```

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
**[X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934**

                    For the Fiscal year ended April 30, 2004
**[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934**

              For the transition period from _________ to _________

                  Commission file number     0-22760

                               Elecsys Corporation
                 (Name of small business issuer in its charter)

          Kansas                                     48-1099142
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                   Identification No.)

                  15301 West 109th Street, Lenexa, Kansas 66219
                 ----------------------------------------------
               (Address of principal executive offices) (Zip Code)

                     Issuer's telephone number (913)647-0158

Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.01 par value
                          ----------------------------
                                (Title of class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
                                                                           ----

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

     State issuer's revenues for its most recent fiscal year. $10,612,000
                                                             -------------------

     The aggregate market value of the voting stock held by non-affiliates of
the issuer on July 16, 2004, based upon the average bid and ask prices for such
stock on that date was $4,075,343. The number of shares of Common Stock of the
issuer outstanding as of July 16, 2004 was 2,791,331.
**DOCUMENTS INCORPORATED BY REFERENCE**
The information contained in Items 9, 10, 11, 12, and 14 of Part III of this
Form 10-KSB have been incorporated by reference to our Proxy Statement for our
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended April 30,
2004.

Transitional Small Business Disclosure Form (Check One): Yes       No  X
                                                            ----

Part I

Item 1.    DESCRIPTION OF BUSINESS**General**

         Elecsys Corporation ("Elecsys," the "Company," or "We"), through its
wholly owned subsidiary, DCI, Inc. ("DCI") is a designer, manufacturer, and
integrator of custom electronic interface solutions for original equipment
manufacturers ("OEMs") in the medical, aerospace, communications, safety systems
and industrial and consumer product industries. The Company has specialized
capabilities to design and efficiently manufacture custom electronic assemblies
which integrate a variety of interface technologies such as custom liquid
crystal displays ("LCDs"), light emitting diode displays ("LEDs"), and keypads
with circuit boards and other electronic components. The Company becomes an
extension of the OEMs' organization by providing key expertise that enables
rapid development and manufacture of electronic products from product conception
through volume production. We offer an effective single source solution for our
customers custom electronic interface requirements.

         Elecsys was incorporated in Kansas in 1991, and from 1991 through
September 2001, the Company designed, manufactured and sold aircraft
navigational aids (the "Navaids Business"). In February 2000, the Company
acquired DCI. In September 2001, we exited the Navaids Business when we sold
substantially all of the assets and operations, and transferred certain
liabilities of the Navaids Business, to a European joint venture.

         On December 31, 2002, DCI completed the purchase of certain assets,
including accounts receivable, inventory, property and equipment, and a customer
list, from Crystaloid Technologies, Inc. ("Crystaloid"), which had closed its
production facility on December 20, 2002. Crystaloid was a pioneer in the
development of LCD technology, a supplier to the avionics industry, and a
competitor of ours in the LCD business.

         In August 2003, DCI invested $100,000 to become a 19% member of Network
Technologies Group, LLC ("NTG"), a limited liability company formed by a group
of technical and management professionals who purchased the Network Technologies
business from LaBarge, Inc. DCI joined several other anticipated key suppliers,
key distributors, and independent investors in capitalizing NTG and is the
electronic manufacturing source for NTG. NTG supplies remote monitoring
solutions utilizing the digital control channels of the nation's cellular
telephone network and has established its initial market in the oil and gas
pipeline industry.

         In January 2004, DCI entered into an agreement with Pro-Tronix, Inc.
("Pro-Tronix"), an Olathe, Kansas contract electronics manufacturer that was
preparing to cease operations, pursuant to which the customers of Pro-Tronix
were referred to DCI as their new manufacturing source. Some existing sales
orders were transferred from Pro-Tronix to DCI and production of those orders
was completed at DCI's facility. A commission is paid to the owner of Pro-Tronix
based on the completion of existing Pro-Tronix sales orders that were
transferred to DCI and any additional sales orders awarded to DCI from the
former Pro-Tronix customer base for the next three years. This agreement also
included some consigned inventory, for which DCI pays Pro-Tronix as it is
consumed. Some key Pro-Tronix employees were hired by DCI to assist in the
transition of the Pro-Tronix customer base. We

                                     Page 2

have added several new customers with this initiative and expect nearly
$1,000,000 in new business from those customers in fiscal 2005.

**Strategy**

         Our strategy is to leverage our expertise as an electronic
manufacturing services ("EMS") provider, capable of integrating specialized
technologies such as custom LCD fabrication, light emitting diode ("LED")
display production, and microelectronic assembly capability, to provide
solutions to our customers' electronic interface needs. We are an extension of
our customers' organizations and offer a compelling single source solution that
encompasses design, manufacturing and support services from product conception
through volume production.

         Our management team views the integration of electronic manufacturing
services with specialized niche technologies to be a large and growing market.
These expanded technological capabilities are expected to broaden our total
service offering which will drive our growth efforts. It is our primary focus to
grow internally through our existing customer base and additions to our customer
base for which our expertise in EMS, displays, display integration, and customer
service is a single-source solution. To further develop our business and
complement our internal growth strategy, we will continue to selectively
evaluate opportunities that would permit us to leverage our capabilities. We
will continue to explore complementary niche technologies in order to expand our
technological capabilities and drive our growth into additional sectors of the
EMS market. We will look at businesses where we see an opportunity to add
complementary customers and capabilities or purchase assets at reasonable
prices. We are committed to expand and grow when an attractive opportunity
presents itself. Our investment in NTG and our agreement with Pro-Tronix are
examples of external growth opportunities.

**Business**

         Through DCI, we provide a range of design, manufacturing, integration
and testing services to OEMs that desire a cost-effective single source for the
development and production of custom electronic assemblies that integrate
specialized interface technologies with flexible electronic production. We
design, manufacture, integrate, and test electronic assemblies, including
circuit boards, high-frequency electronic modules, microelectronic assemblies,
and full turn-key products, along with custom LCD devices and modules, and
custom LED display arrays. The electronic interfaces, assemblies, and LCDs we
produce, or import, are used in medical, aerospace, communications, safety
systems, industrial and consumer products and other applications. We conduct all
of our operations from our 33,000 square foot facility located in Lenexa,
Kansas. We received ISO 9001 certification in November 2000 and were recently
certified to the new ISO 9001:2000 standard. Our sales are made primarily to
customers in the United States, Canada and a few other international markets,
which are serviced through a combination of in-house sales personnel and
independent sales representative firms.

         Our engineering staff provides hardware design, software design and
component engineering services under contract to OEMs. Our manufacturing
processes produce assemblies incorporating both conventional electronic
packaging and high-density configurations, including ball grid array ("BGA") and
microelectronic technologies. We maintain manufacturing capabilities which
include automated surface mount technology component placement, automated solder
paste application and soldering, automated through-hole component insertion,
wire bonded chip on board microelectronic assembly, and complete in-circuit and
functional testing services. We integrate our customers' electronic assemblies

                                     Page 3

with numerous specialized interface technologies such as custom LCDs and LED
display arrays, custom keypads and other user input devices as well as
application specific backlights and illumination sources.

         Our LCD fabrication process produces custom LCDs for numerous
applications. An LCD is a low power display device in which liquid crystal
material is sealed in a cell between specially etched plates of conductively
coated glass. When an electric field is applied across the glass plates, the
liquid crystal material becomes polarized and the display is activated. LCDs are
used to display information in a variety of applications from commercial and
consumer to aerospace and medical products. We fabricate highly specialized and
low- to medium-volume custom LCD devices in our Class 10000 cleanroom located in
our Lenexa facility. The cleanroom includes automated photo-imaging and glass
scribing process equipment. We maintain relationships with several offshore LCD
manufacturers to source our higher volume customer requirements. We are capable
of designing and manufacturing a complete display module involving both the
custom LCD device and the supporting electronics. A limited number of our
competitors currently have the capability to produce such complete modules.

         We believe our design, manufacturing, and integration capabilities,
combined with materials management expertise, make us an effective single
resource for product development and production that allows customers to
integrate their supply chains and reduce their vendor bases. We strive to form
long-term partnerships with our customers and to maintain those relationships
through superior performance. We focus our marketing efforts on OEMs whose
products require the integration of custom electronic interface devices, such as
LCDs, LED displays, or custom input devices, with specialized electronic
manufacturing. Our ideal customer requires both design and manufacturing
services and places a high value on quality, reliable delivery and customer
service. This strategy of focusing on specialized display and interface
technologies differentiates us from conventional domestic EMS providers.

**Competition**

         In the electronic manufacturing services arena, there are numerous
domestic and foreign EMS providers with which we compete. Many of these
competitors are substantially larger than DCI, with greater financial,
operating, manufacturing and marketing resources, including Celestica Inc.,
Flextronics International Ltd., Sanmina-SCI Corporation, and Solectron
Corporation. Many have broader geographic breadth, a broader range of services,
and established overseas operations. There are a limited number of LCD
manufacturers located in the United States. There are also numerous foreign
manufacturers who export LCD products into our primary customer markets. Our
ability to integrate custom LCDs, LED displays and other specialized electronic
interface technologies with electronic assemblies helps differentiate us from
our competitors.

         In addition, we face competition from the internal manufacturing
operations of our current and potential customers who continually evaluate the
relative benefits of internal manufacturing versus outsourcing. Our management
team believes that the principal competitive factors in our target markets are
product quality, reliability in meeting product delivery schedules, flexibility
and timeliness in responding to design and schedule changes, pricing, and
technological sophistication. To remain competitive, we must provide
technologically advanced manufacturing services, maintain quality levels,
deliver finished products on a reliable basis, offer flexible delivery
schedules, and compete effectively on price.

                                     Page 4

**Sources and Availability of Raw Materials and Principal Suppliers**

         The raw materials used in the manufacture of our products are primarily
electronic components and parts. These components and parts are readily
available from a number of sources in the United States and abroad. From time to
time, some components we use have been subject to shortages, and suppliers have
been forced to allocate available quantities among their customers. We attempt
to actively manage our business in a way that minimizes our exposure to these
potential shortages, but we may experience component shortages that could cause
us to delay shipments to customers, which could result in lower net sales and
operating results.

**Dependence on One or a Few Major Customers**

         Sales to our largest five customers accounted for 47% of total sales in
fiscal 2004, with no single customer exceeding 15%. During fiscal 2004, we lost
one of our largest customers, which accounted for $1,401,000, or 13% of sales,
as a result of their decision to move the manufacture of their product to an
offshore production facility used by its parent company. The loss of any more of
these major customers would have a substantial impact on our business. In order
to minimize the impact the loss of any one customer might have on our business,
we seek to expand and diversify our customer base. We are focusing our increased
sales efforts on new market segments and are attempting to increase our market
penetration across all geographic areas in the United States, Canada and
selected international markets. The new market segments include additional
industrial products and medical devices. We were successful in changing our
manufacturing facility to meet the new ISO 9001:2000 standard and we have
registered with the U.S. Food and Drug Administration. We have also added
capacity for high-volume LCD products by increased outsourcing through our
off-shore manufacturing partners and have also added internal capacity to
manufacture high-volume custom LED display arrays. We continue to add, develop
and transition our external independent sales representatives in an effort to
effectively provide nationwide sales coverage in order to develop opportunities
for new products in new markets.. We continue to see improvement in these
efforts as demonstrated by an expanding customer base and a smaller percentage
of total sales to our top five customers in fiscal 2004 (47%) as compared to
fiscal 2003 (59%).

**Intellectual Property**

         The "Elecsys" name is subject to common law trademark protection and
the "Crystaloid" name is a registered trademark. We do not own any other
material patents, registered trademarks or copyrights. Some intellectual
property that is used in our DCI business, such as drawings and manufacturing
and engineering specifications, is owned by our customers and maintained by DCI
as our customers' proprietary information. Other material intellectual property,
consisting of bills of material, production plans, software, material
specifications and manufacturing knowledge, are developed and owned by DCI as
confidential proprietary information. In addition, we depend on recruiting,
training and retaining our employees, who are required to have sufficient
knowledge to operate advanced equipment and to conduct sensitive and complicated
manufacturing operations. We have non-competition and non-disclosure agreements
in place with key members of the management team.

**Governmental Regulations**

         Our operations are subject to certain federal, state and local
regulations concerning the environment, waste management, and health and safety
matters. We believe that we operate in compliance with all applicable
requirements and do not anticipate any material expenditure in

                                     Page 5

maintaining compliance. New, modified, or more stringent requirements or
enforcement policies could be adopted in the future which could result in
material costs and liabilities that could adversely affect our business.

         We periodically generate and temporarily handle limited amounts of
materials that are considered hazardous waste under applicable law. We engage
independent contractors for the off-site disposal of these materials.

**Research and Development**

         We design and manufacture custom products and assemblies for OEM
customers on a contract basis and thus are not engaged in any independent,
self-funded research and development programs. Our process engineering group is
continuously developing and refining improved manufacturing processes in order
to enhance the performance of the Company.

**Total Number of Employees**

         At April 30, 2004, we had a total of 78 full time employees and 2
part-time employees, all of whom were employees of DCI. None of our employees
are represented by a labor organization or subject to a collective bargaining
agreement. Our management team believes that our relationship with our employees
is good.

Item 2.    DESCRIPTION OF PROPERTY

         We conduct operations from the DCI facility, a 33,000 square foot
building on four acres located at 15301 West 109th Street, Lenexa, Kansas. We
have a leasehold interest in this property subject to City of Lenexa, Kansas
Variable Rate Demand Industrial Development Revenue Bonds (DCI Project) Series
1998. The face amount of the Bonds outstanding at April 30, 2004 was $1,570,000
and is due in annual payments beginning October 2005 and ranging from $100,000
to $200,000 through 2017. We use approximately 25,000 square feet for
manufacturing operations while the remaining 8,000 square feet is used for
engineering, administration and marketing. Our Lenexa facility is in good
working order. Upon repayment of the Bonds in whole, we will hold title to the
Lenexa facility.

         During fiscal 2004, we leased an additional 10,000 square feet of
building space in a nearby industrial complex that was used for light
manufacturing and storage. We vacated the building when the lease expired on
December 31, 2003.

Item 3.    LEGAL PROCEEDINGS

         From time to time, we are a party to routine litigation that is
incidental to the business. Currently there is no pending or outstanding
litigation against the Company. The Company is also not aware of any proceedings
pending or contemplated by a governmental authority.

                                     Page 6

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

         We did not submit any matter to a vote of security holders, through a
solicitation of proxies or otherwise, during the fourth quarter of our fiscal
year ended April 30, 2004.

                                     Page 7
Part II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATEDSTOCKHOLDER MATTERS**Stock Trading**

The Company's common stock trades on the American Stock Exchange under the
symbol "ASY".

On October 27, 2003, the Company received a notice from the American Stock
Exchange (the "Amex" or "Exchange") Staff indicating that the Company no longer
complies with the Exchange's continued listing standards. Such standards include
minimum levels of stockholders' equity and required net earnings in a minimum
number of prior fiscal years. The Company sustained losses in prior fiscal years
as a result of the operations of its subsidiaries, including its subsidiary that
was sold in fiscal year 2002, and an impairment loss on goodwill due to the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 142,
*Goodwill and Other Intangible Assets.* The Company submitted a plan to the
Exchange Staff on November 26, 2003 that sets forth definitive actions that
management expects will bring the Company into compliance with the continued
listing standards. On January 23, 2004, the Exchange Staff notified the Company
that it accepted the Company's plan and granted the Company an extension of time
through April 27, 2005 to pursue its plan and regain compliance with the AMEX
continued listing standards. The Company will be subject to periodic review by
Exchange Staff during the extension period. Failure to make progress consistent
with the plan or to regain compliance with the current listing standards by the
end of the extension period could result in the Company being delisted from the
American Stock Exchange. In the recently completed six-month period ended April
30, 2004, the Company's operating income, net income and stockholder's equity
were consistent with the plan submitted to the Exchange Staff.

**Common Stock Price Range and Dividend Information**

The prices in the table below represent the high and low sales prices for
Elecsys common stock as reported by the American Stock Exchange for the two
preceding fiscal years. No cash dividends were declared during such time. As of
April 30, 2004, the Company had approximately 175 stockholders of record.

               **Fiscal Year 2004**                     High                   Low
                                             -------------------------------------------
               First Quarter                       $1.90                 $1.50
               Second Quarter                       2.06                  1.20
               Third Quarter                        1.40                  1.00
               Fourth Quarter                       1.35                  1.02
               For the Year                        $2.06                 $1.00

               **Fiscal Year 2003**                     High                   Low
                                             -------------------------------------------
               First Quarter                       $0.84                 $0.55
               Second Quarter                       0.92                  0.62
               Third Quarter                        1.65                  0.85

                                     Page 8

               Fourth Quarter                       1.60                  1.01
               For the Year                        $1.65                 $0.55

Item 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS**Overview**

         Elecsys Corporation ("Elecsys," the "Company," or "We"), through its
wholly owned subsidiary, DCI, Inc. ("DCI") is a designer, manufacturer, and
integrator of custom electronic interface solutions for original equipment
manufacturers ("OEMs") in the medical, aerospace, communications, safety systems
and industrial and consumer product industries. The Company has specialized
capabilities to design and efficiently manufacture custom electronic assemblies
which integrate a variety of interface technologies such as custom liquid
crystal displays ("LCDs"), light emitting diode displays ("LEDs"), and keypads
with circuit boards and other electronic components. The Company becomes an
extension of the OEMs' organization by providing key expertise that enables
rapid development and manufacture of electronic products from product conception
through volume production. Our sales are made primarily to customers within the
United States, but also include Canada and several other international markets.

         On December 31, 2002, DCI completed the purchase of certain assets,
including accounts receivable, inventory, property, equipment, and a customer
list, from Crystaloid Technologies, Inc. ("Crystaloid"), which had closed its
production facility on December 20, 2002. Crystaloid was a LCD supplier to the
avionics industry and a competitor of ours in the LCD business. The
consideration for the assets purchased totaled approximately $1,294,000, which
was funded by the Company's line of credit and available cash.

         In August 2003, DCI invested $100,000 to become a 19% member of Network
Technologies Group, LLC ("NTG"), a limited liability company formed by a group
of technical and management professionals who purchased the Network Technologies
business from LaBarge, Inc. DCI joined several other anticipated key suppliers,
key distributors, and independent investors in capitalizing NTG. NTG supplies
remote monitoring solutions utilizing the digital control channels of the
nation's cellular telephone network and has established its initial market in
the oil and gas pipeline industry. DCI is the electronic manufacturing source
for NTG and DCI's sales to NTG for the fiscal year ended April 30, 2004 were
approximately $277,000, of which $20,000 was outstanding as accounts receivable
at April 30, 2004.

         On October 27, 2003, the Company received a notice from the American
Stock Exchange (the "Amex" or "Exchange") Staff indicating that the Company no
longer complies with the Exchange's continued listing standards. Such standards
include minimum levels of stockholders' equity and required net earnings in a
minimum number of prior fiscal years. The Company sustained losses in prior
fiscal years as a result of the operations of its subsidiaries, including its
subsidiary that was sold in fiscal year 2002, and an impairment loss on goodwill
due to the adoption of Statement of Financial Accounting Standards ("SFAS") No.
142, *Goodwill and Other Intangible Assets.*The Company submitted a plan to the
Exchange Staff on November 26, 2003 that sets forth definitive actions that

                                     Page 9

management expects will bring the Company into compliance with the continued
listing standards. On January 23, 2004, the Exchange Staff notified the Company
that it accepted the Company's plan and granted the Company an extension of time
through April 27, 2005 to pursue its plan and regain compliance with the AMEX
continued listing standards. The Company will be subject to periodic review by
Exchange Staff during the extension period. Failure to make progress consistent
with the plan or to regain compliance with the current listing standards by the
end of the extension period could result in the Company being delisted from the
American Stock Exchange. In the recently completed six-month period ended April
30, 2004, the Company's operating income, net income and stockholder's equity
were consistent with the plan submitted to the Exchange Staff.

         In January 2004, DCI entered into an agreement with Pro-Tronix, Inc.
("Pro-Tronix"), an Olathe, Kansas contract electronics manufacturer that was
preparing to cease operations, pursuant to which the customers of Pro-Tronix
were referred to DCI as their new manufacturing source. Some existing sales
orders were transferred from Pro-Tronix to DCI and production of those orders
was completed at DCI's facility. A commission is paid to the owner of Pro-Tronix
based on the completion of existing Pro-Tronix sales orders that were
transferred to DCI and any additional sales orders awarded to DCI from the
former Pro-Tronix customer base for the next three years. This agreement also
included some consigned inventory, for which DCI pays Pro-Tronix as it is
consumed. Some key Pro-Tronix employees were hired by DCI to assist in the
transition of the Pro-Tronix customer base. We have added several new customers
with this initiative and expect nearly $1,000,000 in new business from those
customers in fiscal 2005.

         In February 2004, the Board of Directors decided to evaluate and
explore other means of enhancing the value of the Company's common stock. As a
result of this decision, the Board of Directors amended the Company's agreement
with Merit Capital & Management ("Merit Capital"), whose president and sole
shareholder is Mr. Michael J. Meyer, the Company's former Chairman of the Board
of Directors. The agreement was amended to pay Merit Capital an additional fee
of $4,500 per month to evaluate and explore strategic alternatives for the
Company for five months commencing March 2004 and ending July 2004. In July
2004, Mr. Stan Gegen was appointed to the Board of Directors to fulfill the term
of Mr. David J. Schulte, a Managing Director of Kansas City Equity Partners
("KCEP"). Mr. Schulte resigned from the Board in June 2004 as a direct result of
a transaction in which the Company's management team purchased all of the
Company's common stock and the subordinated debenture held by KCEP Ventures II,
L.P. Also in July 2004, Mr. Meyer resigned as Chairman of the Board of Directors
and the Board of Directors then appointed Mr. Robert D. Taylor as Chairman of
the Board of Directors and Mr. Gegen as Audit Committee Chairman. Although the
five-month assignment by Merit Capital is nearly completed and no specific
transactions have resulted, the Board of Directors intends to remain alert to
opportunities that would allow for enhanced value of the Company's common stock.

**Results of Operations**

         The following table sets forth for the periods presented, certain
statement of operations data (in thousands) of the Company:

                                                                       Years Ended
                                       ----------------------------------------------------------------------------
                                                  April 30, 2004                         April 30, 2003
Sales                                          $10,612             100.0%             $11,291              100.0%

                                    Page 10

Cost of products sold                            7,639              72.0%               7,670               67.9%
                                       ----------------- -------------------- ----------------- -------------------
Gross margin                                     2,973              28.0%               3,621               32.1%
Selling, general and
  administrative expenses                        2,767              26.1%               2,845               25.2%
Asset acquisition related
  expenses                                          --                 --                 381                3.4%
                                       ----------------- -------------------- ----------------- -------------------
Total operating expenses                         2,767              26.1%               3,226               28.6%
                                       ----------------- -------------------- ----------------- -------------------
Operating income                                   206               1.9%                 395                3.5%
Interest expense                                 (226)             (2.1%)               (187)              (1.7%)
Other income, net                                    4               0.0%                   6                0.1%
                                       ----------------- -------------------- ----------------- -------------------
Income (loss) before income
  taxes and cumulative effect
  of accounting change                            (16)             (0.2%)                 214                1.9%
Cumulative effect of
  accounting change                                 --                 --             (1,618)             (14.3%)
Income tax benefit                                  39               0.4%                  --                  --
                                       ----------------- -------------------- ----------------- -------------------
Net income (loss)                                  $23               0.2%            $(1,404)             (12.4%)
                                       ================= ==================== ================= ===================
Net income (loss) per share-
  Basic                                          $0.01                                $(0.50)
                                       =================                      =================
Net income (loss) per share -
  Diluted                                        $0.01                                $(0.50)
                                       =================                      =================

     Sales for the year ended April 30, 2004 were $10,612,000, a decrease of
$679,000 or 6% from $11,291,000 in fiscal 2003. The decrease was primarily the
result of a slowdown in existing customer orders in the electronics assembly
product line and a reduction in sales to one of our largest customers as a
result of their permanent decision, made during our fiscal third quarter, to
move the manufacture of its product to the offshore production facility used by
its parent company. The final shipments to this customer were completed in
January 2004 and total shipments were $1,401,000 and $2,240,000, in the years
ended April 30, 2004 and 2003, respectively. These decreases were slightly
offset by increases in the LCD production and LCD resale product lines which
were the result of the addition of some former Crystaloid customers and
increases in our marketing efforts. We are continuing to aggressively pursue new
customer opportunities that include new electronic hybrid and electronic
assembly products and new products at current customers. We believe that our
direct and indirect sales forces will be able to capitalize on new and existing
customer opportunities as they focus on electronic manufacturing services,
especially those opportunities that require our expertise of integrating LCDs
and LEDs with electronics. We expect to experience an increase in sales for the
first half of fiscal year 2005 as compared to fiscal year 2004 as a result of
increases in orders from new and recurring customers that represents recurring
business.

                                    Page 11

     Gross margin can fluctuate from period to period due to a variety of
factors including, but not limited to, sales volume, product mix, and plant
efficiency. Gross margin for the year ended April 30, 2004 was 28%, or
$2,973,000, compared to 32%, or $3,621,000, for the year ended April 30, 2003.
The reduction in gross margin of $648,000 in the current fiscal year reflected a
change in the product mix, fewer strategic pricing opportunities in the
electronic assembly product line as compared with the prior fiscal year, the
effect of lower production efficiencies due to decreased sales volumes in the
electronic assembly and electronic hybrid product lines, and the relocation of
one of our electronic assembly product lines from our formerly leased facility
to our main facility. The decrease in production levels from the loss of one of
our largest customers and the related decrease in production efficiencies
resulted in a labor force reduction during the fiscal year that brought our
number of production personnel in line with our expected product mix and
anticipated volumes. We expect that our gross margins achieved in the current
fiscal year will continue over the next few quarters as a result of expected
product mix, the additions to our customer base and marginal increases in
production employees that will be required to meet increases in production.

         Selling, general and administrative ("SG&A") expenses decreased
$78,000, or 2.7%, to $2,767,000, or 26.1% of sales in the fiscal year ended
April 30, 2004 compared to $2,845,000, or 25.2% of sales in the fiscal year
ended April 30, 2003. The decrease was primarily due to a reduction in
professional fees, which in fiscal 2003 included an independent third party
valuation analysis as a result of the adoption of SFAS No. 142, and lower
personnel costs for fiscal 2004 as compared to fiscal 2003. The decrease in
personnel costs was primarily the result of a decrease in bonuses in fiscal
2004. We expect that our SG&A expenses will continue at or near their current
levels in the next fiscal year as a result of our continuing efforts to control
our corporate expenditures and manage our operating costs.

         Asset acquisition related expenses totaled $381,000 for the fiscal year
ended April 30, 2003. These expenses were the direct result of the Company
acquiring certain assets from Crystaloid and included such expenses as
accounting, legal, travel and integration, and start-up expenses. The Company
did not incur any asset acquisition related expenses in the fiscal year ended
April 30, 2004.

         Interest expense increased from $187,000 in fiscal 2003 to $226,000 in
fiscal 2004. This increase of $39,000, or 20.9%, was primarily due to increased
average borrowings on the line of credit that were outstanding during the year.
There were no outstanding borrowings remaining on the operating line of credit
as of April 30, 2004. We expect to periodically utilize this line of credit in
the next fiscal year as our business grows and capital is needed to meet
operating requirements and debt repayment.

         Effective May 1, 2002, we adopted SFAS No. 142, which requires, among
other things, the discontinuance of amortization of goodwill and the evaluation
of goodwill for potential impairment. As a result of the tests required under
SFAS No. 142, we incurred an impairment loss of the entire recorded goodwill
that was the result of the acquisition of DCI in February 2000. We hired a third
party independent firm to conduct the valuation analysis. The independent firm
provided a valuation opinion based on historical quoted market prices of our
common stock, comparison of market value of comparable businesses, and a market
value calculated from discounted cash flows. The amount of the impairment loss
was approximately $1,618,000, which is presented as a cumulative effect of
accounting change for the fiscal year ended April 30, 2003.

                                    Page 12

         The $39,000 income tax benefit for the year ended April 30, 2004 was
primarily due to the filing of amended tax returns claiming refunds for federal
and state income taxes paid in prior years as a result of carry backs of net
operating losses. No other income tax provision or benefit was recorded for the
years ended April 30, 2004 and 2003 primarily due to net operating loss carry
forwards available, which have been fully reserved due to the uncertainty of
their utilization.

         Primarily as a result of the above factors, net income for fiscal year
2004 was $23,000, or $0.01 per diluted share, as compared to a net loss of
$1,404,000, or $0.50 per diluted share, in fiscal year 2003.

**Liquidity and Capital Resources**

         Cash and cash equivalents decreased $377,000 to $330,000 as of April
30, 2004 compared to $707,000 as of April 30, 2003. This decrease was mainly
attributable to the cash used in operating activities as well as investing
activities.

         We used cash in operating activities of $155,000 and provided cash of
$1,508,000 for the fiscal years ended April 30, 2004 and 2003, respectively. The
cash flow used in operating activities was primarily due to increases in
accounts receivable and inventory of $124,000 and $135,000, respectively. The
increase in accounts receivable was due to the increase in sales at the end of
the fiscal year as compared to the prior fiscal year and the increase in
purchases of inventory as a result of increases in sales orders from new and
current customers. A decrease in accounts payable of $198,000 was the result of
efforts to bring our vendors within their credit terms and a decrease in accrued
expenses of $102,000 was due primarily to bonuses that were accrued in the prior
fiscal year but not in fiscal year 2004. Depreciation and amortization totaled
$302,000 for the year ended April 30, 2004 compared to $373,000 for the year
ended April 30, 2003.

         Net cash used in investing activities totaled $209,000 for the year
ended April 30, 2004 compared to the cash used in investing activities of
$1,581,000 during fiscal 2003. The net cash used during the current fiscal year
was the result of the $100,000 investment in NTG, purchases of property and
equipment of approximately $122,000 and $13,000 of cash received from the
disposal of equipment. The use of cash in fiscal 2003 primarily resulted from
the purchase of the Crystaloid assets for $1,294,000, which included accounts
receivable, inventory, fixed assets and intellectual property, and purchases of
property and equipment of $287,000.

         Net cash used in financing activities totaled approximately $12,000 for
the year ended April 30, 2004 and was the result of regularly scheduled monthly
payments made towards a note payable to the former DCI stockholders. Net cash
provided by financing activities in fiscal year 2003 was the result of proceeds
from the exercise of stock options.

         The Company has a $2,000,000 revolving line of credit facility that is
available for working capital and is secured by accounts receivable and
inventory. The line of credit expires on December 31, 2004 and its borrowing
capacity is calculated as a percentage of accounts receivable and inventory. The
line of credit accrues interest at the prime rate plus 1.5% (5.5% at April 30,
2004) and contains certain financial covenants pertaining to the maintenance of
debt to net worth and minimum net worth ratios. We believe we are in compliance
with all such covenants. We have utilized the line of credit for operating cash
during the fiscal year and as of April 30, 2004, there was no remaining
outstanding

                                    Page 13

balance on the line of credit. We expect to be able to renew the line of credit
upon its expiration.

         The Company has a letter of credit with a bank related to the
Industrial Revenue Bonds for its Lenexa, Kansas facility which expires April 15,
2005. We expect to be able to renew the letter of credit upon its expiration.

         Although there can be no assurances, we believe that existing cash, the
cash expected to be generated from the operations of DCI, amounts available
under our line of credit, and amounts available from trade credit, will be
sufficient to finance our currently anticipated working capital needs, our
capital expenditures for the foreseeable future, and our scheduled debt
repayment.

**Subsequent Event**

         On June 2, 2004, the Company announced that certain members of the
Company's management team had purchased all of the common stock and the
subordinated debenture held by KCEP Ventures II, L.P. ("KCEP"). Individual
management team members purchased all of KCEP's ownership position in the
Company's common stock and Eiger Investment Group, L.L.C., which is owned by
certain members of the Company's management team, purchased the $500,000
convertible subordinated debenture from KCEP. The warrant for the purchase of up
to 45,635 shares of the Company's common stock was amended to expire in August
2009, and the warrant continues to be held by KCEP. As part of this transaction,
Mr. David J. Schulte, a Managing Director of KCEP, resigned from the Company's
Board of Directors.

**Critical Accounting Policies**

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and related disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. We cannot assure you that actual results
will not differ from those estimates. We believe the following critical
accounting policies affect our more significant judgments and estimates used in
the preparation of our consolidated financial statements.

         *Inventory Valuation.*Our inventories are stated at the lower of cost,
using the first-in, first-out (FIFO) method, or market value. Our industry is
characterized by rapid technological change, short-term customer commitments and
rapid changes in demand, as well as other market considerations. We make
provisions for estimated excess and obsolete inventory based on our regular
reviews of inventory quantities on hand and the latest forecasts of product
demand and production requirements from our customers. If actual market
conditions or our customers' product demands are less favorable than those
projected, additional inventory write-downs may be required.

         *Allowance for Doubtful Accounts.*We perform ongoing credit evaluations
of our customers' financial condition and make provisions for doubtful accounts
based on the outcome of our credit evaluations. We also evaluate the
collectibility of our accounts receivable based on specific customer
circumstances, current economic trends, historical experience and the age of
past due receivables. Unanticipated changes in our customers' liquidity or
financial position, which results in an impairment of their ability to make
payments, may require additional provisions for doubtful accounts.

                                    Page 14

**Selected Quarterly Financial Data (Unaudited)**

         The following table sets forth selected unaudited financial information
for the Company for the four fiscal quarters of the years ended April 30, 2004
and 2003. This unaudited information has been prepared on the same basis as the
annual financial statements contained elsewhere herein, and in the opinion of
the Company, reflects all adjustments for a fair presentation thereof. The
following table is qualified by reference to and should be read in conjunction
with the consolidated financial statements, related notes thereto and other
financial data included elsewhere herein.

                                                                        Three Months Ended
                                             July 31, 2003       October 31, 2003       January 31, 2004       April 30, 2004
                                             -------------       ----------------       ----------------       --------------
                                                                          (In thousands)
Sales                                               $2,619                 $2,739                 $2,749               $2,505
Gross margin                                           695                    755                    670                  853
Operating income (loss)                               (92)                    (7)                     18                  287
Income (loss) before
     income taxes                                    (149)                   (69)                   (39)                  241
Net income (loss)                                   $(113)                 $ (69)                 $ (43)                $ 248
Net cash provided by (used
    in) operating activities                        $(391)                 $  237                 $(102)                $ 101

                                                                        Three Months Ended
                                             July 31, 2002       October 31, 2002       January 31, 2003       April 30, 2003
                                             -------------       ----------------       ----------------       --------------
                                                                          (In thousands)
Sales                                               $2,844                 $2,776                 $2,553               $3,118
Gross margin                                           871                    986                    723                1,041
Operating income (loss)                                128                    256                  (155)                  166
Income (loss) from
    continuing operations
    before cumulative
    effect of accounting
    change                                              91                    218                  (192)                   97
Cumulative effect of
    accounting change                              (1,618)                     --                     --                   --
Net income (loss)                                 $(1,527)                  $ 218                 $(192)                $  97
Net cash provided by (used
    in) operating activities of
    continuing operations                           $ (29)                  $ 488                 $  454                $ 595

                                    Page 15

**New Accounting Pronouncements**

         In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, *Accounting
for Stock-Based Compensation - Transition and Disclosure.*This statement
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in the financial statements about the effects
of stock-based compensation. The expanded annual disclosure requirements and the
transition provisions were adopted by the Company in fiscal year 2003.

         In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
*Consolidation of Variable Interest Entities.*FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements." It
establishes standards for identifying a variable interest entity and for
determining under what circumstances a variable interest entity should be
consolidated with its primary beneficiary. The requirements of the
interpretation are effective for the Company no later than the end of the first
reporting period that ends after March 15, 2004. The adoption of this
interpretation did not have a material impact on the Company's consolidated
financial statements.

         In May 2003, the FASB issued SFAS No. 150, *Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.*This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 was effective for all financial instruments entered into or
modified after May 31, 2003 and was otherwise effective at the beginning of the
second fiscal quarter ended October 31, 2003. The Company's adoption of this
statement did not have an impact on its consolidated financial statements.

**Forward Looking Statements**

         This annual report on Form 10-KSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including, but
not limited to, our statements on strategy, operating forecasts, and our working
capital requirements and availability. In addition, from time to time, the
Company or its representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included in, but
are not limited to, various filings made by the Company with the Securities and
Exchange Commission, press releases or oral statements made by or with the
approval of an authorized executive officer of the Company. Forward-looking
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate," or "continue" or the negative thereof or
other variations thereon or comparable terminology. Actual results could differ
materially from those projected or suggested in any forward-looking statements
as a result of a wide variety of factors and conditions, including, but not
limited to, the Company's dependence on its top five customers, reliance on
certain key management personnel, an inability to grow the Company's customer
base, potential growth in costs and expenses, an inability to refinance the
Company's existing debt on terms comparable to those now in existence, potential
deterioration of business or economic conditions for the Company's customers'
products, price competition from larger and better financed

                                    Page 16

competitors, and the factors and conditions described in the discussion of
"Results of Operations" and "Liquidity and Capital Resources" as contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations of this annual report, as well as those included in other documents
the Company files from time to time with the Securities and Exchange Commission,
including the Company's quarterly reports on Form 10-QSB and current reports on
Form 8-K. Holders of the Company's securities are specifically referred to these
documents with regard to the factors and conditions that may affect future
results. The reader is cautioned that the Company does not have a policy of
updating or revising forward-looking statements and thus he or she should not
assume that silence by management of the Company over time means that actual
events are bearing out as estimated in such forward-looking statements.

Item 7.    FINANCIAL STATEMENTS

         The information required for Item 310(a) of Regulation S-B and provided
on pages F-1 through F-18 of this filing on Form 10-KSB are hereby incorporated
by reference herein.

Item 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE

         We engaged Ernst & Young LLP to audit our financial statements for the
fiscal year ended April 30, 2004. We have no disagreements with our independent
registered public accounting firm through the date of this filing.

Item 8A.   CONTROLS AND PROCEDURES

         The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures as of April 30, 2004. Based
on that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures were
effective as of April 30, 2004. There were no material changes in the Company's
internal control over financial reporting during the 2004 fiscal year.

                                    Page 17

Part III

Item 9.    DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The Company has adopted a Code of Ethics for the Company's officers and
directors. A copy of the Code of Ethics may be obtained without charge by
contacting the Company's Secretary at the Company's headquarters, 15301 West
109th Street, Lenexa, Kansas 66219.

         The remaining information required to be disclosed pursuant to this
Item 9 (Items 401 and 405 of Regulation S-B) is incorporated by reference to our
Proxy Statement for our Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days after the close of the year
ended April 30, 2004.

Item 10.   EXECUTIVE COMPENSATION

         Incorporated by reference to our Proxy Statement for our Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission within
120 days after the close of the year ended April 30, 2004.

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS

         Incorporated by reference to our Proxy Statement for our Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission within
120 days after the close of the year ended April 30, 2004.

Item 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated by reference to our Proxy Statement for our Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission within
120 days after the close of the year ended April 30, 2004.

Item 13.   EXHIBITS AND REPORTS ON FORM 8-K:

(a)      Exhibits: The following exhibits have been previously filed or are
         being filed herewith, and are numbered in accordance with Item 601 of
         Regulation S-B:

NUMBERDESCRIPTION

3.1                 ARTICLES OF INCORPORATION

                    (a)  The amended Articles of Incorporation of the Company
                         dated September 14, 1994, attached as Exhibit 3.1 pages
                         19-55 of the Company's Form 10-KSB, filed July 31, 1995
                         with the Securities and Exchange Commission is
                         incorporated herein by reference.

                                    Page 18

                    (b)  An amendment to the Articles of Incorporation of the
                         Company dated November 1, 2000, attached as Exhibit 4.2
                         of the Company's Form S-8, filed June 19, 2000 with the
                         Securities and Exchange Commission, is incorporated
                         herein by reference.

3.2                 BY-LAWS

                    The Restated By-Laws of the Company dated October 1, 1993,
                    attached as Exhibit 3.2, of the Company's Registration
                    Statement, Form SB-2, filed November 29, 1993 with the
                    Securities and Exchange Commission, are incorporated herein
                    by reference.

4                   INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS

                    A specimen stock certificate representing shares of the
                    common stock, par value $.01 per share, attached as Exhibit
                    4.1 of the Company's Registration Statement, Form SB-2,
                    filed November 29, 1993 with the Securities and Exchange
                    Commission, is incorporated herein by reference.

10                  MATERIAL CONTRACTS

                    (a)  Restated 1991 Stock Option Plan attached as Exhibit
                         10.5 of the Company's Registration Statement, Form
                         SB-2, filed November 29, 1993 with the Securities and
                         Exchange Commission, is incorporated herein by
                         reference.

                    (b)  Amendment of the Company's Restated 1991 Stock Option
                         Plan, increasing the number of shares of Common Stock
                         subject to option thereunder from 375,000 shares to
                         475,000 approved by the shareholders at the annual
                         stockholders meeting held September 15, 1998, attached
                         as Exhibit 10(cc) of the Company's Form 10-KSB filed
                         July 29, 1999 with the Securities and Exchange
                         Commission, is incorporated herein by reference.

                    (c)  Form of Stock Option Agreement for Restated 1991 Stock
                         Option Plan, attached as Exhibit 10(c) of the Company's
                         Form 10-KSB filed July 29, 2002 with the Securities and
                         Exchange Commission, is incorporated herein by
                         reference.

                    (d)  Form of Non-Employee Director Stock Option Agreement
                         for Restated 1991 Stock Option Plan attached as Exhibit
                         10(d) of the Company's Form 10-KSB filed July 29, 2002
                         with the Securities and Exchange Commission, is
                         incorporated herein by reference.

                    (e)  Employment Agreement dated December 6, 1999, by and
                         between the Company and Karl Gemperli attached as
                         Exhibit 10(cc) of the Company's Form 10-KSB, filed July
                         28, 2000, with the Securities and Exchange Commission
                         is incorporated herein by reference.

                    (f)  Supplemental Agreement dated February 28, 2001, between
                         the Company and Karl Gemperli, attached as Exhibit
                         10(mm) of the Company's Form 10-QSB, filed March 19,
                         2001, with the Securities and Exchange Commission, is
                         incorporated herein by reference.

                    (g)  Commercial Loan Agreement dated July 18, 2002 between
                         the Company and Gold Bank attached as Exhibit 10.1 of
                         the Company's Form 10-QSB, filed September 13, 2002
                         with the Securities and Exchange Commission, is
                         incorporated herein by reference.

                                    Page 19

                    (h)  Investment Agreement, dated February 7, 2000, by and
                         between KCEP Ventures II, L.P. and Airport Systems
                         International, Inc., attached as Exhibit 10.3 to the
                         Company's Form 8-K filed February 15, 2000, with the
                         Securities and Exchange Commission, is incorporated
                         hereby by reference.

                    (i)  Registration Rights Agreement, dated February 7, 2000,
                         by and among Airport Systems International, Inc., Chris
                         I. Hammond, Larry C. Klusman and William D. Cook,
                         attached as Exhibit 10.5 to the Company's Form 8-K
                         filed February 15, 2000, with the Securities and
                         Exchange Commission, is incorporated hereby by
                         reference.

                    (j)  Investor's Rights Agreement, dated February 7, 2000, by
                         and among Airport Systems International, Inc. and KCEP
                         Ventures II, L.P., attached as Exhibit 10.6 to the
                         Company's Form 8-K filed February 15, 2000, with the
                         Securities and Exchange Commission, is incorporated
                         hereby by reference.

                    (k)  10% Convertible Subordinated Debenture, due February 7,
                         2005, dated February 7, 2000, attached as Exhibit 10.7
                         to the Company's Form 8-K filed February 15, 2000, with
                         the Securities and Exchange Commission, is incorporated
                         hereby by reference.

                    (l)  Warrant, attached as Exhibit 10.8 to the Company's Form
                         8-K filed February 15, 2000, with the Securities and
                         Exchange Commission, is incorporated hereby by
                         reference.

                    (m)  Letter Agreement, dated September 27, 2001 by and
                         between the Company and KCEP Ventures II, L.P. attached
                         as Exhibit 10(o) of the Company's Form 10-KSB filed
                         July 29, 2002 with the Securities and Exchange
                         Commission, is incorporated herein by reference.

                    (n)  Asset Purchase Agreement between DCI, Inc., Crystaloid
                         Technologies, Inc., Jackson Products, Inc. and Elecsys
                         Corporation.

21                  SUBSIDIARIES OF THE COMPANY

23                  Consent of Ernst & Young LLP

31.1                Rule 13a-14(a)/15d-14(a) Certification of President and
                    Chief Executive Officer (Principal Executive Officer)

31.2                Rule 13a-14(a)/15d-14(a) Certification of Vice President
                    and Chief Financial Officer (Principal Financial and
                    Accounting Officer)

32.1                Section 1350 Certification of President and Chief Executive
                    Officer (Principal Executive Officer)

32.2                Section 1350 Certification of Vice President and Chief
                    Financial Officer (Principal Financial and Accounting Officer)

(b)  REPORTS ON FORM 8-K:

     The following were reports filed on Form 8-K or 8-K/A during the last
     quarter of the fiscal year:

     Date of Filing
     March 12, 2004     Form 8-K, announcing Elecsys Corporation's third quarter results for
                        the period ended January 31, 2004.  (Items 7 and 12).

                                    Page 20

Item 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Incorporated by reference to our Proxy Statement for our Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission within
120 days after the close of the year ended April 30, 2004.

                                    Page 21

                                   Signatures

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

                                             ELECSYS CORPORATION

Date:  July 26, 2004                         /s/ Karl B. Gemperli
                                             -------------------------------------
                                    By:      Karl B. Gemperli
                                             President and Chief Executive Officer
                                             Principal Executive Officer

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated:

         /s/ Karl B. Gemperli                                 Date:  July 26, 2004
--------------------------------------------
Karl B. Gemperli
President, Chief Executive Officer and Director
Principal Executive Officer

         /s/ Todd A. Daniels                                  Date:  July 26, 2004
--------------------------------------------
Todd A. Daniels
Vice President and Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer

         /s/ Robert D. Taylor                                 Date:  July 26, 2004
--------------------------------------------
Robert D. Taylor
Chairman of the Board of Directors

         /s/ Michael J. Meyer                                 Date:  July 26, 2004
--------------------------------------------
Michael J. Meyer
Director

         /s/ Stan Gegen                                       Date:  July 26, 2004
--------------------------------------------
Stan Gegen
Director

                                       22
EXHIBIT INDEXNUMBERDESCRIPTION

3.1       ARTICLES OF INCORPORATION

          (a)  The amended Articles of Incorporation of the Company dated
               September 14, 1994, attached as Exhibit 3.1 pages 19-55 of the
               Company's Form 10-KSB, filed July 31, 1995 with the Securities
               and Exchange Commission is incorporated herein by reference.

          (b)  An amendment to the Articles of Incorporation of the Company
               dated November 1, 2000, attached as Exhibit 4.2 of the Company's
               Form S-8, filed June 19, 2000 with the Securities and Exchange
               Commission, is incorporated herein by reference.

3.2       BY-LAWS

          The Restated By-Laws of the Company dated October 1, 1993, attached as
          Exhibit 3.2, of the Company's Registration Statement, Form SB-2, filed
          November 29, 1993 with the Securities and Exchange Commission, are
          incorporated herein by reference.

4         INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS

          A specimen stock certificate representing shares of the common stock,
          par value $.01 per share, attached as Exhibit 4.1 of the Company's
          Registration Statement, Form SB-2, filed November 29, 1993 with the
          Securities and Exchange Commission, is incorporated herein by
          reference.

10        MATERIAL CONTRACTS

          (a)  Restated 1991 Stock Option Plan attached as Exhibit 10.5 of the
               Company's Registration Statement, Form SB-2, filed November 29,
               1993 with the Securities and Exchange Commission, is incorporated
               herein by reference.

          (b)  Amendment of the Company's Restated 1991 Stock Option Plan,
               increasing the number of shares of Common Stock subject to option
               thereunder from 375,000 shares to 475,000 approved by the
               shareholders at the annual stockholders meeting held September
               15, 1998, attached as Exhibit 10(cc) of the Company's Form 10-KSB
               filed July 29, 1999 with the Securities and Exchange Commission,
               is incorporated herein by reference.

          (c)  Form of Stock Option Agreement for Restated 1991 Stock Option
               Plan, attached as Exhibit 10(c) of the Company's Form 10-KSB
               filed July 29, 2002 with the Securities and Exchange Commission,
               is incorporated herein by reference.

          (d)  Form of Non-Employee Director Stock Option Agreement for Restated
               1991 Stock Option Plan attached as Exhibit 10(d) of the Company's
               Form 10-KSB filed July 29, 2002 with the Securities and Exchange
               Commission, is incorporated herein by reference.

          (e)  Employment Agreement dated December 6, 1999, by and between the
               Company and Karl Gemperli attached as Exhibit 10(cc) of the
               Company's Form 10-KSB, filed July 28, 2000, with the Securities
               and Exchange Commission is incorporated herein by reference.

                                    Page 23

          (f)  Supplemental Agreement dated February 28, 2001, between the
               Company and Karl Gemperli, attached as Exhibit 10(mm) of the
               Company's Form 10-QSB, filed March 19, 2001, with the Securities
               and Exchange Commission, is incorporated herein by reference.

          (g)  Commercial Loan Agreement dated July 18, 2002 between the Company
               and Gold Bank attached as Exhibit 10.1 of the Company's Form
               10-QSB, filed September 13, 2002 with the Securities and Exchange
               Commission, is incorporated herein by reference.

          (h)  Investment Agreement, dated February 7, 2000, by and between KCEP
               Ventures II, L.P. and Airport Systems International, Inc.,
               attached as Exhibit 10.3 to the Company's Form 8-K filed February
               15, 2000, with the Securities and Exchange Commission, is
               incorporated hereby by reference.

          (i)  Registration Rights Agreement, dated February 7, 2000, by and
               among Airport Systems International, Inc., Chris I. Hammond,
               Larry C. Klusman and William D. Cook, attached as Exhibit 10.5 to
               the Company's Form 8-K filed February 15, 2000, with the
               Securities and Exchange Commission, is incorporated hereby by
               reference.

          (j)  Investor's Rights Agreement, dated February 7, 2000, by and among
               Airport Systems International, Inc. and KCEP Ventures II, L.P.,
               attached as Exhibit 10.6 to the Company's Form 8-K filed February
               15, 2000, with the Securities and Exchange Commission, is
               incorporated hereby by reference.

          (k)  10% Convertible Subordinated Debenture, due February 7, 2005,
               dated February 7, 2000, attached as Exhibit 10.7 to the Company's
               Form 8-K filed February 15, 2000, with the Securities and
               Exchange Commission, is incorporated hereby by reference.

          (l)  Warrant, attached as Exhibit 10.8 to the Company's Form 8-K filed
               February 15, 2000, with the Securities and Exchange Commission,
               is incorporated hereby by reference.

          (m)  Letter Agreement, dated September 27, 2001 by and between the
               Company and KCEP Ventures II, L.P. attached as Exhibit 10(o) of
               the Company's Form 10-KSB filed July 29, 2002 with the Securities
               and Exchange Commission, is incorporated herein by reference.

          (n)  Asset Purchase Agreement between DCI, Inc., Crystaloid
               Technologies, Inc., Jackson Products, Inc. and Elecsys
               Corporation.

21        SUBSIDIARIES OF THE COMPANY

23        Consent of Ernst & Young LLP

31.1      Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive
          Officer (Principal Executive Officer)

31.2      Rule 13a-14(a)/15d-14(a) Certification of Vice President and Chief
          Financial Officer (Principal Financial and Accounting Officer)

32.1      Section 1350 Certification of President and Chief Executive Officer
          (Principal Executive Officer)

32.2      Section 1350 Certification of Vice President and Chief Financial Officer
          (Principal Financial and Accounting Officer)

                                    Page 24

                           FINANCIAL STATEMENTS INDEX

Report of Independent Registered Public Accounting Firm  . . . . . . . . . .. . . . . . . . . . . . . . . .  F-2

Consolidated Balance Sheets as of April 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . . . . . . . .F-3

Consolidated Statements of Operations
    Years Ended April 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statements of Stockholders' Equity
    Years Ended April 30, 2004 and 2003 . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows
    Years Ended April 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.

                                      F-1

**Report of Independent Registered Public Accounting Firm**

The Board of Directors and Stockholders
Elecsys Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Elecsys
Corporation and Subsidiaries (the Company) as of April 30, 2004 and 2003, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Elecsys
Corporation and Subsidiaries at April 30, 2004 and 2003, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 4 to the consolidated financial statements, in 2003 the
Company changed its method of accounting for goodwill and other intangible
assets.

/s/ Ernst & Young LLP
Kansas City, Missouri
June 18, 2004

                                      F-2

**Elecsys Corporation and Subsidiaries
                           Consolidated Balance Sheets
                        (In thousands, except share data)**

                                                                              April 30, 2004         April 30, 2003
                                                                             -----------------      -----------------
**ASSETS**
   Current assets:
      Cash and cash equivalents                                                         $ 330                  $ 707
      Accounts receivable, less allowances of $52 in 2004
        and $131 in 2003                                                                1,440                  1,343
      Inventories                                                                       2,095                  1,960
      Prepaid expenses                                                                    106                    143
                                                                             -----------------      -----------------
   Total current assets                                                                 3,971                  4,153

   Property and equipment, at cost:
      Land                                                                                637                    637
      Building and improvements                                                         1,103                  1,093
      Equipment                                                                         2,019                  2,019
                                                                             -----------------      -----------------
                                                                                        3,759                  3,749
      Accumulated depreciation and amortization                                       (1,147)                  (983)
                                                                             -----------------      -----------------
                                                                                        2,612                  2,766

   Investment in NTG, LLC                                                                 100                     --
   Other assets, net                                                                       34                     68
                                                                             -----------------      -----------------
Total assets                                                                           $6,717                 $6,987
                                                                             =================      =================
**LIABILITIES AND STOCKHOLDERS' EQUITY**
   Current liabilities:
      Accounts payable                                                                   $901                 $1,099
      Accrued expenses                                                                    439                    541
      Current portion of long-term debt                                                   914                     14
                                                                             -----------------      -----------------
   Total current liabilities                                                            2,254                  1,654

   Long-term debt, less current portion                                                 1,430                  2,323

   Stockholders' equity:
      Preferred stock, $.01 par value, 5,000,000 shares
        authorized; none issued and outstanding                                            --                     --
      Common stock, $.01 par value, 10,000,000 shares authorized;
        issued and outstanding - 2,791,331 at April 30, 2004 and 2003                      28                     28
      Additional paid-in capital                                                        8,140                  8,140
      Accumulated deficit                                                             (5,135)                (5,158)
                                                                             -----------------      -----------------
   Total stockholders' equity                                                           3,033                  3,010
                                                                             -----------------      -----------------
Total liabilities and stockholders' equity                                             $6,717                 $6,987
                                                                             =================      =================

*See Notes to Consolidated Financial Statements.*

                                      F-3

**Elecsys Corporation and Subsidiaries
                      Consolidated Statements of Operations
                      (In thousands, except per share data)**

                                                                           Years Ended April 30,
                                                                    ---------------- -- ----------------
                                                                         2004                2003
                                                                    ----------------    ----------------
Sales                                                                       $10,612             $11,291
Cost of products sold                                                         7,639               7,670
                                                                    ----------------    ----------------
Gross margin                                                                  2,973               3,621

Selling, general and administrative expenses                                  2,767               2,845
Asset acquisition related expenses                                               --                 381
                                                                    ----------------    ----------------
Total operating expense                                                       2,767               3,226
                                                                    ----------------    ----------------

Operating income                                                                206                 395

Other income (expense):
  Interest expense                                                            (226)               (187)
  Other income, net                                                               4                   6
                                                                    ----------------    ----------------
Income (loss) from operations before income taxes and
  cumulative effect of accounting change                                       (16)                 214

Income tax benefit                                                               39                  --
                                                                    ----------------    ----------------
Income before cumulative effect of accounting change                             23                 214
Cumulative effect of accounting change                                           --             (1,618)
                                                                    ----------------    ----------------
Net income (loss)                                                              $ 23            $(1,404)
                                                                    ================    ================

Income (loss) per share information:
  Basic:
  Income per share before cumulative effect of
    accounting change                                                         $0.01               $0.08
  Cumulative effect of accounting change                                         --              (0.58)
                                                                    ----------------    ----------------
  Income (loss) per share                                                     $0.01             $(0.50)
                                                                    ================    ================
  Weighted average common shares outstanding - basic                          2,791               2,791

  Diluted:
  Income per share before cumulative effect of
    accounting change                                                         $0.01               $0.08
  Cumulative effect of accounting change                                         --              (0.58)
                                                                    ----------------    ----------------
  Income (loss) per share                                                     $0.01             $(0.50)
                                                                    ================    ================
  Weighted average common shares outstanding - diluted                        2,860               2,823

*See Notes to Consolidated Financial Statements.*

                                      F-4

**Elecsys Corporation and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                                 (In thousands)**

                                                                    Additional                                  Total
                                                   Common             Paid-In           Accumulated         Stockholders'
                                                   Stock              Capital             Deficit               Equity
                                               ---------------    ----------------    -----------------    -----------------
Balance at April 30, 2002                                 $28             $ 8,138             $(3,754)               $4,412
   Issuance of common stock through
     exercise of stock options                             --                   2                   --                    2
   Net loss                                                --                  --              (1,404)              (1,404)
                                               ---------------    ----------------    -----------------    -----------------
Balance at April 30, 2003                                  28               8,140              (5,158)                3,010
   Net income                                              --                  --                   23                   23
                                               ---------------    ----------------    -----------------    -----------------
Balance at April 30, 2004                                 $28             $ 8,140             $(5,135)               $3,033
                                               ===============    ================    =================    =================

*See Notes to Consolidated Financial Statements.*

                                      F-5

**Elecsys Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (In thousands)**

                                                                                            Years ended April 30,
                                                                                   --------------------------------------
                                                                                         2004                 2003
                                                                                   -----------------    -----------------
**Operating Activities:**
Net income (loss)                                                                              $ 23              $(1,404)
Adjustments to reconcile net income (loss) to net cash (used in)
  provided by operating activities:
    Depreciation                                                                                270                   343
    Amortization                                                                                 32                    30
    Provision for doubtful accounts                                                              27                    59
    Gain on disposal of property and equipment                                                  (8)                    --
    Cumulative effect of accounting change                                                       --                 1,618
    Changes in operating assets and liabilities:
      Accounts receivable                                                                     (124)                   493
      Inventories                                                                             (135)                   174
      Accounts payable                                                                        (198)                   125
      Accrued expenses                                                                        (102)                   114
      Other, net                                                                                 59                  (44)
                                                                                   -----------------    -----------------
Net cash (used in) provided by operating activities                                           (156)                 1,508

**Investing Activities:**
Investment in NTG, LLC                                                                        (100)                    --
Purchases of property and equipment                                                           (122)                 (287)
Proceeds from sale of property and equipment                                                     13                    --
Assets acquired from Crystaloid                                                                  --               (1,294)
                                                                                   -----------------    -----------------
Net cash used in investing activities                                                         (209)               (1,581)

**Financing Activities:**
Principal payments on long-term debt                                                           (12)
Borrowings on note payable to bank                                                            2,030                 1,000
Payments on note payable to bank                                                            (2,030)               (1,000)
Proceeds from exercise of stock options                                                          --                     2
                                                                                   -----------------    -----------------
Net cash (used in) provided by financing activities                                            (12)                     2
                                                                                   -----------------    -----------------
Net decrease in cash and cash equivalents                                                     (377)                  (71)
Cash and cash equivalents at beginning of year                                                  707                   778
                                                                                   -----------------    -----------------
Cash and cash equivalents at end of year                                                       $330                  $707
                                                                                   =================    =================

**Supplemental Disclosures of Cash Flow Information:**
Cash payments for (receipts of):
Interest                                                                                       $107                  $185
Income taxes                                                                                   (32)                    --

*See Notes to Consolidated Financial Statements.*

                                      F-6

**Elecsys Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
                                 April 30, 2004

1.       NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
         ACCOUNTING POLICIES***Nature of Business*
         Elecsys Corporation (the "Company"), through its wholly owned
subsidiary DCI, Inc. ("DCI"), is a leading designer, manufacturer, and
integrator of custom electronic interface solutions for original equipment
manufacturers ("OEMs") in the medical, aerospace, communications, safety systems
and industrial and consumer product industries. The Company has unique
capabilities to design and efficiently manufacture custom electronic assemblies
which integrate a variety of interface technologies such as custom liquid
crystal displays, light emitting diode displays, and keypads with circuit boards
and other electronic components. The Company becomes an extension of the OEMs
organization by providing key expertise that enables rapid development and
manufacture of electronic products from product conception through volume
production. The Company's sales are made primarily to customers within the
United States, but also include Canada and several other international markets.

*Principles of Consolidation*
         The accompanying consolidated financial statements include the accounts
of Elecsys Corporation (Elecsys) and its wholly-owned subsidiary, DCI. All
significant intercompany balances and transactions have been eliminated in
consolidation.

*Use of Estimates*
         The preparation of the consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

*Cash and Cash Equivalents*
         Cash and cash equivalents include all cash and highly liquid
investments with original maturities of three months or less.

*Concentration of Credit Risk and Financial Instruments*
         The Company grants credit to customers who meet the Company's
pre-established credit requirements. Credit risk is managed through credit
approvals, credit limits, and monitoring procedures. Credit losses are provided
for in the Company's consolidated financial statements and historically have
been within management's expectations. The Company had sales to five customers
which accounted for 47% and 59% of total sales for 2004 and 2003, respectively.

         The carrying value of the Company's financial instruments, including
cash, accounts receivable, accounts payable, notes payable and long-term debt,
as reported in the accompanying consolidated balance sheets, approximates fair
value.

                                      F-7

*Revenue Recognition*
         Revenue is recognized upon shipment of product to the Company's
customers.

*Inventories*
         Inventories are stated at the lower of cost or market, using the
first-in, first-out (FIFO) method. Inventories are summarized by major
classification as follows (in thousands):

                                                 April 30,
                                           2004            2003
                                       -------------    ------------
          Raw materials                      $1,713          $1,586
          Work-in-process                       382             374
                                       -------------    ------------
                                             $2,095          $1,960
                                       =============    ============

*Property and Equipment*
        Depreciation is computed using the straight-line method over the
following estimated useful lives:

         Description                                 Years
         -----------                                 -----
         Building and improvements                     30
         Equipment                                    3-8

*Income Taxes*
         The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 109,
*Accounting for Income Taxes.*Under the liability method, deferred tax assets and
liabilities are recorded based upon the differences between the tax bases of
assets and liabilities and their carrying amount for financial reporting
purposes, as measured by the enacted tax rates which will be in effect when
these differences are expected to reverse.

*Advertising Costs*
         The Company expenses advertising costs as incurred. Advertising expense
charged to operations amounted to approximately $39,000 and $75,000 for the
years ended April 30, 2004 and 2003, respectively.

*Stock-Based Compensation*
         At April 30, 2004, the Company has a stock-based employee compensation
plan. The Company accounts for the plan under the recognition and measurement
principles of Accounting Principles Board Opinion ("APB") No. 25, *Accounting for
Stock Issued to Employees,*and the related interpretations. Under APB No. 25, no
employee compensation expense is recognized, as all options granted under the
plan had an exercise price equal to the market value of the underlying common
stock on the date of grant. The following table illustrates the effect on net
income (loss) and net income (loss) per share as if the Company had applied the
fair value recognition provision of SFAS No. 123, *Accounting for Stock-Based
Compensation,*to stock-based employee compensation (in thousands, except per
share data):

                                      F-8

                                                                                Years Ended April 30,
                                                                              2004                2003
                                                                         ----------------    ----------------
    Net income (loss), as reported                                                   $23            $(1,404)
    Deduct:  Total stock-based employee compensation
      expense determined under fair value based
      method for all options, net of tax                                            (59)                (63)
                                                                         ----------------    ----------------
    Pro forma net loss                                                             $(36)            $(1,467)
                                                                         ================    ================

    Net income (loss) per share:
             Basic - as reported                                                   $0.01             $(0.50)
             Basic - pro forma                                                   $(0.01)             $(0.53)

             Diluted - as reported                                                 $0.01             $(0.50)
             Diluted - pro forma                                                 $(0.01)             $(0.52)

The fair value of the above options was estimated at the date of grant using the
Black-Scholes option-pricing model with the following key assumptions:

                                                                        Years Ended April 30,
                                                                      2004                 2003
                                                                -----------------    -----------------
        Expected years until exercise                                   5                    5
        Risk-free interest rate                                         4.25%                4.25%
        Expected stock volatility                                      80.1%                80.1%
        Expected dividend yield                                         0%                   0%

*New Accounting Pronouncements*
         In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, *Accounting
for Stock-Based Compensation -- Transition and Disclosure.*This statement
provides alternative methods of transition for a voluntary change to the fair
value based method of acounting for stock-based compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in the financial statements about the effects
of stock-based compensation. SFAS No. 123 was adopted by the Company in fiscal
2003.

         In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
*Consolidation of Variable Interest Entities.*FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements." It
establishes standards for identifying a variable interest entity and for
determining under what circumstances a variable interest entity should be
consolidated with its primary beneficiary. The requirements of the
interpretation were effective for the Company for the fiscal year ended April
30, 2004. The adoption of this interpretation did not have a material impact on
the Company's consolidated financial statements.

         In May 2003, the FASB issued SFAS No. 150, *Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.*This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and

                                      F-9

equity. SFAS No. 150 was effective for all financial instruments entered into or
modified after May 31, 2003 and was otherwise effective at the beginning of the
Company's 2004 second fiscal quarter. The Company's adoption of this statement
did not have an impact on its consolidated financial statements.

*Reclassification*
         Certain reclassifications have been made to prior year's financial
statements to conform to the current year's financial statement presentation.

**2.       INVESTMENT**

         In August 2003, DCI invested $100,000 (maximum exposure to loss) to
become a 19% member of Network Technologies Group, LLC ("NTG"), a limited
liability company formed by a group of technical and management professionals
who purchased the Network Technologies business from LaBarge, Inc. DCI joined
several other anticipated key suppliers, key distributors, and independent
investors in capitalizing NTG. Network Technologies Group, LLC supplies remote
monitoring solutions utilizing the digital control channels of the nation's
cellular telephone network and has established its initial market in the oil and
gas pipeline industry. DCI is the electronic manufacturing source for NTG and
had sales of approximately $277,000 to NTG for the fiscal year ended April 30,
2004, of which $20,000 was outstanding as accounts receivable at April 30, 2004.
DCI's investment in NTG is accounted for under the cost method.

**3.       ASSETS ACQUIRED**

         On December 31, 2002, DCI completed the purchase of certain assets,
including accounts receivable, inventory, property, equipment, and a customer
list, from Crystaloid Technologies, Inc. ("Crystaloid"), which had closed its
production facility on December 20, 2002. The total consideration for the assets
purchased of approximately $1,294,000, was funded by the Company's line of
credit and available cash. The purchase price was allocated to the acquired
assets based on their estimated fair market values consistent with the
requirements of SFAS No. 141, *Business Combinations*and No. 142, *Goodwill and
Other Intangible Assets*.

**4.       GOODWILL**

         Effective May 1, 2002, the Company adopted SFAS No. 142, *Goodwill and
Other Intangible Assets*. As required by SFAS No. 142, goodwill is no longer
amortized into the statement of operations over an estimated life but rather is
tested at least annually for impairment based on specific guidance included in
SFAS No. 142. Based on an impairment test performed as of May 1, 2002, the
Company determined that the goodwill related to the Company's acquisition of DCI
was entirely impaired. Accordingly, the Company recorded an impairment charge of
$1,618,000 in the financial statements during the year ended April 20, 2003 as
the cumulative effect of an accounting change.

                                      F-10

**5.       LINE OF CREDIT**

        On December 31, 2003, the Company renewed its $2,000,000 line of credit
facility that is secured by accounts receivable and inventory and is available
for working capital. The line of credit expires on December 31, 2004 and its
borrowing capacity is calculated as a specified percentage of accounts
receivable and inventory. The line of credit accrues interest at the prime rate
plus 1.5% (5.5% at April 30, 2004) and contains various covenants, including
certain financial performance covenants pertaining to the maintenance of debt to
net worth and minimum net worth ratios. As of April 30, 2004, the Company was in
compliance with all of the covenants under the line of credit and there were no
borrowings outstanding on the credit facility as of April 30, 2004 and 2003.

**6.       LONG-TERM DEBT**

         Long-term debt as of April 30, 2004 and 2003 consists of the following
(in thousands):

                                                                                           April 30,
                                                                                  -----------------------------
                                                                                      2004            2003
                                                                                  -------------   -------------
Industrial revenue bonds, variable interest rate (1.25% as of April 30, 2004),
due in annual principal payments ranging from $100,000 to $200,000 beginning
October 2005 through maturity in October 2017, secured by property and equipment
and an irrevocable letter of credit in favor of the bond Trustee up to a maximum
amount of $1,588,000 through April 2005. In connection with the acquisition of
DCI, the face amount of this IRB was discounted approximately $178,000. The
discount totaled $140,000 and $149,000 as of April 30, 2004 and 2003
respectively.

                                                                                        $1,430          $1,421

Convertible long-term subordinated notes payable to the former DCI stockholders,
convertible into shares of common stock at a conversion price of $1.93 per
common share, with interest payable quarterly at 10%. The notes mature on
February 7, 2005 and are subordinated to all other borrowings of the
Company.                                                                                   405              405

Subordinated note payable to the former DCI stockholders, with interest accrued
at 5% per annum. The principal and accrued interest is payable in equal monthly
installments beginning September 30, 2003 and ending February 28, 2005.

                                                                                            20               32

                                      F-11

Convertible subordinated debenture in the amount of $500,000, with a conversion
price of $1.93 per common share, and a warrant granting the holder the right to
purchase 45,635 shares of the Company's stock for $88,076 ($1.93 per common
share). The subordinated debt is convertible into 259,067 shares of common stock
at the option of the subordinated debt holder. The common stock purchase warrant
was valued at $50,000 using the Black-Scholes option pricing model. Accordingly,
the subordinated debenture has been discounted by $50,000 which results in an
effective interest rate of 13%. The debenture has a stated interest rate of 10%
and is due February 7, 2005. Interest is paid on a quarterly basis.

                                                                                           489              479
                                                                                  -------------   -------------

Total long-term debt                                                                     2,344            2,337

Less current portion                                                                       914               14
                                                                                  -------------   -------------
                                                                                        $1,430           $2,323
                                                                                  =============   =============

         The aggregate amount of principal to be paid on the long-term debt
during each of the next five years ending April 30 is as follows (in thousands):

                          YearAmount
                          2005                    $914
                          2006                     100
                          2007                     200
                          2008                     170
                          2009                     100

         As of April 30, 2004, the Company is not subjective to any restrictive
covenants with its long-term debt.

**7.       OPERATING LEASES**

         In November 2002, as a result of the Crystaloid transaction, the
Company entered into a one-year non-cancelable operating lease for a facility
that was to be used for storage and some manufacturing. On December 31, 2003,
the lease expired and the Company vacated the facility. The Company currently
sub-leases storage space and certain on site storage containers on a
month-to-month basis.
         Rent expense under all operating leases was approximately $40,000 and
$31,000 for the years ended April 30, 2004 and 2003, respectively. The Company
does not have any future obligations for minimum lease payments.

**8.       NET INCOME (LOSS) PER SHARE**

         The following table presents the components of the calculation of basic
and diluted income

                                      F-12

(loss) per share (in thousands):
                                                                                           Years Ended April 30,
                                                                                           2004             2003
                                                                                       -------------    -------------
    Numerator:
    Income before cumulative effect of
      accounting change                                                                         $23             $214
    Cumulative effect of accounting change                                                       --          (1,618)
                                                                                       -------------    -------------
    Net income (loss)                                                                           $23         $(1,404)
                                                                                       =============    =============

    Denominator:
    Weighted average common shares outstanding - basic                                        2,791            2,791
    Effect of dilutive options outstanding                                                       69               32
                                                                                       -------------    -------------
    Weighted average common shares outstanding - diluted                                      2,860            2,823
                                                                                       =============    =============

         Options to purchase 76,000 and 147,750 shares of common stock as of
April 30, 2004 and 2003, respectively, were antidilutive and therefore were not
included in the computation of diluted earnings per share.

**9.       STOCK OPTIONS AND WARRANTS**

         The Company has reserved 675,000 shares of common stock for issuance to
employees and consultants of the Company pursuant to the Company's 1991 stock
option plan (the Plan). According to the terms of the Plan, both incentive stock
options and non-qualified stock options to purchase common stock of the Company
may be granted to key employees of and consultants to the Company, at the
discretion of the Board of Directors. Incentive stock options may not be granted
at prices that are less than the fair market value on the date of grant.
Non-qualified options may be granted at prices determined appropriate by the
Board of Directors of the Company. Generally, these options become exercisable
and vest over one to five years and expire within 10 years of the date of grant.
At April 30, 2004 and 2003, options to purchase approximately 206,000 and
128,000 shares, respectively, were vested and exercisable. Information with
respect to options granted under the Plan is as follows:

                                                                     Shares                 Price
                                                                 ----------------     ------------------
         Outstanding at April 30, 2002                                   241,750           $0.34  $6.00
            Granted                                                       76,000            1.25 - 1.30
            Exercised                                                      5,250                   0.34
            Canceled                                                      13,250            0.81 - 6.00
                                                                 ----------------     ------------------
         Outstanding at April 30, 2003                                   299,250          $0.81 - $3.25
            Granted                                                           --                     --
            Exercised                                                         --                     --
            Canceled                                                          --                     --
                                                                 ----------------     ------------------
         Outstanding at April 30, 2004                                   299,250          $0.81 - $3.25
                                                                 ================     ==================
                                      F-13

         The following table summarizes information about stock options
outstanding at April 30, 2004

                                        Options outstanding                               Options exercisable
                      ------------------ ------------------- ------------------    ---------------- -----------------
                           Number         Weighted-average                             Number
 Range of exercise     outstanding at        remaining       Weighted-average      exercisable at   Weighted-average
       prices          April 30, 2004     contractual life    exercise price       April 30, 2004    exercise price
--------------------- ------------------ ------------------- ------------------    ---------------- -----------------
$0.81                           147,250     8 years                $0.81                   104,840        $0.81
$1.25 - $1.50                    91,000     8.30 years             $1.29                    50,338        $1.32
$2.13 - $3.25                    61,000     5.51 years             $2.41                    51,000        $2.44
                      ------------------                                           ----------------
$0.81 - $3.25                   299,250     7.58 years             $1.28                   206,178        $1.34
                      ==================                                           ================

         The per-share weighted-average fair value of stock options granted
during 2003 was $0.83.

         In connection with financing the acquisition of DCI in February 2000,
the Company issued $500,000 face amount of convertible subordinated debt and a
warrant that allows the holder to purchase up to an aggregate of 45,635 shares
of common stock. The warrant was restructured so that the shares are exercisable
at a per share price of $1.93 through August 2009. The convertible subordinated
debenture matures on February 7, 2005. The Company has reserved 304,702
additional shares of common stock for future issuance pursuant to the
convertible subordinated debt and the outstanding warrant.

**10.      INCOME TAXES**

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities at April 30,
2004 and 2003 are as follows (in thousands):

                                                                                           April 30,
                                                                                    2004              2003
                                                                                -------------    ----------------
Deferred tax assets:
      Net operating loss carry forward                                                $1,205              $1,224
      Alternative minimum tax and research and development
         credit carry forward                                                            244                 283
      Accrued expenses                                                                   120                 102
      Inventories                                                                        110                  88
                                                                                -------------    ----------------
Total deferred tax assets                                                              1,679               1,665

Deferred tax liabilities:
      Basis differences in acquired assets                                             (145)               (129)
                                                                                -------------    ----------------
Total deferred tax liabilities                                                         (145)               (129)
                                                                                -------------    ----------------
Net deferred tax asset                                                                 1,534               1,568
Valuation allowance                                                                    1,534               1,568
                                                                                -------------    ----------------
                                                                                       $  --               $  --
                                                                                =============    ================

                                      F-14

         The $39,000 income tax benefit for the year ended April 30, 2004
resulted from filing amended tax returns claiming refunds for federal and state
income taxes paid in prior years as a result of additional carry backs of net
operating losses pursuant to the Job Creation and Worker Assistance Act of 2002.
There was no income tax expense or benefit for the year ended April 30, 2003.

         The income tax expense (benefit) differs from amounts computed at the
statutory federal income tax rate as follows (in thousands):

                                                                        Years Ended April 30,
                                                                        2004             2003
                                                                     ------------    -------------
Benefit at statutory rate                                                   $(6)           $(478)
State income tax, net of federal income tax effect                           (1)             (70)
Non-deductible goodwill impairment charge                                     --              633
Valuation allowance                                                         (34)             (84)
Other                                                                          2              (1)
                                                                     ------------    -------------
                                                                           $(39)             $ --
                                                                     ============    =============

      The valuation allowance is primarily related to net operating loss
carryforwards for which no tax benefit has been recognized due to the
uncertainty of utilization. At April 30, 2004, the Company has available net
operating loss carryforwards of approximately $3.1 million which will begin to
expire in fiscal year 2020.

**11.      EMPLOYEE BENEFIT PLAN**

         The Company has a defined contribution employee benefit plan that
covers substantially all full-time employees who have attained age 21 and
completed six months of service. Qualified employees are entitled to make
voluntary contributions to the plan of up to 15% of their annual compensation
subject to Internal Revenue Code maximum limitations. The Company contributes
50% of each employee's contribution up to a maximum of 6% of the employee's
annual compensation. Participants in the plan may direct 50% of the Company's
contribution into mutual funds and money market funds, with the remaining 50% of
the Company contribution invested in common stock of the Company. Additionally,
the Company may make discretionary contributions to the plan. For the years
ended April 30, 2004 and 2003, Company contributions to the plans amounted to
approximately $61,000 and $54,000, respectively.

**12.      RELATED PARTY TRANSACTIONS**

         The Company has a management advisory agreement with Merit Capital &
Management, Inc. ("Merit Capital") whose president and sole shareholder is
Michael Meyer, the Company's Chairman of the Board of Directors. Pursuant to the
terms of the agreement, the Company pays a monthly fee, in addition to benefits,
in exchange for management advisory services.

         In July 2003, the agreement was amended and the management advisory
services were terminated effective October 31, 2003. In February 2004, the
Company amended Merit Capital's

                                      F-15

management advisory agreement. Pursuant to the terms of the amended agreement,
Merit Capital is paid a fee of $4,500 per month commencing March 2004 and ending
July 2004 in exchange for exploring strategic alternatives for the Company.
Merit Capital may also be paid an additional fee in the event that a strategic
alternative transaction is completed. This fee will be a minimum of $40,000 and
shall not exceed $100,000 with such amount being determined at the discretion of
the independent members of the Board of Directors.

         The Company paid Merit Capital $80,000 and $78,000 for the years ended
April 30, 2004 and 2003, respectively.

**13.      SUBSEQUENT EVENT**

         On June 2, 2004, the Company announced that certain members of the
Company's management team purchased all of the common stock and the subordinated
debenture held by KCEP Ventures II, L.P. ("KCEP"). Individual management team
members purchased all of KCEP's common stock of the Company and Eiger Investment
Group, L.L.C., which is owned by certain members of the Company's management
team, purchased the $500,000 convertible subordinated debenture from KCEP. In
connection with this transaction, the warrant for the purchase of up to 45,635
shares of common stock was amended to expire in August 2009 and continues to be
owned by KCEP. As part of this transaction, Mr. David J. Schulte, a Managing
Director of KCEP, resigned from the Company's Board of Directors.

                                      F-16
```