business.

 

 

●

Costs of Professional Services increased 7% in the three months ended October 31, 2023 to $4.0 million compared to $3.8 million in the three months ended October 31, 2022. Costs were 41% of segment total revenue in the three months ended October 31, 2023, as compared to 39% of segment total revenue in the three months ended October 31, 2022.  The increase is directly related to an increase in labor costs.

  

 

●

Expenses remained constant in the three months ended October 31, 2023 at $3.7 million compared to $3.7 million in the three months ended October 31, 2022. Expenses were 38% of segment total revenue in the three months ended October 31, 2023, as compared to 38% of segment total revenue in the three months ended October 31, 2022.

 

Aerospace Products

 

 

●

Revenue increased  3% to $9.8  million in the three months ended October 31, 2023, compared to $9.6 million in the three months ended October 31, 2022.

 

 

●

Costs of Aerospace Products increased  4% in the three months ended October 31, 2023 to $6.9 million compared to $6.6 million for the three months ended October 31, 2022.  Costs were 70% of segment total revenue in the three months ended October 31, 2023, as compared to 69% of segment total revenue in the three months ended October 31, 2022. The increase is directly related to the increase in material and labor costs.

 

 

●

Expenses increased  16% in the three months ended October 31, 2023 to $1.5 million compared to $1.3 million in the three months ended October 31, 2022.  Expenses were 14% of segment total revenue in the three months ended October 31, 2023, as compared to 13% of segment total revenue in the three months ended October 31, 2022. The increase is primarily due to the stock award of $222 awarded to a board member expensed in October 2023.

   

 

 

 

Employees

 

Other than persons employed by our gaming subsidiaries, there were 123 full time and 2 part time employees on October 31, 2023, compared to 107 full time and 4 part time employees on October 31, 2022. As of December 8, 2023 staffing is 130 full time and 2 part time employees. Our staffing at Boot Hill Casino & Resort on October 31, 2023 was 190 full time and 54 part time employees compared to 197 full time and 55 part time employees on October 31, 2022. At December 8, 2023 there are 197 full time and 54 part time employees. None of the employees are subject to any collective bargaining agreements.

 

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Liquidity and Capital Resources

 

Overview

 

Butler National is a holding company. Our ability to fund our obligations depends on existing cash on hand, cash flow from our subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital resources have been cash on hand, cash flow from operations, borrowings under our lines of credit and notes payable (as further described below) and proceeds from the issuance of debt and equity securities. We assess liquidity in terms of the ability to generate cash or obtain financing in order to fund operating, investing and debt service requirements. Our primary ongoing cash requirements include the funding of operations, capital expenditures, acquisitions and other investments in line with our business strategy and debt repayment obligations and interest payments. Our strategy has been to maintain moderate leverage and substantial capital resources in order to take advantage of opportunities, to invest in our businesses and develop new streams of income that may be profitable. As such, we have continued to invest in developing and marketing new STCs and growing our established sports wagering platform. 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 2024 and beyond.

 

Operating Activities

 

During the six months ended October 31, 2023 our cash position decreased by $3.7 million. Net income was $5.7 million for the six months ended October 31, 2023. Cash flow provided by operating activities was $3.5 million for the six months ended October 31, 2023. Non-cash activities consisting of depreciation and amortization provided $3.0 million, gain on sale of airplanes used $4.2 million, stock awarded to a director provided $222, and deferred compensation used $145. Contract assets increased our cash position by $138. Contract liability decreased our cash position by $1.4 million. Inventories decreased our cash position by $764. Accounts receivable decreased our cash position by $1.8 million. Gaming facility mandated payments decreased our cash position by $43. Prepaid expenses and other assets increased our cash by $1.6 million. A decrease in accounts payable and accrued liabilities and an increase in lease liabilities and other current liabilities decreased our cash by $329. Income tax payable increased our cash position by $1.4 million.

 

Investing Activities

 

Cash provided in investing activities was $550 for the six months ended October 31, 2023. We invested $884 towards STCs, $1.5 million on a building, and $1.9 million on equipment and furnishings. We received $4.9 million in proceeds from the sale of airplanes. 

 

Financing Activities

 

Cash used by financing activities was $7.7 million for the six months ended October 31, 2023. We made repayments on our debt of $2.5 million. We made repayments on lease right-to-use of $131. We purchased Company stock of $5.0 million. The stock acquired was placed in treasury.

 

Capital Expenditures

The Company anticipates capital expenditures during the remainder of fiscal year 2024 to be approximately $2.0 million, consisting of $1.0 million on STC's and $1.0 million on equipment. We anticipate our cash balance will be sufficient to cover cash requirements through the current fiscal year.

 

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, inventory and long-lived assets. 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 from Contracts with Customers – Aerospace Contracts

 

Methodology

 

We recognize revenue and profit based upon either (1) the percent completion method, in which sales and profit are recorded based upon the ratio of labor costs incurred to date to estimated total labor costs to complete the performance obligation, or (2) the point-in-time method, in which sales are recognized at the time control is transferred to the customer. For aerospace contracts that involve airplane modifications based on customer specific requirements, we generally recognize revenue and income using the percent completion method because of continuous transfer of control to the customer. Revenue is generally recognized using the percent completion method based on the extent of progress towards completion of the performance obligation, which allows for recognition of revenue as work on a contract progresses. Our general contract term is between one to twelve months. 

 

Management performs detailed quarterly reviews of all of our significant long-term contracts. Based upon these reviews, we record the effects of adjustments in profit estimates each period. If at any time management determines that in the case of a particular contract total costs will exceed total contract revenue, we record a provision for the entire anticipated contract loss at that time.

 

Judgment and Uncertainties

 

The percent completion revenue recognition model requires that we estimate future revenues and costs over the life of a contract. Revenues are estimated based upon the original contract price, with consideration being given to exercised contract options, change orders and, in some cases, projected customer requirements. Contract costs may be incurred over a period of several months, and the estimation of these costs requires significant judgment based upon the acquired knowledge and experience of program managers, engineers and financial professionals. Estimated costs are based primarily on anticipated purchase contract terms, historical performance trends, business base and other economic projections.

 

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Effect if Actual Results Differ From Assumptions

 

While we do not believe there is a reasonable likelihood there will be a material change in estimates or assumptions used to calculate our revenue contracts and costs, estimating the percentage of work complete on certain programs is a complex task. As a result, changes to these estimates could have a significant impact on our results of operations. These products and services are an important element in our continuing strategy to increase operating efficiencies and profitability as well as broaden our business base. Management continues to monitor and update program cost estimates quarterly for these contracts. A significant change in an estimate on one or more of these contracts could have a material effect on our financial position and results of operations.

 

Inventory Valuation

 

Methodology

 

We have four types of inventory (a) raw materials, (b) contracts in process, (c) other work in process and (d) finished goods. Raw material includes certain general stock materials but primarily relates to purchases that were made in anticipation of specific programs that have not been started as of the balance sheet date. Raw materials are stated at the lower of the cost of the inventory or its fair market value. Contracts in process, other work in process and finished goods are valued at production cost comprised of material, labor and overhead. Contracts in process, other work in process and finished goods are reported at the lower of cost or net realizable value.

 

Judgment and Uncertainties

 

The process for evaluating inventory obsolescence or market value often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be sold in the normal course of business. We adjust our inventory by the difference between the estimated market value and the actual cost of our inventory to arrive at net realizable value. Changes in estimates of future sales volume may necessitate future write-downs of inventory value.

 

Effect if Actual Results Differ From Assumptions

 

Management reviews the inventory balance on an annual basis to determine whether any additional write-downs are necessary. Following the write-down of the inventory as discussed above, we believe this inventory is stated at net realizable value at October 31, 2023, although an unanticipated lack of demand for aircraft or spare parts in the future could result in additional write-downs of the inventory value. Overall, management believes that our inventory is appropriately valued at October 31, 2023.

 

Long-lived Assets

 

Methodology

 

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 the recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. 

 

Judgment and Uncertainties

 

In years that management performs a qualitative assessment we consider the following qualitative factors: general economic conditions in the markets served by the segment, relevant industry-specific performance statistics, and forecasted results of operations.

 

For the quantitative impairment tests, management estimated the fair value of the long-lived asset group using an income methodology based on management's estimates of forecasted undiscounted cash flows over the estimated life of the assets. Changes in these estimates and assumptions could materially affect the results of our impairment testing.

 

An impairment loss is recognized for any excess of the carrying amount of the estimated undiscounted cash flows over the remaining life of the assets. No impairment charges were recorded during the six months ended October 31, 2023.

 

Effect if Actual Results Differ From Assumptions

 

As with all assumptions, there is an inherent level of uncertainty and actual results, to the extent they differ from those assumptions, could have a material impact on fair value. For example, a reduction in customer demand would impact our assumed growth rate resulting in a reduced fair value. Potential events or circumstances could have a negative effect on the estimated fair value. The loss of a major customer or program could have a significant impact on the future cash flows associated with a long-lived asset group. We do not currently believe there to be a reasonable likelihood that actual results will vary materially from estimates and assumptions used to test our long-lived assets for impairment losses. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to additional impairment charges that could be material.

    

Changing Prices and Inflation

  

We have experienced upward pressure from inflation in fiscal year 2024. From fiscal year 2023 to fiscal year 2024 most of the increases we experienced were in material and labor 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 2024 and 2025.

  

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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.

 

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 October 31, 2023. 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 October 31, 2023.

  

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 the three months ended October 31, 2023 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

    

PART II.  OTHER INFORMATION

 

Item 1.

 

LEGAL PROCEEDINGS.

 

 

As of October 31, 2023, 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.

 

 

Smaller reporting companies are not required to provide the information required by this item.

 

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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 second quarter of fiscal 2024.

 

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  

August 1, 2023 - August 31, 2023

     -     $ -       -     $ 2,560,000  

September 1, 2023 - September 30, 2023

     2,000     $ 0.74       2,000     $ 2,558,000  

October 1, 2023 - October 31, 2023

     300     $ 0.68       300     $ 2,558,000  

Total

     2,300     $ 0.73       2,300          

 

(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 in the second quarter of fiscal 2020. In July 2023, the Board of Directors approved an increase in the size of the Company's stock repurchase program from $4,000,000 to $9,000,000. 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 July 31, 2025.

 

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 First Amendment to Employment Agreement of Christopher J. Reedy dated October 4, 2023
     
  10.2 First Amendment to Employment Agreement of Tad M. McMahon dated October 4, 2023
     
  10.3 First Amendment to Employment Agreement of Joe A. Peters dated October 4, 2023
     

 

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 October 31, 2023, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of October 31, 2023 and April 30, 2023, (ii) Condensed Consolidated Statements of Operations for the three and six months ended October 31, 2023 and 2022, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the six months ended October 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended October 31, 2023 and 2022 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 October 31, 2023, formatted in Inline XBRL (included as Exhibit 101)
     

    

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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)

 

 
December 15, 2023

/s/ Christopher J. Reedy

Date

Christopher J. Reedy

 

(President and Chief Executive Officer)

 

 
December 15, 2023

/s/ Tad M. McMahon

Date

Tad M. McMahon

 

(Chief Financial Officer and Secretary)  

   

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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 First Amendment to Employment Agreement of Christopher J. Reedy dated October 4, 2023  
     
10.2 First Amendment to Employment Agreement of Tad M. McMahon dated October 4, 2023  
     
10.3 First Amendment to Employment Agreement of Joe A. Peters dated October 4, 2023  
     

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 October 31, 2023, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of October 31, 2023 and April 30, 2023, (ii) Condensed Consolidated Statements of Operations for the three and six months ended October 31, 2023 and 2022, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the six months ended October 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended October 31, 2023 and 2022, 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 October 31, 2023, formatted in Inline XBRL (included as Exhibit 101)  
     

 

30

Exhibit 31.1

 

CERTIFICATIONS

 

I, Christoph J. Reedy, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q ended October 31, 2023 of Butler National Corporation.

 

2.

Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

 

Date: December 15, 2023

/s/Christopher J. Reedy

 

 

Christopher J. Reedy

 

President and Chief Executive Officer

 

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Tad M. McMahon, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q ended October 31, 2023 of Butler National Corporation.

 

2.

Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

 

Date: December 15, 2023

/s/ Tad M. McMahon

 

 

Tad M. McMahon

 

Chief Financial Officer and Secretary

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Butler National Corporation (the "Company") on Form 10-Q for the period ending October 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Christopher J. Reedy, Chief Executive Officer of the Company, certify, (to the best of my knowledge), pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002 that;

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/Christopher J. Reedy

Christopher J. Reedy

President and Chief Executive Officer

Butler National Corporation
December 15, 2023

 

 

"A signed original of this written statement required by Section 906 has been provided to Butler National Corporation and will be retained by Butler National Corporation and furnished to the Securities and Exchange Commission or its staff upon request."

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Butler National Corporation (the "Company") on Form 10-Q for the period ending October 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tad M. McMahon, Chief Financial Officer of the Company, certify, (to the best of my knowledge), pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002 that;

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Tad M. McMahon

 

 

Tad M. McMahon

 

Chief Financial Officer and Secretary

 

Butler National Corporation

 

 December 15, 2023

 

 

"A signed original of this written statement required by Section 906 has been provided to Butler National Corporation and will be retained by Butler National Corporation and furnished to the Securities and Exchange Commission or its staff upon request."

 

 

 
v3.23.3
Document And Entity Information - shares
 6 Months Ended
Oct. 31, 2023
Dec. 15, 2023
Document Information [Line Items]    
Entity Central Index Key 0000015847  
Entity Registrant Name BUTLER NATIONAL CORP  
Amendment Flag false  
Current Fiscal Year End Date --04-30  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Oct. 31, 2023  
Document Transition Report false  
Entity File Number 0-1678  
Entity Incorporation, State or Country Code KS  
Entity Tax Identification Number 41-0834293  
Entity Address, Address Line One One Aero Plaza  
Entity Address, City or Town New Century  
Entity Address, State or Province KS  
Entity Address, Postal Zip Code 66031  
City Area Code 913  
Local Phone Number 829-4606  
Title of 12(g) Security Common Stock $.01 Par Value  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   69,025,600
v3.23.3
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
CURRENT ASSETS:    
Cash $ 18,324 $ 21,997
Accounts receivable, net 5,578 3,793
Inventory, net 9,239 8,947
Contract asset 1,755 1,893
Prepaid expenses and other current assets 1,932 3,532
Total current assets 36,828 40,162
LEASE RIGHT-TO-USE ASSET, net 2,986 3,081
PROPERTY, PLANT AND EQUIPMENT, net 60,136 59,067
SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $11,165 at October 31, 2023 and $10,603 at April 30, 2023) 9,044 8,722
OTHER ASSETS:    
Other assets (net of accumulated amortization of $12,642 at October 31, 2023 and $12,290 at April 30, 2023) 1,146 1,401
Deferred tax asset, net 1,473 1,473
Total other assets 2,619 2,874
Total assets 111,613 113,906
CURRENT LIABILITIES:    
Accounts payable 9,820 5,320
Current maturities of long-term debt 4,858 4,987
Current maturities of lease liability 99 145
Contract liability 4,680 6,031
Gaming facility mandated payment 1,687 1,730
Compensation and compensated absences 1,485 6,722
Income taxes payable 1,599 228
Other current liabilities 528 214
Total current liabilities 24,756 25,377
LONG-TERM LIABILITIES    
Long-term debt, net of current maturities 36,026 38,418
Lease liability, net of current maturities 3,339 3,330
Total long-term liabilities 39,365 41,748
Total liabilities 64,121 67,125
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:    
Common stock, par value $.01: Authorized 100,000,000 shares, issued 79,871,211 shares, and outstanding 69,025,600 shares at October 31, 2023 and issued 80,871,211 shares, and outstanding 76,891,689 shares at April 30, 2023 798 808
Capital contributed in excess of par 13,734 13,647
Treasury stock at cost, 10,845,611 shares at October 31, 2023 and 3,979,522 shares at April 30, 2023 (7,174) (2,138)
Retained earnings 40,134 34,464
Total stockholders' equity 47,492 46,781
Total liabilities and stockholders' equity 111,613 113,906
Preferred Class A [Member]    
STOCKHOLDERS' EQUITY:    
Preferred stock 0 0
Preferred Class B [Member]    
STOCKHOLDERS' EQUITY:    
Preferred stock $ 0 $ 0
v3.23.3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Oct. 31, 2023
Apr. 30, 2023
Supplemental type certificates, accumulated amortization $ 11,165 $ 10,603
Other assets, accumulated amortization $ 12,642 $ 12,290
Preferred stock, par value (in dollars per share) $ 5 $ 5
Preferred stock, shares authorized (in shares) 50,000,000 50,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 100,000,000 100,000,000
Common stock, issued (in shares) 79,871,211 80,871,211
Common stock, outstanding (in shares) 69,025,600 79,891,689
Treasury stock, shares (in shares) 10,845,611 3,979,522
Preferred Class A [Member]    
Preferred stock, stated value (in dollars per share) $ 100 $ 100
Preferred stock, dividend rate 9.80% 9.80%
Preferred stock, liquidation value $ 100 $ 100
Preferred stock, redemption value $ 100 $ 100
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Preferred stock, designated classes (in shares) 200,000 200,000
Preferred Class B [Member]    
Preferred stock, stated value (in dollars per share) $ 1,000 $ 1,000
Preferred stock, dividend rate 6.00% 6.00%
Preferred stock, liquidation value $ 1,000 $ 1,000
Preferred stock, redemption value $ 1,000 $ 1,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Preferred stock, designated classes (in shares) 200,000 200,000
v3.23.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Oct. 31, 2023
Oct. 31, 2022
REVENUE:        
Revenues from customers $ 19,602 $ 19,326 $ 36,786 $ 34,629
COSTS AND EXPENSES:        
Marketing and advertising 1,361 1,368 2,639 2,699
General, administrative and other 3,785 3,622 7,282 7,519
Total costs and expenses 16,004 15,324 32,051 29,002
OPERATING INCOME 3,598 4,002 4,735 5,627
OTHER INCOME (EXPENSE):        
Interest expense (615) (707) (1,254) (1,430)
Gain on sale of airplanes 3,729 0 4,169 0
Interest income 70 0 117 0
Total other income (expense) 3,184 (707) 3,032 (1,361)
INCOME BEFORE INCOME TAXES 6,782 3,295 7,767 4,266
Gain on sale of building     0 69
PROVISION FOR INCOME TAXES:        
Provision for income taxes 1,831 612 2,097 872
NET INCOME $ 4,951 $ 2,683 $ 5,670 $ 3,114
BASIC EARNINGS PER COMMON SHARE (in dollars per share) $ 0.07 $ 0.03 $ 0.08 $ 0.04
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares) 69,502,008 76,781,461 72,005,204 76,618,873
DILUTED EARNINGS PER COMMON SHARE (in dollars per share) $ 0.07 $ 0.03 $ 0.08 $ 0.04
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION (in shares) 69,502,008 76,781,461 72,005,204 76,618,873
Deferred Income Tax Expense (Benefit)     $ 0 $ 280
Professional Services [Member]        
REVENUE:        
Revenues from customers $ 9,770 $ 9,745 18,810 18,707
COSTS AND EXPENSES:        
Cost of services and products 4,006 3,752 7,952 7,375
Aerospace Products [Member]        
REVENUE:        
Revenues from customers 9,832 9,581 17,976 15,922
COSTS AND EXPENSES:        
Cost of services and products $ 6,852 $ 6,582 $ 14,178 $ 11,409
v3.23.3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock, Common [Member]
Retained Earnings [Member]
Parent [Member]
Total
Balance (in shares) at Apr. 30, 2022 80,348,572   3,890,426      
Balance at Apr. 30, 2022 $ 803 $ 12,160 $ (2,077) $ 29,948 $ 40,834  
Deferred compensation, restricted stock (in shares) (75,000)   0      
Deferred compensation, restricted stock $ 0 132 $ 0 0 132  
Stock repurchase (in shares) 0   1,639     1,639 [1]
Stock repurchase $ 0 0 $ (2) 0 (2)  
Stock awarded to Director (in shares) 400,000   0      
Stock awarded to Director $ 4 348 $ 0 0 352  
Net Income $ 0 0 $ 0 431 431  
Balance (in shares) at Jul. 31, 2022 80,673,572   3,892,065      
Balance at Jul. 31, 2022 $ 807 12,640 $ (2,079) 30,379 41,747  
Balance (in shares) at Apr. 30, 2022 80,348,572   3,890,426      
Balance at Apr. 30, 2022 $ 803 12,160 $ (2,077) 29,948 40,834  
Net Income           $ 3,114
Balance (in shares) at Oct. 31, 2022 80,673,572   3,892,215      
Balance at Oct. 31, 2022 $ 807 12,786 $ (2,079) 33,062 44,576  
Balance (in shares) at Jul. 31, 2022 80,673,572   3,892,065      
Balance at Jul. 31, 2022 $ 807 12,640 $ (2,079) 30,379 41,747  
Deferred compensation, restricted stock (in shares) 0   0      
Deferred compensation, restricted stock $ 0 146 $ 0 0 146  
Stock repurchase (in shares) 0   150     150 [1]
Stock repurchase $ 0 0 $ 0 0 0  
Net Income $ 0 0 $ 0 2,683 2,683 $ 2,683
Balance (in shares) at Oct. 31, 2022 80,673,572   3,892,215      
Balance at Oct. 31, 2022 $ 807 12,786 $ (2,079) 33,062 44,576  
Balance (in shares) at Apr. 30, 2023 80,871,211   3,979,522      
Balance at Apr. 30, 2023 $ 808 13,647 $ (2,138) 34,464 46,781 $ 46,781
Deferred compensation, restricted stock (in shares) (1,300,000)   0      
Deferred compensation, restricted stock $ (13) (236) $ 0 0 (249)  
Stock repurchase (in shares) 0   6,863,789     6,863,789 [1]
Stock repurchase $ 0 0 $ (5,035) 0 (5,035)  
Net Income $ 0 0 $ 0 719 719  
Balance (in shares) at Jul. 31, 2023 79,571,211   10,843,311      
Balance at Jul. 31, 2023 $ 795 13,411 $ (7,173) 35,183 42,216  
Balance (in shares) at Apr. 30, 2023 80,871,211   3,979,522      
Balance at Apr. 30, 2023 $ 808 13,647 $ (2,138) 34,464 46,781 $ 46,781
Net Income           5,670
Balance (in shares) at Oct. 31, 2023 79,871,211   10,845,611      
Balance at Oct. 31, 2023 $ 798 13,734 $ (7,174) 40,134 47,492 $ 47,492
Balance (in shares) at Jul. 31, 2023 79,571,211   10,843,311      
Balance at Jul. 31, 2023 $ 795 13,411 $ (7,173) 35,183 42,216  
Deferred compensation, restricted stock (in shares) 0   0      
Deferred compensation, restricted stock $ 0 104 $ 0 0 104  
Stock repurchase (in shares) 0   2,300     2,300 [1]
Stock repurchase $ 0 0 $ (1) 0 (1)  
Stock awarded to Director (in shares) 300,000   0      
Stock awarded to Director $ 3 219 $ 0 0 222  
Net Income $ 0 0 $ 0 4,951 4,951 $ 4,951
Balance (in shares) at Oct. 31, 2023 79,871,211   10,845,611      
Balance at Oct. 31, 2023 $ 798 $ 13,734 $ (7,174) $ 40,134 $ 47,492 $ 47,492
[1] These shares of common stock were purchased through a private transaction
v3.23.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Income $ 5,670 $ 3,114
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 3,049 2,939
Stock awarded to director 222 352
Deferred Income Tax Expense (Benefit) 0 280
Gain on sale of airplanes (4,169) 0
Gain (loss) on sale of building 0 (69)
Deferred compensation, restricted stock (145) 278
Changes in operating assets and liabilities:    
Accounts receivable (1,785) (324)
Inventory (764) (424)
Contract assets 138 228
Prepaid expenses and other assets 1,601 (1,557)
Accounts payable 4,500 (157)
Increase (Decrease) in Contract with Customer, Liability (1,351) 4,028
Lease liability 94 93
Accrued liabilities (5,237) (408)
Gaming facility mandated payment (43) 52
Income tax payable 1,371 (814)
Other liabilities 314 238
Net cash provided by operating activities 3,465 7,849
CASH FLOWS FROM INVESTING ACTIVITIES:    
Capital expenditures (4,354) (3,253)
Proceeds from sale of airplanes 4,904 0
Proceeds from sale of building 0 164
Net cash provided by (used in) investing activities 550 (3,089)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayments of long-term debt (2,521) (2,614)
Repayments on right-to-use lease liability (131) (129)
Repurchase of common stock (5,036) (2)
Net cash used in financing activities (7,688) (2,745)
NET INCREASE (DECREASE) IN CASH (3,673) 2,015
CASH, beginning of period 21,997 12,487
CASH, end of period 18,324 14,502
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Interest paid 1,266 1,423
Income taxes paid 725 1,686
NON CASH INVESTING AND FINANCING ACTIVITY:    
Lease right-of-use assets purchased 0 541
Lease liability for purchase of assets under lease $ 0 $ 541
v3.23.3
Note 1
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the annual report on Form 10-K for the fiscal year ended April 30, 2023. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and six months ended October 31, 2023 are not indicative of the results of operations that may be expected for the fiscal year ending April 30, 2024.

 

Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years. These reclassifications have no impact on the reported results of operations. Financial amounts are in thousands of dollars except per share amounts.
v3.23.3
Note 2 - Net Income Per Share
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Earnings Per Share [Text Block]

2. Net Income Per Share: Butler National Corporation (“the Company”) follows ASC 260 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net earnings per share would be excluded. 
v3.23.3
Note 3 - Revenue Recognition: ASC Topic 606, "Revenue From Contracts With Customers"
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

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)

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 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)

Identify 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)

Determine 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 of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

 

 

4)

Allocate 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, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as billed by multiplying the price assigned to the good or service, by the units.

 

 

5)

Recognize 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 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.

 

 

Aircraft modifications are performed under fixed-price contracts unless modified with a change order.  Significant payment terms are generally included in these contracts, requiring a 30% to 50% down payment on arrival of the aircraft and include milestone payments throughout the project.  Typically, contracts are less than one year in duration.  Revenue from fixed-priced contracts is recognized on the percentage-of-completion method, measured by the direct labor incurred compared to total estimated direct labor.  Direct labor best represents the progress on a contract.

 

 

Revenue from Aircraft Avionics and Special Mission Electronics are recognized when shipped. Payment for these Avionics products is due within 30 days of the invoice date after shipment.

 

 

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 aggregate of gaming wins 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. Effective September 1, 2022, sports wagering became legal in the State of Kansas. The company is currently managing sports wagering through DraftKings sports wagering platform. The Company shares a percentage of the gross sports wagering win with its platform partner. Revenue from Gaming Management and other Corporate/Professional Services is recognized as the service is rendered. Food, beverage, and other revenue is recorded when the service is received and paid.

 
v3.23.3
Note 4 - Disaggregation of Revenue
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Disaggregation of Revenue [Text Block]

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 October 31, 2023

    

Three Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 9,770     $ 8,639     $ 18,409     $ 9,745     $ 8,298     $ 18,043  

Europe

     -       952       952       -       124       124  

Asia

     -       4       4             274       274  

Australia and Other

     -       237       237       -       885       885  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 7,298     $ -     $ 7,298     $ 7,744     $ -     $ 7,744  

Sportsbook Revenue

     1,314       -       1,314       825       -       825  

Casino Non-Gaming Revenue

     1,158       -       1,158       1,105       -       1,105  

Professional Services

     -       -       -       71       -       71  

Aircraft Modification

     -       6,082       6,082       -       5,878       5,878  

Aircraft Avionics

     -       778       778       -       523       523  

Special Mission Electronics

     -       2,972       2,972       -       3,180       3,180  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 5,401     $ 5,401     $ -     $ 5,624     $ 5,624  

Goods or services transferred at a point of sale

     9,770       4,431       14,201       9,745       3,957       13,702  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  

   

   

Six Months Ended October 31, 2023

    

Six Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 18,810     $ 14,184     $ 32,994     $ 18,707     $ 14,294     $ 33,001  

Europe

     -       1,619       1,619       -       306       306  

Asia

     -       358       358       -       411       411  

Australia and Other

     -       1,815       1,815       -       911       911  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 14,496     $ -     $ 14,496     $ 15,560     $ -     $ 15,560  

Sportsbook Revenue

     2,015       -       2,015       825       -       825  

Casino Non-Gaming Revenue

     2,247       -       2,247       2,182       -       2,182  

Professional Services

     52       -       52       140       -       140  

Aircraft Modification

     -       11,565       11,565       -       9,714       9,714  

Aircraft Avionics

     -       1,522       1,522       -       1,237       1,237  

Special Mission Electronics

     -       4,889       4,889       -       4,971       4,971  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 10,613     $ 10,613     $ -     $ 8,875     $ 8,875  

Goods or services transferred at a point of sale

     18,810       7,363       26,173       18,707       7,047       25,754  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  

 
v3.23.3
Note 5 - Accounts Receivable, Net, Contract Asset and Contract Liability
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Text Block]
5. Accounts receivable, net, contract asset and contract liability

 

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

 

  October 31,  April 30, 
  

2023

  

2023

 

Accounts Receivable, net

 $5,578  $3,793 

Contract Asset

  1,755   1,893 

Contract Liability

  4,680   6,031 

 

Accounts receivable, net consist of $5,578 and $3,793 from customers as of  October 31, 2023 and April 30, 2023, respectively. At October 31, 2023 and April 30, 2023, the allowance for doubtful accounts was $205 and $205, respectively.

 

Contract assets are net of progress payments and performance based payments from our customers totaling $1,755 and $1,893 as of October 31, 2023 and April 30, 2023. Contract assets decreased $138 during the six months ended October 31, 2023, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the six months ended October 31, 2023. There were no significant impairment losses related to our contract assets during the six months ended October 31, 2023. We expect to bill our customers for the majority of the October 31, 2023 contract assets during fiscal year end 2024.

 

Contract liabilities decreased $1,351 during the six months ended October 31, 2023, primarily due to the revenue recognized on these performance obligations being greater than the payments received.
v3.23.3
Note 6 - Inventory
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Inventory Disclosure [Text Block]

6. Inventory

 

Inventories are priced at the lower of cost, determined on a 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. 

 

Inventory is comprised of the following, net of the estimate for obsolete inventory of $275 at  October 31, 2023 and $275 at April 30, 2023.

 

  

October 31, 2023

  

April 30, 2023

 

Parts and raw material

 $6,196  $5,704 

Work in process

  

2,981

   3,194 

Finished goods

  62   49 

Total Inventory, net of allowance

 $9,239  $8,947 

 
v3.23.3
Note 7 - Property, Plant and Equipment
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Property, Plant and Equipment Disclosure [Text Block]

7. Property, Plant and Equipment

 

Property, plant and equipment is comprised of the following:

 

  October 31, 2023  

April 30, 2023

 

Land

  $4,751   $4,751 

Building and improvements

  49,401   47,867 

Aircraft

  4,046   8,515 

Machinery and equipment

  6,939   5,547 

Office furniture and fixtures

  14,327   13,881 

Leasehold improvements

  4,032   4,032 
   83,496   84,593 

Accumulated depreciation

  (23,360)  (25,526

)

Total property, plant and equipment

 $60,136  $59,067 

 

Property and Related Depreciation: Machinery and equipment are recorded at cost and depreciated over their estimated useful lives. Depreciation is provided on a straight-line basis. Depreciation expense was $2,347 for the six months ended October 31, 2023 and $2,153 for the six months ended October 31, 2022. Depreciation expense is included in cost of sales and general and administrative costs.

 

Description

 

Estimated useful life

Building and improvements

 

39 years or the shorter of the estimated useful life of the asset or the underlying lease term

Aircraft

 

5 years

Machinery and equipment

 

5 years

Office furniture and fixtures

 

5 years

Leasehold improvements

 

Shorter of the estimated useful life of the asset or the underlying lease term

 

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets retired are removed from the accounts and any resulting gains or losses are reflected as income or expense.

 
v3.23.3
Note 8 - Use of Estimates
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Use of Estimates [Text Block]

8. 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. 
v3.23.3
Note 9 - Research and Development
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Research, Development, and Computer Software Disclosure [Text Block]

9. Research and Development:

 

We invested in research and development activities. The amount invested in the six months ended October 31, 2023 and 2022 was $1,339 million and $1,632, respectively.

 
v3.23.3
Note 10 - Debt
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

10. Debt: At  October 31, 2023 , the Company has a line of credit with Kansas State Bank in the form of a promissory note with an interest rate 8.4% totaling $2,000. The unused line at October 31, 2023  was $2,000. There were no advances made on the line of credit during the quarter ended  October 31, 2023. The line of credit is due on demand and is secured by a first and second position on all assets of the Company.

 

One note with Academy Bank, N.A. for $29,847 secured by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.32% payable over seven years with an initial twenty-year amortization and a balloon payment of $19,250 in December 2027. The second note with Academy Bank, N.A. for $8,766 is secured by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.75% payable in full over five years. These notes contain a covenant to maintain a debt service coverage ratio of 1.3 to 1.0. These notes also contain a liquidity covenant requiring the Company to maintain an aggregate sum of $1.5 million of unrestricted cash. We are in compliance with these covenants at October 31, 2023.

 

At October 31, 2023, there was a note payable with Bank of America, N.A. with a balance of $867. The interest rate on this note is at SOFR plus 1.75%.  The loan is secured by buildings and improvements having a net book value of $629.  This note matures in March 2029.

 

At October 31, 2023, there is a note payable with Bank of America, N.A. with a balance of $397.  The interest rate on this note is at SOFR plus 1.75%.  This loan is secured by buildings and improvements with a net book value of $680.  This note matures in March 2029.

 

At October 31, 2023, there was a note payable with Patriots Bank with an interest rate of 4.35% totaling $968.  This loan is secured by aircraft security agreements with a net book value of $847.  This note matures in March 2029.

 

At October 31, 2023, there is a note payable with an interest rate of 8.13% totaling $39 secured by equipment with a net book value of $39. This note matures in October 2025.

 

We are compliant with the covenants and obligations of each of our notes as of October 31, 2023, and December 15, 2023.

 
v3.23.3
Note 11 - Other Assets
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Intangible Assets Disclosure [Text Block]

11. Other Assets:

 

Our other asset account includes assets of $5,500 related to the Kansas Expanded Lottery Act Management Contract privilege fee, $6,744 of gaming equipment we were required to pay for ownership by the State of Kansas Lottery, JET autopilot intellectual property of $1,417 and miscellaneous other assets of $127. BHCMC expects the $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 assumed by 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 fully amortized.

 
v3.23.3
Note 12 - Stock Options and Incentive Plans
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

12. 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.  

 

In July 2022, the Company granted a board member 400,000 shares under the plan. These shares were fully vested and non-forfeitable on the date of grant. These shares were valued at $0.88 per share, for a total of $352. The compensation related to this grant was expensed in fiscal year 2023. 

 

In October 2023, the Company granted a board member 300,000 shares under the plan.  These shares were fully vested and non-forfeitable on the date of the grant. These shares were valued at $0.74 per share, for a total of $222.  The compensation related to this grant was expensed in the current period.

 

For the six months ended October 31, 2023 the Company expensed $208 and received a benefit from the forfeiture of shares of $353 for a net benefit of $145.  For the six months ended  October 31, 2022, the Company expensed $278.

 

  

Number of Shares

  

Weighted Average Grant Date Fair Value

 

Total shares issued

  8,200,000  $0.43 

Forfeited, in prior periods

  (100,000) $0.40 

Forfeited, during the year ended April 30, 2023

  (875,000) $0.40 

Forfeited, during the six months ended October 31, 2023

  (1,300,000) $0.40 

Total

  5,925,000  $0.45 

 
v3.23.3
Note 13 - Stock Repurchase Program
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Treasury Stock [Text Block]

13. Stock Repurchase Program:

 

In July 2023, the Board of Directors approved an increase in the size of the Company's stock repurchase program from $4 million to $9 million.  The program was established for the purpose of enabling Butler National Corporation (BNC) to flexibly repurchase its own shares in consideration of factors such as opportunities for strategic investment, BNC's financial condition and the price of its common stock as part of improving capital efficiency.  The program is currently authorized through July 31, 2025.

 

The table below provides information with respect to common stock purchases by the Company through October 31, 2023.

 

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

  3,290,426  $0.40   3,290,426  $2,655 

Quarter ended July 31, 2022 (a)

  1,639  $0.84   1,639  $2,653 

Quarter ended October 31, 2022 (a)

  150  $0.70   150  $2,653 

Quarter ended January 31, 2023 (a)

  85,307  $0.68   85,307  $2,595 

Quarter ended April 30, 2023 (a)

  2,000  $0.68   2,000  $2,594 

Increase in program authorization July 2023

  -  $-   -  $7,594 

Quarter ended July 31, 2023 (a)

  6,863,789  $0.73   6,863,789  $2,560 

Quarter ended October 31, 2023 (a)

  2,300  $0.73   2,300  $2,558 

Total

  10,245,611  $0.63   10,245,611     

 

(a)

These shares of common stock were purchased through a private transaction

 
v3.23.3
Note 14 - Lease Right-to-use
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Lessee, Finance Leases [Text Block]

14. Lease Right-to-Use:

 

We lease hangars and office space with initial lease terms of five, forty-six, and fifty years.

 

  

October 31, 2023

 

Lease right-to-use assets

 $3,781 

Less accumulated depreciation

  795 

Total

 $2,986 

 

Future minimum lease payments for assets under finance leases at October 31, 2023 are as follows:

 

2024

 $214 

2025

  114 

2026

  117 

2027

  119 

2028

  122 

Thereafter

  12,767 

Total minimum lease payments

  13,453 

Less amount representing interest

  10,015 

Present value of net minimum lease payments

  3,438 

Less current maturities of lease liability

  99 

Lease liability, net of current maturities

 $3,339 

 

Finance lease costs at October 31, 2023 and  October 31, 2022 are as follows: 

 

  

October 31, 2023

  

October 31, 2022

 

Finance lease cost:

        

Amortization of right-of-use assets

 $95  $94 

Interest on lease liabilities

  94   93 

Total finance lease cost

 $189  $187 

 

  

October 31, 2023

  

October 31, 2022

 

Weighted average remaining lease term - Financing leases (in years)

  44   45 

Weighted average discount rate - Financing leases

  5.8%  5.8%
v3.23.3
Note 15 - Acquisition
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Business Combination Disclosure [Text Block]

15. Acquisition:

 

In September 2023, the Company acquired KC Machine, a recognized provider of high quality precision machine parts for $2,860.  The purchase price was paid by a combination of $2,375 in cash, a $300 earned-out liability due in March 2024, and a final escrow liability due September 2024.  The present value of these liabilities is included in accounts payable at October 31, 2023.

 

The following table summarizes the purchase price and accounting for this transaction:

 

Purchase price summary:

    

Cash paid at closing

 $2,375 

Present value of final escrow liability

  228 

Present value of earn-out liability

  257 
  $2,860 
     

Accounting summary:

    

Building

 $1,510 

Equipment

  930 

Intangibles

  205 

Inventory

  230 

Other

  (15)
  $2,860 

  
v3.23.3
Note 16 - Segment Reporting and Sales by Major Customer
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

16. Segment Reporting and Sales by Major Customer:

 

Industry Segmentation

 

Current Activities - The Company focuses on two 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, mapping, environmental research, search and rescue, 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 civilian and military aircraft and vehicles. Ruggedized electrical fabrication is another recognized specialty. 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 October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,770  $6,082  $778  $2,972  $-  $19,602 

Interest expense

  532   58   -   16   9   615 

Depreciation

  689   88   4   32   27   840 

Operating income (loss)

  2,767   557   (105)  1,482   (1,103)  3,598 

 

 

Three Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,674  $5,878  $523  $3,180  $71  $19,326 

Interest expense

  622   66   -   11   8   707 

Depreciation

  608   58   3   36   51   756 

Operating income (loss)

  2,939   912   (249)  1,451   (1,051)  4,002 

 

 

Six Months Ended October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,758  $11,565  $1,522  $4,889  $52  $36,786 

Interest expense

  1,088   116   -   33   17   1,254 

Depreciation

  1,337   152   7   63   54   1,613 

Operating income (loss)

  5,081   (191)  (146)  2,203   (2,212)  4,735 

 

 

Six Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,567  $9,714  $1,237  $4,971  $140  $34,629 

Interest expense

  1,264   132   -   18   16   1,430 

Depreciation

  1,234   111   5   75   102   1,527 

Operating income (loss)

  5,581   966   (201)  2,067   (2,786)  5,627 

 

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:

 

  

Six Months Ended October 31, 2023

  

Six Months Ended October 31, 2022

 

Aerospace Products – two customers in the six months ended October 31, 2023, two customers in the six months ended October 31, 2022

  27.5%  25.2%

Professional Services

  -   - 

 

In the six months ended October 31, 2023 the Company derived 34.4% of total revenue from five Aerospace customers. The top customer provided 15.7% of total revenue while the next top four customers ranged from 1.8% to 11.8%.

 
v3.23.3
Note 17 - Subsequent Events
 6 Months Ended
Oct. 31, 2023
Notes to Financial Statements  
Subsequent Events [Text Block]

17. Subsequent Events:

 

The Company evaluated its October 31, 2023 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 consolidated financial statements.

 
v3.23.3
Note 4 - Disaggregation of Revenue (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Disaggregation of Revenue [Table Text Block]
   

Three Months Ended October 31, 2023

    

Three Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 9,770     $ 8,639     $ 18,409     $ 9,745     $ 8,298     $ 18,043  

Europe

     -       952       952       -       124       124  

Asia

     -       4       4             274       274  

Australia and Other

     -       237       237       -       885       885  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 7,298     $ -     $ 7,298     $ 7,744     $ -     $ 7,744  

Sportsbook Revenue

     1,314       -       1,314       825       -       825  

Casino Non-Gaming Revenue

     1,158       -       1,158       1,105       -       1,105  

Professional Services

     -       -       -       71       -       71  

Aircraft Modification

     -       6,082       6,082       -       5,878       5,878  

Aircraft Avionics

     -       778       778       -       523       523  

Special Mission Electronics

     -       2,972       2,972       -       3,180       3,180  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 5,401     $ 5,401     $ -     $ 5,624     $ 5,624  

Goods or services transferred at a point of sale

     9,770       4,431       14,201       9,745       3,957       13,702  
    $ 9,770     $ 9,832     $ 19,602     $ 9,745     $ 9,581     $ 19,326  
   

Six Months Ended October 31, 2023

    

Six Months Ended October 31, 2022

  
   

Professional Services

    

Aerospace Products

    

Total

    

Professional Services

    

Aerospace Products

    

Total

  

Geographical Markets

                                                

North America

   $ 18,810     $ 14,184     $ 32,994     $ 18,707     $ 14,294     $ 33,001  

Europe

     -       1,619       1,619       -       306       306  

Asia

     -       358       358       -       411       411  

Australia and Other

     -       1,815       1,815       -       911       911  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Major Product Lines

                                                

Casino Gaming Revenue

   $ 14,496     $ -     $ 14,496     $ 15,560     $ -     $ 15,560  

Sportsbook Revenue

     2,015       -       2,015       825       -       825  

Casino Non-Gaming Revenue

     2,247       -       2,247       2,182       -       2,182  

Professional Services

     52       -       52       140       -       140  

Aircraft Modification

     -       11,565       11,565       -       9,714       9,714  

Aircraft Avionics

     -       1,522       1,522       -       1,237       1,237  

Special Mission Electronics

     -       4,889       4,889       -       4,971       4,971  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
                                                 

Contract Types / Revenue Recognition Timing

                                                

Percentage of completion contracts

   $ -     $ 10,613     $ 10,613     $ -     $ 8,875     $ 8,875  

Goods or services transferred at a point of sale

     18,810       7,363       26,173       18,707       7,047       25,754  
    $ 18,810     $ 17,976     $ 36,786     $ 18,707     $ 15,922     $ 34,629  
v3.23.3
Note 5 - Accounts Receivable, Net, Contract Asset and Contract Liability (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]
  October 31,  April 30, 
  

2023

  

2023

 

Accounts Receivable, net

 $5,578  $3,793 

Contract Asset

  1,755   1,893 

Contract Liability

  4,680   6,031 
v3.23.3
Note 6 - Inventory (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

October 31, 2023

  

April 30, 2023

 

Parts and raw material

 $6,196  $5,704 

Work in process

  

2,981

   3,194 

Finished goods

  62   49 

Total Inventory, net of allowance

 $9,239  $8,947 
v3.23.3
Note 7 - Property, Plant and Equipment (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Property, Plant and Equipment [Table Text Block]
  October 31, 2023  

April 30, 2023

 

Land

  $4,751   $4,751 

Building and improvements

  49,401   47,867 

Aircraft

  4,046   8,515 

Machinery and equipment

  6,939   5,547 

Office furniture and fixtures

  14,327   13,881 

Leasehold improvements

  4,032   4,032 
   83,496   84,593 

Accumulated depreciation

  (23,360)  (25,526

)

Total property, plant and equipment

 $60,136  $59,067 
Schedule of Useful Life of Property, Plant, and Equipment [Table Text Block]

Description

 

Estimated useful life

Building and improvements

 

39 years or the shorter of the estimated useful life of the asset or the underlying lease term

Aircraft

 

5 years

Machinery and equipment

 

5 years

Office furniture and fixtures

 

5 years

Leasehold improvements

 

Shorter of the estimated useful life of the asset or the underlying lease term
v3.23.3
Note 12 - Stock Options and Incentive Plans (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Share-Based Payment Arrangement, Option, Activity [Table Text Block]
  

Number of Shares

  

Weighted Average Grant Date Fair Value

 

Total shares issued

  8,200,000  $0.43 

Forfeited, in prior periods

  (100,000) $0.40 

Forfeited, during the year ended April 30, 2023

  (875,000) $0.40 

Forfeited, during the six months ended October 31, 2023

  (1,300,000) $0.40 

Total

  5,925,000  $0.45 
v3.23.3
Note 13 - Stock Repurchase Program (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Class of Treasury Stock [Table Text Block]

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

  3,290,426  $0.40   3,290,426  $2,655 

Quarter ended July 31, 2022 (a)

  1,639  $0.84   1,639  $2,653 

Quarter ended October 31, 2022 (a)

  150  $0.70   150  $2,653 

Quarter ended January 31, 2023 (a)

  85,307  $0.68   85,307  $2,595 

Quarter ended April 30, 2023 (a)

  2,000  $0.68   2,000  $2,594 

Increase in program authorization July 2023

  -  $-   -  $7,594 

Quarter ended July 31, 2023 (a)

  6,863,789  $0.73   6,863,789  $2,560 

Quarter ended October 31, 2023 (a)

  2,300  $0.73   2,300  $2,558 

Total

  10,245,611  $0.63   10,245,611     
v3.23.3
Note 14 - Lease Right-to-use (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Lessee, Finance Lease, Right of Use Assets [Table Text Block]
  

October 31, 2023

 

Lease right-to-use assets

 $3,781 

Less accumulated depreciation

  795 

Total

 $2,986 
Finance Lease, Liability, to be Paid, Maturity [Table Text Block]

2024

 $214 

2025

  114 

2026

  117 

2027

  119 

2028

  122 

Thereafter

  12,767 

Total minimum lease payments

  13,453 

Less amount representing interest

  10,015 

Present value of net minimum lease payments

  3,438 

Less current maturities of lease liability

  99 

Lease liability, net of current maturities

 $3,339 
Lease, Cost [Table Text Block]
  

October 31, 2023

  

October 31, 2022

 

Finance lease cost:

        

Amortization of right-of-use assets

 $95  $94 

Interest on lease liabilities

  94   93 

Total finance lease cost

 $189  $187 
  

October 31, 2023

  

October 31, 2022

 

Weighted average remaining lease term - Financing leases (in years)

  44   45 

Weighted average discount rate - Financing leases

  5.8%  5.8%
v3.23.3
Note 15 - Acquisition (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Purchase price summary:

    

Cash paid at closing

 $2,375 

Present value of final escrow liability

  228 

Present value of earn-out liability

  257 
  $2,860 
     

Accounting summary:

    

Building

 $1,510 

Equipment

  930 

Intangibles

  205 

Inventory

  230 

Other

  (15)
  $2,860 
v3.23.3
Note 16 - Segment Reporting and Sales by Major Customer (Tables)
 6 Months Ended
Oct. 31, 2023
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]

Three Months Ended October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,770  $6,082  $778  $2,972  $-  $19,602 

Interest expense

  532   58   -   16   9   615 

Depreciation

  689   88   4   32   27   840 

Operating income (loss)

  2,767   557   (105)  1,482   (1,103)  3,598 

 

Three Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $9,674  $5,878  $523  $3,180  $71  $19,326 

Interest expense

  622   66   -   11   8   707 

Depreciation

  608   58   3   36   51   756 

Operating income (loss)

  2,939   912   (249)  1,451   (1,051)  4,002 

Six Months Ended October 31, 2023

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,758  $11,565  $1,522  $4,889  $52  $36,786 

Interest expense

  1,088   116   -   33   17   1,254 

Depreciation

  1,337   152   7   63   54   1,613 

Operating income (loss)

  5,081   (191)  (146)  2,203   (2,212)  4,735 

 

Six Months Ended October 31, 2022

 

Gaming

  

Aircraft Modification

  

Aircraft Avionics

  

Special Mission Electronics

  

Other

  

Total

 

Revenues from customers

 $18,567  $9,714  $1,237  $4,971  $140  $34,629 

Interest expense

  1,264   132   -   18   16   1,430 

Depreciation

  1,234   111   5   75   102   1,527 

Operating income (loss)

  5,581   966   (201)  2,067   (2,786)  5,627 
Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]
  

Six Months Ended October 31, 2023

  

Six Months Ended October 31, 2022

 

Aerospace Products – two customers in the six months ended October 31, 2023, two customers in the six months ended October 31, 2022

  27.5%  25.2%

Professional Services

  -   - 
v3.23.3
Note 3 - Revenue Recognition: ASC Topic 606, "Revenue From Contracts With Customers" (Details Textual)
 6 Months Ended
Oct. 31, 2023
Period for Payment Due (Day) 30 days
v3.23.3
Note 4 - Disaggregation of Revenue - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Oct. 31, 2023
Oct. 31, 2022
Revenues from customers $ 19,602 $ 19,326 $ 36,786 $ 34,629
Percentage of Completion Contracts [Member]        
Revenues from customers 5,401 5,624 10,613 8,875
Transferred at Point in Time [Member]        
Revenues from customers 14,201 13,702 26,173 25,754
Casino [Member]        
Revenues from customers 7,298 7,744 14,496 15,560
Sportsbook [Member]        
Revenues from customers 1,314 825 2,015 825
Casino Non-gaming [Member]        
Revenues from customers 1,158 1,105 2,247 2,182
Professional Services [Member]        
Revenues from customers 0 71 52 140
Aircraft Modification [Member]        
Revenues from customers 6,082 5,878 11,565 9,714
Aircraft Avionics [Member]        
Revenues from customers 778 523 1,522 1,237
Special Mission Electronics [Member]        
Revenues from customers 2,972 3,180 4,889 4,971
Professional Services [Member]        
Revenues from customers 9,770 9,745 18,810 18,707
Professional Services [Member] | Percentage of Completion Contracts [Member]        
Revenues from customers 0 0 0 0
Professional Services [Member] | Transferred at Point in Time [Member]        
Revenues from customers 9,770 9,745 18,810 18,707
Professional Services [Member] | Casino [Member]        
Revenues from customers 7,298 7,744 14,496 15,560
Professional Services [Member] | Sportsbook [Member]        
Revenues from customers 1,314 825 2,015 825
Professional Services [Member] | Casino Non-gaming [Member]        
Revenues from customers 1,158 1,105 2,247 2,182
Professional Services [Member] | Professional Services [Member]        
Revenues from customers 0 71 52 140
Professional Services [Member] | Aircraft Modification [Member]        
Revenues from customers 0 0 0 0
Professional Services [Member] | Aircraft Avionics [Member]        
Revenues from customers 0 0 0 0
Professional Services [Member] | Special Mission Electronics [Member]        
Revenues from customers 0 0 0 0
Aerospace Products [Member]        
Revenues from customers 9,832 9,581 17,976 15,922
Aerospace Products [Member] | Percentage of Completion Contracts [Member]        
Revenues from customers 5,401 5,624 10,613 8,875
Aerospace Products [Member] | Transferred at Point in Time [Member]        
Revenues from customers 4,431 3,957 7,363 7,047
Aerospace Products [Member] | Casino [Member]        
Revenues from customers 0 0 0 0
Aerospace Products [Member] | Sportsbook [Member]        
Revenues from customers 0 0 0 0
Aerospace Products [Member] | Casino Non-gaming [Member]        
Revenues from customers 0 0 0 0
Aerospace Products [Member] | Professional Services [Member]        
Revenues from customers 0 0 0 0
Aerospace Products [Member] | Aircraft Modification [Member]        
Revenues from customers 6,082 5,878 11,565 9,714
Aerospace Products [Member] | Aircraft Avionics [Member]        
Revenues from customers 778 523 1,522 1,237
Aerospace Products [Member] | Special Mission Electronics [Member]        
Revenues from customers 2,972 3,180 4,889 4,971
North America [Member]        
Revenues from customers 18,409 18,043 32,994 33,001
North America [Member] | Professional Services [Member]        
Revenues from customers 9,770 9,745 18,810 18,707
North America [Member] | Aerospace Products [Member]        
Revenues from customers 8,639 8,298 14,184 14,294
Europe [Member]        
Revenues from customers 952 124 1,619 306
Europe [Member] | Professional Services [Member]        
Revenues from customers 0 0 0 0
Europe [Member] | Aerospace Products [Member]        
Revenues from customers 952 124 1,619 306
Asia [Member]        
Revenues from customers 4 274 358 411
Asia [Member] | Professional Services [Member]        
Revenues from customers 0 0 0
Asia [Member] | Aerospace Products [Member]        
Revenues from customers 4 274 358 411
Australia and Other [Member]        
Revenues from customers 237 885 1,815 911
Australia and Other [Member] | Professional Services [Member]        
Revenues from customers 0 0 0 0
Australia and Other [Member] | Aerospace Products [Member]        
Revenues from customers $ 237 $ 885 $ 1,815 $ 911
v3.23.3
Note 5 - Accounts Receivable, Net, Contract Asset and Contract Liability (Details Textual) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Apr. 30, 2023
Accounts Receivable, after Allowance for Credit Loss $ 5,578   $ 3,793
Accounts Receivable, Allowance for Credit Loss 205   205
Contract with Customer, Asset, after Allowance for Credit Loss 1,755   $ 1,893
Increase (Decrease) in Contract with Customer, Asset (138) $ (228)  
Increase (Decrease) in Contract with Customer, Liability $ (1,351) $ 4,028  
v3.23.3
Note 5 - Accounts Receivable, Net, Contract Asset and Contract Liability - Accounts Receivable, Net, Contract Asset and Contract Liability (Details) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
Accounts Receivable, net $ 5,578 $ 3,793
Contract Asset 1,755 1,893
Contract Liability $ 4,680 $ 6,031
v3.23.3
Note 6 - Inventory (Details Textual) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Apr. 30, 2023
Duration During Which Inventory If Inactive Taken as Obsolete (Year) 5 years  
Inventory Valuation Reserves $ 275 $ 275
v3.23.3
Note 6 - Inventory - Schedule of Inventory (Details) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
Parts and raw material $ 6,196 $ 5,704
Work in process 2,981 3,194
Finished goods 62 49
Total Inventory, net of allowance $ 9,239 $ 8,947
v3.23.3
Note 7 - Property, Plant and Equipment (Details Textual) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Depreciation $ 2,347 $ 2,153
v3.23.3
Note 7 - Property, Plant, and Equipment - Schedule of Property, Plant, and Equipment (Details) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
Property, plant, and equipment, gross $ 83,496 $ 84,593
Accumulated depreciation (23,360) (25,526)
Total property, plant and equipment 60,136 59,067
Land [Member]    
Property, plant, and equipment, gross 4,751 4,751
Building and Building Improvements [Member]    
Property, plant, and equipment, gross 49,401 47,867
Aircraft [Member]    
Property, plant, and equipment, gross 4,046 8,515
Machinery and Equipment [Member]    
Property, plant, and equipment, gross 6,939 5,547
Furniture and Fixtures [Member]    
Property, plant, and equipment, gross 14,327 13,881
Leasehold Improvements [Member]    
Property, plant, and equipment, gross $ 4,032 $ 4,032
v3.23.3
Note 7 - Property, Plant, and Equipment - Schedule of Property and Related Depreciation (Details)
Oct. 31, 2023
Building and Building Improvements [Member]  
Useful life (Year) 39 years
Aircraft [Member]  
Useful life (Year) 5 years
Machinery and Equipment [Member]  
Useful life (Year) 5 years
Furniture and Fixtures [Member]  
Useful life (Year) 5 years
v3.23.3
Note 9 - Research and Development (Details Textual) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Research and Development Expense $ 1,339 $ 1,632
v3.23.3
Note 10 - Debt (Details Textual)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
USD ($)
Line of Credit Facility, Interest Rate at Period End 8.40%
Line of Credit Facility, Maximum Borrowing Capacity $ 2,000
Line of Credit Facility, Remaining Borrowing Capacity 2,000
Long-Term Line of Credit 0
Notes Collateralized by BHCMC's Assets and Compensation Due under State Management Contract Due December 2027 [Member]  
Notes Payable $ 29,847
Debt Instrument, Interest Rate, Stated Percentage 5.32%
Debt Instrument, Term (Year) 7 years
Debt Instrument, Convertible, Remaining Discount Amortization Period (Year) 20 years
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid $ 19,250
Notes Collateralized by BHCMC's Assets and Compensation Due under State Management Contract Due October 2026 [Member]  
Notes Payable $ 8,766
Debt Instrument, Interest Rate, Stated Percentage 5.75%
Debt Instrument, Term (Year) 5 years
Debt Instrument, Covenant, Debt Service Coverage Ratio 1.3
Debt Instrument, Aggregate Unrestricted Cash Requirement $ 1,500
Note One Collateralized by Real Estate Due March 2029 [Member]  
Notes Payable $ 867
Debt Instrument, Interest Rate, Stated Percentage 1.75%
Debt Instrument, Collateral Amount $ 629
Note Two Collateralized by Real Estate Due March 2029 [Member]  
Notes Payable $ 397
Debt Instrument, Interest Rate, Stated Percentage 1.75%
Debt Instrument, Collateral Amount $ 680
Note Collateralized by Aircraft Security Agreement [Member] | Patriots Bank [Member]  
Notes Payable $ 968
Debt Instrument, Interest Rate, Stated Percentage 4.35%
Debt Instrument, Collateral Amount $ 847
Note Collateralized by Equipment Due October 2025 [Member]  
Notes Payable $ 39
Debt Instrument, Interest Rate, Stated Percentage 8.13%
Debt Instrument, Collateral Amount $ 39
v3.23.3
Note 11 - Other Assets (Details Textual)
$ in Thousands
Oct. 31, 2023
USD ($)
Kansas Expanded Lottery Act Contract Privilege [Member]  
Finite-Lived Intangible Assets, Gross $ 5,500
Gaming Equipment [Member]  
Finite-Lived Intangible Assets, Gross $ 6,744
Finite-Lived Intangible Asset, Useful Life (Year) 3 years
JET Autopilot Intellectual Property [Member]  
Finite-Lived Intangible Assets, Gross $ 1,417
Other Miscellaneous Long-Term Assets [Member]  
Finite-Lived Intangible Assets, Gross $ 127
v3.23.3
Note 12 - Stock Options and Incentive Plans (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
 1 Months Ended 6 Months Ended
Mar. 17, 2020
Apr. 12, 2019
Oct. 31, 2023
Jul. 31, 2022
Oct. 31, 2023
Oct. 31, 2022
Nov. 30, 2016
Share-Based Payment Arrangement, Expense         $ 208 $ 278  
Shares Issued, Value, Share-Based Payment Arrangement, Forfeited         353    
Share-Based Payment Arrangement, Expense, Tax Benefit         $ 145    
Butler National Corporation 2016 Equity Incentive Plan [Member]              
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)             12,500,000
Stock Issued During Period, Value, Restricted Stock Award, Gross $ 2,000 $ 950          
Butler National Corporation 2016 Equity Incentive Plan [Member] | Director [Member]              
Stock Issued During Period, Shares, Issued for Services (in shares)     300,000 400,000      
Shares Issued, Price Per Share (in dollars per share)     $ 0.74 $ 0.88 $ 0.74    
Stock Issued During Period, Value, Issued for Services     $ 222 $ 352      
Butler National Corporation 2016 Equity Incentive Plan [Member] | Restricted Stock [Member]              
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 5,000,000 2,500,000          
Share Price (in dollars per share) $ 0.41 $ 0.38          
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)   5 years          
v3.23.3
Note 12 - Stock Options and Incentive Plans - Restricted Stock Options Activity (Details) - $ / shares
 6 Months Ended 12 Months Ended 37 Months Ended
Oct. 31, 2023
Apr. 30, 2023
Apr. 30, 2022
Outstanding, shares (in shares)     8,200,000
Outstanding, weighted average fair value (in dollars per share)     $ 0.43
Forfeited, shares (in shares) (1,300,000) (875,000) (100,000)
Forfeited, weighted average fair value (in dollars per share) $ 0.4 $ 0.4 $ 0.4
Outstanding, shares (in shares) 5,925,000    
Outstanding, weighted average fair value (in dollars per share) $ 0.45    
v3.23.3
Note 13 - Stock Repurchase Program (Details Textual) - USD ($)
$ in Millions
Jul. 20, 2023
Apr. 30, 2023
Stock Repurchase Program, Authorized Amount $ 9 $ 4
v3.23.3
Note 13 - Stock Repurchase Program - Schedule of Stock Purchases (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 72 Months Ended 90 Months Ended
Oct. 31, 2023
 [1]
Jul. 31, 2023
Apr. 30, 2023
 [1]
Jan. 31, 2023
 [1]
Oct. 31, 2022
 [1]
Jul. 31, 2022
 [1]
Apr. 30, 2022
Oct. 31, 2023
Number of Shares Purchased (in shares) 2,300 6,863,789 [1] 2,000 85,307 150 1,639 3,290,426 10,245,611
Average Price Paid per Share (in dollars per share)   $ 0.73 [1] $ 0.68 $ 0.68 $ 0.7 $ 0.84 $ 0.4 $ 0.63
Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in shares)   6,863,789 [1] 2,000 85,307 150 1,639 3,290,426 10,245,611
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Programs   $ 2,560 [1] $ 2,594 $ 2,595 $ 2,653 $ 2,653 $ 2,655  
Increase in Program Authorization [Member]                
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Programs   $ 7,594            
[1] These shares of common stock were purchased through a private transaction
v3.23.3
Note 14 - Lease Right-to-use (Details Textual)
Oct. 31, 2023
Casino, Hangar, and Office Space, Two [Member]  
Lessee, Finance Lease, Term of Contract (Year) 46 years
Casino, Hangar, and Office Space, Three [Member]  
Lessee, Finance Lease, Term of Contract (Year) 50 years
v3.23.3
Note 14 - Lease Right-to-use - Finance Lease Right-of-use Assets (Details) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
Lease right-to-use assets $ 3,781  
Less accumulated depreciation 795  
Total $ 2,986 $ 3,081
v3.23.3
Note 14 - Lease Right-to-use - Future Minimum Lease Payments (Details) - USD ($)
$ in Thousands
Oct. 31, 2023
Apr. 30, 2023
2024, Finance Lease $ 214  
2025, Finance Lease 114  
2026, Finance Lease 117  
2027, Finance Lease 119  
2028, Finance Lease 122  
Thereafter, Finance Lease 12,767  
Total minimum lease payments, Finance Lease 13,453  
Less amount representing interest 10,015  
Present value of net minimum lease payments 3,438  
Less current maturities of lease liability 99 $ 145
Lease liability, net of current maturities $ 3,339 $ 3,330
v3.23.3
Note 14 - Lease Right-to-use - Lease Cost (Details) - USD ($)
$ in Thousands
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Amortization of right-of-use assets $ 95 $ 94
Interest on lease liabilities 94 93
Total finance lease cost $ 189 $ 187
Weighted average remaining lease term - Financing leases (in years) (Year) 44 years 45 years
Weighted average discount rate - Financing leases 5.80% 5.80%
v3.23.3
Note 15 - Acquisition (Details Textual) - KC Machine [Member]
$ in Thousands
 1 Months Ended
Sep. 30, 2023
USD ($)
Business Combination, Consideration Transferred $ 2,860
Payments to Acquire Businesses, Gross 2,375
Earn Out Liability [Member]  
Business Combination, Consideration Transferred, Liabilities Incurred $ 257
v3.23.3
Note 15 - Acquisition - Schedule of Acquisition (Details) - KC Machine [Member]
$ in Thousands
 1 Months Ended
Sep. 30, 2023
USD ($)
Cash paid at closing $ 2,375
Business Combination, Consideration Transferred 2,860
Building 1,510
Equipment 930
Intangibles 205
Inventory 230
Other (15)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net 2,860
Final Purchase Agreement Liability [Member]  
Present value of final escrow liability 228
Earn Out Liability [Member]  
Present value of final escrow liability $ 257
v3.23.3
Note 16 - Segment Reporting and Sales by Major Customer (Details Textual)
 6 Months Ended
Oct. 31, 2023
Number of Operating Segments 2
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | The Five Aerospace Customers [Member]  
Concentration Risk, Percentage 34.40%
Number of Major Customers 5
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Top Customer [Member]  
Concentration Risk, Percentage 15.70%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Next Top Four Customers [Member] | Minimum [Member]  
Concentration Risk, Percentage 1.80%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Next Top Four Customers [Member] | Maximum [Member]  
Concentration Risk, Percentage 11.80%
v3.23.3
Note 16 - Segment Reporting and Sales by Major Customer - Professional Services (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Oct. 31, 2023
Oct. 31, 2022
Revenues from customers $ 19,602 $ 19,326 $ 36,786 $ 34,629
Interest expense 615 707 1,254 1,430
Depreciation 840 756 1,613 1,527
Operating income (loss) 3,598 4,002 4,735 5,627
Gaming [Member]        
Revenues from customers 9,770 9,674 18,758 18,567
Interest expense 532 622 1,088 1,264
Depreciation 689 608 1,337 1,234
Operating income (loss) 2,767 2,939 5,081 5,581
Aircraft Modification [Member]        
Revenues from customers 6,082 5,878 11,565 9,714
Interest expense 58 66 116 132
Depreciation 88 58 152 111
Operating income (loss) 557 912 (191) 966
Aircraft Avionics [Member]        
Revenues from customers 778 523 1,522 1,237
Interest expense 0 0 0 0
Depreciation 4 3 7 5
Operating income (loss) (105) (249) (146) (201)
Special Mission Electronics [Member]        
Revenues from customers 2,972 3,180 4,889 4,971
Interest expense 16 11 33 18
Depreciation 32 36 63 75
Operating income (loss) 1,482 1,451 2,203 2,067
Product and Service, Other [Member]        
Revenues from customers 0 71 52 140
Interest expense 9 8 17 16
Depreciation 27 51 54 102
Operating income (loss) $ (1,103) $ (1,051) $ (2,212) $ (2,786)
v3.23.3
Note 16 - Segment Reporting and Sales by Major Customer - Schedule of Revenue by Major Customers by Reporting Segments (Details) - Customer Concentration Risk [Member] - Revenue Benchmark [Member]
 6 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Aerospace Products [Member]    
Concentration risk percentage 27.50% 25.20%
Professional Services [Member]    
Concentration risk percentage 0.00% 0.00%
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