UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 Form
10-K
 
 
 [X]
      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934
                For
      the Fiscal year ended April 30, 2009[   ]
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934
                
                For
      the transition period from _________to
  _________
   Commission file
      number 0-22760ELECSYS
  CORPORATION(Exact name of
      Registrant as Specified in its charter)
  Kansas
                48-1099142(State or
      other jurisdiction of  incorporation or
      organization)
                (I.R.S.
      Employer Identification No.)846 N.
      Mart-Way Court  Olathe, KS
                66061(Address of
      principal executive offices)
                (Zip
      Code)Registrant's
      telephone number, including area code:  (913)647-0158Securities
      registered under Section 12(b) of the Exchange
  Act:Title of each
      class
                Name of
      Each Exchange on Which RegisteredCommon Stock,
      $.01 par value
                NASDAQ Stock
      Market
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. [  ]Yes [X] No
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. [  ]Yes [X] No
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 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 [ ]
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes [
]  No [ ]
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K in not contained herein, and will not  contain, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
 [ ] Large
accelerated
filer                                           [
] Accelerated
filer                                           [
] Non-accelerated
filer                                                      [X]
Smaller Reporting Company
 
 Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).  Yes[  ] No[X]
  1
  
 The
aggregate market value of the Common Stock held by non-affiliates as of October
31, 2008, was approximately $11,567,615 based on the closing sale price of the
Issuer’s Common Stock on such date.
 
 There
were 3,471,187 shares of Common Stock, $.01 par value, outstanding as of July 1,
2009.
 
 DOCUMENTS
INCORPORATED BY REFERENCE PURSUANT TO RULE 12b-23:
  Portions
of the Company’s Proxy Statement for its 2009 Annual Meeting are incorporated by
reference into Part III.
  2
  
 ELECSYS
CORPORATION AND SUBSIDIARIES
 FORM
10-K
 Year
Ended April 30, 2009
 
 INDEX
    PagePART IITEM
      1.  BUSINESS
                                          4ITEM
      1A.  RISK FACTORS
                                          11ITEM
      1B.  UNRESOLVED STAFF COMMENTS
                                          14ITEM
      2.  PROPERTIES
                                          14ITEM
      3.  LEGAL PROCEEDINGS
                                          15ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
                                          15PART IIITEM
      5.  MARKET FOR REGISTRANT’S COMMON EQUITY,
      RELATEDSTOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
                                          16ITEM
      6.  SELECTED FINANCIAL DATA
                                          16ITEM
      7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND
      RESULTS OF OPERATION
                                          17ITEM
      7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
                                          27ITEM
      8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                          28ITEM
      9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND
      FINANCIAL DISCLOSURE
                                          50ITEM
      9A(T).  CONTROLS AND PROCEDURES
                                          50ITEM
      9B.  OTHER INFORMATION
                                          51PART IIIITEM
      10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE
                                          52ITEM
      11.  EXECUTIVE COMPENSATION
                                          52ITEM
      12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      ANDMANAGEMENT
      AND RELATED STOCKHOLDER MATTERS
                                          52ITEM
      13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE
                                          52ITEM
      14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
                                          52PART IVITEM
      15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
                                          53SIGNATURES
                                          54EXHIBIT
      INDEX
                                          55
   3
  Part I
 
 Item
1.BUSINESS
 
 General
 
 Elecsys
is a publicly traded company that tailors specific technology solutions to its
customers’ requirements wherever high quality, reliability, and innovation are
essential.  Elecsys provide electronic design and manufacturing
services, custom liquid crystal displays (“LCDs”), ultra-rugged mobile computing
devices, and wireless remote monitoring solutions to numerous industries
worldwide.  The Company operates its business through three
wholly-owned subsidiaries, DCI, Inc. (“DCI”), Radix Corporation (“Radix”) and
NTG, Inc. (“NTG”).
 
 DCI
provides electronic design and manufacturing services for original equipment
manufacturers (“OEMs”) in the aerospace, transportation, communications, safety,
security and other industrial product markets.  DCI has specialized
expertise and capabilities to design and efficiently manufacture custom
electronic assemblies that integrate a variety of specialized interface
technologies, such as custom LCDs, keypads, and touchscreens with circuit boards
and other electronic components.  DCI seeks to become an extension of
the OEM’s organization by providing key expertise that enables rapid development
and manufacture of electronic products from product conception through volume
production.
 
 Radix
designs, develops, and implements ultra-rugged handheld computing solutions for
tough environments where data integrity is paramount.  Its products,
which include handheld computers, printers, peripherals, and application
software, are deployed in over 70 countries in applications that include
utilities, transportation logistics, traffic and parking enforcement, route
accounting/deliveries, and inspection and maintenance.  Radix’s
flexibility to custom configure solutions tailored to specific requirements has
provided opportunities to expand our product offerings into new
industries.
 
 NTG
designs, markets, and provides remote monitoring solutions for the oil and gas
pipeline industry as well as other industries that require remote
monitoring.  NTG's wireless remote monitoring devices utilize the
existing cellular and satellite infrastructure and its Watchdog CP Web Monitor
to provide full time, wireless status monitoring and alarm notification
regarding the performance of multiple types of systems over the internet. 
This highly reliable network, combined with its internet-based front-end,
provides NTG’s customers with active monitoring and control of a large
population of field-deployed remote monitoring devices.
 
 Elecsys
was incorporated in Kansas in 1991. In September 2007, the Company, through its
newly formed and wholly owned subsidiary, Radix Corporation, acquired
substantially all of the tangible assets, as well as all of the intellectual
property and intangible assets and assumed certain liabilities of Radix
International Corporation and its subsidiary of Salt Lake City,
Utah.  Radix had built a reputation for reliability and support over
its history of manufacturing ultra-rugged mobile computing devices.
 
 Business
 
 DCI.  DCI
provides a range of design, manufacturing, integration and testing services to
OEMs
  4
  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.  DCI’s strategy is to leverage its
expertise as a technical partner that can integrate specialized technologies,
such as custom LCD fabrication, wireless communication interfaces, and
microelectronic assembly to provide solutions tailored to our customers’
specific electronic needs.  DCI designs, manufactures, integrates, and
tests a wide variety of electronic assemblies, including circuit boards,
high-frequency electronic modules, microelectronic assemblies, and full turn-key
products, along with custom LCD devices and modules.  The electronic
interfaces, assemblies, and LCDs DCI produces, or imports, are used in
aerospace, industrial, communications, safety, transportation, military, medical
and other applications.  DCI’s operating business is located in the
Company’s 60,000 square foot production and headquarters facility located in
Olathe, Kansas.  Although DCI operations utilize the majority of the
facility, we believe that there is sufficient surplus capacity to accommodate
anticipated near-term growth for all of our subsidiaries.
 
 DCI is
registered to the ISO 9001:2000 international quality standard, having received
initial ISO 9001 certification in November 2000.  DCI is also registered to
the ISO 13485:2003 standard, which governs the design and manufacture of medical
devices.  DCI is also registered with the U.S. Department of State,
Directorate of Defense Trade Controls for the production of restricted military
and defense items in compliance with the Arms Export Control Act (AECA) and the
International Traffic in Arms Regulations (ITAR).
 
 Sales at
DCI are made primarily to customers in the United States, Canada and a few other
international markets, which are serviced primarily by in-house sales and
program management personnel.  DCI views its OEM customers as strategic
partners and works to provide them with broad technical services and excellent
customer care.  A strategic operating objective is to form long-term
business relationships with customers by developing technological partnership
between DCI and the customer.
 
 The DCI
engineering staff provides hardware design, software design and component
engineering services to OEMs.  Its manufacturing processes produce
assemblies incorporating both conventional electronic packaging and high-density
configurations, including ball grid array (BGA) and microelectronic
technologies.  DCI maintains manufacturing capabilities that 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.  DCI integrates our customers’ electronic
assemblies with numerous specialized interface technologies such as custom LCDs,
touchscreens, wireless communications and other user input devices as well as
application specific backlights and illumination sources.
 
 DCI’s LCD
fabrication process produces custom LCDs that are used to display information in
a variety of applications from commercial and consumer to aerospace and medical
products.  DCI fabricates highly specialized and low-to-medium volume
custom LCD devices in its Class 10000 cleanroom located in Olathe, Kansas. 
DCI also maintain relationships with several offshore LCD manufacturers to
source higher volume customer requirements.  DCI is capable of designing
and manufacturing a complete display module involving both the custom LCD device
and the supporting electronics.  DCI believes a limited number of
competitors currently have the capability to produce such complete
modules.
  5
  
 DCI
believes the design, manufacturing, and integration capabilities, combined with
materials management expertise, make it an effective single resource for product
development and production that allows customers to integrate their supply
chains and reduce their vendor bases.  DCI’s 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 DCI from conventional domestic
EMS providers.
 
 DCI views
the integration of electronic manufacturing services with specialized niche
technologies to be a large and growing market.  It is DCI’s primary focus
to grow internally through both the existing customer base and the addition of
new customers, for which DCI’s expertise in EMS, displays, display integration,
and customer service is a single-source solution.  To further develop DCI’s
business and complement the internal growth strategy, DCI will continue to
selectively evaluate opportunities that will permit it to leverage its
capabilities.  DCI will continue to explore complementary niche
technologies in order to expand its capabilities and drive its growth into
additional sectors of the EMS market.  DCI will look at businesses where it
sees an opportunity to add complementary customers and capabilities, or purchase
assets at reasonable prices.
 
 Radix.  Radix
designs, develops, and implements ultra-rugged handheld computing solutions for
use in demanding environments where data integrity is
paramount.  Radix has built a reputation for reliability and support
and markets what are considered to be some of the most rugged, reliable, and
easy-to-use handheld computers and portable printers in the
world.  Its field proven products, which include handheld computers,
printers, peripherals, and application software, are deployed in over 70
countries in a variety of critical applications.  Engineering and
production operations for Radix are located in the Company’s 60,000 square foot
production and headquarters facility in Olathe, Kansas, where a majority of
Radix’s electronic subassemblies are manufactured by DCI.  Several
satellite locations provide sales and technical support to its customers and
business partners.
 
 Radix
sells its products and services to both private firms and government affiliated
end users worldwide.  Radix utilizes both a direct sales force and a
network of specialized business partners located throughout the
world.  In many cases, Radix combines its hardware and software
products with those of its business partners to create an integrated solution
for its mutual customers.  Radix products can be found in utilities,
law enforcement, transportation, logistics tracking, maintenance, and other
critical applications in rugged environments.  The Radix reputation
for supplying innovative, reliable, and easy-to-use products and its commitment
to provide superior support has earned Radix many customers and business
partners.
 
 Radix
handheld computers are designed to withstand the extreme environmental
conditions found in our customers’ demanding applications.  Radix
equipment is designed to exceed the industry’s highest specifications for shock,
vibration, and environmental ruggedness.  Radix products operate
throughout a wide temperature range, are completely waterproof and submersible,
and are resistant to dust, oil and solvents.  To enhance customer
productivity and facilitate training, Radix proprietary design keyboards can be
customized for different languages and applications.  Based on
Windows® CE.NET
operating systems and high performance Intel XScale®
architecture, Radix’s handheld devices make use of industry standard components
that simplify application development.
 
 Radix
offers a comprehensive range of cutting edge peripheral equipment including
printers,
  6
  scanners,
and communications devices.  Radix manufactures a full line of bar
code readers, radio frequency identification (RFID) scanners, and image capture
devices, as well as magnetic stripe and smart card readers.  A wide
range of communication options are supported including Ethernet, USB,
Bluetooth®, WiFi, GSM/GPRS, and CDMA.  Since these are custom
integrated devices designed by Radix, all of these options can be added without
compromising the environmental durability of the equipment.  In
addition to integrated peripherals, Radix can provide multiple accessories,
including chargers, loaders, carrying cases, and vehicle mounts.
 
 Radix
also provides the Utility Management System (UMS), a complete meter reading
solution designed to meet the unique requirements of the utility meter reading
market.  Available in multiple languages, UMS is a highly configurable
data capture application that provides advanced route management to hundreds of
utilities worldwide.  UMS offers configurable file formats, custom
handheld configuration, and professional reports and interfaces to most
automatic meter reading (AMR) technologies, as well as existing billing
systems.
 
 Radix’s
commitment to customers extends beyond the delivery and installation of our
hardware.  Radix provides factory direct support to its customers and
business partners through a customer service department staffed with highly
experienced technical professionals.  Radix products are offered with
comprehensive support and maintenance agreements to ensure that systems remain
fully operational and deliver the expected benefits to its
customers.  Radix has established several factory certified service
centers outside North America to serve international customers.
 
 Radix
Corporation is believed to be an established leader in the specialized
ultra-rugged handheld computing market.  Radix believes that the
market for rugged mobile computing equipment is large and
growing.  Radix is committed to developing and supplying the best
products and services for the markets that demand secure mobile computing
solutions for use in the harshest environments.  Radix remains
committed to providing its customers with the most durable and reliable products
backed up with the best service and support in the industry.
 
 NTG.  NTG
provides wireless, internet-based remote monitoring equipment and network data
services for industrial monitoring applications. NTG’s strategy is to focus
product and market development on industrial monitoring applications that
require wide-area wireless networking technologies and proprietary field
application hardware.  NTG provides various application specific remote
monitoring units that are integrated with centralized data services that operate
using the Company’s proprietary WatchdogCP Web Monitor software and data
center.  In addition to initial equipment revenue, each remote monitor
generates monthly network services revenue. NTG currently operates out of a
portion of the Company’s 60,000 square foot production and headquarters facility
located in Olathe, Kansas, where a majority of NTG’s electronic subassemblies
are manufactured by DCI.  Sales at NTG are primarily conducted through,
in-house direct marketing and sales efforts combined with independent sales
representatives with expertise in the pipeline corrosion protection market and
national and regional trade expositions. NTG currently sells its remote
monitoring products and services throughout North America and select markets in
the Middle East and South America.
 
 The
WatchdogCP Web Monitor is comprised of a variety of remote monitoring devices
that use either the digital cellular network infrastructure or the Inmarsat-D
satellite data transmission system to link into an internet-based back-end
network and customer/user interface.  The remote devices, proprietary
designs and technology pioneered by the Company monitor functions such as
voltages, currents, temperatures, levels, and pressures, and allow control
activity to take place at remote sites.  By
  7
  utilizing
the capacity, coverage, and capability of the existing cellular and satellite
based wireless infrastructure, the WatchdogCP Web Monitor can receive data from
and deliver information to remote devices.  When combined with its
internet-based user interface, NTG’s customers can directly access and control a
large population of field-deployed remote monitoring devices at an attractive
cost.
 
 NTG
initially targeted the cathodic protection (“CP”) market for North American
pipelines where numerous applications currently exist for our products and
services.  The millions of miles of buried pipelines that carry gas, oil,
water, and other products throughout North America corrode due to the
interaction of the metals with underground moisture.  Pipeline operators
constantly fight this natural corrosion process to protect their pipeline assets
and comply with strictly enforced federal regulations that require corrosion
protection, assessment, and monitoring.  Pipelines are generally protected
with CP rectifiers deployed along the pipeline that establish a voltage between
the pipeline and the surrounding soil to arrest corrosion activity. 
Historically, pipeline organizations employ corrosion technicians who travel
from site to site to verify the operation of CP systems.  There currently
are vast numbers of CP-related sites in North America with thousands of
additional sites being installed each year.  A small number of these sites
are remotely monitored at the present time.  NTG feels that the
availability of cellular and satellite digital data channels, and the low cost
of sending periodic, by-exception data over the wireless infrastructure, is an
ideal means to automate the monitoring and data collection tasks required by the
pipeline CP industry.  Thousands of NTG remote monitors have been deployed
in various applications and locations that provide recurring network services
revenues to the Company.
 
 During the past year, NTG has
integrated globally compatible wireless communications techniques into its
products, while using the same centralized, internet-centric network to provide
network services from its data center in Olathe, Kansas and a secure off-site
location.  NTG will continue to explore opportunities to both expand into
additional markets and regions with its proprietary product lines and to design
new products.  NTG will continue to focus product and market development on
niche applications that leverage complete client solutions, wireless networking
technologies, and proprietary field application hardware.
 
 Competition
 
 There are
numerous domestic and foreign EMS providers with which DCI competes.  Many
of these competitors are substantially larger than DCI, with greater financial,
operating, manufacturing and marketing resources, including Flextronics
International Ltd., Sanmina-SCI Corporation, and Celestica, Inc.  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 DCI’s primary customer markets. 
DCI’s ability to integrate custom LCDs and other specialized electronic
interface technologies with electronic assemblies helps differentiate DCI from
its competitors.  The Company’s management team believes that the principal
competitive factors in target markets for DCI 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, DCI must provide technologically advanced manufacturing
services, maintain quality levels, deliver finished products on a reliable
basis, offer flexible delivery schedules, and compete effectively on total
value.
 
 There are
many domestic and foreign manufacturers that compete with Radix in the
rugged
  8
  handheld
computing markets.  Many of these competitors are substantially larger
than Radix, with greater financial, operating, and marketing resources,
including companies such as Motorola, Inc., Honeywell International, and
Intermec, Inc.  Many have broader geographic breadth and offer a broader
range of services.  Radix competes in the ultra-rugged segment of the
overall mobile computing market, where Radix believes it enjoys certain
competitive advantage that differentiates Radix from the larger
competitors.  Radix management believes that significant competitive
factors in our segment of the market include reliability, performance, support,
and the ability to rapidly customize solutions.  There are also
several smaller firms that participate in the ultra-rugged segment of the
market.  The Company believes that Radix competes favorably with
respect to these competitors.
 
 While
there are numerous competitors in the general remote monitoring market, some
that are much larger than NTG, we participate in specialized industrial sectors
of the market where NTG believes it has a significant portion of the market and
possesses certain product technology advantages.  In the CP remote
monitoring market, American Innovations, Ltd. is a direct competitor that is
comparable to NTG in size.  There are also several smaller firms that
participate in the CP remote monitoring market.  Management believes the
significant competitive factors in our markets include reliability, features,
performance, and price.  NTG believes that its current proprietary products
and the WatchdogCP Web Monitor compete favorably with respect to these
factors.
 
 Sources and Availability of
Raw Materials and Principal Suppliers
 
 The raw
materials used in the manufacture of the Company’s 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 the Company uses have been subject to shortages,
and suppliers have been forced to allocate available quantities among their
customers.  The Company attempts to actively manage its business in a way
that minimizes its exposure to these potential shortages, but it may experience
component shortages that could cause delays in shipments to customers, which
could result in lower net sales and operating results.
 
 In
addition to manufacturing its own products, the Company has close working
relationships with companies both in the United States and in some foreign
countries to provide component assemblies and finished goods that are
manufactured to the Company’s specifications. Although multiple suppliers are
available for such items, if the Company were to lose one or more of the current
suppliers, some delay and additional costs may be incurred while the Company
obtains and qualifies alternative sources.
 
 Patents, Trademarks and
Licenses
 
 The
Company owns or licenses multiple patents dealing with control channel
communication techniques over the cellular network and other communication
concepts.  Some of these patents deal specifically with the CP market and
have influence on the Company’s competitive status.  The Company intends to
use these intellectual property assets to both protect its competitive position
and to license certain technology.  The average remaining life of
these patents is approximately 11 years.
 
 The
Company holds federal trademark registrations for marks used in the Company’s
business as follows: ScadaNET, ScadaNET Network, CellularRTU, ConfigRTU, CPi,
CellularRMU, RMUvi, and P2S.
  9
  Research
and Development
 
 DCI
designs and manufactures custom products and assemblies for OEM customers on a
contract basis and thus is not engaged in any independent, self-funded research
and development programs.  Radix and NTG, respectively, develops
proprietary mobile computing and remote monitoring products in addition to the
design and manufacture of custom products and assemblies for OEM customers that
are targeted at specific industry applications and involve electronic hardware
and system software design.  Total research and development expenses
for mobile computing and remote monitoring products were approximately $743,000
and $616,000 for the fiscal years 2009 and 2008, respectively.  The
Company believes that its internal engineering resources combined with qualified
third-party engineering consultants will be able to satisfy the current needs of
its customer bases.
 
 Effect of Governmental
Regulations
 
 The
Company’s operations are subject to certain federal, state and local regulations
concerning waste management and health and safety matters.  The
Company believes that it operates in material compliance with all applicable
requirements and do not anticipate any material expenditure in maintaining
compliance.  New, modified, or more stringent requirements or
enforcement policies could be adopted in the future that could result in
material costs and liabilities that could adversely affect the
business.
 
 Effect of Environmental
Regulations
 
 The
Company is not aware of any federal, state, or local provisions regulating the
discharge of materials into the environment or otherwise relating to the
protection of the environment with which compliance by the Company has had, or
is expected to have, a material effect upon the capital expenditures, earnings,
or competitive position of the Company.
 
 Dependence on One or a Few
Major Customers
 
 Sales to
the Company’s five largest customers were 31% of total sales in fiscal 2009 with
sales to one customer accounting for 12% of total sales.  Sales to the
five largest customers in fiscal 2008 totaled 27% of total
sales.  There was an increase in sales to the Company’s five largest
customers in fiscal 2009 primarily as a result of the shipment of $2.6 million
order of a newly developed configuration of its FW900 handheld computers to a
transport and logistics company that operates the railways, ports and pipelines
throughout South Africa.  The loss of one or more of these major
customers would have a substantial impact on the Company’s
business.  In order to minimize the impact the loss of any one
customer might have on the business, the Company seeks to expand and diversify
the customer base.  The Company is focusing its increased sales
efforts on new market segments and is attempting to increase its market
penetration across all geographic areas in the United States, Canada and
selected international markets.  The new market segments include
additional industrial controls and products, aerospace applications and medical
devices.  The Company continues to add, develop and transition its
internal sales force in an effort to effectively develop opportunities for new
products in new markets.  The Company has, in the last few years, seen
improved results from these efforts, as demonstrated by an expanding customer
base and a smaller percentage of total sales to its top five
customers.  Excluding the slight increase in sales to one major new
customer in fiscal 2009 as well as the addition of another major new customer in
fiscal 2007, the overall trend in sales and
  10
  reliance
on its top five customers has been declining.  Additional analysis of
the last five fiscal years shows that the percentage of sales to the
Company’s top five customers has been 31% in fiscal 2009, 27% in fiscal 2008,
51% in fiscal 2007, 39% in fiscal 2006 and 45% in fiscal 2005.
 
 Total Number of
Employees
 
 At April
30, 2009, the Company had a total of 131 full time employees and 1 part-time
employee.  None of the employees are represented by a labor
organization or subject to a collective bargaining agreement.  The
Company’s management team believes that its relationship with its employees is
good.
 
 Item
1A.  RISK
FACTORS
 
 Based on
current and known information, the Company believes that the following
identifies the most significant risk factors that could affect its business.
However, the risks and uncertainties the Company faces are not limited to those
discussed below. There could be other unknown or unpredictable economic,
business, competitive or regulatory factors, including factors that the Company
currently believes to be immaterial, that could have material adverse effects on
its financial position, liquidity, and results of operations. Past financial
performance may not be a reliable indicator of future performance and historical
trends should not be used to anticipate results or trends in future
periods.
 
 You
should consider the following risk factors, in addition to other information
presented or incorporated by reference into this Annual Report on Form 10-K in
evaluating our business and your investment in the Company.
 
 Current capital and credit
market conditions may adversely affectthe Company’saccess to capital, cost of
capital and business operations.
 
 The
general economic and capital market conditions in the United States have
deteriorated significantly and have adversely affected businesses access to
capital as well as an increased cost of such capital.  If the current
economic conditions in the United States continue or become worse, the Company’s
cost of debt and equity capital and the access to capital markets could be
adversely affected.  Although the Company currently has access to
approximately $2,000,000, pursuant to its line of credit agreement with a
regional financial institution, this line of credit expires in August
2009.  The Company’s lender has granted one year extensions on
the line of credit on identical terms in the past, but there can be no assurance
that they will do so in the future, and if they do grant extensions, there can
be no assurance that the terms of such extensions will not be on terms that are
more burdensome and/or costly to the Company.  To the extent that the
Company’s lender fails to grant an extension of the line of credit or if the
terms of any extension are more burdensome or costly, the Company’s operating
results and financial condition could be materially adversely
affected.
  11
  Delays in development,
introduction and shipment of new products or services may result in a decline in
sales.
 
 The
Company tailors specific technology solutions to its customer requirements
wherever high quality, reliability, and innovation are
essential.  Significant technological, supplier, manufacturing or
other problems may delay the development, introduction or production of these
products or services.  These problems could include:
 
 ·
              technical
      problems in the development of new specific technology
      solutions;
 ·
              inability
      to hire qualified personnel; and
 ·
              delays
      or failures to perform by third parties involved in our development
      projects.
 
 Delays in
the development, completion and shipment of new products or services, or failure
of customers to accept new products, may result in a decline in
sales.
 
 Dependence on key
personnel
 
 The
Company’s continued success will depend to a significant extent on the continued
services of its senior executives and other key employees, including certain
technical and marketing personnel.  The competition for these
individuals is significant; hence the loss of one or more of its key executives
or employees (including if one or more of its officers or employees decided to
join a competitor or otherwise compete directly or indirectly with the Company),
could materially adversely affect its business, operating results, and financial
condition.
 
 Dependence on a small number
of customers
 
 The Company is dependent on a small
number of original equipment manufacturer customers in its DCI business, and
Radix relies on its business partners worldwide to create integrated solutions
with its hardware and its business partner’s software
products.  Accordingly, the Company is dependent on the continued
growth, viability and financial stability of its largest OEM customers and
business partners.  The Company generally does not obtain firm,
long-term purchase commitments from its customers or business partners, and has
often experienced reduced lead times in customer orders.  Customers
and business partners may cancel their orders, change production quantities, and
delay production for a number of reasons.  The Company’s business
partners may experience delays in their software development which may delay
delivery of Radix hardware products.  Uncertain economic conditions
have resulted, and may continue to result, in some of the Company’s customers
and business partners delaying the delivery of some of the products manufactured
for them and placing purchase orders for lower volumes of products than
previously anticipated.  Cancellations, reductions, or delays by a
significant customer, business partner, or by a group of customers and business
partners have harmed, and may continue to harm, the Company’s results of
operations by reducing the volumes of products manufactured, as well as by
causing a delay in the recovery of its expenditures for inventory in preparation
for customer and business partner orders and lower asset utilization resulting
in lower gross margins.
 
  12
  Operating results may vary
significantly from period to period.
 
 The
Company can experience fluctuations in its operating results from quarter to
quarter and its results of operations for any one quarter are not necessarily
indicative of results for any future periods.  Factors which may cause
its quarterly operating results to fluctuate include:
 
 ·
              increased
      competition
 ·
              timing
      of new products introduced into the
market
 ·
              pricing
      changes by us or our competitors;
 ·
              market
      acceptance or delays in the introduction of new products or
      services;
 ·
              production
      constraints;
 ·
              quality
      issues;
 ·
              labor
      or material shortages;
 ·
              the
      timing of significant orders;
 ·
              the
      sales mix of products and services;
 ·
              customers’
      budgets;
 ·
              adverse
      movements in interest rates or tax
rates;
 ·
              general
      economic conditions; and
 ·
              cyclical
      nature of demand for customers’
products.
  Pursuit of business
acquisitions could impair the Company’s financial position and
profitability.
 
 The Company may pursue acquisitions of
complementary technologies, product lines or businesses.  Future
acquisitions may include risks, the occurrence of which could have a material
adverse affect on the Company’s operating results and financial
condition.  These risks include:
 
 ·
              burdening
      management and its operating teams during the integration of the acquired
      entity or product line;
 ·
              diverting
      management’s attention from other business
  concerns;
 ·
              failing
      to successfully integrate the acquired products or
    business;
 ·
              lack
      of acceptance of the acquired products by its sales channels or
      customers;
 ·
              entering
      markets where management has no or limited prior
    experience;
 ·
              potential
      loss of key employees of the acquired
business;
 ·
              the
      effect on the Company’s financial statements of the amortization of
      acquired intangible assets;
 ·
              potential
      loss of customer base of acquired
business;
 ·
              the
      cost associated with acquisitions including the Company’s ability to
      secure capital to finance future acquisitions to the extent additional
      debt or equity is needed; and
 ·
              assumption
      of unknown liabilities, or other unanticipated events or
      circumstances.
  13
  
 Failure to comply with
regulatory requirements may adversely affect the Company’s stock price and
business.
 
 As a public company, Elecsys is subject
to numerous governmental and stock exchange requirements, with which management
believes the Company is in compliance.  The Sarbanes-Oxley Act of 2002
and the Securities and Exchange Commission (SEC) have requirements that the
Company may fail to meet by the required deadlines or it may fall out of
compliance with, such as the internal controls auditor attestation required
under Section 404 of the Sarbanes-Oxley Act of 2002, with which the Company is
not yet required to comply as it is not an accelerated filer.  The
Company assumes it will continue to have the status of a smaller reporting
company based on the aggregate market value of the voting shares held as of
October 31, 2008.  During the course of its testing management may
identify deficiencies which the Company may not be able to remediate in time to
meet the deadline imposed by the Sarbanes-Oxley Act of 2002 for compliance with
the requirements of Section 404.  The Company may also incur
additional costs in order to comply with Section 404.  In addition, if
management fails to achieve and maintain the adequacy of our internal controls,
as such standards are modified, supplemented or amended from time to time,
management may not be able to conclude on an ongoing basis that the Company has
effective internal controls over financial reporting in accordance with Section
404 of the Sarbanes-Oxley Act of 2002.  Moreover, effective internal
controls, particularly those related to revenue recognition, are necessary for
management to produce reliable financial reports and are important to help
prevent financial fraud.  If management cannot provide reliable
financial reports or prevent fraud, the Company’s business and operating results
could be harmed, investors could lose confidence in the reported financial
information, and the trading price of the Company’s stock could drop
significantly.  Management’s failure to meet regulatory requirements
and exchange listing standards may result in actions such as the delisting of
the Company’s stock impacting its stock’s liquidity, SEC enforcement actions,
and securities claims and litigation.
 
 Item
1B.  UNRESOLVED STAFF
COMMENTS
 
 None.
 
 Item
2.  DESCRIPTION OF
PROPERTY
 
 In September 2006, we moved into our
current facility located at 846 N. Mart-Way Court in Olathe,
Kansas.  Each of our subsidiaries utilizes the facility’s 60,000 sq ft
for their operations and administration.  We currently use
approximately 50,000 sq ft for manufacturing operations, including our
stockroom, LCD cleanroom and production, and production support.  The
remaining approximately 10,000 sq ft is used for administration, engineering and
marketing.  We believe that the current facility adequately supports
our current and near term future operations.
 
 We also lease approximately 5,600 sq ft
of office space near Salt Lake City, Utah for sales offices and a customer
support center.  In May 2009, we subleased this office space to
another company for the remainder of the lease term.
  14
  
 Item
3.LEGAL
PROCEEDINGS
  From time
to time, we are a party to routine litigation that is incidental to our
business.  Currently there is no pending or outstanding litigation
against the Company.  The Company is not aware of any proceedings
pending or contemplated by a governmental authority.
 
 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 fiscal year 2009.
  15
  
 Part II
  Item
5.  MARKET
FOR REGISTRANT’S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
 Stock
Trading
 
 The
Company’s common stock trades on the NASDAQ Stock Market under the symbol
“ESYS”.
 
 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 NASDAQ Stock Market and the American Stock
Exchange for the two preceding fiscal years.  The Company’s common
stock started trading on the NASDAQ stock market on March 10,
2009.  No cash dividends were declared during the last two fiscal
years.  As of April 30, 2009, the Company had approximately 550
stockholders of record.
 
 Fiscal
      Year 2009
                  
                  High
                  
                  
                  LowFirst
      Quarter
                  
                  $
                  7.00
                  
                  
                  $
                  5.51Second
      Quarter
                  
                  
                  7.50
                  
                  
                  
                  4.50Third
      Quarter
                  
                  
                  5.40
                  
                  
                  
                  4.00Fourth
      Quarter
                  
                  
                  4.15
                  
                  
                  
                  2.80For
      the Year
                  
                  $
                  7.50
                  
                  
                  $
                  2.80
 
 Fiscal
      Year 2008
                  
                  High
                  
                  
                  LowFirst
      Quarter
                  
                  $
                  8.99
                  
                  
                  $
                  5.63Second
      Quarter
                  
                  
                  7.35
                  
                  
                  
                  5.06Third
      Quarter
                  
                  
                  8.22
                  
                  
                  
                  4.90Fourth
      Quarter
                  
                  
                  6.50
                  
                  
                  
                  5.00For
      the Year
                  
                  $
                  8.99
                  
                  
                  $
                  4.90
 
 Item
6.  SELECTED
FINANCIAL DATA
 
 Not applicable.
 
  16
  Item
7.  MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
 
 Overview
 
 Elecsys
is a publicly traded company that tailors specific technology solutions to our
customer requirements wherever high quality, reliability, and innovation are
essential.  We provide electronic design and manufacturing services,
custom liquid crystal displays (“LCDs”), ultra-rugged mobile computing devices,
and wireless remote monitoring solutions to numerous industries
worldwide.  We operate our business through three wholly-owned
subsidiaries, DCI, Inc. (“DCI”), Radix Corporation (“Radix”) and NTG, Inc.
(“NTG”).
 
 DCI
provides electronic design and manufacturing services to original equipment
manufacturers (“OEMs”) in the aerospace, transportation, communications, safety,
security and other industrial product markets.  DCI has specialized
expertise and capabilities to design and efficiently manufacture custom
electronic assemblies which integrate a variety of specialized interface
technologies, such as custom LCDs, keypads, and touchscreens with circuit boards
and other electronic components.  DCI seeks to become an extension of
our partners’ organizations by providing key expertise that enables rapid
development and manufacture of electronic products from product conception
through volume production.
 
 Radix
designs, develops, and implements ultra-rugged handheld computing solutions for
tough environments where data integrity is paramount.  Its
field-proven products, which include handheld computers, printers, peripherals,
and application software, are deployed in over 70 countries in applications that
include utilities, transportation logistics, traffic and parking enforcement,
route accounting/deliveries, and inspection and maintenance.  Radix
has built a reputation for reliability and support over its lengthy
history.  Our flexibility to custom configure solutions tailored to
specific requirements has provided opportunities to expand our product offerings
into new industries.
 
 NTG
designs, markets, and provides remote monitoring solutions for the oil and gas
pipeline industry as well as other industries that require remote
monitoring.  NTG's wireless remote monitoring devices utilize the
existing cellular and satellite infrastructure and its WatchdogCP Web Monitor to
provide full time, wireless status monitoring and alarm notification regarding
the performance of multiple types of systems over the internet.  This
highly reliable network, combined with its internet-based front-end, provides
NTG’s customers with active monitoring and control of a large population of
field-deployed remote monitoring devices.
 
 On August
14, 2008, the Company renewed its $6,000,000 operating line of
credit.  This line of credit provides the Company and its subsidiaries
with short-term financing for working capital requirements, is secured by
accounts receivable and inventory, and expires on August 13,
2009.  The Company’s borrowing capacity under this line is calculated
as a specified percentage of accounts receivable and inventory.  The
line of credit accrues interest at the higher of the prime rate (3.25% at April
30, 2009) or 5.5%.  The loan agreement has various covenants,
including certain financial performance covenants pertaining to the maintenance
of debt to net worth and minimum net worth ratios.
  17
  Results
of Operations
  The
following table sets forth for the periods presented, certain statement of
operations data (in thousands) of the Company:
  Years
      EndedApril
      30, 2009
                        April
      30, 2008Sales
                        $21,882
                        100.0%
                        $23,418
                        100.0%Cost
      of products sold
                        13,651
                        62.4%
                        15,182
                        64.8%Gross
      margin
                        8,231
                        37.6%
                        8,236
                        35.2%Selling,
      general and administrative expenses
                        6,766
                        30.9%
                        6,526
                        27.9%Operating
      income
                        1,465
                        6.7%
                        1,710
                        7.3%Interest
      expense
                        (412)
                        (1.9%)
                        (491)
                        (2.1%)Other
      income, net
                        2
                        0.0%
                        20
                        0.1%Net
      income before taxes
                        1,055
                        4.8%
                        1,239
                        5.3%Income
      tax expense
                        378
                        1.7%
                        551
                        2.4%Net
      income
                        $677
                        3.1%
                        $688
                        2.9%Net
      income per share - basic
                        $0.21
                        
                        $0.21Net
      income per share - diluted
                        $0.20
                        
                        $0.20
 
 Sales for
the fiscal year ended April 30, 2009 were approximately $21,882,000, a decrease
of $1,536,000, or 6.6%, from $23,418,000 for fiscal 2008.
 DCI. Sales at DCI were
approximately $16,244,000 in fiscal 2009, a decrease of $4,527,000, or 21.8%,
from $20,771,000 from the prior year. The sales from the prior year included
approximately $872,000 in sales to the former Radix
Corporation.  External sales reported at DCI no longer include sales
made to our Radix subsidiary after September 18, 2007.  Total sales to
external customers were approximately $11,593,000 and $15,605,000 for fiscal
2009 and 2008, respectively.  The decrease in sales at DCI also was
caused by lower bookings during the preceding quarters primarily as a result of
the widespread economic recession.  Due to the severity of the
recession and the reduced level of orders from our existing customers, we expect
sales volumes to outside customers at DCI to decrease from their current levels
during the next fiscal quarter.  With the addition of several new
customers and the modest improvement in orders from existing customers that we
have recently experienced, we expect increased sales in subsequent quarters of
the 2010 fiscal year.  This expectation is based upon scheduled
shipments to customers currently recorded in our backlog, combined with
anticipated future bookings from additional sales and marketing investments made
at DCI.
 Radix. Sales at Radix totaled
approximately $6,731,000 for fiscal 2009.  Revenues for the current
period were primarily for sales of rugged hand held computer hardware and
peripherals that totaled approximately $5,295,000.  Maintenance
contract revenues and repairs were approximately $1,436,000 for fiscal
2009.   Radix sales for the previous year totaled approximately
$3,249,000 and only included sales from the acquisition date of September 17,
2007.  Sales at Radix during the first quarter of the 2010 fiscal year
are expected to be lower than the sales levels that were reported in the  18
 preceding
quarter as well as the comparable period of the prior fiscal year
2009.  Based on current opportunities and the expected booking of
rugged handheld solutions to customers during the first quarter of fiscal year
2010, we expect increased revenues for the subsequent quarters which we believe
will raise total sales of Radix products and solutions above those recorded in
fiscal year 2009.
 NTG. Sales at NTG were
$3,484,000 for fiscal 2009 a decrease of $208,000, or 5.6%, from $3,692,000 in
sales during fiscal 2008.  Sales from the prior year included
approximately $908,000 of upgrade kits to convert fielded analog units to the
new digital standard in advance of the FCC’s phase-out of analog service in
February 2008.  Revenues from upgrade kits in the current year totaled
approximately $347,000.  Exclusive of these one-time sales of upgrade
kits, revenue increased $353,000, or 12.7% from fiscal 2008 to fiscal
2009.  Sales at NTG are expected to growing over the next few quarters
due to strong demand for our WatchdogCP products and our initiative to market
our products internationally.
 
 Total
consolidated backlog at April 30, 2009 was approximately $3,067,000, a decrease
of approximately $2,099,000, or 40.6%, from a total backlog of $5,166,000 on
April 30, 2008 and a decrease of $904,000 from a total backlog of $3,971,000 on
January 31, 2009.  The amount of total consolidated backlog at April
30, 2009, includes purchase orders in place from our customers at each of the
three subsidiaries that are scheduled for shipment in future periods but
excludes any intercompany purchase orders.  The following table
presents total backlog by subsidiary for the periods ended April 30, 2009 and
2008 (in thousands):
 
 April
      30, 2009
                        
                        April
      30, 2008DCI,
      Inc.
                        
                        $2,851
                        
                        $4,469NTG,
      Inc.
                        
                        2
                        
                        108Radix
      Corporation
                        
                        214
                        
                        589Total
                        
                        $3,067
                        
                        $5,166
 
 Gross
margin for fiscal 2009, was 37.6% of sales, or $8,231,000, compared to 35.2% of
sales, or $8,236,000, for fiscal 2008.  The minimal change in gross
margin dollars resulted from an increase in sales of NTG and Radix proprietary
products and services, which generate slightly higher gross margins than DCI’s
manufacturing services.
 DCI.  DCI’s gross
margin was approximately $4,805,000, or 29.6%, for fiscal 2009 compared to
approximately $5,360,000, or 25.8%, for the prior year primarily as a result of
product mix to its outside customers.
 Radix. The gross margin at
Radix for the year was approximately $2,056,000, or 30.6% of
sales.  The gross margin for fiscal 2008 was $1,380,000, or 42.5% of
sales, and only included the period from the acquisition date of September 17,
2008.  The change in Radix’s gross margin was the result
of  higher margin product sales of handheld computers and maintenance
services in the previous year as compared to the current year.  We
anticipate Radix margins to range between 32% and 36% in future
quarters.
 NTG. The gross margin at NTG
was approximately $1,370,000, or 39.3% of sales, for fiscal 2009 as compared to
approximately $1,496,000, or 40.5%, for fiscal 2008.  The slight
decrease in gross margin percentage at NTG was mainly due to product mix and the
decrease in sales of higher margin upgrade kits sold in comparison to the prior
year.
 We expect
that consolidated gross margins over the next few quarters will remain in the
range of 33% to 38%.
  19
  Selling,
general and administrative (“SG&A”) expenses increased $240,000, or 3.7%, to
$6,766,000 in fiscal 2009 from $6,526,000 in fiscal 2008.  SG&A
expenses were 30.9% of sales for fiscal 2009 as compared to 27.9% of sales for
fiscal 2008.
 DCI. SG&A expenses at DCI
decreased $287,000 from the prior year to approximately $2,702,000 for fiscal
2009.  The decrease in DCI’s SG&A expenses included decreases in
travel, external sales commissions, support engineering expenses, bad debt
expenses, and other administration costs.
 Radix. SG&A expenses at
Radix were approximately $2,349,000 during fiscal 2009, which was the primary
contributing factor to the overall increase in total SG&A expenses for the
year.  SG&A expenses were $1,712,000 for fiscal
2008.  The approximate $637,000 increase was primarily due to the
impact of a full fiscal year of expenses at Radix.  The Company
acquired Radix midway through the comparable period of the prior
year.  During the current fiscal year, Radix has intensified its
engineering efforts with additional experienced personnel and has also enhanced
its marketing expertise with more sales and marketing resources which has
contributed to the overall increase in SG&A expenses.
 NTG. SG&A expenses at NTG
decreased $95,000 from $1,253,000 in the prior fiscal year.  The
decrease was the result of lower engineering costs and a decrease in sales
commissions to independent sales representatives slightly offset by higher
personnel and personnel-related expenses.  The SG&A expenses at
NTG are indicative of the current level of expenses required to support NTG’s
sales, marketing and customer support efforts for the next several
quarters.
 Elecsys
Corporation.  Corporate expenses were approximately $557,000
which was approximately $15,000 lower than for the previous fiscal
year.  The decrease was a result of a reduction during the current
year in consulting and recruiting expenses slightly offset by increases in
public company expenses as compared to the previous fiscal year.
 We
anticipate that our SG&A expenses will continue at or near their present
levels.  We will continue to invest in the growth at DCI and will
intensify our investment in product development, marketing, and sales at both
NTG and Radix.
 
 Interest
expense was $412,000 and $491,000 for fiscal 2009 and 2008,
respectively.  This decrease of $79,000 was the direct result of the
repayment of two long-term notes during the current period.  The
asset-backed long-term note related to the Company’s acquisition of assets and
assumption of certain liabilities of Radix International Corporation and the
long-term mortgage secured by approximately 74,000 square feet of land adjacent
to the Company’s production and headquarters in Olathe, Kansas, were paid in
full at the end of December 2008.  Additionally, the average
outstanding balance on the line of credit has been lower during fiscal 2009 as
compared to the same period of the prior year.  The line of credit was
utilized during the period to pay operating expenses, including accounts
payable, income taxes and debt payments.  As of April 30, 2009, there
was $4,000,000 outstanding on the line of credit and an additional $3,393,000 in
outstanding long-term borrowings.   We plan to continue to
utilize the operating line of credit over the next few quarters and anticipate
that the amount of outstanding borrowings will remain stable as our business
continues to grow.
 
 Income
tax expense totaled approximately $378,000 and $551,000 for fiscal 2009 and
2008, respectively.  Income tax expense for fiscal 2009 was based on a
39% blended tax rate for both federal and state taxes and included certain state
income tax adjustments, state income tax credits and the recognition of the
domestic manufacturing deduction which resulted in an adjusted tax rate of 35.8%
for the year.  The income tax rate for fiscal 2008 was 44.5% and
included $97,000 of adjustments to income tax expenses due to the impact of FIN
48.  The Company adopted FASB Interpretation No. 48,  20
 Accounting for Uncertainty in Income
Taxes(“FIN 48”) at the beginning of the 2008 fiscal
year.  FIN 48 requires that the Company recognize the financial
statement benefit, or liability, of a tax position only after determining that
the relevant tax authority would more likely than not sustain the position
following an audit.  For tax positions meeting the more likely than
not threshold, the amount recognized in the financial statements is the largest
benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement with the relevant tax authority.  The Company recognized an
additional $97,000 of income tax liability for accrued income taxes, penalties
and interest related to its tax positions.
 
 As a
result of the above, net income was $677,000, or $0.20 per diluted share, for
fiscal 2009 as compared to net income of $688,000, or $0.20 per diluted share,
as reported for fiscal 2008.
  Impact of Inflation and
Changing Prices
 
 Inflation and the effect of changing
prices over the past two fiscal years have had minimal impact on the Company’s
financial position and its results of operations.
 
 
 Liquidity and Capital
Resources
 
 Cash and
cash equivalents decreased $229,000 to $128,000 as of April 30, 2009 compared to
$357,000 at April 30, 2008.  This decrease was the result of cash used
for new production equipment, principal payments on long-term debt, and cash
provided by decreases in inventory and accounts receivable slightly offset by
decreases in accounts payable and accrued expenses, including income
taxes.
 
 Operating
activities.  Our consolidated working capital increased
approximately $826,000 from $2,375,000 in consolidated working capital at the
end of the 2008 fiscal year to $3,201,000 at the end of the 2009 fiscal year due
to decreases in current liabilities as a result of payments for accounts payable
and a reduction in accrued expenses.  Lower levels of current assets
slightly offset the decrease in current liabilities and included a reduction in
inventory and accounts receivable as a result of a decrease in consolidated
sales in the last fiscal quarter.  Operating cash receipts during
fiscal 2009 totaled over $22,960,000 while cash disbursements for operations,
which includes purchases of inventory and operating expenses, were approximately
$22,315,000. The Company utilizes its line of credit when necessary in order to
pay suppliers and meet operating cash requirements.
 
 Investing
activities.  The cash used in investing activities during
fiscal 2009 totaled approximately $293,000.  Purchases of equipment
were approximately $294,000 and cash received from the sale of equipment totaled
$1,000.  During fiscal 2008, cash used in investing activities
included purchases of equipment that totaled approximately
$585,000.  Anticipated future purchases of equipment and cash used in
investing activities is expected to be consistent with amounts expended in the
most recent fiscal years.
 
 Financing
activities.  For fiscal 2009, total borrowings on our operating
line of credit were $4,731,000 which were primarily used to finance the
operations of DCI, Radix and NTG.  Payments on the line of credit and
long-term debt were $5,353,000 for the fiscal year.  Also included in
the
 
 21
 
 Company’s
financing activities for the year was $41,000 of cash provided by the exercise
of stock options.  For fiscal 2008, cash provided by financing
activities totaled $2,573,000 and included the addition of a new $550,000 loan
to meet financing obligations under the acquisition agreement with Radix
International Corporation.  Also during the prior year period, total
borrowings on our operating line of credit were $5,028,000 and payments on the
operating line of credit were approximately $2,717,000.  As of April
30, 2009 the outstanding balance on the line of credit
was  $4,000,000.
 
 Although
there can be no assurances, we believe that existing cash, the cash expected to
be generated from the operations of our subsidiaries, 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
repayments.
 
 Off-balance Sheet
Arrangements
 
 Although the Company does not generally
utilize off-balance sheet arrangements in its operations, it does enter into
operating leases in the normal course of business.  The operating
lease obligations are disclosed under “Contractual Obligations” and also in the
Notes to Consolidated Financial Statements.
 
 Contractual
Obligations
 
 The
Company renewed its $6,000,000 operating line of credit on August 14,
2008.  The line of credit is secured by accounts receivable and
inventory and is available for working capital.  It expires on August
13, 2009 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 (3.25% at April 30, 2009) and contains an interest
rate floor of 5.5%.  The loan also contains various covenants,
including certain financial performance covenants pertaining to the maintenance
of debt to net worth and minimum net worth ratios.
 
 The
following table summarizes our contractual obligations as of April 30, 2009 (in
thousands):
 
 For
      Fiscal Years Ending April 30,Total
                                                                                            
                                                                                            
                                                                                            2010
                                                                                            
                                                                                            
                                                                                            2011
                                                                                            
                                                                                            
                                                                                            2012
                                                                                            
                                                                                            
                                                                                            2013
                                                                                            
                                                                                            
                                                                                            2014
                                                                                            
                                                                                            
                                                                                            ThereafterContractual
      obligations:Series
      A IRB Bonds
                                                                                              (Building
      Debt)
                                                                                            
                                                                                            $
                                                                                            3,393
                                                                                            
                                                                                            
                                                                                            $
                                                                                            121
                                                                                            
                                                                                            
                                                                                            $
                                                                                            128
                                                                                            
                                                                                            
                                                                                            $
                                                                                            134
                                                                                            
                                                                                            
                                                                                            $
                                                                                            142
                                                                                            
                                                                                            
                                                                                            $
                                                                                            150
                                                                                            
                                                                                            
                                                                                            $
                                                                                            2,718Interest
      payments
                                                                                            
                                                                                            
                                                                                            1,840
                                                                                            
                                                                                            
                                                                                            
                                                                                            179
                                                                                            
                                                                                            
                                                                                            
                                                                                            173
                                                                                            
                                                                                            
                                                                                            
                                                                                            166
                                                                                            
                                                                                            
                                                                                            
                                                                                            158
                                                                                            
                                                                                            
                                                                                            
                                                                                            150
                                                                                            
                                                                                            
                                                                                            
                                                                                            1,014Operating
      leases
                                                                                            
                                                                                            
                                                                                            175
                                                                                            
                                                                                            
                                                                                            
                                                                                            121
                                                                                            
                                                                                            
                                                                                            
                                                                                            52
                                                                                            
                                                                                            
                                                                                            
                                                                                            2
                                                                                            
                                                                                            
                                                                                            
                                                                                            --
                                                                                            
                                                                                            
                                                                                            
                                                                                            --
                                                                                            
                                                                                            
                                                                                            
                                                                                            --Total
                                                                                            
                                                                                            $
                                                                                            5,408
                                                                                            
                                                                                            
                                                                                            $
                                                                                            421
                                                                                            
                                                                                            
                                                                                            $
                                                                                            353
                                                                                            
                                                                                            
                                                                                            $
                                                                                            302
                                                                                            
                                                                                            
                                                                                            $
                                                                                            300
                                                                                            
                                                                                            
                                                                                            $
                                                                                            300
                                                                                            
                                                                                            
                                                                                            $
                                                                                            3,732
 
 Other
      obligations:
              
              Amount
      Available at
                April
      30, 2009
              
              Amount
      Owed at
                April
      30, 2009
              
              ExpirationLine
      of credit
              
              $6,000,000
              
              $4,000,000
              
              August
      13, 2009
 
  22
  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.
 
 Revenue
Recognition.  We derive revenue from the manufacture of
production units of electronic assemblies, liquid crystal displays, remote
monitoring equipment and ultra-rugged handheld computers and
peripherals.  We also derive revenue from repairs and non-warranty
services, engineering design services, remote monitoring services and
maintenance contracts.  Production and repaired units are billed to
the customer after they are shipped.  Remote monitoring services and
maintenance contracts are billed and the revenue recognized at the end of the
month after the services or maintenance periods are completed.  For
customers that utilize our engineering design services, we bill the customer and
recognize revenue after the design services or tooling have been
completed.  We require our customers to provide a binding purchase
order to verify the manufacturing services to be provided.  Typically,
we do not have any post-shipment obligations that would include customer
acceptance requirements, training, installation or other services.
 
 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 quarterly reviews of inventory quantities on hand and the
latest forecasts of product demand and production requirements from our
customers.  We review our inventory in detail on a quarterly basis
utilizing a 24-month time horizon.  Individual part numbers that have
not had any usage in a 24-month time period are examined by manufacturing
personnel for obsolescence, excess and fair value.  Parts that are not
identified for common use or are unique to a former customer or application are
categorized as obsolete and are discarded as part of our quarterly inventory
write-down.  If actual market conditions or our customers’ product
demands are less favorable than those projected, additional inventory
write-downs may be required.  The reserve balance is analyzed for
adequacy along with the inventory review each quarter.
 
 Allowance for Doubtful
Accounts.Accounts receivable are carried at original invoice
amount less an estimate made for doubtful receivables based on a review of all
outstanding amounts on a monthly basis.  We determine the allowance
for doubtful accounts by regularly evaluating individual customer receivables
and considering a customer’s financial condition and credit history, and current
economic conditions.  Receivables are written off when deemed
uncollectible.  Recoveries of receivables previously written off are
recorded when received.  The majority of the customer accounts are
considered past due after 30 days.  Interest is not charged on past
due accounts for the majority of our customers.
 
 Warranty
Reserve.  We have established a warranty reserve for rework,
product warranties and customer refunds.  We provide a limited
warranty for a period of one year from the date of receipt of our products by
our customers and our standard warranties require us to repair or replace
defective products at no cost to the customer or refund the customer’s purchase
price.  The warranty reserve is  23
 based on
historical experience and analysis of specific known and potential warranty
issues.  The product warranty liability reflects management’s
best estimate of probable liability under our product warranties.
 
 Goodwill.Goodwill
is initially measured as the excess of the cost of an acquired business over the
fair value of the identifiable net assets acquired.  We do not
amortize goodwill, but rather review its carrying value for impairment annually
(April 30), and whenever an impairment indicator is identified. Our annual
impairment test is performed at year-end.  The goodwill impairment
test involves a two-step approach.  The first step is to identify if
potential impairment of goodwill exists. If impairment of goodwill is determined
to exist, the second step of the goodwill impairment test measures the amount of
the impairment using a fair value-based approach.
 
 Intangible
Assets.Intangible assets consist of patents, trademarks,
copyrights, customer relationships and capitalized
software.  Intangible assets are amortized over their estimated useful
lives using the straight-line method.
 
 Impairment of Long-Lived Intangible
Assets.Long-lived assets, including amortizable intangible
assets, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset or group of assets may not be
fully recoverable. These events or changes in circumstances may include a
significant deterioration of operating results, changes in business plans, or
changes in anticipated future cash flows. If an impairment indicator is present,
we evaluate recoverability by a comparison of the carrying amount of the assets
to future undiscounted cash flows expected to be generated by the
assets.  If the sum of the expected future cash flows is less than the
carrying amount, we would recognize an impairment loss. An impairment loss would
be measured by comparing the amount by which the carrying value exceeds the fair
value of the long-lived assets and intangibles.
 
  24
  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, 2009 and 2008.  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 EndedJuly 31,
      2008
                October 31,
      2008
                January 31,
      2009
                April 30,
      2009(In
      thousands, except per share data)Sales
                $5,564
                $7,202
                $5,032
                $4,083Gross
      margin
                1,951
                2,888
                1,921
                1,470Operating
      income
                296
                871
                226
                71Income
      (loss) before taxes
                179
                765
                135
                (25)Net
      income (loss)
                $109
                $424
                $213
                $(70)Net
      income (loss) per share – basic
                $0.03
                $0.13
                $0.06
                $(0.02)Net
      income (loss) per share – diluted
                $0.03
                $0.12
                $0.06
                $(0.02)Net
      cash (used in) provided by
                  operating
      activities
                $73
                $1,725
                $(729)
                $(424)
 
 
 Three
      Months EndedJuly 31,
      2007
                October 31,
      2007
                January 31,
      2008
                April 30,
      2008(In
      thousands, except per share data)Sales
                $4,787
                $5,602
                $6,135
                $6,894Gross
      margin
                1,515
                1,796
                2,402
                2,523Operating
      income
                354
                140
                526
                690Income
      before taxes
                266
                16
                390
                567Net
      income
                $174
                $10
                $241
                $263Net
      income per share – basic
                $0.05
                $0.00
                $0.07
                $0.08Net
      income per share – diluted
                $0.05
                $0.00
                $0.07
                $0.08Net
      cash (used in) provided by
                  operating
      activities
                $(856)
                $(1,253)
                $(215)
                $208
 
 
 New Accounting
Pronouncements
 
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements
(“SFAS 157”). SFAS
  25
  157
establishes a common definition for fair value to be applied to U.S. GAAP,
establishes guidance requiring use of fair value, establishes a framework for
measuring fair value, and expands disclosure about such fair value
measurements.  FASB Staff Position No. SFAS 157-2 was issued in
February 2008.  SFAS 157-2 delayed the application of SFAS 157 for
non-financial assets and non-financial liabilities, except items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis, until fiscal years beginning after November 15, 2008.  The
Company is required to adopt SFAS 157 in the first quarter of fiscal year
2010.  The Company believes that the financial impact, if any, of
adopting SFAS 157 will not result in a material impact to its financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), The Fair Value Option for Financial
Assets and Financial Liabilities.  Under SFAS 159, the Company
may elect to report financial instruments and certain other items at fair value
on a contract-by-contract basis with changes in value reported in
earnings.  This election is irrevocable.  SFAS 159 provides
an opportunity to mitigate volatility in reported earnings that is caused by
measuring hedged assets and liabilities that were previously required to use a
different accounting method than the related hedging contracts when the complex
hedge accounting provisions of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, are not met.   The Company
adopted SFAS 159 as of May 1, 2008 and it did not result in a material impact to
its financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No.
51.  SFAS 160 establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  SFAS 160
is effective for the Company in its fiscal year beginning May 1,
2009.  The Company does not believe the adoption of this statement
will have a material impact on its financial position and results of
operations.
 
 In
December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”), Business
Combinations.  SFAS 141R establishes principles and
requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any noncontrolling interest in the acquiree.  SFAS 141R also
provides guidance for recognizing and measuring the goodwill acquired in the
business combination and determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination.  SFAS 141R will be effective for the Company’s
fiscal year beginning May 1, 2009.  The Company does not believe the
adoption of this statement will have a material impact on its financial position
and results of operations.
 
 In May
2008, the FASB issued SFAS No. 162 (“SFAS 162”), The Hierarchy of Generally Accepted
Accounting Principles.  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting
principles.  SFAS 162 directs the hierarchy to the entity, rather than
the independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles.  SFAS 162 is effective
November 15, 2008.  The Company’s adoption of SFAS No. 162 did not
have a material impact on its financial statements.
  26
  
 Forward Looking
Statements
 
 This
annual report on Form 10-K 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, an inability
on the part of the Company to successfully market and grow NTG, Radix and DCI,
the Company’s dependence on its top 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 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 Operation and “Risk
Factors” 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-Q 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
7A.  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
 
 Not applicable.
  27
  Item
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  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, 2009 and 2008, 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 consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Elecsys
Corporation and Subsidiaries as of April 30, 2009 and 2008, and the results of
their operations and their cash flows for the years then ended in conformity
with U.S. generally accepted accounting principles.
 
 We were
not engaged to examine management’s assessment of the effectiveness of Elecsys
Corporation and Subsidiaries’ internal control over financial reporting as of
April 30, 2009 included in this Annual Report under the caption “Management’s
Report on Internal Control over Financial Reporting” and, accordingly, we do not
express an opinion thereon.
 
 
 /s/
McGladrey & Pullen, LLP
 Kansas
City, Missouri
 July 21,
2009
 
  28
  Elecsys
Corporation and Subsidiaries
 Consolidated
Balance Sheets
 (In
thousands, except share data)
 
 April
      30, 2009
                              
                              
                              April
      30, 2008ASSETSCurrent
      assets:Cash
                              
                              $
                              128
                              
                              
                              $
                              357Accounts
      receivable, less allowances of $162
                                and
      $303, respectively
                              
                              
                              2,673
                              
                              
                              
                              3,757Inventories
                              
                              
                              5,985
                              
                              
                              
                              6,207Prepaid
      expenses
                              
                              
                              44
                              
                              
                              
                              75Income
      tax refund claims receivable
                              
                              
                              105
                              
                              
                              
                              --Deferred
      taxes
                              
                              
                              798
                              
                              
                              
                              781Total
      current assets
                              
                              
                              9,733
                              
                              
                              
                              11,177Property
      and equipment:Land
                              
                              
                              1,737
                              
                              
                              
                              1,737Building
      and improvements
                              
                              
                              3,395
                              
                              
                              
                              3,395Equipment
                              
                              
                              3,504
                              
                              
                              
                              3,4908,636
                              
                              
                              
                              8,622Accumulated
      depreciation
                              
                              
                              (2,512
                              )
                              
                              
                              (2,249
                              )6,124
                              
                              
                              
                              6,373Goodwill
                              
                              
                              1,414
                              
                              
                              
                              1,544Intangible
      assets, net
                              
                              
                              1,760
                              
                              
                              
                              1,927Other
      assets, net
                              
                              
                              73
                              
                              
                              
                              77Total
      assets
                              
                              $
                              19,104
                              
                              
                              $
                              21,098LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                              
                              $
                              1,097
                              
                              
                              $
                              2,051Accrued
      expenses
                              
                              
                              1,279
                              
                              
                              
                              2,042Income
      taxes payable
                              
                              
                              --
                              
                              
                              
                              564Notes
      payable to bank
                              
                              
                              4,000
                              
                              
                              
                              3,836Current
      maturities of long-term debt
                              
                              
                              121
                              
                              
                              
                              309Total
      current liabilities
                              
                              
                              6,497
                              
                              
                              
                              8,802Deferred
      taxes
                              
                              
                              417
                              
                              
                              
                              311Long-term
      debt, less current maturities
                              
                              
                              3,272
                              
                              
                              
                              3,870Stockholders'
      equity:Preferred
      stock, $.01 par value, 5,000,000 sharesauthorized;
                                none
      issued and outstanding
                              
                              
                              --
                              
                              
                              
                              --Common
      stock, $.01 par value, 10,000,000 shares authorized;
                                issued
      and outstanding – 3,296,187 at April 30, 2009 and
                                3,285,437
      at April 30, 2008
                              
                              
                              33
                              
                              
                              
                              33Additional
      paid-in capital
                              
                              
                              9,243
                              
                              
                              
                              9,117Accumulated
      deficit
                              
                              
                              (358
                              )
                              
                              
                              (1,035
                              )Total
      stockholders' equity
                              
                              
                              8,918
                              
                              
                              
                              8,115Total
      liabilities and stockholders' equity
                              
                              $
                              19,104
                              
                              
                              $
                              21,098
 
 See
Notes to Consolidated Financial Statements.
 
  29
  Elecsys
Corporation and Subsidiaries
 Consolidated
Statements of Operations
 (In
thousands, except per share data)
 
 Years
      Ended April 30,2009
                            
                            
                            2008Sales
                            
                            $
                            21,882
                            
                            
                            $
                            23,418Cost
      of products sold
                            
                            
                            13,651
                            
                            
                            
                            15,182Gross
      margin
                            
                            
                            8,231
                            
                            
                            
                            8,236Selling,
      general and administrative expenses
                            
                            
                            6,766
                            
                            
                            
                            6,526Operating
      income
                            
                            
                            1,465
                            
                            
                            
                            1,710Financial
      income (expense):Interest
      expense
                            
                            
                            (412
                            )
                            
                            
                            (491
                            )Other
      income, net
                            
                            
                            2
                            
                            
                            
                            20(410
                            )
                            
                            
                            (471
                            )Net
      income before income tax expense
                            
                            
                            1,055
                            
                            
                            
                            1,239Income
      tax expense
                            
                            
                            378
                            
                            
                            
                            551Net
      income
                            
                            $
                            677
                            
                            
                            $
                            688Net
      income per share information:Basic
                            
                            $
                            0.21
                            
                            
                            $
                            0.21Diluted
                            
                            $
                            0.20
                            
                            
                            $
                            0.20Weighted
      average common shares outstanding:Basic
                            
                            
                            3,292
                            
                            
                            
                            3,285Diluted
                            
                            
                            3,438
                            
                            
                            
                            3,452
 See
Notes to Consolidated Financial Statements.
  30
  Elecsys
Corporation and Subsidiaries
 Consolidated
Statements of Stockholders' Equity
 (In
thousands)
 
 Common
      Stock
                    (#
      of shares)
                  
                  
                  Common
                    Stock
                  
                  
                  Additional
                    Paid-In
                    Capital
                  
                  
                  Accumulated
                    Deficit
                  
                  
                  Total
                    Stockholders’
                    EquityBalance
      at April 30, 2007
                  
                  
                  3,285
                  
                  
                  $
                  33
                  
                  
                  $
                  9,031
                  
                  
                  $
                  (1,723
                  )
                  
                  $
                  7,341Net
      income
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  688
                  
                  
                  
                  688Share-based
      compensation expense
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  86
                  
                  
                  
                  --
                  
                  
                  
                  86Balance
      at April 30, 2008
                  
                  
                  3,285
                  
                  
                  
                  33
                  
                  
                  
                  9,117
                  
                  
                  
                  (1,035
                  )
                  
                  
                  8,115Net
      income
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  677
                  
                  
                  
                  677Exercise
      of stock options
                  
                  
                  11
                  
                  
                  
                  --
                  
                  
                  
                  41
                  
                  
                  
                  --
                  
                  
                  
                  41Share-based
      compensation expense
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  85
                  
                  
                  
                  --
                  
                  
                  
                  85Balance
      at April 30, 2009
                  
                  
                  3,296
                  
                  
                  $
                  33
                  
                  
                  $
                  9,243
                  
                  
                  $
                  (358
                  )
                  
                  $
                  8,918
 
 See
Notes to Consolidated Financial Statements.
  31
  Elecsys
Corporation and Subsidiaries
 Consolidated
Statements of Cash Flows
 (In
thousands)
 
 Years
      ended April 30,2009
                  
                  
                  2008Cash
      Flows from Operating Activities:Net
      income
                  
                  $
                  677
                  
                  
                  $
                  688Adjustments
      to reconcile net income to net cash provided by
                    (used
      in) operating activities:Share-based
      compensation expense
                  
                  
                  85
                  
                  
                  
                  86Depreciation
                  
                  
                  528
                  
                  
                  
                  537Amortization
                  
                  
                  171
                  
                  
                  
                  133Provision
      for (recovery of) doubtful accounts
                  
                  
                  (97
                  )
                  
                  
                  77Loss
      on disposal of equipment
                  
                  
                  14
                  
                  
                  
                  3Deferred
      taxes
                  
                  
                  89
                  
                  
                  
                  (15
                  )Changes
      in operating assets and liabilities, net of acquisition
                    of
      assets and assumed liabilities:Accounts
      receivable
                  
                  
                  1,179
                  
                  
                  
                  (2,345
                  )Inventories
                  
                  
                  223
                  
                  
                  
                  (907
                  )Income
      tax refund claims receivable
                  
                  
                  (105
                  )
                  
                  
                  --Accounts
      payable
                  
                  
                  (822
                  )
                  
                  
                  (665
                  )Accrued
      expenses
                  
                  
                  (763
                  )
                  
                  
                  (286
                  )Income
      taxes payable
                  
                  
                  (565
                  )
                  
                  
                  564Other,
      net
                  
                  
                  31
                  
                  
                  
                  14Net
      cash provided by (used in) operating activities
                  
                  
                  645
                  
                  
                  
                  (2,116
                  )Cash
      Flows from Investing Activities:Purchases
      of property and equipment
                  
                  
                  (294
                  )
                  
                  
                  (585
                  )Proceeds
      from disposal of equipment
                  
                  
                  1
                  
                  
                  
                  --Goodwill
      increase related to acquisition costs
                  
                  
                  --
                  
                  
                  
                  (6
                  )Acquisition
      of assets and assumed liabilities, net of cash acquired
                  
                  
                  --
                  
                  
                  
                  (12
                  )Net
      cash (used in) investing activities
                  
                  
                  (293
                  )
                  
                  
                  (603
                  )Cash
      Flows from Financing Activities:Proceeds
      from exercise of stock options
                  
                  
                  41
                  
                  
                  
                  --Borrowings
      on long-term debt
                  
                  
                  --
                  
                  
                  
                  550Principal
      payments on long-term debt
                  
                  
                  (786
                  )
                  
                  
                  (288
                  )Borrowings
      on notes payable to bank
                  
                  
                  4,731
                  
                  
                  
                  5,028Principal
      payments on notes payable to bank
                  
                  
                  (4,567
                  )
                  
                  
                  (2,717
                  )Net
      cash (used in) provided by financing activities
                  
                  
                  (581
                  )
                  
                  
                  2,573Net
      (decrease) in cash
                  
                  
                  (229
                  )
                  
                  
                  (146
                  )Cash
      at beginning of year
                  
                  
                  357
                  
                  
                  
                  503Cash
      at end of year
                  
                  $
                  128
                  
                  
                  $
                  357
 
  32
  Elecsys
Corporation and Subsidiaries
 Consolidated
Statements of Cash Flows
 (In
thousands)
 
 Years
      ended April 30,2009
                              
                              
                              2008Supplemental Disclosures of
      Cash Flow Information:Cash
      paid during the period for interest
                              
                              $
                              415
                              
                              
                              $
                              492Cash
      paid during the period for income taxes
                              
                              
                              969
                              
                              
                              
                              2Supplemental
      Disclosures of Non-Cash Investing
                                and
      Financing Activities:Acquisition
      of assets and assumed liabilities:Receivables
                              
                              $
                              (2
                              )
                              
                              $
                              785Inventories
                              
                              
                              --
                              
                              
                              
                              614Intangibles
                              
                              
                              --
                              
                              
                              
                              1,705Goodwill
                              
                              
                              (130
                              )
                              
                              
                              1,456Accounts
      payable
                              
                              
                              132
                              
                              
                              
                              (666
                              )Accounts
      payable due to Elecsys Corporation
                              
                              
                              --
                              
                              
                              
                              (2,262
                              )Accrued
      expenses
                              
                              
                              --
                              
                              
                              
                              (1,620
                              )Total
      cash paid in acquisition, net of cash acquired
                              
                              $
                              --
                              
                              
                              $
                              12
 
 See
Notes to Consolidated Financial Statements.
  33
  Elecsys
Corporation and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 1.           NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT
 ACCOUNTING
POLICIES
 
 Nature
of Business
 Elecsys
Corporation tailors specific technology solutions for customers wherever high
quality, reliability, and innovation are essential.  The Company provides
electronic design and manufacturing services, custom liquid crystal displays
(“LCDs”), ultra-rugged mobile computing devices, and wireless remote monitoring
solutions to numerous industries worldwide.  The markets served include
energy infrastructure, aerospace, transportation, logistics, law enforcement,
safety, military, and other industrial product industries.  Elecsys
operates its business through three wholly-owned subsidiaries, DCI, Inc.
(“DCI”), Radix Corporation (“Radix”) and NTG, Inc. (“NTG”).
 
 The
Company’s sales are made 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 the
Company and its wholly-owned subsidiaries, DCI, NTG and Radix.  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 reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the period.  Actual results could differ
from those estimates.
 
 Cash
 The
Company maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits.  Accounts are guaranteed by the Federal
Deposit Insurance Corporation (“FDIC”) up to $250,000.  The Company
has not experienced any losses due to this.
 
 Accounts
Receivable
 Accounts
receivable are carried at original invoice amount less an estimate made for
doubtful receivables based on a review of all outstanding amounts on a monthly
basis. Management determines the allowance for doubtful accounts by regularly
evaluating individual customer receivables and considering a customer’s
financial condition and credit history, and current economic conditions.
Receivables are written off when deemed uncollectible. Recoveries of receivables
previously written off are recorded when received.  The majority of
the customer accounts are considered past due after the invoice becomes older
than the customer’s credit terms (30 days for the majority of
customers).  Interest is not charged on past due accounts for the
majority of our customers.
  34
  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.
 
 Total
Company sales to the five largest customers were 31% of total sales in fiscal
2009 with sales to one customer accounting for 12% of total
sales.  Sales to the five largest customers in fiscal 2008 totaled 27%
of total sales.  The increase in sales to the Company’s five largest
customers in fiscal 2009 is primarily the result of the shipment of $2.6 million
order of a newly developed configuration of our FW900 handheld computers to a
transport and logistics company that operates the railways, ports and pipelines
throughout South Africa.  The loss of one or more of these major
customers would have a material adverse effect on the Company’s
business.
 
 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 due to
their liquid nature (cash, accounts receivable, and accounts payable) and
variable interest rates (for notes payable and long-term debt).
 
 Shipping
and Handling Costs
 Shipping and handling costs that are
billed to the Company’s customers are recognized as revenues in the period that
the product is shipped.  Shipping and handling costs that are incurred
by the Company are recognized as cost of sales in the period that the product is
shipped.
 
 Revenue
Recognition
 The Company derives revenue from the
manufacture of production units of electronic assemblies, liquid crystal
displays, remote monitoring equipment and ultra-rugged handheld computers and
peripherals.  The Company also derives revenue from repairs and
non-warranty services, engineering design services, remote monitoring services
and maintenance contracts.  Production and repaired units are billed
to the customer after they are shipped.  Remote monitoring services
and maintenance contracts are billed and the revenue recognized at the end of
the month after the services or maintenance periods are
completed.  For customers that utilize the Company’s engineering
design services, the customer is billed and revenue is recognized after the
design services or tooling have been completed.  The Company requires
our customers to provide a binding purchase order to verify the manufacturing
services to be provided.  Typically, the Company does not have any
post-shipment obligations that would include customer acceptance
requirements.  Radix does provide training and installation services
to its customers and those services are billed and the revenue recognized at the
end of the month after the services are completed.  Revenue recognized
is net of sales taxes remitted to the government.
 
 Inventory
Valuation
 Inventories
are stated at the lower of cost, using the first-in, first-out (FIFO) method, or
market value.  The Company’s industry is characterized by rapid
technological change, short-term customer commitments and rapid changes in
demand, as well as other market considerations.  Provisions for
estimated excess and obsolete inventory are based on quarterly reviews of
inventory quantities on hand and the latest forecasts of product demand and
production requirements from the customers.  Inventories are reviewed
in detail on a quarterly basis utilizing a 24-month time
horizon.  Individual
   35
  part
numbers that have not had any usage in a 24-month time period are examined by
manufacturing personnel for obsolescence, excess and fair
value.  Parts that are not identified for common use or are unique to
a former customer or application are categorized as obsolete and are discarded
as part of the quarterly inventory write-down.  If actual market
conditions or customers’ product demands are less favorable than those
projected, additional inventory write-downs may be required.  The
reserve balance is analyzed for adequacy along with the inventory review each
quarter.  Inventories, net of reserves of approximately $377,000 and
$251,000, at April 30, 2009 and 2008, respectively, are summarized by major
classification as follows (in thousands):
  April
      30,2009
                  
                  
                  2008Raw
      materials
                  
                  $
                  4,762
                  
                  
                  $
                  4,725Work-in-process
                  
                  
                  646
                  
                  
                  
                  959Finished
      goods
                  
                  
                  577
                  
                  
                  
                  523$
                  5,985
                  
                  
                  $
                  6,207
 
 The
Company has entered into supplier arrangements with some of its larger customers
that allows for the Company to produce finished goods for those customers based
on their forecasted requirements.  As of April 30, 2009 and 2008, finished
goods inventory of approximately $197,000 and $118,000, respectively, was
directly related to those customer agreements.
 
 Property
and Equipment
 Property
and equipment are recorded at cost.  Depreciation is computed using
the straight-line method over the following estimated useful lives:
    Description
              YearsBuilding
      and improvements
              39Equipment
              3-8Computers
      and software
              3
   
 
 
 Goodwill
 Goodwill is initially measured as the
excess of the cost of an acquired business over the fair value of the
identifiable net assets acquired.  The Company does not amortize
goodwill, but rather reviews its carrying value for impairment annually (April
30), and whenever an impairment indicator is identified. The Company performs
its annual impairment test at year-end.  The goodwill impairment test
involves a two-step approach.  The first step is to identify if
potential impairment of goodwill exists. If impairment of goodwill is determined
to exist, the second step of the goodwill impairment test measures the amount of
the impairment using a fair value-based approach.  The Company has
concluded that no impairment existed as of April 30, 2009 or 2008.
 
 Intangible
assets
 Intangible
assets consist of patents, trademarks, copyrights, customer relationships and
capitalized software.  Intangible assets are amortized over their
estimated useful lives using the straight-line method.
 
 Impairment
of Long-Lived Intangible Assets
 Long-lived
assets, including amortizable intangible assets, are reviewed for
impairment
  36
  whenever
events or changes in circumstances indicate that the carrying amount of an asset
or group of assets may not be fully recoverable. These events or changes in
circumstances may include a significant deterioration of operating results,
changes in business plans, or changes in anticipated future cash flows. If an
impairment indicator is present, the Company evaluates recoverability by a
comparison of the carrying amount of the assets to future undiscounted cash
flows expected to be generated by the assets.  If the sum of the
expected future cash flows is less than the carrying amount, the Company would
recognize an impairment loss. An impairment loss would be measured by comparing
the amount by which the carrying value exceeds the fair value of the long-lived
assets and intangibles.  Management reviewed the intangible assets for
impairment as of April 30, 2009 and 2008 and determined that no impairment
existed.
 
 Income
Taxes
 The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes
(“SFAS 109”) as clarified by FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes(“FIN 48”).  Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to 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.  The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.  In assessing
the realizability of deferred income tax assets, the Company considers whether
it is “more likely than not,” according to the criteria of SFAS 109, that some
portion or all of the deferred income tax assets will be
realized.  The ultimate realization of deferred income tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible.  FIN 48 requires
that the Company recognize the financial statement benefit of a tax position
only after determining that the relevant tax authority would more likely than
not sustain the position following an audit.  For tax positions
meeting the more likely than not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the relevant tax
authority.
 
 Advertising
Costs
 The
Company expenses advertising costs as incurred.  Advertising expense
charged to operations amounted to approximately $21,000 and $35,000 for the
years ended April 30, 2009 and 2008, respectively.
 
 Research
and Development Costs
 The
Company expenses research and development costs as incurred.  Research
and development expenses were approximately $743,000 and $616,000 for the years
ended April 30, 2009 and 2008, respectively.
 
 Recent
Accounting Pronouncements
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements
(“SFAS 157”). SFAS 157 establishes a common definition for fair value to be
applied to U.S. GAAP, establishes guidance requiring use of fair value,
establishes a framework for measuring fair value, and expands disclosure about
such fair value measurements.  FASB Staff Position No. SFAS 157-2 was
issued in February 2008.  SFAS 157-2 delayed the application of SFAS
157 for non-financial assets and non-financial liabilities, except items that
are recognized or disclosed at fair value in the financial statements on
a
  37
  recurring
basis, until fiscal years beginning after November 15, 2008.  The
Company is required to adopt SFAS 157 in the first quarter of fiscal year
2010.  The Company believes that the financial impact, if any, of
adopting SFAS 157 will not result in a material impact to its financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), The Fair Value Option for Financial
Assets and Financial Liabilities.  Under SFAS 159, the Company
may elect to report financial instruments and certain other items at fair value
on a contract-by-contract basis with changes in value reported in
earnings.  This election is irrevocable.  SFAS 159 provides
an opportunity to mitigate volatility in reported earnings that is caused by
measuring hedged assets and liabilities that were previously required to use a
different accounting method than the related hedging contracts when the complex
hedge accounting provisions of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, are not met.   The Company
adopted SFAS 159 as of May 1, 2008 and it did not result in a material impact to
its financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No.
51.  SFAS 160 establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  SFAS 160
is effective for the Company in its fiscal year beginning May 1,
2009.  The Company does not believe the adoption of this statement
will have a material impact on its financial position and results of
operations.
 
 In
December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”), Business
Combinations.  SFAS 141R establishes principles and
requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any noncontrolling interest in the acquiree.  SFAS 141R also
provides guidance for recognizing and measuring the goodwill acquired in the
business combination and determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination.  SFAS 141R will be effective for the Company’s
fiscal year beginning May 1, 2009.  The Company does not believe the
adoption of this statement will have a material impact on its financial position
and results of operations.
 
 In May
2008, the FASB issued SFAS No. 162 (“SFAS 162”), The Hierarchy of Generally Accepted
Accounting Principles.  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting
principles.  SFAS 162 directs the hierarchy to the entity, rather than
the independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles.  SFAS 162 is effective
November 15, 2008.  The Company’s adoption of SFAS No. 162 did not
have a material impact on its financial statements.
 
 
 2.           ACQUISITIONS
OF ASSETS
 
 Radix.  On
September 18, 2007, the Company, through its newly formed and wholly owned
subsidiary, Radix Corporation, acquired the assets and assumed certain
liabilities of Radix International
  38
  Corporation
and its subsidiary.  The Company made the strategic decision to grow
through expansion into the specialized niche of rugged mobile
computing.  The Company, through Radix, acquired approximately $4.43
million in assets, including accounts receivable and inventory, as well as all
of the intellectual property and intangible assets owned by Radix International
Corporation and its subsidiary.  In the transaction, Radix assumed
accounts payable due to DCI, assumed an additional amount of approximately $2.15
million in liabilities, and incurred acquisition costs of approximately
$50,000.  The transaction also includes performance related contingent
consideration based on the annual revenues of the acquired business over the
next five years.  The total performance related contingency is limited
to approximately $2.2 million and is subject to certain conditions that may
impact the total amount to be paid.
 
 The
acquisition has been accounted for as a purchase and, accordingly, the
accompanying financial statements include the results of operations of Radix,
from the date of the acquisition.
 
 The
purchase price was initially allocated based on the fair value of the assets
acquired and, subsequent to the acquisition date, there have been additional
purchase price adjustments leading to the following allocation for the assets
purchased and liabilities assumed (in thousands):
  Assets
      acquired:Receivables
                      
                      $
                      783Inventories
                      
                      
                      614Goodwill
                      
                      
                      1,326Intangibles
      (customer list, trade names/trade secrets, and technology)
                      
                      
                      1,7054,428Liabilities
      assumed:Accounts
      payable to outside vendors
                      
                      
                      (534
                      )Accounts
      payable to DCI, Inc. (a subsidiary of Elecsys Corporation)
                      
                      
                      (2,262
                      )Accrued
      expenses
                      
                      
                      (1,620
                      )(4,416
                      )Cost
      of acquisition, net of cash acquired
                      
                      $
                      12
  The
purchase price in excess of the fair value of the tangible assets acquired has
been allocated to intangibles and goodwill.  The Company engaged an
independent third party valuation expert to assist in the allocation of the
excess purchase price to the various specific separately identifiable
intangibles.  The final valuation report allocated the $1,705,000 in
intangible valuation to customer relationships ($950,000), trade names
($530,000) and technology ($225,000).  These assets were determined by
the valuation expert to have a useful life of 15 years.  Amortization
expense for the acquired intangible assets is estimated to be approximately
$114,000 in each of the next fifteen fiscal years.
 
 The following table sets forth the
unaudited pro forma results of operations of the Company for the period ended
April 30, 2008 as if the Company had acquired the assets and assumed certain
liabilities of Radix International Corporation and subsidiary at the beginning
of the period.  The pro forma information contains the actual
operating results of the Company and Radix with the results prior to September
18, 2007, for Radix, adjusted to include pro forma impact of (i) the elimination
of intercompany sales and gross margin in inventory as of the periods presented;
(ii) additional interest expense associated with the financing arrangement
entered into by the Company on September 25, 2007 in connection with the
transaction; (iii) additional expense as a result of estimated amortization
of
  39
  identifiable
intangible assets; (iv) and an adjustment to income tax expense for the tax
effect of the above adjustments.  These pro forma amounts do not
purport to be indicative of the results that would have actually been obtained
if the acquisitions occurred at the beginning of the period or that may be
obtained in the future (in thousands, except per share data).
 
 Year
      Ended April 30, 2008Reported
                      
                      
                      Pro
      forma adjustments
                      
                      
                      Pro
      formaSales
                      
                      $
                      23,418
                      
                      
                      $
                      1,399
                      
                      
                      $
                      24,817Net
      income (loss)
                      
                      
                      688
                      
                      
                      
                      (418
                      )
                      
                      
                      270Basic
      Earnings per share
                      
                      $
                      0.21
                      
                      
                      
                      
                      
                      
                      $
                      0.08Diluted
      Earnings per share
                      
                      $
                      0.20
                      
                      
                      
                      
                      
                      
                      $
                      0.08
 
 Total
acquired intangible assets consist of the following (in thousands):
 
 April
      30, 2009
                                                        
                                                        
                                                        April
      30, 2008Intangible
      Asset Description
                                                        Company
                                                        
                                                        Gross
      Carrying Amount
                                                        
                                                        
                                                        Accumulated
      Amortization
                                                        
                                                        
                                                        Gross
      Carrying Amount
                                                        
                                                        
                                                        Accumulated
      AmortizationPatents,
      trademarks and copyrights
                                                        NTG
                                                        
                                                        $
                                                        352
                                                        
                                                        
                                                        $
                                                        (155
                                                        )
                                                        
                                                        $
                                                        352
                                                        
                                                        
                                                        $
                                                        (120
                                                        )Customer
      relationships
                                                        NTG
                                                        
                                                        
                                                        90
                                                        
                                                        
                                                        
                                                        (42
                                                        )
                                                        
                                                        
                                                        90
                                                        
                                                        
                                                        
                                                        (24
                                                        )Customer
      relationships
                                                        Radix
                                                        
                                                        
                                                        950
                                                        
                                                        
                                                        
                                                        (106
                                                        )
                                                        
                                                        
                                                        950
                                                        
                                                        
                                                        
                                                        (42
                                                        )Trade
      name
                                                        Radix
                                                        
                                                        
                                                        530
                                                        
                                                        
                                                        
                                                        (59
                                                        )
                                                        
                                                        
                                                        530
                                                        
                                                        
                                                        
                                                        (24
                                                        )Technology
                                                        Radix
                                                        
                                                        
                                                        225
                                                        
                                                        
                                                        
                                                        (25
                                                        )
                                                        
                                                        
                                                        225
                                                        
                                                        
                                                        
                                                        (10
                                                        )$
                                                        2,147
                                                        
                                                        
                                                        $
                                                        (387
                                                        )
                                                        
                                                        $
                                                        2,147
                                                        
                                                        
                                                        $
                                                        (220
                                                        )
 
 Amortization
expense for the years ended April 30, 2009 and 2008, was approximately $167,000
and $129,000, respectively.
 
 Estimated
amortization expense for the next five fiscal years is as follows (in
thousands):
 
 Year
                  
                  Amount2010
                  
                  $
                  1672011
                  
                  
                  1672012
                  
                  
                  1612013
                  
                  
                  1492014
                  
                  
                  149
 
 
 3.           PLEDGED
ASSETS, NOTES PAYABLE AND LONG-TERM DEBT
 
 As of
April 30, 2009, the Company had multiple credit agreements with a regional
lender based in Kansas City, Missouri.  These credit agreements
include an operating line of credit and long-term financing for the Company’s
production and headquarters in Olathe, Kansas.  During fiscal year
2009, the Company completely paid off two additional loans which included an
additional asset-backed long-term note related to the Company’s acquisition of
assets and assumption of certain liabilities of Radix International Corporation
and a long-term mortgage secured by approximately 74,000 square feet of land
adjacent to the Company’s facility.
 
 The
Company has an operating line of credit that provides the Company and its
subsidiaries with short-term financing for their working capital
requirements.  On August 14, 2008, the Company and
its
  40
  financial
institution renewed the $6,000,000 agreement.  The line of credit
accrues interest at the prime rate (3.25% at April 30, 2009) and has an interest
rate floor of 5.50%.  The line of credit is secured by accounts
receivable and inventory and expires on August 13, 2009, and has a borrowing
capacity calculated as a specified percentage of accounts receivable and
inventory.  The line of credit 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, 2009 the
Company is in compliance with all of the covenants.  There were
$4,000,000 and $3,836,000 in borrowings outstanding on the credit facility as of
April 30, 2009 and 2008, respectively.
 
 The
following table is a summary of the Company’s long-term debt and related current
maturities (in thousands):
 April
      30,2009
                                  
                                  
                                  2008Industrial
      revenue bonds, Series 2006A, 5-year adjustable interest rate based on the
      yield on 5-year United States Treasury Notes, plus .45% (5.30% as of April
      30, 2009), due in monthly principal and interest payments beginning
      October 1, 2006 through maturity  on September 1, 2026, secured
      by real estate.
                                  
                                  $
                                  3,393
                                  
                                  
                                  $
                                  3,508Note
      payable with an adjustable interest rate of 7.94%, due in monthly
      principal and interest payments beginning December 15, 2006 through
      maturity on November 15, 2016, secured by real estate.  This
      note was paid off in fiscal 2009.
                                  
                                  
                                  --
                                  
                                  
                                  
                                  217Note
      payable with a fixed interest rate of 9.00%, due in monthly principal and
      interest payments beginning October 25, 2007 through maturity on September
      25, 2010, secured by accounts receivable and inventory.  This
      note was paid off in fiscal 2009.
                                  
                                  
                                  --
                                  
                                  
                                  
                                  4543,393
                                  
                                  
                                  
                                  4,179Less
      current maturities
                                  
                                  
                                  121
                                  
                                  
                                  
                                  309Total
      long-term debt
                                  
                                  $
                                  3,272
                                  
                                  
                                  $
                                  3,870
 
  The
approximate aggregate amount of principal to be paid on the long-term debt
d uring
each of the next five years ending April 30 is as follows (in
thousands):
 
 Year
                  
                  Amount2010
                  
                  $
                  1212011
                  
                  
                  1282012
                  
                  
                  1342013
                  
                  
                  1422014
                  
                  
                  150Thereafter
                  
                  
                  2,718$
                  3,393
 
 
  41
  4.           SEGMENT
REPORTING
 
 The
Company operates three reportable business segments:  DCI, Inc., NTG,
Inc. and Radix Corporation.  DCI produces custom electronic assemblies
which integrate a variety of interface technologies, such as custom liquid
crystal displays, light emitting diode displays, and keypads, and also provides
repair services and engineering design services.  NTG designs,
markets, and provides remote monitoring services.  The Company’s Radix
subsidiary develops, designs and markets ultra-rugged handheld computers,
peripherals and portable printers.  The following table presents
business segment revenues, income (loss), and total assets for the years ended
April 30, 2009 and 2008 (in thousands).
 
 Year
      Ended April 30, 2009DCI
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          NTG
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          Radix
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          Unallocated
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          Eliminations
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          TotalSales:External
      customers
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          11,593
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          3,484
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          6,731
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          74
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          21,882Intersegment
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          4,651
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (4,651
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --Total
      sales
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          16,244
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          3,484
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          6,731
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          74
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (4,294
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          21,882Depreciation
      and amortization expenses
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          457
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          89
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          153
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          699Segment
      income (loss)
                                                                                                                                                                                                                                            before
      income tax expense
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          1,192
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          212
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (317
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (485
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          453
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          1,055Capital
      expenditures
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          219
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          3
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          73
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          294Goodwill
      and intangible
                                                                                                                                                                                                                                            assets
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          333
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          2,841
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          3,174Total
      assets
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          20,454
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          994
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          3,542
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          5,163
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (11,049
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          19,104
 
 Year
      Ended April 30, 2008DCI
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            NTG
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            Radix
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            Unallocated
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            Eliminations
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            TotalSales:External
      customers
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            16,477
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,692
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,249
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            23,418Intersegment
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            4,294
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            (4,294
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            --Total
      sales
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            20,771
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,692
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,249
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            (4,294
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            23,418Depreciation
      and amortization expenses
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            492
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            90
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            88
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            670Segment
      income (loss)
                                                                                                                                                                                              before
      income tax expense
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            2,375
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            244
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            (358
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            (572
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            (450
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            1,239Capital
      expenditures
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            405
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            10
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            170
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            585Goodwill
      and intangible
                                                                                                                                                                                              assets
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            387
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,084
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            --
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            3,471Total
      assets
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            20,476
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            1,718
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            5,717
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            4,989
                                                                                                                                                                                            
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            (11,802
                                                                                                                                                                                            )
                                                                                                                                                                                            
                                                                                                                                                                                            $
                                                                                                                                                                                            21,098
 
  42
  The following table reconciles total
revenues to the products and services offered by the Company (in
thousands).'
 Years
      Ended
                                April
      30,2009
                              
                              
                              2008Products
      and services:Electronic
      manufacturing services
                              
                              $
                              11,158
                              
                              
                              $
                              16,102Remote
      monitoring solutions
                              
                              
                              3,484
                              
                              
                              
                              3,692Rugged
      mobile computing
                              
                              
                              6,731
                              
                              
                              
                              3,249Engineering
      services
                              
                              
                              350
                              
                              
                              
                              168Other
                              
                              
                              159
                              
                              
                              
                              207Total
      sales
                              
                              $
                              21,882
                              
                              
                              $
                              23,418
  The
Company had total export sales of approximately $6,238,000 and $2,765,000 for
the years ended April 30, 2009 and 2008, respectively.
 
 5.           WARRANTY
 
 The Company provides a limited warranty
for a period of one year from the date a customer receives its
products.  The Company’s standard warranties require the Company to
repair or replace defective products at no cost to the customer or refund the
customer’s purchase price.  The Company’s product warranty liability
reflects management’s best estimate of probable liability under product
warranties.  Management determines the liability based on known
product failures (if any), historical experience, and other currently available
evidence.
 
 The following table presents changes in
the Company’s warranty liability, which is included in accrued expenses on the
balance sheets (in thousands):
 
 Years
      Ended
                                      April
      30,2009
                                    
                                    
                                    2008Warranty
      reserve balance at beginning of period
                                    
                                    $
                                    122
                                    
                                    
                                    $
                                    85Expense
      accrued
                                    
                                    
                                    113
                                    
                                    
                                    
                                    95Warranty
      costs incurred
                                    
                                    
                                    (113
                                    )
                                    
                                    
                                    (58
                                    )Warranty
      reserve balance at end of period
                                    
                                    $
                                    122
                                    
                                    
                                    $
                                    122
 
 
 6.
              OPERATING
      LEASES
 
 The
Company has a number of office equipment leases which will begin to expire in
July 2009 through October 2012.  As a result of the Radix transaction,
the Company entered into a three year lease for office space in Sandy, UT for
approximately 5,400 square feet beginning October 1, 2007 through September 30,
2010.  Subsequent to April 20, 2009, the Company entered into an
agreement with a
  43
  company
in Sandy, UT to sublease the office space for the remainder of the lease for
approximately $8,000 per month.
 
 Rent
expense under all operating leases was approximately $123,000 and $143,000 for
the years ended April 30, 2009 and 2008, respectively.  The following
table presents the Company’s future obligations for minimum lease payments (in
thousands):
 
 Years
      Ended April 30,
                  
                  Amount2010
                  
                  $
                  1212011
                  
                  
                  522012
                  
                  
                  2
 
 
 7.           NET
INCOME PER SHARE
 
 The
following table presents the components of the calculation of basic and diluted
income per share (in thousands):
 
 Years
      Ended April 30,2009
                                  
                                  
                                  2008Numerator:Net
      income
                                  
                                  $
                                  677
                                  
                                  
                                  $
                                  688Denominator:Weighted
      average common shares outstanding – basic
                                  
                                  
                                  3,292
                                  
                                  
                                  
                                  3,285Effect
      of dilutive options outstanding
                                  
                                  
                                  146
                                  
                                  
                                  
                                  167Weighted
      average common shares outstanding – diluted
                                  
                                  
                                  3,438
                                  
                                  
                                  
                                  3,452
 
 
 8.           STOCK
OPTIONS
 
 At April
30, 2009, the Company had an equity-based compensation plan from which
stock-based compensation awards are granted to eligible employees and
consultants of the Company.  According to the terms of the Company’s
1991 stock option plan (the “Plan”) for which the Company originally reserved
675,000 shares of common stock.  Both incentive stock options and
non-qualified stock options to purchase common stock of the Company may be
granted to key employees, directors and consultants to the Company, at the
discretion of the Board of Directors pursuant to the Plan.  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, but have
not been granted at less than market value on the date of
grant.  Generally, these options become exercisable and vest over one
to five years and expire within 10 years of the date of grant.  The
Plan also provides for accelerated vesting if there is a change in control of
the Company.  As of April 30, 2009, options to purchase approximately
320,750 shares were outstanding, of which 254,000 were vested and
exercisable.
 
 Prior
to May 1, 2006, the Company accounted for its equity-based compensation plan
under the recognition and measurement provision of APB Opinion No. 25, Accounting for Stock Issued
to
  44
  Employees (APB 25), and
related Interpretations, as permitted by Statement of Financial Accounting
Standards No. 123, Accounting
for Stock-Based Compensation (SFAS 123).  The Company did not
recognize the value of stock-based compensation issued to employees and
directors in its Consolidated Statements of Operations prior to May 1, 2006, as
all options granted under its equity-based compensation plan had an exercise
price equal to the market value of the underlying common stock on the date of
the grant.  Effective May 1, 2006, the Company adopted the fair value
recognition provisions of Statement of Financial Accounting Standard No. 123
(revised 2004), Share-Based
Payment (SFAS 123R), using the modified-prospective-transition
method.  Under this transition method, compensation cost recognized in
fiscal year 2007 includes compensation costs for all share-based payments
granted prior to May 1, 2006, but not yet vested as of May 1, 2006, based on the
grant-date fair value estimated in accordance with the original provisions of
SFAS 123, and compensation cost for all share-based payments granted subsequent
to April 30, 2006 based on the grant date fair value estimated in accordance
with the provisions of SFAS 123R.  Results from prior periods have not
been restated to reflect the impact of adopting the new standard.
 
 The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option pricing model, which uses the following weighted-average
assumptions for the indicted periods.
 
 Year
      Ended April 30,2009
                  
                  2008Risk-free
      interest rate
                  
                  1.71%
      - 2.92%
                  
                  2.93%
      - 4.85%Expected
      life, in years
                  
                  6
                  
                  6Expected
      volatility
                  
                  35.10%
      - 37.96%
                  
                  48.78%
      - 51.32%Dividend
      yield
                  
                  0.0%
                  
                  0.0%Forfeiture
      rate
                  
                  5.00%
                  
                  5.00%
 
 The
Company uses historical data to estimate option exercises and employee
terminations used in the model.  Expected volatility is based on
monthly historical fluctuations of the Company’s common stock using the closing
market value for the number of months of the expected term immediately preceding
the grant.  The risk-free interest rate is based on the U.S. Treasury
yield curve in effect at the time of the grant for a bond with a similar
term.
 
 The
Company receives a tax deduction for certain stock option exercises and
disqualifying stock dispositions during the period the options are exercised if
the stock is sold, generally for the excess of the price at which the options
are sold over the exercise prices of the options.    In
accordance with SFAS 123R, the Company will revise the Consolidated Statement of
Cash Flows presentation to report any tax benefit from the exercise of stock
options as financing cash flows.  For the year ended April 30, 2009
and 2008, there were no exercises of stock options which triggered tax
benefits.
 
 At April
30, 2009, there was approximately $82,000 of unrecognized compensation cost
related to share-based payments which is expected to be recognized over a
weighted-average period of 1.97 years.
  45
  The
following table represents stock option activity for the years ended April 30,
2009 and 2008:
 
 Number
                          of
                          Shares
                        
                        Weighted-Average
                          Exercise
      Price
                        
                        Weighted-Average
                          Remaining
                          Contract
      LifeOutstanding
      options at April 30, 2007
                        
                        295,750
                        
                        $2.16
                        
                        5.93
      YearsGranted
                        
                        29,500
                        
                        6.24
                        
                        9.44
      YearsExercised
                        
                        (500)
                        
                        0.81
                        
                        --Forfeited
                        
                        --
                        
                        --
                        
                        --Outstanding
      options at April 30, 2008
                        
                        324,750
                        
                        $2.53
                        
                        5.34
      YearsGranted
                        
                        36,750
                        
                        6.33
                        
                        9.18
      YearsExercised
                        
                        (10,750)
                        
                        3.87
                        
                        --Forfeited
                        
                        (30,000)
                        
                        5.84
                        
                        --Outstanding
      options at April 30, 2009
                        
                        320,750
                        
                        $2.62
                        
                        4.62
      YearsOutstanding
      exercisable at April 30, 2009
                        
                        254,000
                        
                        $1.90
                        
                        3.62
      Years
 
 Shares
available for future stock option grants to employees, officers, directors and
consultants of the Company under the existing Plan were 26,750 at April 30,
2009.  The aggregate intrinsic value of options outstanding was
approximately $451,000 and $1,275,000 as of April 30, 2009 and 2008,
respectively.  The aggregate intrinsic value of options exercisable
was approximately $451,000, and $1,112,000 at April 30, 2009 and 2008,
respectively.  Total aggregate intrinsic value of options exercised
during for the years ended April 20, 2009 and 2008 were approximately $4,000 and
$3,000, respectively.  Compensation expense of $85,000 and $86,000 was
recognized for the years ended April 30, 2009 and 2008,
respectively.
 
 During
the year ended April 30, 2009, the Company granted 36,750
options.  These options had a weighted average grant date fair value
of $2.35 per share.
 
 The
following table summarizes information about stock options outstanding at April
30, 2009:
 
 Options
      outstanding
                              
                              Options
      exercisableRange
      of exercise prices
                              Number
      outstanding at April 30, 2009
                              Weighted-average
      remaining contractual life
                              Weighted-average
      exercise price
                              
                              Number
      exercisable at April 30, 2009
                              Weighted-average
      exercise price$0.81
                              95,500
                              2.98 years
                              $0.81
                              
                              95,500
                              $0.81$1.25
      - $1.50
                              47,500
                              3.59 years
                              $1.25
                              
                              47,500
                              $1.25$2.13
      - $2.25
                              51,000
                              0.76 years
                              $2.25
                              
                              51,000
                              $2.25$3.25
      - $3.99
                              80,000
                              7.01 years
                              $3.70
                              
                              56,667
                              $3.71$4.94
                              5,000
                              8.81 years
                              $4.70
                              
                              --
                              --$5.85
      - $5.90
                              20,000
                              8.85 years
                              $5.75
                              
                              3,333
                              $5.87$7.00
      - $7.05
                              21,750
                              9.30 years
                              $7.03
                              
                              --
                              --$0.81
      - $7.05
                              320,750
                              4.62 years
                              $2.62
                              
                              254,000
                              $1.90
 
  46
  9.       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, 2009 and 2008 are
as follows (in thousands):
 
 Years
      Ended April 30,2009
                        
                        2008Deferred
      tax assets:Current:Alternative
      minimum tax and research and development
                          credit
      carry forward
                        
                        --
                        
                        25Accrued
      expenses
                        
                        118
                        
                        160Inventories
                        
                        642
                        
                        480Other
                        
                        38
                        
                        116Total
      deferred tax assets
                        
                        798
                        
                        781Deferred
      tax liabilities:Property
      and equipment
                        
                        (373)
                        
                        (311)Other
                        
                        (44)
                        
                        --Total
      deferred tax liabilities
                        
                        (417)
                        
                        (311)Net
      deferred tax asset
                        
                        $381
                        
                        $470
 
 Years
      Ended April 30,2009
                
                2008Current
      tax expense
                
                $289
                
                $566Deferred
      tax expense (benefit)
                
                89
                
                (15)$378
                
                $551
 
  The
income tax benefit differs from amounts computed at the statutory federal income
tax rate as follows (in thousands):
 
 Years
      Ended April 30,2009
                
                2008Expense
      at federal statutory rate
                
                $358
                
                $434Permanent
      tax differences
                
                13
                
                5State
      tax , net of federal tax benefit
                
                53
                
                62Additional
      tax credits and benefits generated in prior years
                
                (40)
                
                --Other
                
                (6)
                
                50$378
                
                $551
 
 At April
30, 2009, the Company has no remaining net operating loss
carryforwards.
 
 Effective
May 1, 2007, the Company adopted the Financial Accounting Standards
Board
  47
  (“FASB”)
Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income
Taxes – an Interpretation of SFAS No. 109.  As required by FIN
48, the Company recognizes the financial statement benefit of a tax position
only after determining that the relevant tax authority would more likely than
not sustain the position following an audit.  For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon the ultimate settlement with the relevant tax
authority.
 
 Included
in the balance at April 30, 2008, the Company recognized an additional $97,000
of income tax expense, including $14,000 relating to penalties and interest, for
potential state income tax liability in various states for tax years 2003
through the current fiscal year.  The potential state income tax
liability is approximately $34,000 with an additional $14,000 accrued for
penalties and interest. An additional $49,000 is reserved for the application of
past net operating losses that were applied to a state income tax
liability.  During fiscal 2009, the state income tax liability was
reduced by $12,000 as a result of expiring statute of limitations.  At
the adoption date of May 1, 2007 and as of April 30, 2008, the Company had no
unrecognized tax benefits that, if recognized, would affect the effective tax
rate.  As of April 30, 2009, the Company had no unrecognized tax
benefits that, if recognized, would affect the effective tax rate.  A
reconciliation of the total amounts of unrecognized tax benefits for the years
ended April 30, 2009 and 2008 are presented below (in thousands):
 
 Years
      Ended April 30,2009
                
                2008Unrecognized
      tax benefits, beginning of period
                
                $97
                
                $--Increases
      – tax positions taken in prior periods
                
                --
                
                97Lapse
      of statute of limitations
                
                (12)
                
                --Unrecognized
      tax benefits, end of period
                
                $85
                
                $97
 
 The
Company recognizes interest and penalties accrued on unrecognized tax benefits
as well as interest received from favorable tax settlements within tax
expense.  At the adoption date of May 1, 2007, the Company recognized
no interest or penalties related to uncertain tax positions due to the
insignificance to its financial position and results of operations.
 
 It is
reasonably possible that significant change in the gross balance of unrecognized
tax benefits may occur within the next 12 months.  An estimate of the
range of such gross changes cannot be made at this time.  However, the
Company does not expect the changes to have a significant impact on its
effective tax rate or expected cash payments for income taxes within the next 12
months.
 
 The
Company files income tax returns in the U.S. federal and various state
jurisdictions.  Tax regulations within each jurisdiction are subject
to the interpretation of the related tax laws and regulations and require
significant judgment to apply.  With a few exceptions, we are no
longer subject to Internal Revenue Service (IRS), state or local income tax
examinations by tax authorities for the years before 2004.  The
Company is not currently under examination by any taxing
jurisdiction.
 
 
  48
  10.           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
three months of service.  Qualified employees are entitled to make
voluntary contributions to the plan of up to 50% of their annual compensation
subject to Internal Revenue Code maximum limitations.  On January 1,
2008 the Company amended the Plan to account for a change in the Company’s
contribution on the employee’s behalf.  The Company now matches the
employee’s first 1% contribution plus an additional 50% of each employee's
contribution up to the next 5% to a maximum of 6% of the employee's annual
compensation.  Participants in the plan may direct the Company’s
contribution into mutual funds and money market funds.  Additionally,
the Company may make discretionary contributions to the plan.  For the
years ended April 30, 2009 and 2008, Company contributions to the plans amounted
to approximately $160,000 and $119,000, respectively.
 
 
 11.           SUBSEQUENT
EVENT
 
 On July
1, 2009, the Company announced that it had completed the acquisition of the
assets and the assumption of certain liabilities of MBBS, S.A., of Cortaillod,
Switzerland.  MBBS designs and produces radio frequency identification
(RFID) solutions for harsh and extreme environments.  Its patented
technology is characterized by its unique ability to reliably read and write
electronic data through metal.  Custom-tailored traceability solutions
have been deployed into multiple industries by MBBS for use in harsh operating
environments over the past several years.  The transaction closed on
June 30, 2009.  The Stock Purchase Agreement to acquire all of the
capital stock of MBBS, announced on March 19, 2009, was renegotiated into the
form of an Asset Purchase Agreement under substantially the same economic
terms.
 
 The
Company acquired approximately $750,000 in tangible assets – including accounts
receivable, inventory, and fixed assets, as well as all of the patents,
intellectual property and intangible assets owned by MBBS – in exchange for
175,000 shares of Elecsys Corporation common stock that are not freely
transferable.  Additional performance related consideration may be
paid to MBBS over the next five years.
  49
  
 
 Item
9.   CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  None.
 
 Item
9A(T).     CONTROLS AND
PROCEDURES
 
 (a)           Evaluation of disclosure controls
and procedures.  The Company’s management, with the
participation of our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the Company’s disclosure controls and procedures,
as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the
period covered by this report.  Based on such evaluation, these
officers have concluded that the Company’s disclosure controls and procedures
are effective to provide reasonable assurance that information required to be
disclosed in our periodic filings under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required
disclosure.
 
 (b)           Management’s Report on Internal
Control over Financial Reporting.  The Company’s management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the
Exchange Act.  The Company’s internal control system over financial
reporting is designed by, or under the supervision of, our Chief Executive
Officer and Chief Financial Officer, and is effected by our board of directors,
management and other personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles.  The Company’s internal control over financial reporting
includes those policies and procedures that:
 
 i.
              Pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the assets of the
Company;
 ii.
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with U.S. generally
      accepted accounting principles and that transactions are made only in
      accordance with the authorization of our management and directors;
      and
 iii.
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized transactions that could have a material effect on the
      financial statements.
 
 Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.  Also, projections
of any evaluation of effectiveness to future periods are subject to risk that
controls may become inadequate because of changes in condition, or that the
degree of compliance with the policies or procedures may
deteriorate.
 
 Management
has assessed the Company’s internal control over financial reporting in relation
to criteria described in Internal Control – Integrated
Framework, issued by the Committee of Sponsoring
  50
  Organizations
of the Treadway Commission.  Based on this assessment using those
criteria, management concluded that, as of April 30, 2009, the Company’s
internal control over financial reporting was effective.
 
 This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting.  Management’s report was not subject to
attestation by the Company’s independent registered public accounting firm
pursuant to the rules of the Securities and Exchange Commission that permit the
Company to provide only management’s report in this annual report.
 
 (c)           Changes in internal
controls.  There were no significant changes in the Company’s
internal controls over financial reporting or in other factors that in
management’s estimates have materially affected, or are reasonably likely to
materially affect, the Company’s internal controls over financial reporting
subsequent to the date of the evaluation.
 
 Item
9B.  OTHER
INFORMATION
 
 None.
  51
  Part III
 
 Item
10.   DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
 The information required to be
disclosed pursuant to this Item 10 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, 2009.
 
 Item
11. EXECUTIVE
COMPENSATION
 
 The information required by Item 11 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, 2009.
 
 Item
12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
 The information required by Item 12 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, 2009.
 
 Item
13.      CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
 The information required by Item 13 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, 2009.
 
 Item
14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
 
 The information required by Item 14 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, 2009.
  52
  Part IV
 
 Item
15.  EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES
 
 The list of exhibits following the
signature page of this Annual Report on Form 10-K is incorporated by reference
herein.
 
 
  53
  
 SIGNATURES
 
 Pursuant to the requirements of Section
13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
   ELECSYS
      CORPORATIONDate: 
       July 22, 2009
                By:
                /s/ Karl
      B. GemperliKarl
      B. GemperliPresident
      and Chief Executive Officer
                  Principal
      Executive Officer
 
 Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
  
 /s/ Karl B. Gemperli
                
                Date:  July
      22, 2009
 Karl B.
Gemperli
 President,
Chief Executive Officer and Director
 Principal
Executive Officer
 
 
 /s/ Todd A. Daniels
                
                Date:  July
      22, 2009
 Todd A.
Daniels
 Vice
President and Chief Financial Officer
 Principal
Financial Officer and Principal Accounting Officer
 
 
 /s/ Robert D. Taylor
                
                Date:  July
      22, 2009
 Robert D.
Taylor
 Chairman
of the Board of Directors
 
 
 /s/ Stan Gegen
                
                Date:  July
      22, 2009
 Stan
Gegen
 Director
 
 
  54
  EXHIBIT
INDEX
 
 NUMBER                                DESCRIPTION
 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.
  55
  (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)
              Trust
      Indenture dated September 1, 2006 between the City of Olathe, Kansas, and
      UMB Bank, N.A. as Trustee attached as Exhibit 10.1 of the Company’s Form
      10-QSB filed December 11, 2006 with the Securities and Exchange
      Commission, is incorporated herein by
reference.
 
 (h)
              Lease
      Agreement dated September 1, 2006 between the City of Olathe, Kansas, and
      DCI Holdings FAE, LLC attached as Exhibit 10.2 of the Company’s Form
      10-QSB filed December 11, 2006 with the Securities and Exchange
      Commission, is incorporated herein by
reference.
 
 (i)
              Guaranty
      Agreement dated September 1, 2006 among DCI, Inc., Elecsys Corporation,
      and NTG, Inc., and UMB Bank, N.A. as Trustee attached as Exhibit 10.3 of
      the Company’s Form 10-QSB filed December 11, 2006 with the Securities and
      Exchange Commission, is incorporated herein by
  reference.
 
 (j)
              Bond
      Pledge Agreement dated September 1, 2006 between DCI, Inc. and Bank
      Midwest, N.A. attached as Exhibit 10.4 of the Company’s Form 10-QSB filed
      December 11, 2006 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 (k)
              Promissory
      Note dated November 15, 2006 between DCI, Inc. and Bank Midwest, N.A.
      attached as Exhibit 10.7 of the Company’s Form 10-QSB filed December 11,
      2006 with the Securities and Exchange Commission, is incorporated herein
      by reference.
 
 (l)
              Commercial
      Guaranty dated November 15, 2006 between DCI, Inc. and Bank Midwest, N.A.
      and Elecsys Corporation attached as Exhibit 10.8 of the Company’s Form
      10-QSB filed December 11, 2006 with the Securities and Exchange
      Commission, is incorporated herein by
reference.
 
 (m)
              Commercial
      Guaranty dated November 15, 2006 between DCI, Inc. and Bank Midwest, N.A.
      and NTG, Inc. attached as Exhibit 10.9 of the Company’s Form 10-QSB filed
      December 11, 2006 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 (n)
              Mortgage
      dated November 15, 2006 between DCI, Inc. and Bank Midwest, N.A. attached
      as Exhibit 10.10 of the Company’s Form 10-QSB filed December 11, 2006 with
      the Securities and Exchange Commission, is incorporated herein by
      reference.
 
 (o)
              Business
      Loan Agreement (Asset Based) dated August 15, 2007 between Elecsys
      Corporation and Bank Midwest, N.A. attached as Exhibit 10.1 of the
      Company’s Form 10-QSB filed September 10, 2007 with the Securities and
      Exchange Commission, is incorporated herein by
  reference.
 
 (p)
              Change
      in terms Agreement dated August 15, 2007 between Elecsys Corporation and
      Bank Midwest, N.A. attached as Exhibit 10.2 of the Company’s Form 10-QSB
      filed September 10, 2007 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 (q)
              Promissory
      Note dated September 25, 2007 between Elecsys
  Corporation
  56
  and
      Bank Midwest, N.A. attached Exhibit 10.1 of the Company’s Form 10-QSB
      filed December 21, 2007 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 (r)
              Asset
      Purchase Agreement dated August 31, 2007 between ER Acquisition
      Corporation and Radix International Corporation attached as Exhibit 99.1
      of the Company’s Form 8-K/A filed December 17, 2007 with the Securities
      and Exchange Commission, is incorporated herein by
    reference.
 
 (s)
              Waiver
      relating to Business Loan Agreement between Elecsys Corporation and Bank
      Midwest, N.A. attached as Exhibit 10.1 of the Company’s Form 10-QSB filed
      March 10, 2008 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 (t)
              Asset
      Purchase Agreement dated June 30, 2009 between Elecsys International
      Corporation and MBBS S.A. attached as Exhibit 99.2 of the Company’s Form
      8-K filed July 1, 2009 with the Securities and Exchange Commission, is
      incorporated herein by reference.
 
 21
              Subsidiaries
      of the Company
 
 23.1                                 Consent of
McGladrey & Pullen 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)
  57