SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549

                                  
                          FORM 10-Q

(Mark One)
          Quarterly Report Pursuant to Section 13 or 15(d) of the
      X   Securities Exchange Act of 1934
                                    
          For the quarter ended October 31, 1996

          Transition Report Pursuant to Section 13 or 15 (d) of the
          Security Exchange Act  of 1934

          For the quarter ended October 31, 1996.

                 Commission File Number 0-1678

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

                Minnesota                      41-0834293
         (State of incorporation)     (I.R.S. Employer Identification No.)

             1546 E. Spruce Road, Olathe, KS               66061
        (Address of Principal Executive Office)          (Zip Code)


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


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

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months and (2) has been subject to such
filing requirements for the past ninety days:  Yes  X   No ______


The number of shares outstanding of the Registrant's Common Stock, $0.01 par
value, as of October 31, 1996, was 9,427,890 shares.

<PAGE>

<TABLE>

               BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS <FN1>
                                    
<CAPTION>

ASSETS                                         
                                       10/31/96      4/30/96
<S>                                   <C>           <C>                        
                     
Current Assets:  
 
 Cash                                 $   272,313    $  745,647
 Accounts receivable, net of allowance
 for doubtful accounts of $110,161      2,357,623     1,473,854
 
 Contracts in process                     637,920       993,881

 Inventories:
   Raw materials                          651,835       593,994
   Work in process                        414,560       214,746
   Finished goods                         446,369       209,070
                                        __________    __________

                                        1,512,764     1,017,810
     
 Prepaid expenses and other assets        509,611        59,825
                                        __________    __________

  Total current assets                  5,290,231     4,291,017


Property, Plant and Equipment:        
 Building                                 150,240       150,240
 Machinery and equipment                  586,914       589,788
 Office furniture and fixtures            528,952       384,928
 Leasehold improvements                    53,318        53,318
                                        __________     __________

   Total cost                           1,319,424     1,178,274
    
 Accumulated depreciation                (894,480)     (856,092)
                                        __________     __________

                                          424,944       322,182
Other Assets (Note 1):

 Deferred costs of Indian Gaming        1,348,115     1,142,023
 Aircraft and aircraft parts            2,403,113     2,394,677
 Other Assets                             253,101       111,184
                                        __________    __________
   Total other assets                   4,004,329     3,647,884

   Total assets                        $9,719,504    $8,261,083
                                        ==========    ==========     

 

LIABILITIES AND SHAREHOLDERS' EQUITY 

                                                 
                               
Current Liabilities:                                
         
 Bank overdraft payable                $  165,212    $  248,878
 Promissory notes payable                 649,472       301,434
 Current maturities of long-term debt   1,569,257     1,511,040
 Accounts payable                       1,474,934     1,211,760
 Customer Deposits                        317,882       526,407
 Accrued liabilities
  Compensation and compensated absences   207,342       258,519
  Other                                    42,909        34,026
                                        __________    __________

   Total current liabilities            4,427,008     4,092,064
          
Long-Term Debt, net of current maturities  50,686        57,057
Convertible Debenture                     750,000          -    
                                        _________     __________

   Total liabilities                    5,227,694     4,149,121

Commitments and contingencies:

Shareholders' equity :
 Preferred stock, par value $5 :
 Authorized, 200,000 shares, all classes           
 $100 Class A, 9.8%, cumulative if earned,         
   liquidation and redemption value $100,         
   issued and outstanding, 20,000 shares  100,000      100,000
  Capital contributed in excess of par  1,900,000    1,900,000
 Common stock, par value $.01:                     
  Authorized, 40,000,000 shares
  Issued 9,280,890 shares April 30, 1996 &
  9,427,890 at October 31, 1996            94,279       92,809
  Common stock warrants                     8,807        8,707
  Capital contributed in excess of par  5,554,747    5,266,731
 Note receivable arising from stock
  purchase agreement                     (318,241)    (359,027)
 Unearned service contracts              (296,667)    (276,771)
 Treasury stock (20,000 preferred &
  80,000 common)                       (2,087,240)  (2,087,240)
 Retained earnings (deficit)             (463,875)    (533,247)
  (Deficit of $11,938,813 eliminated
   October 31, 1992)                   ___________  ___________
             
  Total shareholders' equity             4,491,810   4,411,962

  Total liabilities and
      shareholders' equity              $9,719,504  $8,261,083
                                       ===========  =========== 

<FN>
<F1>  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</FN>
</TABLE>

<PAGE>
<TABLE>

                            BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF INCOME <FN1>
<CAPTION>

                                   
                                                                             
                                             THREE MONTHS ENDED        
                                                  October 31,

                                            1996           1995
<S>                                      <C>             <C>
 Net sales                               $6,117,711      $4,229,528

 Cost of sales                            5,087,388       3,381,472
                                          _________       _________

Gross profit                              1,030,323         848,056
                                                                        
 Selling, general and
   administrative expenses                  948,540         808,681
                                          _________       _________

  Operating income                           81,783          39,375
                                                                              
                            
 Other income (expense):                                                      
                  
  Interest expense                          (66,742)        (13,237)
  Interest income                            10,451           3,939
  Other                                     (11,310)         33,901
                                          __________      __________

 Other income (expense)                     (67,601)         24,603
                                          __________      __________

Income before taxes                          14,182          63,978
                                                                              
                        
 Provision for income tax                     8,000            -   
                                          __________      __________

   Net income                            $    6,182     $    63,978


 Net income per primary earnings per share $    .00       $     .01

 Net income per fully diluted earnings
   per share                               $    .00       $     .01


 Shares used in primary earnings
   per share calculation                  9,611,960       8,744,281

 Shares used in fully diluted earnings
   per share calculation                  9,697,244       8,744,281




<FN>
<FN1>The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
                           BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF INCOME <FN1>
<CAPTION>

                                                 
                                                                         
                                         SIX MONTHS ENDED        
                                            October 31,

<S>                                    1996             1995
                                     <C>             <C>

 Net sales                           $11,424,788     $8,083,888

 Cost of sales                         9,366,536      6,547,226
                                      __________      __________

 Gross profit                          2,058,252      1,536,662
                                                                        
 Selling, general and
    administrative expenses            1,854,332      1,428,917
                                      __________     ___________

 Operating income                        203,920        107,745
                                                                              
                            
 Other income (expense):                                                      
                  
  Interest expense                      (123,097)       (23,034)
  Interest income                         20,276          7,630
  Other                                  (14,027)        39,027
                                       __________     __________

  Other income (expense)                (116,848)        20,623
                                       __________     __________

 Income before taxes                      87,072        128,368
                                                                              
                        
 Provision for income tax                 17,700           -   
                                       __________     __________

   Net income                         $   69,372    $   128,368
     

 Net income per primary earnings
   per share                          $      .01    $       .01

 Net income per fully diluted
   earnings per share                 $      .01    $       .01


 Shares used in primary earnings
   per share calculation               9,547,825      8,914,413

 Shares used in fully diluted
   earnings per share calculation      9,645,128      8,914,413


<FN>
<F1>The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>

<TABLE>



               BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS <FN1>
<CAPTION>
                                  
                                            
                                              SIX MONTHS ENDED
                                                 October 31,
                                            1996              1995  
<S>                                        <C>               <C>     

Cash flows from operating activities:           
                                              
                             
 Net income                                  $ 69,372          $ 128,368   
Adjustments to reconcile income to
   net cash used in operations:                 
                                
 Depreciation                                  43,287             21,280 
 Amortization of shares issued
   for service contracts                       33,229             79,217 
 
Changes in assets and liabilities:              
                                      
 (Increase) decrease in accounts receivable  (883,769)          (476,349) 
 (Increase) decrease in contracts in process  355,961             38,135 
 (Increase) decrease in inventories          (246,685)          (409,490) 
 (Increase) decrease in prepaid expenses 
   and other current assets                  (409,786)           (17,233)
 (Increase) decrease in other assets         (527,447)          (117,465) 
 Increase (decrease) in accounts payable      263,174            216,384
 Increase (decrease) in customer deposits    (208,525)           (95,723) 
 Increase (decrease) in accrued liabilities   (42,268)           (29,325)      
           
                                             _________          _________

   Total adjustments                        (1,622,829)         (790,569) 
                                             _________          _________
 
  Cash provided by (used in) operations     (1,553,457)         (662,201) 
                                             _________          _________ 
Cash flows from investing activities:     
    Capital expenditures, net                  (42,066)          (60,738) 
                                             _________          _________
 
  Cash provided by (used in)
    investing activities                       (42,066)          (60,738) 
                                             _________          _________  

Cash flows from financing activities:           
         
 Net borrowings under line-of-credit
   agreement                                    98,039            59,227
 Proceeds from increase in
   line-of-credit                              250,000              -  
 Repayments and borrowings of long-term debt    51,819            20,243
 Bank overdraft payable                        (83,666)           45,115
 Proceeds from Stock Issuances, Net            805,997         1,312,268 
                                             _________         _________
 
  Cash provided by (used in) financing
    activities                               1,122,189         1,436,853
                                             _________         _________
 
Net increase (decrease) in cash               (473,334)          713,914  

Cash, beginning of period                      745,647           212,799 
                                             _________         _________  

Cash, end of period                        $   272,313       $   926,713
                                                
                   
Supplemental disclosures of cash flow
information:                                    
                              
 Interest paid                             $   100,080       $    12,155 
 Income taxes                                   17,580             9,500
                         
<FN>
<FN1>The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
               BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with the instructions to Form 10-Q of Regulation S-X
and do not include all of the information and footnotes required be generally
accepted accounting principles for complete financial statements.  In the
opinion of the management of the Company, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation have been
included.  Operating results for the three and six months ended October 31,
1996, are not indicative of the results of operations that may be expected
for the year ending April 30, 1997.

For further information, refer to the Consolidated Financial Statements and
Footnotes included in the Registrant's Annual Report on Form 10-K for the year
ended April 30, 1996.

2.   The Company has capitalized approximately $1,350,000 and $1,150,000 at
October 31, 1996 and April 30, 1996, respectively, of costs related to the
anticipated construction of three Indian gaming facilities.  These costs are
included in other assets in the accompanying balance sheet.  In the opinion
of management, these costs will be recoverable through the gaming activities
or, in event the Company is unsuccessful in establishing such operations,
these costs will be recovered through the liquidation of the associated
assets.  These costs include the following:

 A prepayment of $242,500 for construction services to be rendered. 
This prepayment was funded with 60,000  shares of the Company's common stock
issued in the fiscal year 1994 and an additional 40,000 shares in fiscal year
1995.

 Payments of $87,622 for architectural and engineering services.  These
payments were also funded with stock  issuances of 29,715 shares in fiscal
year 1995. Payments of $50,000 for equipment.  These payments were  funded
with stock issuances of 20,000 shares in fiscal year 1994.

 Cash payments of approximately $118,000, $172,000, $65,000 and $57,000 in
fiscal 1997, 1996, 1995, and 1994,  respectively, for architectural,
engineering and construction services.

 Cash Advances to the Tribes of $190,000 in fiscal 1995 which the Tribes used
for the acquisition of land.

 Acquisition of land by the Company in the amount of $82,000 in fiscal year
1997 and $225,000 in fiscal 1994.

3. The Company had an employment agreement with an individual which the Company
terminated in April 1995.  This individual filed a lawsuit against the
Company, the President of the Company and various corporate subsidiaries
alleging the Company wrongfully terminated the individual's employment in
breach of the contract.  The suit was filed in October, 1995, in State Court
in Johnson County, Kansas.  The individual dismissed the claim in Johnson
County, Kansas and refiled in Federal District Court.  The individual has
asserted a claim for damages in excess of $1,400,000.  The individual had
proposed a settlement offer for $500,000, but has withdrawn the settlement
offer.  It is management's position that the Company will defend the claim
vigorously and in that pursuit the Company has asserted a counterclaim
against the individual for negligence in the performance of the individual's
professional duties.

4. During fiscal 1996, the President and CEO, Clark D. Stewart, exercised his
option to purchase 400,000 shares of the Company's common stock under the
terms of the 1989 Nonqualified Stock Option Plan through a loan by the
Company.  The shares were purchased at prices ranging from $.70 to $1.00 per
share.  The largest aggregate amount of indebtedness outstanding was $367,000
during fiscal 1996.  The amount outstanding at October 31, 1996, is $318,241.
Interest is charged at the applicable federal rate and the loan is being
amortized over five years.

5.  After completing a three year program of restructuring the Company's
operation on October 31, 1992, by using quasi reorganization accounting, the
Company was able to adjust the accumulated deficit to a zero balance thereby
affording the Company a "fresh start".  No assets or liabilities required
adjustment in this process.  The amount of accumulated deficit and capital
contributed in excess of par removed as of October 31, 1992, was $11,938,813.

<PAGE>


6.   Income per common and common equivalent share are based on the weighted
average number of common shares outstanding during the quarters ended October
31, 1996 and 1995 and during the six months ended October 31, 1996 and 1995.
Stock options are included in 1996 and 1995 as common stock equivalents
because they are dilutive.  The convertible debenture is included in 1996 as
a common stock equivalent since the debenture is dilutive.  Shares used in the
per share computations are as follows:

<TABLE>
<CAPTION>


                                    THREE MONTHS ENDED       SIX MONTHS ENDED
                                       October 31,              October 31,

                                     1996        1995       1996       1995
<S>                                  <C>         <C>        <C>        <C>

Common shares beginning of period    9,387,890   8,507,100  9,280,890  8,231,015
                        
Cumulative increase in weighted average
 due to Common Stock Equivalents       192,005     193,925    147,413    423,563

Cumulative increase in weighted average
 due to convertible debenture           85,284        -        97,303       -  

  
Cumulative increase in weighted average
 due to issues per Nonqualified Stock
 Option Plans                              489      16,992      4,277     21,595
   
Cumulative increase in weighted average
 due to issues per acquisition, legal
 and consulting agreements              31,576        -       115,245        447
                                                         
Cumulative increase in weighted average
 due to issue per private offering        -         26,264       -       237,793
                                      _________  _________  _________  _________

Weighted average shares, end
  of period                           9,697,244  8,744,281  9,645,128  8,914,413

</TABLE>

7. The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed of". This standard provides a framework for
evaluating the realizability of the Company's investments in long-lived
assets. The Company adopted this standard beginning May 1, 1996.  This
standard did not have a material impact on its results of operations or
financial position, nor does the Company anticipate that it will in the
future. The Financial Accounting Standards Board also issued SFAS No. 123,
"Accounting for Stock Based Compensation".  Under the new standard, the
Company must either change its method of computing the compensation expense
associated with the issuance of stock options or make pro forma disclosures
based on the new computation method.  At this time, the Company anticipates
adopting the standard by making the pro forma disclosures.

<PAGE>

  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview of Operations:  Sales for the second fiscal quarter and the six
months ended October 31, 1996, increased $1,888,183  (44.6%) and $3,340,900
(41.3%), respectively, as compared to the same quarter and six months of the
prior year.  Increased sales occurred in the Food Distribution division
(50.2%).  Relatively stable sales occurred in the Aircraft Modifications
division (4.7%).  Switching Unit sales continued to decrease (10.2%).  Sales
at the Monitoring Services division increased (33.5%).  The Temporary Services
and Management Services divisions did not recognize any revenue in the first
six months of fiscal 1997.

The Company recorded a profit of $69,372 in the current six month period
compared to $128,368 in the prior period.

Food Distribution (R F, Inc.):  Revenues from the Food Distribution business
segment increased 52% from $3,317,382 in the prior quarter to $5,053,804 in
the current year, due to the increasing customer base and additional sales
personnel resulting in increased product sales.  Food Distribution sales for
the six months ended October 31, 1996, were $9,716,938 compared to $6,470,l00
for the same period in the preceding fiscal year, an increase of $3,246,838
(50.2%).  Contribution to earnings before corporate allocations increased from
$207,575 and $359,847, respectively, in the quarter and six months ending
October 31, 1995, to $227,007 and $642,007, respectively, in the quarter and
six months ending October 31, 1996.  However, contributions from earnings in
the second quarter fiscal 1997 compared to the first quarter fiscal year 1997
were down approximately $190,000.  The decrease in contribution is due to a
lower margin and increased administrative expenses.  The Company does not
expect the decrease in margins to be a trend.  The Company has implemented
procedures which they anticipate will cause margins to return.   Additionally,
the Company is reviewing alternatives to reduce administrative expenses in
this segment.

Aircraft Modification (Avcon Industries, Inc.): Sales at Avcon decreased
$40,919 (6.8%) from $599,976 in the second quarter of the prior fiscal year
to $640,895 during the current fiscal quarter ended October 31, 1996.   Avcon
sales for the six months ended October 31, 1996 were $1,039,769 compared to
$1,091,026 for the same period in the preceding fiscal year, a decrease of
$51,257 (4.7%).  

The gross profit percentage for the six months ended October 31, 1996 was
28.18% compared to 36.26% in the preceding six months.  The decrease in the
gross margin is due to research and development costs associated with new
product development.  This segment is continuing to work on the development
of new products and is introducing some of these products.

This segment has received several new orders relating to the new product
development in fiscal 1997.  The orders total approximately $2,700,000 and the
majority of these orders should be completed in the third and fourth quarters
fiscal 1997.  Of these new orders, approximately $1,700,000 is with one
customer, Bombardier Aviation Service (Learjet).

Switching Units (Woodson Avionics, Inc.):  Switching unit sales for the
quarter ended October 31, 1996, of $41,611 decreased $21,358 (33.9%) as
compared to switching unit sales of $62,969 for the same quarter of the prior
year.  Sales for the six month period ended October 31, 1996, reflect a
decrease with current period switching unit sales totaling $77,795  versus
$86,652 for the comparable period of the previous year, a $8,857 (10.2%)
decrease.  The decrease in sales in the Avionics division continues to be a
trend, largely due to the decrease in volume of aircraft produced by McDonnell
Douglas.

SCADA Systems and Monitoring Services (Butler National Services, Inc.):
Monitoring service sales for the three month and six month periods ended
October 31, 1996, were $373,248 and $582,135, respectively, compared to
$248,522 and $436,111 for the same periods in 1995.   Earnings from operations
for the three month and six month periods ended October 31, 1996, were $84,976
and $135,435, respectively, compared to the same periods in the prior year of
$79,298 and $109,736. 

<PAGE>

This segment continues to maintain a relatively level volume of sales due to
long term contracts with municipalities.  In addition to the relatively level
volume of sales to its current customers, this segment was awarded the
contracts with four additional municipalities to provide, install and maintain
telemetry systems totalling approximately $500,000 during fiscal 1997.
Additionally, each of the contracts allow for the continued maintenance of the
systems which are renewable on an annual basis.  This segment has had a 33.5%
increase in sales in the first six months of fiscal 1997 and a 50.2% increase
for the quarter ended October 31, 1996 due to these special projects.

Temporary Services (Butler Temporary Services, Inc.):   This segment did not
recognize any revenue in the first and second quarters of fiscals 1996 or
1997.   If and when the Company is able to open Indian gaming facilities,
management expects that a majority of the personnel in the various Indian
gaming enterprises will be staffed by Temporary Services.

Management Services (Butler National Service Corporation):

                              -General-
                                               
The Company received no revenue and incurred $120,000 and $230,000 in general
and administrative expenses in the current quarter and current six month
period compared to $205,000 and $330,000 in the prior periods associated with
its continued efforts to explore service opportunities related to the Indian
Gaming Act of 1988.  Additionally, the Company amortized $33,229 and $79,217
in the first six months of 1997 and 1996, respectively, related to shares
issued for services rendered to the Company in that regard.

The Company has invested $1,350,000 in land, land improvements and
professional design fees related to the development of Indian Gaming
facilities.  Included in this investment is 160 acres of land,  located
adjacent to the Linn Valley Lakes resort and residential development in Linn
County, Kansas.  The Company believes that this tract could be developed and
sold for residential and commercial use other than Indian gaming if the gaming
enterprise does not open.  Additional improvements including access roads,
water and sewer services, etc. are planned for this land.   After these
improvements, the land may be sold in small tracts.  This may allow the
Company to recover the majority, if not all, of the $1,350,000 investment.  

                         -Princess Maria Casino-
                                               
The Company has a management agreement with the Miami Tribe to provide
management services to the Miami Tribe.  The Miami Tribe requested a compact
with the State of Kansas for Class III Indian full-casino Indian gaming on
Indian land known as the Maria Christiana Miami Reserve No. 35 located in
Miami County, Kansas, on July 9, 1992.

The Miami Tribe's 1992 compact was the subject of a lawsuit filed in February
1993, in the Federal District Court by the Miami Tribe alleging the failure
to negotiate a compact in good faith by the State of Kansas.  The Court
dismissed the Miami Tribe's failure to negotiate a compact suit against the
State of Kansas as a result of the United States Supreme Court's ruling in
Seminole v. State of Florida.  The Supreme Court ruled that the provisions of
the IGRA did not allow an Indian tribe to compel a state by litigation to
negotiate a compact.         

In February, 1993, former Kansas Governor Finney requested a determination of
the suitability of the Miami Indian land for Indian Gaming under the IGRA from
the Bureau of Indian Affairs (the "BIA").  In May, 1994, the NIGC again
requested the same determination.  Finally, in May, 1995, an Associate
Solicitor within the BIA issued an opinion letter stating the Miami Tribe has
not established jurisdiction over the Miami land in Kansas.  This was the
first definitive statement received from the central office of the BIA in
three years.  The latest opinion is contrary to a September, 1994, opinion of
the Tulsa Field Solicitor, in an Indian probate stating that the Miami Tribe
has jurisdiction over the Miami Indian land in Kansas.  On July 11, 1995, the
U.S. Department of Justice issued a letter to the Associate Solicitor
expressing concern about the conclusions reached based upon the analysis of
the case.

<PAGE>


The Miami Tribe has challenged this opinion in Federal Court to prove and
protect the sovereignty of the Miami Tribe and other Indian tribes relating
to their lands.  On April 16, 1996, the Court ruled that the Miami Tribe did
not have jurisdiction because the BIA had not approved the Tribal membership
of the Princess Maria heirs at the time the management agreement was
submitted, therefore, the Court ordered that the NIGC's determination that
Reserve No. 35 is not "Indian land" pursuant to IGRA is affirmed.  However,
the Court noted in its ruling that nothing precludes the Tribe from
resubmitting its management agreement to the NIGC along with evidence of the
current owners' consent and the newly adopted tribal amendment.  On February
22, 1996, the BIA approved the Miami Tribe's constitution and the membership
of the heirs.  On June 16, 1996, the Tribe resubmitted the management
agreement.  No response has yet been received by the NIGC.  Although the Court
noted that the Tribe could resubmit the management agreement, the Court did
not pass on whether or not a new submission will obtain approval.  Therefore,
even though the Company and the Tribe believe the re-submission is in
compliance with all laws and regulations, there is no assurance that the
management agreement will be approved.

               -Stables Bingo and Off-Track Betting-
                                               
Additionally, the Company has a signed Management Agreement with the Miami and
Modoc Tribes.   A class III Indian Gaming Compact for a joint-venture by the
Miami and Modoc Tribes, both of Oklahoma, has been approved by the State of
Oklahoma and by the Assistant Secretary, Indian Affairs for the U.S.
Department of the Interior.  The Compact was published in the Federal Register
on February 6, 1996, and is therefore, deemed effective.  The Compact
authorizes Class III (Off-Track Betting "OTB") along with Class II (high
stakes bingo) at a site within the City of Miami, Oklahoma.

The Company will consult with the development of and plans to manage the
joint-venture for the tribes.  The proposed facility is planned to be
approximately 22,000 square-feet and to be located directly south of the Modoc
Tribal Headquarters building in Miami.  It is currently intended the complex
will contain off-track betting windows, a bingo hall, and a restaurant.  The
Company's  Management Agreement requires the approval of the NIGC.  The
Management Agreement was filed in September, 1994, with the NIGC and rejected
pending approval of this Compact.  On January 25, 1996, the Management
Agreement was resubmitted and currently is being reviewed by the NIGC.  The
Management Agreement and the  Environmental Assessment are in final stages of
being examined by the NIGC and the Company expects approval during fiscal
1997.  Under the Management Agreement as submitted, the Company, as manager,
is to receive a 30% share of the profits and reimbursement of the development
costs.  Even though the Company and the Tribes believe the re-submission will
be in compliance with all laws and regulations, there is no assurance that the
management agreement will be approved.

                     -Shawnee Reserve No. 206-
                                               
Since 1992, the Company has maintained a business relationship with
approximately seventy Indian and Non-Indian heirs (the "Owners") of the Newton
McNeer Shawnee Reserve No. 206 ("Shawnee Reserve No. 206").  This relationship
includes assistance with the defense of the property against adverse
possession by one family member in exchange for being named the manager for
any Indian gaming enterprises that may be established on the land.  As a
result of the Company's assistance, the Owners are in the process of becoming
the undisputed beneficial owners of approximately 72 acres of the Shawnee
Reserve No. 206 as ordered by the United States District Court for the
District of Kansas.  The Company has purchased options for an additional 17
acres contiguous to the Indian land.

Shawnee Reserve No. 206 has been a part of the Shawnee Reservation in Kansas
Territory since 1831 and was reserved as Indian land and not a part of the
State of Kansas when Kansas became a state in 1861.  Within the boundaries of
Johnson County, Kansas and the Kansas City metro area, the Indian land is
located on west 83rd Street approximately 25 road miles southwest from
downtown Kansas City, Missouri.

In addition, the Company maintains a relationship and agreement to manage the
proposed establishment as a part of the Owners' desire to work with the
Shawnee Tribe of Oklahoma.  The Shawnee Tribe of Oklahoma is not a federally
recognized tribe.  The tribe, sometimes known as the Loyal Shawnee Tribe, is
a tribe organized by a 1960 federal resolution operating within and as a part
of the federal recognition of the Cherokee Nation of Oklahoma.  The Indian
Owners of Shawnee Reserve No. 206 have federal Indian membership cards showing
them as Cherokee-Shawnee members of the Cherokee Nation of

<PAGE>

Oklahoma.  The Shawnee and the Cherokee are currently working to reaffirm the
Shawnee's jurisdiction over the Indian land.

The Company believes that there is a significant opportunity for Indian gaming
on the Shawnee Reserve No. 206.  However, none of the above agreements have
been approved by the BIA or the Cherokee Nation or any other regulatory
authority.  There can be no assurance that these or future agreements will be
approved and that any Indian gaming will ever be established on the Shawnee
Reserve or that the Company will be the Management Company.


                             -Modoc Bingo-
                                               
The Company has a management agreement with the Modoc Tribe, to construct and
operate an Indian gaming facility on Modoc Reservation lands in Eastern
Oklahoma.  The Management Agreement was filed with the NIGC on June 7, 1994,
for review and approval.  No approval has yet been received by the NIGC.

                             -Other Gaming-
                                               
The Company is currently reviewing other potential Indian gaming opportunities
with other tribes.  These discussions are in the early stages of negotiation
and there can be no assurance that these gaming opportunities will be
successful.

The various management agreements have not yet been approved by the various
governing agencies and therefore are not filed as exhibits to the document.
        
COSTS AND EXPENSES

The consolidated gross profit percentages of 16.8% for the quarter and
18.0% for the six months ended October 31, 1996, compared to 20.0% and
19.0% for the same periods of the prior year.                       

Operating expenses (selling, general and administrative) for the three and
six month periods ended October 31, 1996, were $948,540 (15.6%) and
$1,854,332 (16.2%), respectively, versus $808,681 (19.1%) and $1,428,917
(17.7%) for the comparable periods of the prior year.  

Interest Expense for the three and six month periods ended October 31,
1996, increased $53,505 and decreased $100,063, respectively, as compared
to the same periods of the prior year.  The Company continues to use its
line of credit to maintain operations.  The Company increased the line of
credit by $250,000 during the quarter.

The Company acquired a Lear 35 during November 1996 for debt of $1,500,000.
The Company increased the loan by $100,000 during this quarter.  The
majority of the increase in interest expense relates to this acquisition
and the related debt.

Other Income Expense  is ($14,027) in the six months ended October 31,
1996, versus $39,027 in the six months ended October 31, 1995.  The
majority of the other income in 1996 relates to a gain of approximately
$25,000 recognized on the sale of the building in Overton, Nebraska. 

EARNINGS

The Company earned a consolidated net income of $6,182 ($.00 income per
share) for the quarter and $69,372 ($.01 income per share) for the six
months ended October 31, 1996, compared to net income of $63,978 ($.01
income per share) and $128,368 ($.01 income per share), respectively, for
the same periods of the prior year.  

CAPITAL RESOURCES

The Company had no material commitments for capital expenditures at October
31, 1996.


<PAGE>

LIQUIDITY 

Borrowed funds have been used primarily for working capital.  Bank debt at
October 31, 1996, is $649,473 and was $421,722 at October 31, 1995.  The
Company's unused line of credit was approximately $100,527 as of October
31, 1996.  Due to the growth in both the food distribution and aircraft
modification segments,  the Company increased their line of credit by
$250,000 to be used for operations.

The Company plans to continue using the promissory notes payable due in
November, 1996, as working capital.  The promissory notes payable
maturities have been extended to February, 1996.  The Company believes the
extensions will continue and does not anticipate the repayment of these
notes in fiscal 1997.  The extensions of the promissory notes payable is
consistent with prior years.  If the Bank were to demand repayment of the
notes payable the Company currently does not have enough cash to pay off
the notes without materially adversely affecting the financial condition of
the Company.  

Prior to 1991, the Company incurred significant operating losses, which
resulted in reduced working capital, cash flow problems, and a net capital
deficiency.  Accordingly, the Company began a process of voluntarily
reorganizing and financially restructuring its financial position.  As a
result, the Company was successful in settling substantially all past due
liabilities from vendors and governmental taxing authorities on
satisfactory terms.  The Company recorded income from the Favorable
settlement of liabilities of $234,603 in fiscal 1992, $78,842 in fiscal
1993 and 71,230 in fiscal 1995.  This income relates to the write off of
vendor payables which had been accrued for in prior years at amounts
greater than the actual cost of settlement.  During fiscal 1991,  many of
these vendors accepted a portion of the debt owed in stock and a portion to
be paid off over a three year period.  During fiscal 1993, many of these
same vendors forgave the remaining payments due to the significant increase
in the value of the stock received and the fact that the Company was
continuing to restructure and incurring cash flow problems.  During fiscal
1995, the Company wrote off the rest of the vendor payables related to
prior to 1989 which were not settled by the restructuring.

The Company continued in fiscal 1995 to issue stock at fair market value
for various legal, marketing and consulting services, in lieu of cash
payments.  During fiscal 1995, the Company issued 95,000 shares of stock at
a value of $219,668 for professional services to be provided in the future.

The Company did not issue shares for professional services to be provided
in the future in fiscal 1996. 

The Company issued 20,000 shares for consulting services related to the
acquisition of the operating rights and assets of Woodson Electronics, Inc.
in fiscal 1997.  The Company issued 25,000 shares in the amount of $53,125,
for consulting services related to Indian Gaming in fiscal 1997.  The
Company issued 10,000 shares in the amount of $21,250, for the acquisition
of 100% of the stock of Valu Foods, in fiscal 1997.

The Company acquired RFI on April 21, 1994.  The Company exchanged 650,000
shares of the Company's common stock for 100% of the issued and outstanding
shares of RFI.  At the date of acquisition, RFI's total assets were
$565,605, consisting of cash of approximately $200,000, accounts receivable
of approximately $280,000, and inventory of approximately $60,000.  RFI's
liabilities included approximately $260,000 of vendor payables, and
$115,000 of accrued payroll and payroll taxes.

The Company does not expect nor has it incurred any substantial costs
associated with integrating RFI's operations.  The Company expects that the
majority of RFI's operations will continue to operate as it did under
previous management.  The Company does plan to expand the customer base of
RFI, by hiring additional sales personnel in various locations.  The
additional costs of personnel should be more than offset by the additional
contribution margin recognized.  The Company hired nine (9) additional
sales personnel at various locations in fiscals 1995, 1996 and 1997.

The Company is planning a retail market test under its trade name, Valu
Foods, of the products being distributed by RFI.  Two or more test stores
are planned in smaller communities.  Capital to finance this planned test
marketing of approximately $500,000 may be required during fiscal 1997.

The Company completed the acquisition of the operating rights and assets of
Woodson Electronics, Inc.  The Company received a portion of WEI's
operating rights and assets in exchange for 80,000 shares of 

<PAGE>

stock with a fair market value of $160,000.  The Company also entered into
a Non-Exclusive Consulting, Non-Disclosure and Non-Compete Agreement with
Thomas E. Woodson, which provides for the issuance of 20,000 shares of the
Company's common stock and $36,000 to be paid out over 24 months.  WEI is
engaged in the business of designing, manufacturing, improving, marketing,
maintaining, and providing, directly and with the assistance of others,
data acquisition, alarm monitoring and reporting products and services
related to such products.  WEI supplies the monitoring products to Butler
National Services, Inc.  During the first quarter of fiscal 1997, the
Company relocated its Woodson Avionics business segment, along with the
newly acquired operating rights and assets of WEI to Phoenix, Arizona.   

During fiscal 1996, the President and CEO, Clark D. Stewart, exercised his
option to purchase 400,000 shares of the Company's common stock under the
terms of the 1989 Nonqualified Stock Option Plan through a loan by the
Company.  The shares were purchased at prices ranging from $.70 to $1.00
per share.  The largest aggregate amount of indebtedness outstanding was
$367,000 during fiscal 1996.  The amount outstanding at October 31, 1996,
is $318,241.  Interest is charged at the applicable federal rate and the
loan is being amortized over five years.

The Company had an employment agreement with an individual which the
Company terminated in April 1995.  This individual filed a lawsuit against
the Company, the President of the Company and various corporate
subsidiaries alleging the Company wrongfully terminated the individual's
employment in breach of the contract.  The suit was filed in October, 1995,
in State Court in Johnson County, Kansas.  The individual dismissed the
claim in Johnson County, Kansas and refiled in Federal District Court.  The
individual has asserted a claim for damages in excess of $1,400,000.  The
individual had proposed a settlement offer for $500,000, but has withdrawn
the settlement offer.  It is management's position that the Company will
defend the claim vigorously and in that pursuit the Company has asserted a
counterclaim against the individual for negligence in the performance of
the individual's professional duties.

Depending upon the development schedules, the Company, through BNSC, will
need additional funds to complete its currently planned Indian gaming
opportunities.  The Company will use current cash available and these
additional funds for the start up and construction of gaming facilities.
The Company anticipates initially obtaining these funds from two sources:
internally generated working capital from non-gaming operations and the
proceeds from an anticipated private placement of the Company's common
stock.  After a few gaming facilities become operational, the gaming
operations will generate additional working capital for the start up and
construction of other additional gaming facilities.  The Company expects
that its start up and construction financing of gaming facilities will be
replaced by other financial lenders, long term financing through debt
issue, or equity issues.

FORWARD LOOKING INFORMATION

The information set forth above may include "forward-looking" information
as outlined in the recently enacted Private Securities Litigation Reform
Act of 1995.  The Cautionary Statements filed by the Company as Exhibit 99
to this filing are incorporated herein by reference and investors are
specifically referred to such Cautionary Statements for a discussion of
factors which could affect the Company's operations and forward-looking
statements contained herein.

<PAGE>



                             PART II.


                       OTHER INFORMATION


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

Item 2.  Changes in Securities

   On  August 9, 1996, the Company issued 25,000 shares of common stock, $.01
par value, for consulting services related to Indian Gaming, in the amount
of $53,125. The shares were issued to an individual consultant.  The
transaction was executed in reliance upon an exemption from the Securities
Act of 1933 and the shares were issued without registration under the
Securities Act of 1933 since the transaction did not involve any public
offering.

   On August 9, 1996, the Company issued 10,000 shares of common stock, $.01
par value, to acquire 100% of the stock of Valu Foods, with a value of
$21,250.  The shares were issued to an individual person, who owned 100%
of the stock of the company acquired.  The transaction was executed in
reliance upon an exemption from the Securities Act of 1933 and the shares  
were issued without registration under the Securities Act of 1933 since the
transaction did not involve any public offering.

Item 4.  Submission of Matters to a Vote of Security Holders

   The Company held the annual meeting of shareholders on October 1, 1996.
In addition to the election of directors, the following items were submitted
to and approved by the shareholders.

    The ratification of the selection of Arthur Andersen LLP as auditors for
the fiscal year ending April 30, 1997.  Shares voting for appointing Arthur
Andersen LLP were 7,452,100, against 29,583, and abstentions were 681,895.

    The approval to change the Company's state incorporation from Minnesota
to Delaware by merging the Company into a wholly owned subsidiary of the
Company which is a Delaware Corporation. Shares voting for the proposal
to change the Company's State of Incorporation were 7,428,712, against
29,583, and abstentions were 681,895.

Item 6.   Exhibits and reports on Form 8-K.

           (A) Exhibits. 

               Exhibit Number 99.

               Description

    Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.

          (B) Reports on Form 8-K.

    The Company filed a Form 8-K dated November 27, 1996 reporting under
    Item 9.  Sales of Equity Securities pursuant to Regulation S.          
      
<PAGE>

                         Exhibit Number 99

CAUTIONARY STATEMENTS FOR PURPOSE OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The Company desires to take advantage of the new "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 and is filing this
exhibit in order to do so.  The following important factors, among others,
could effect the Company's actual results and could cause such results to
differ materially from those expressed in the Company's forward-looking
statements:

- The General Governmental Regulation of Gaming Operations - The Company's
proposed gaming management operations will be subject to extensive gaming laws
and regulations, many of which were recently adopted and have not been the
subject of definitive interpretations and are still subject to proposed
amendments and regulation.  The political and regulatory environment in which
the Company is and will be operating, with respect to gaming activities on
both non-Indian and Indian land, is dynamic and rapidly changing.  Adoption
and/or changes in gaming laws and regulations could have a materially adverse
effect on the Company.

- Key Personnel - The Company's  inability to retain key personnel may be
critical to the Company's ability to achieve its objectives.  Key personnel
are particularly important in maintaining relationships with Indian Tribes.
Loss of any such personnel could have a materially adverse effect on the
Company. 

- Competition - Increased competition, including the entry of new competitors,
the introduction of new products by new and existing competitors, or price
competition, could have a materially adverse effect on the Company. 
Additionally, because of the rapid rate at which the gaming industry has
expanded and continues to expand, the gaming industry may be at risk of market
saturation, both as to specific areas and generally.  Overbuilding of gaming
facilities at particular sites chosen by the Company may have a material
adverse effect on the Company's ability to compete and on the Company's
operations.

- Major Customers - The termination of contracts with major customers or
renegotiation of these contracts at less cost-effective terms, could have a
materially adverse effect on the Company.

- Product Development - Difficulties or delays in the development, production,
testing and marketing of products, could have a materially adverse effect on
the Company.  The Company's aviation business is subject, in part, to
regulatory procedures and administration enacted by and/or administered by the
FAA.  Accordingly, the Company's business may be adversely affected in the
event the Company is unable to comply with such regulations and/or if any new
products and/or services to be offered by the Company can or may not be
formally approved by such agency.  Moreover, the Company's proposed new
aviation modification products will depend upon the issuance by the FAA of a
supplemental type certificate, the issuance of which no assurances can be
given.

- Administrative Expenditures - Higher service, administrative or general
expenses occasioned by the need for additional legal, consulting, advertising,
marketing, or administrative expenditures may decrease income to be recognized
by the Company.


<PAGE>



                             SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                 BUTLER NATIONAL CORPORATION
                                 (Registrant)



December 12, 1996                       /S/ Clark D. Stewart        
       Date                             Clark D. Stewart, (President
                                        and Chief Executive Officer)




December 12, 1996                       /S/ Stephanie S. Ruskey  
        Date                            Stephanie S. Ruskey
                                        (Vice President and Chief
                                        Financial Officer and Principal
                                        Accounting Officer)




<PAGE>