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BUTLER NATIONAL CORP - Quarter Report: 2004 October (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSIONWashington, D

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.


----------------------------------

FORM 10-Q
-----------------------------------

(Mark One)
X

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

For the quarter ended October 31, 2004

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

For the quarter ended October 31, 2004

Commission File Number 0-1678


BUTLER NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)

Kansas
(State of Incorporation)

41-0834293
(I.R.S. Employer Identification No.)

19920 West 161st Street, Olathe, Kansas 66062
(Address of Principal Executive Office)(Zip Code)

Registrant's telephone number, including area code: (913) 780-9595

Former name, former address and former fiscal year if changed since last report:
Not Applicable

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 and (2) has been subject to such filing requirements for the past ninety days: Yes X No ____

The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of December 3, 2004 was 40,125,871 shares.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I.

FINANCIAL INFORMATION:

PAGE NO.


Condensed Consolidated Balance Sheets - October 31, 2004 and April 30, 2004

3


Condensed Consolidated Statements of Income - Three Months ended October 31, 2004 and 2003

4


Condensed Consolidated Statements of Income - Six Months ended October 31, 2004 and 2003

5


Condensed Consolidated Statements of Cash Flows - Six Months ended October 31, 2004 and 2003

6


Notes to Condensed Consolidated Financial Statements

7


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

8-9

 

Item 3 Quantitative & Qualitative

9

 

Item 4 Controls and Procedures

9-10

PART II.

Other Information

10-11


Signatures

11-13

BUTLER NATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

10/31/04

 

4/30/04

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

10/31/04

 

4/30/04

   

unaudited

 

audited

     

unaudited

 

audited

CURRENT ASSETS:

         

CURRENT LIABILITIES:

       
 

Cash

$

894,721

$

1,160,914

   

Bank overdraft payable

$

640,162

$

401,674

 

Accounts receivable, net of allowance for

 

998,258

 

646,762

   

Promissory notes payable

 

2,798,164

 

2,460,998

 

doubtful accounts of $11,576 at Oct. 31 and

           

Current maturities of long-term debt and capital lease

 

427,924

 

440,254

 

$25,576 at April 30, 2004

           

obligations

       
                   

Accounts payable

 

1,088,445

 

448,204

               

Customer deposits

   

-

 

134,985

 

Inventories -

           

Accrued liabilities -

       
 

Raw materials

 

3,697,973

 

2,576,432

   

Compensation and compensated absences

 

374,609

 

370,689

 

Work in process

 

1,890,457

 

1,226,586

   

Other

 

324,222

 

223,961

 

Finished goods

 

43,630

 

66,803

       

--------------

 

--------------

 

Aircraft

 

2,793,302

 

2,607,387

   

Total current liabilities

 

5,653,526

 

4,480,765

     

--------------

 

--------------

             
     

8,425,362

 

6,477,208

   

LONG-TERM DEBT, AND CAPITAL LEASE NET

 

1,314,339

 

1,528,267

               

OF CURRENT MATURITIES

       
 

Prepaid expenses and other current assets

 

26,801

 

126,667

             
     

--------------

 

--------------

       

--------------

 

--------------

 

Total current assets

 

10,345,142

 

8,411,551

   

Total liabilities

 

6,967,865

 

6,009,032

                         
               

COMMITMENTS AND CONTINGENCIES

       
 

PROPERTY, PLANT AND EQUIPMENT:

           

SHAREHOLDERS' EQUITY:

       
 

Land and building

 

1,004,300

 

952,800

   

Preferred stock, par value $5

       
 

Machinery and equipment

 

1,340,461

 

1,294,249

   

Authorized 50,000,000 shares, all classes

       
 

Office furniture and fixtures

 

669,813

 

669,813

   

Designated Classes A and B, 200,000 shares

       
 

Leasehold improvements

 

4,249

 

4,249

   

$1,000 Class A, 9.8%, cumulative if earned

       
     

--------------

 

--------------

   

liquidation and redemption value $100,

       
 

Total cost

 

3,018,823

 

2,921,111

   

no shares issued and outstanding

   

-

   

-

 

Accumulated depreciation

 

(1,974,335)

 

(1,947,111)

   

$1,000 Class B, 6%, convertible cumulative,

       
     

--------------

 

--------------

   

liquidation and redemption value $1,000

       
     

1,044,488

 

974,000

   

no shares issued and outstanding

   

-

   

-

               

Common stock, par value $.01:

       
 

SUPPLEMENTAL TYPE CERTIFICATES

 

1,190,266

 

1,190,266

   

Authorized 100,000,000 shares

       
               

issued and outstanding 40,725,871 shares at

       
 

INDIAN GAMING:

           

at Oct. 31 and 40,305,871 at April 30, 2004

 

407,259

 

403,059

 

ADVANCES FOR INDIAN GAMING DEVELOPMENTS

 

2,006,551

 

2,006,551

             
 

(net of reserves of $2,712,440 @ Oct. 31 and April 30, 2004)

           

Capital contributed in excess of par

 

10,420,112

 

10,384,687

     

--------------

 

--------------

             
 

Total Indian Gaming

 

2,006,551

 

2,006,551

   

Treasury stock at cost (600,000 shares)

 

(732,000)

 

(732,000)

               

Retained earnings

 

(2,393,389)

 

(3,399,010)

 

OTHER ASSETS

 

83,400

 

83,400

   

 

--------------

 

--------------

               

Total shareholders' equity

 

7,701,982

 

6,656,736

     

--------------

 

--------------

       

--------------

 

--------------

 

Total assets

$

14,669,847

$

12,665,768

   

Total liabilities and shareholders' equity

$

14,669,847

$

12,665,768

     

========

 

========

       

========

 

========

                         

The accompanying notes are an integral part of these financial statements

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED

October 31,

2004

2003

(unaudited)

(unaudited)

NET SALES

$

5,930,581

$

2,362,976

COST OF SALES

4,601,562

1,414,704

---------------

---------------

1,329,019

948,272

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

662,125

807,955

---------------

---------------

OPERATING INCOME (LOSS)

666,894

140,317

OTHER INCOME (EXPENSE):

Interest expense

(65,202)

(35,561)

Interest revenue

-

710

Other

-

(20)

---------------

---------------

Other expense

(65,202)

(34,871)

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

601,692

105,446

PROVISION FOR INCOME TAXES

20,000

-

---------------

---------------

NET INCOME (LOSS)

$

581,692

$

105,446

=========

=========

BASIC EARNINGS (LOSS) PER COMMON SHARE:

$

.01

$

.00

=========

=========

Shares used in per share calculation

39,599,391

38,333,724

DILUTED EARNINGS (LOSS) PER COMMON SHARE

$

.01

$

.00

=========

=========

Shares used in per share calculation

48,423,140

49,162,529

The accompanying notes are an integral part of these statements.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

SIX MONTHS ENDED

October 31,

2004

2003

(unaudited)

(unaudited)

NET SALES

$

11,102,339

$

4,387,083

COST OF SALES

8,500,300

2,699,995

---------------

---------------

2,602,039

1,687,088

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

1,434,703

1,317,350

---------------

---------------

OPERATING INCOME (LOSS)

1,167,336

369,738

OTHER INCOME (EXPENSE):

Interest expense

(135,360)

(68,415)

Interest revenue

-

4,724

Other

3,644

-

---------------

---------------

Other expense

(131,716)

(63,691)

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

1,035,620

306,047

PROVISION FOR INCOME TAXES

30,000

-

---------------

---------------

NET INCOME (LOSS)

$

1,005,620

$

306,047

=========

=========

BASIC EARNINGS (LOSS) PER COMMON SHARE:

$

.03

$

.01

=========

=========

Shares used in per share calculation

39,599,391

38,333,724

DILUTED EARNINGS (LOSS) PER COMMON SHARE

$

.02

$

.01

=========

=========

Shares used in per share calculation

48,423,140

49,162,529

The accompanying notes are an integral part of these statements.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

SIX MONTHS ENDED

 

Oct. 31,

 

2004

 

2003

 

(unaudited)

 

(unaudited)

       

CASH FLOWS FROM OPERATING ACTIVITIES

       

Net income (loss)

$

1,005,620

$

306,047

Adjustments to reconcile net income (loss) to net cash provided by

       

(used in) operations -

       

Depreciation

 

27,224

 

44,696

         

Changes in assets and liabilities:

       

Accounts receivable

 

(258,019)

 

121,514

Inventories

 

(1,948,154)

 

(601,680)

Prepaid expenses and other current assets

 

6,388

 

10,009

Accounts payable

 

878,729

 

134,490

Customer deposits

 

(134,985)

   

-

Accrued liabilities

 

104,181

 

114,415

   

--------------

 

--------------

Cash provided by (used in) operations

 

(319,016)

 

129,491

   

--------------

 

--------------

CASH FLOWS FROM INVESTING ACTIVITIES

       

Capital expenditures, net

 

(97,710)

 

(30,662)

Advances for Indian Gaming Developments

   

-

 

35,906

Supplemental Type Certificates

   

-

 

(55,000)

   

--------------

 

--------------

Cash provided by (used in) investing activities

 

(97,710)

 

(49,756)

   

--------------

 

--------------

CASH FLOWS FROM FINANCING ACTIVITIES

       

Proceeds from stock option exercise

 

39,625

   

-

Net borrowings under promissory note

 

337,166

 

(182,282)

Repayments of long-term debt and capital lease obligations

 

(226,258)

 

78,159

   

--------------

 

--------------

Cash provided by (used in) financing activities

 

150,533

 

(104,123)

   

--------------

 

--------------

NET INCREASE (DECREASE) IN CASH

 

(266,193)

 

(24,388)

         

CASH, beginning of period

 

1,160,914

 

378,255

   

--------------

 

--------------

CASH, end of period

$

894,721

$

353,867

   

========

 

========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

       

Interest paid

$

135,360

$

68,415

Income taxes paid

 

10,000

 

-

 

The accompanying notes are an integral part of these statements.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of Regulation S-X and do not include all of 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 dated April 30, 2004. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three months and six months ended October 31, 2004 are not indicative of the results of operations that may be expected for the year ending April 30, 2005.

Certain reclassifications within the financial statement captions have been made to maintain consistency in presentation between years.

2. Advances for Indian Gaming Development: We are advancing funds for the establishment of Indian gaming. These funds have been capitalized in accordance with Statements of Financial Accounting Standards (SFAS) 67 "Accounting for Costs and Initial Rental Operations of Real Estate Projects." Such standard requires costs associated with the acquisition, development, and construction of real estate and real estate related projects to be capitalized as part of that project. The realization of these advances is predicated on the ability of the Company and their Indian gaming clients to successfully open and operate the proposed casinos. There is no assurance that we will be successful. The inability to recover these advances could have a material adverse effect on our financial position and results of operations.

Advances to the tribes and for gaming developments are capitalized and recorded as receivables from the tribes. These receivables, shown as Advances for Indian Gaming Development on the balance sheet, represent costs to be reimbursed to us pending approval of Indian gaming in several locations. We have agreements in place which require payments to be made to us for the respective projects upon opening of Indian gaming facilities. Once gaming facilities have gained proper approvals, we will enter into note receivable arrangements with the tribe to secure reimbursement of advanced funds for the particular project. However, reserves have been recorded for Indian gaming development costs when we are unable to determine whether reimbursement from the tribes will occur. We have agreements with the Tribes to be reimbursed for all costs incurred to develop gaming when the facilities are constructed and open.

Advances for Indian Gaming Developments totaled approximately $4,718,991 and $4,718,991 at October 31, 2004 and April 30, 2004 respectively, related to the development of Indian gaming facilities. These amounts are net of reserves of $2,712,440 at October 31, 2004 and April 30, 2004 respectively. Current economic projections for the gaming activities indicate adequate future cash flows to recover the advances. In the event we are unsuccessful in establishing gaming operations, these net advances will be recovered through the liquidation of the associated assets.

3. Earnings Per Share: Earnings per common share is based on the weighted average number of common shares outstanding during the year. Stock options are considered in the dilutive earnings per share calculation.

4. Research and Development: We charge to operations research and development costs. The amount charged in the quarters ended October 31, 2004 and 2003 were approximately $303,191 and $416,118 respectively. The amount charged for the six months ended October 31, 2004 and 2003 were $631,318 and $729,008 respectively.

5. Subsequent Events: On November 30, 2004 we exercised our option to purchase the leased building in Tempe, Arizona for the option price of $1,200,000. This purchase was funded by a bank loan and cash.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Second quarter fiscal 2005 compared to second quarter fiscal 2004
Our sales for the six months ended October 31, 2004 were $11,102,339 compared to $4,387,083 for the six months ended October 31, 2003, an increase of 153%. CAUTION: Modification and Avionics currently contribute to this increase. There can be no assurance that activity will continue at this level.

Discussion of the specific changes by operation at each business segment follows:

Aircraft Modifications: Sales from the Aircraft Modifications business segment including modified aircraft increased $5,206,387 (233%) from $2,232,667 in the first half of the prior fiscal year to $7,439,054 in the current first half of fiscal 2005. Second quarter operating income was $489,373 in fiscal 2005 compared to income of $213,018 in fiscal 2004. Our emphasis is on the Learjet 20 series including the purchase, modification and resale of upgraded twenty-first century Learjets. Our long-term efforts are to enhance our position in the market and increase market share of all modification products.


Avionics: Sales from the Avionics business segment were $1,432,623 for the six months ended October 31, 2004 compared to $813,197 in the comparable period of the preceding year, an increase of 76.2%. The increase resulted from Defense Military related Classic Aviation products sales. Operating profit for the six months ended October 31, 2004, was $233,167 compared to a loss of $(20,667) for the six months ended October 31, 2003. Defense and Military related Classic Avionics products are being designed, manufactured and sold to military aircraft manufacturers. Management plans for this business segment to continue to increase in future years due to the additional new Classic Aviation Products.

Services - SCADA Systems and Monitoring Services:
Sales from the Scada Systems and Monitoring Services business segment for the six months ended October 31, 2004 were $596,999 compared to sales of $577,754 for the comparable period of the prior year an increase of 3.3%. Operating profit for the six months was $114,661 compared to $131,785 for the six months ended October 31, 2003. Revenue fluctuates due to the introduction of new products and services and related installations of these products. Our contracts with our two largest customers have been renewed for fiscal 2005.

Corporate / Professional Services: We provide as a management service licensed architectural services through our subsidiary, BCS Design, Inc. These services include commercial and industrial building design and graphic representation. We also provide as a management service professional design, development and management of Indian gaming establishments. These services include the architectural services of BCS Design, Inc., arrangements for financing, and on site contract management of establishments for Indian tribes and others. Management consulting and professional service fees for the six months ended October 31, 2004 were $1,633,662 compared to $763,466 in the comparable period of the preceding year, a increase of 114%. Sales recorded from the development programs related to these services for pass-thru costs were $904,881 for the six months ended October 31, 2004.

Selling, General and Administrative (SG&A): Expenses in the six months ended October 31, 2004, were $1,434,703 (13% of sales) compared to $1,317,350 (30% of sales) for the six months ended October 31, 2003, an increase of $117,103 or 8.9%.

Other Income (Expense): Interest expense for the six months ended October 31, 2004, increased $66,945 from $68,415in the first half of the prior year to $135,360. We continue to use our line of credit to maintain operations.

We employed 75 at October 31, 2004 and 61 at October 31, 2003.




EARNINGS

We recorded income of $1,025,620 in the six months ended October 31, 2004. This is comparable to income of $306,047 in the six months ended October 31, 2003. Income (Loss) per share is $0.03 and $0.01 for the six months ending October 31, 2004, and October 31, 2003, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Borrowed funds have been used primarily for working capital. Bank (Industrial State Bank) debt related to our operating line was $11,906 at October 31, 2004, and was $198,200 at October 31, 2003. Our unused line of credit was approximately $488,094 as of October 31, 2004 and approximately $301,800 as of October 31, 2003. The interest rate on our line of credit is prime plus two (with a floor of 7%). As of December 3, 2004, the interest rate is 7.0%.

We opened a new line of credit at ISB February 10, 2004 to support the additional inventory requirements of the RVSM product line. The current debt relating to this line of credit was $1,177,758 at October 31, 2004.

We have additional short-term promissory notes with two other banks to finance the increased RVSM related activities. Net advances against these loans were $1,500,000 during the six months ended October 31, 2004.

We plan to continue using the promissory notes payable to fund working capital. We believe the extensions will continue and does not anticipate the repayment of these notes in fiscal 2005. The extension of the promissory notes-payable is consistent with prior years. If the Bank were to demand repayment of the notes payable we currently do not have enough cash to pay off the notes without materially adversely affecting the financial condition of the Company.

We do not, as of October 31, 2004 have any material commitments for other capital expenditures other than the terms of the Indian gaming Management Agreements. Depending upon the development schedules, we will need additional funds to complete our currently planned Indian gaming opportunities. We will use current cash available as well as additional funds, for the start up and construction of gaming facilities. We anticipate initially obtaining these funds, for the start up and construction of gaming facilities. After a few gaming facilities become operational, gaming operations will generate additional working capital for the start up and construction of other gaming facilities. We expect that our start up and construction financing of gaming facilities will be replaced by other financial lenders, long term financing through debt issue, or equity issues.

FORWARD LOOKING INFORMATION

The information set forth below includes "forward-looking" information as outlined in the Private Securities Litigation Reform Act of 1995. The Cautionary Statements, filed by us as Exhibit 99 to its Form 10-K, are incorporated herein by reference and you are specifically referred to such Cautionary Statements for a discussion of factors which could affect our operations and forward-looking statements contained herein.

Part I Item 3:

Quantitative and Qualitative Disclosures about Market Risk.

None

Part I Item 4

Controls and Procedures. We maintain a set of disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our principal executive and financial officers have evaluated our disclosure controls and procedures within 90 days prior to the filing of this Quarterly Report on Form 10-Q and have determined that such disclosure controls and procedures are effective.

Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II.
OTHER INFORMATION


Responses to items 1, 3, and 5 are omitted since these items are either inapplicable or the response thereto would be negative.

Item 2

Unregistered Shares of Equity Securities and Use of Proceeds

During the quarter ended October 31, 2004, we issued 50,000 shares in connection with the exercise of employee stock options granted through our Non Qualified Stock Option Plans as amended on Form S8 on February 24, 1998.

Item 4

Submission of Matters to Vote of Security Holders
None

Item 6

Exhibits and reports on Form 8-K.
(A) 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 DEF 14A filed on December 26, 2001.

 

99 Exhibit Number 99.

 

Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995, are incorporated by reference to Exhibit 99 of the Form 10-K for the fiscal year ended April 30, 2004.

 

27.1 Financial Data Schedule (EDGAR version only). Filed herewith.

 

We agree to file with the Commission any agreement or instrument not filed as an exhibit upon the request of the Commission.

 

(B) Reports on Form 8-K.
We reported on September 1, 2004 on Form 8-K under Item 8.01 and 9.01 that we issued a press release announcing
the completion of 40 RVSM Solution Upgrades with an additional sixty RVSM orders booked or pending.

We reported on September 15, 2004 on Form 8-K under Item 2.02 and Item 9.01 that we issued a press release regarding the filing of our quarterly report on Form 10-Q with the Securities and Exchange Commission for the period ending July 31, 2004.

We reported on October 12, 2004 on Form 8-K under Item 8.01 and Item 9.01 that we issued a press release announcing
RVSM Installation Centers.

We reported on October 19, 2004 on Form 8-K under Item 8.01 and Item 9.01 that we issued a press release announcing
a profitable NBAA show with results in excess of $1,500,000.

We reported on October 29, 2004 on Form 8-K under Item 8.01 and Item 9.01 that we issued a press release announcing that Ameristar Jet Charters had selected Avcon Industries, Inc., a subsidiary of Butler National Corporation, had a very successful exposition at the National Business Aviation Association (NBAA) show in Orlando, Florida.

We reported on October 29, 2003 on Form 8-K under Item 5 and Item 7 that they issued a press release announcing
its Defense Contracting & Electronics segment in Tempe, AZ, was awarded a contract for up to $2 million from Alliant Techsystems, Inc., Mesa, AZ.






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 14, 2004
Date

/S/ Clark D. Stewart
Clark D. Stewart
(President and Chief Executive Officer)

December 14, 2004
Date

/S/ Angela D. Seba
Angela D. Seba
(Chief Financial Officer)

 

 

CERTIFICATIONS

 

I, Clark D. Stewart, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Butler National Corporation;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent 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 quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

Date: December 14, 2004

/s/ Clark D. Stewart
Clark D. Stewart
President and CEO

 

 

CERTIFICATIONS

 

I, Angela D. Seba, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Butler National Corporation;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent 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 quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

   

Date: December 14, 2004

/s/ Angela D. Seba
Angela D. Seba
Chief Financial Officer