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 January 31, 1997

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

               For the quarter ended January 31, 1997.

                     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 East Spruce, Olathe, Kansas  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 January 31, 1997, was 9,524,156 shares.

<PAGE>

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

<CAPTION>

                                                 
ASSETS                                   1/31/97        4/30/96

<S>                                         <C>           <C>            
                                
                                         
Current Assets:     
 Cash                                   $  306,965        $745,647
 Accounts receivable, net of allowance
 for doubtful accounts of $191,882
 January 31, 1997 and $110,161 at        1,845,372       1,473,854
 April 30, 1996
  
 Contracts in process                    1,053,019         993,881
 Inventories:
   Raw materials                           791,810         593,994
   Work in process                         638,483         214,746
   Finished goods                          389,515         209,070
                                        ------------    -----------
                                         1,819,808       1,017,810
        
 Prepaid expenses and other assets         192,282          59,825
                                        ------------    ----------- 
Total current assets                     5,217,446       4,291,017

Property, Plant and Equipment:   
 
    Building                               150,240         150,240
    Machinery and equipment                609,185         589,788
    Office furniture and fixtures          536,521         384,928
    Leased improvements                     53,318          53,318
                                       ------------     -----------
  Total cost                             1,349,264       1,178,274
      
 Accumulated depreciation                 (914,936)       (856,092)
                                       -------------   -------------
                                           434,328         322,182

Other Assets  
 Deferred costs of Indian Gaming         1,369,123       1,142,023
 Aircraft and aircraft parts             2,403,113       2,394,677
 Other Assets                              313,518         111,184
                                      --------------   ------------
  Total Other Assets                     4,085,754       3,647,884

                                      --------------   -------------
  
Total assets                            $9,737,528      $8,261,083
                                      ==============   =============

   

LIABILITIES AND SHAREHOLDERS' EQUITY 

                                           
                                        
Current Liabilities:
 Bank Overdraft payable                  $101,739        $248,878
 Promissory notes payable                 723,334         301,434
 Current maturities of long-term debt   1,555,165       1,511,040
 Accounts payable                       1,116,172       1,211,760
 Customer Deposits                        702,090         526,407
 Accrued liabilities -
  Compensation and compensated absences   121,809         258,519
  Other                                    50,388          34,026
                                      -------------   -------------
   Total current liabilities            4,370,697       4,092,064
          
Long-Term Debt, net of current maturities  14,362          57,057
Convertible Debenture                   1,100,000            --  
                                      -------------   -------------
   Total liabilities                    5,485,059       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 9,524,156 at January 31, 1997 &
  9,280,890 shares April 30, 1996           95,242         92,809
  Common stock warrants                      8,807          8,707
  Capital contributed in excess of par   5,725,618      5,266,731
 Note receivable arising from stock
  purchase agreement                      (321,489)      (359,027)
 Unearned service contracts               (273,108)      (276,771)
 Treasury stock
   (20,000 preferred & 50,000 common)   (2,087,240)    (2,087,240)
 Retained earnings                        (895,361)      (533,247)
  (Deficit of $11,938,813 eliminated October 31, 1992)
                                        ------------- -------------
   Total shareholders' equity            4,252,469      4,111,962
                                        ------------- -------------
   Total liabilities and
      shareholders' equity              $9,737,528     $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
                                              January 31,


                                           1997         1996
<S>                                        <C>          <C>            
                                                                          
Net sales                             $ 4,946,796  $ 3,720,955

Cost of sales                           4,107,262    2,934,968

Gross profit                              839,534      785,987

Selling general and
    administrative expenses             1,199,889      756,616


 Operating income                        (360,355)      29,371


Other income (expense):

     Interest expense                     (66,766)     (41,029)
     Interest income                        7,357        5,993
     Other                                (11,722)      12,045

Other income (expense)                    (71,131)     (22,991)


Income (loss) before taxes               (431,486)       6,380


Provision for income tax                     -            -   


     Net income (loss)                 $ (431,486)   $   6,380


Net income (loss) per share            $   (0.05)    $   0.00


Shares used in per share calculation    9,495,631    8,550,026


<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>

                                     NINE MONTHS ENDED
                                         January 31,

                                   1997             1996 
<S>                                 <C>             <C>
                                 
Net sales                        $16,371,584      $11,804,843

Cost of sales                     13,473,798        9,482,194

Gross profit                       2,897,786        2,322,649

Selling general and
   administrative expenses         3,071,922        2,185,534


     Operating income               (174,136)         137,115

Other income (expense):

 Interest expense                   (189,863)         (67,063)
 Interest income                      27,631           13,623
 Other                               (25,746)          51,073

Other income (expense)              (187,978)          (2,367)

Income (loss) before taxes          (362,114)         134,748

Provision for income tax                -                -   

     Net income (loss)           $  (362,114)      $  134,748


Net income (loss) per share      $    (0.04)       $    0.02

Shares used in per
   share calculation               9,441,311        9,192,797


<FN>
<FN1> 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>


                                         NINE MONTHS ENDED
                                            January 31,
                                            1997           1996
<S>                                          <C>            <C>
                                                                  
Cash flows from operating activities:                                    
  
   Net income                               $ (362,114) $ 134,748
   Adjustments to reconcile income (loss)
    to net cash used in operations:                                      
   Depreciation                                 63,743     33,521 
   Amortization of shares issued
     for service contracts                      56,788    108,749 

Changes in assets and liabilities:                                     
 (Increase) decrease in accounts receivable   (371,518)  (163,388) 
 (Increase) decrease in contracts in process   (59,138)  (300,930) 
 (Increase) decrease in inventories           (553,729)  (727,146) 
 (Increase) decrease in prepaid expenses
   and other current assets                    (92,457)     2,019
 (Increase) decrease in other assets          (608,873)  (151,424) 
 Increase (decrease) in accounts payable       (95,588)   216,538
 Increase (decrease) in customer deposits      175,683    (45,723) 
 Increase (decrease) in accrued liabilities   (120,321)   (20,196)
                                            ----------  ---------
  Total adjustments                         (1,605,410)(1,047,980)
                                            ----------- ----------
 
  Cash used in operations                   (1,967,524)  (913,232)
                                            ----------- -----------
 
Cash flows from investing activities:     
    Capital expenditures, net                  (71,905)   (60,738) 
                                            ----------- ------------ 
  Cash used in investing activities            (71,905)   (60,738)
                                            ----------- ------------ 
Cash flows from financing activities:                                     
                
 Net borrowings under line-of-credit agreement 171,900     94,110
 Proceeds from increase in line-of-credit      250,000       -
 Repayments of long term debt                  (98,596)   (27,756)
 Proceeds from borrowings of debt              100,000       -
 Bank overdraft payable                       (147,139)    (8,798)
 Proceeds from Stock Issuances and
   convertible debentures, Net               1,324,582  1,309,213
 Purchase of Treasury Stock                       -       (50,000)
                                            ---------- ------------- 
  Cash provided by financing activities      1,600,747  1,316,769
                                            ---------- ------------- 
Net increase (decrease) in cash               (438,682)   342,799    

Cash, beginning of period                      745,647    212,799   
                                            ----------- ------------- 
Cash, end of period                          $ 306,965  $ 555,598 
                                                                     
Supplemental disclosures of cash flow information:                         
                     
 Interest paid                               $ 157,928  $ 39,859 
 Income taxes                                   22,430    20,668
Non-cash transactions: 
 Acquisition of Lear 35 for debt                  -    1,500,000

<FN>
<F1> 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 by 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 nine months ended
January 31, 1997 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 $1,370,000 and $1,150,000 at
January 31, 1997 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 $138,000, $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. In April 1994, Butler National Corporation acquired 100% of the stock of
RF, Inc.  The individual has sought for some time to reacquire from Butler
National Corporation the ownership of RF, Inc.  In what Butler National
Corporation believes is an effort to enhance his bargaining position regarding
this matter, the individual has filed a lawsuit against Butler National
Corporation seeking to rescind the sale of RF, Inc. stock and for damages.
Butler National Corporation's and RF, Inc.'s position is that the
individual's allegations are without merit, and the Company intends to
proceed with a vigorous defense of this matter in court. 

4. 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.

<PAGE>

5. 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 January 31, 1997, is
$321,489.  Interest is charged at the applicable federal rate and the loan is
being amortized over five years.

6.  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.

7. Income per common and common equivalent share are based on the weighted
average number of common shares outstanding during the quarters ended
January 31, 1997 and 1996 and during the nine months ended January 31, 1997
and 1996.  Stock options are included in 1996 as common stock equivalents
because they are dilutive.  Stock options are not included in 1997 as common
stock equivalents even though they are dilutive, they are not considered due
to the loss.  The convertible debenture is not included in 1997 as a common
stock equivalent even though they are dilutive, they are not considered due
to the loss.  Shares used in the per share computations are as follows:

<TABLE>
<CAPTION>
                             THREE MONTHS ENDED    NINE MONTHS ENDED
                                January 31,           January 31,
                               ------------          ------------
                       
<S>                         <C>        <C>        <C>          <C>  

                           1997        1996       1997         1996

                                           
Common shares beginning
  of period              9,400,412   8,490,850   9,280,890   8,231,015

Cumulative increase in
weighted average due to
Common Stock Equivalents      -         49,393        -        568,672


Cumulative increase in
weighted average due to
issues per Nonqualified
Stock Option Plans            -          9,783      6,851       32,249


Cumulative increase in
weighted average
due to issues per
acquisition, legal and   
consulting agreements         -           -       121,830          607


Cumulative increase in
weighted average due to
convertible debenture       95,219        -        31,740          -     


Weighted average shares,
 end of period           9,495,631   8,550,026  9,441,311     9,192,797

</TABLE>

8. 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>

9. On November 27, 1997, the Company completed a private placement which was
executed in reliance upon the exemption from registration afforded by
Regulation S as promulgated by the Securities and Exchange Commission, under
the Securities Act of 1933, as amended.  The Company issued an 8.0% cumulative
convertible debenture due November 27, 1998 in the amount of $500,000. 
Interest to be paid at time of conversion either in cash or kind at the
option of the Company.  Net proceeds of the offering were $450,000, after
deducting the expenses of the offering.
<PAGE>

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

RESULTS OF OPERATIONS

Overview of Operations:  Sales for the third fiscal quarter and the nine months
ended January 31, 1997, increased $1,225,841  (33.0%) and $4,566,741 (39.0%),
respectively, as compared to the same quarter and nine months of the prior
year.  For the nine months, increased sales occurred in the Food Distribution
division (26.8%), Aircraft Modifications division (21.6%), Switching Units
(26.0%), and Monitoring Services division (23.5%). The Temporary Services and
Management Services divisions did not recognize any revenue in the third quarter
of fiscal 1997.

The Company recorded a loss of $362,114 in the current nine month period
compared to income of  $134,748 in the prior period.  The majority of the
decrease in profit relates to the Food Distribution segment.  This segment's
margins have decreased from an average margin of 17.62% in the first quarter of
fiscal 1997 to 11.84% in the third quarter of fiscal 1997.  Additionally,
selling, general and administrative expenses in this segment have increased
$620,656 (76.5%) from $811,502 in the nine months ended January 31, 1996
compared to $1,432,158 in the nine months ended January 31, 1997.  Selling,
general and administrative expenses as a percent of sales were 8.5% in the
nine months ended fiscal 1996 compared to 10.5% in the current fiscal year.
This segment recorded a loss of $97,032 in the third quarter of 1997,
compared to profit of $231,352 in the prior period.

Food Distribution (R F, Inc.):  Revenues from the Food Distribution business
segment increased 26.8% from $3,053,758 in the third quarter of the prior
fiscal year to $3,872,099 in the current fiscal quarter ended January 31,
1997.  Food Distribution sales for the nine months ended January 31, 1997, were
$13,589,037 compared to $9,523,858 for the same period in the preceding
fiscal year, an increase of $4,065,179 (42.7%).  Revenue continues to
increase due to an increasing customer base and additional sales personnel
resulting in increased product sales.  However, contribution to earnings
decreased from $231,352 and $591,199, respectively, in the quarter and nine
months ending January 31, 1996, to a loss of  $(97,032) and income of $544,975,
respectively, in the quarter and nine months ending January 31, 1997.

The decrease in contribution is due to a lower margin and increased
administrative expenses.  The margins have decreased from an average of
17.62% in the first quarter of fiscal 1997 to 11.84% in the third quarter of
fiscal 1997.  The Company is in the process of evaluating the operations of
this segment.  The Company hopes to implement procedures which they
anticipate will return the margin to acceptable levels.  Additionally, the
Company is reviewing alternatives to reduce administrative expenses in this
segment.

Aircraft Modification (Avcon Industries, Inc.):  Sales at Avcon increased
$364,727 (101.1%) from $360,824 in the third quarter of the prior fiscal year
to $725,551 during the current fiscal quarter ended January 31, 1997.  Avcon
sales for the nine months ended January 31, 1997 were $1,765,320 compared to
$1,451,850 for the same period in the preceding fiscal year, an increase of
$313,470 (21.6%).  The increase in revenue relates to an increase in the
volume of production at the aircraft modification facility.  

The gross profit percentage for the nine months ended January 31, 1997 was
28.94% compared to 34.70% in the preceding nine 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 in fiscal 1997.   

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 of fiscal 1997.  Of these new orders, approximately $1,700,000 is
with one customer, Bombardier Aviation Service (Learjet).

<PAGE>


Switching Units (Woodson Avionics, Inc.):  Switching unit sales for the quarter
ended January 31, 1997 of $156,495 increased $57,227 (57.6%) as compared to
switching unit sales of $99,268 for the same quarter of the prior year. 
Sales for the nine month period ended January 31, 1997, reflect an increase with
current period switching unit sales totaling $234,290 versus $185,919 for the
comparable period of the previous year, a $48,371 (26.0%) increase.

SCADA Systems and Monitoring Services (Butler National Services, Inc.): 
Monitoring service sales for the three month and nine month periods ended
January 31, 1997, were $211,973 and $794,108, respectively, compared to
$217,105 and $643,216 for the same periods in 1996, a change of (.02)% and 23.5%
for the three and nine month periods.   Earnings from operations for the
three month and nine month periods ended January 31, 1997, were $41,502 and
$176,937, respectively, compared to the same periods in the prior year of
$39,492 and $179,229.

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.  

Temporary Services (Butler Temporary Services, Inc.):   This segment did not
recognize any revenue in the nine months ended January 31, 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 $115,000 and $345,000 in general
and administrative expenses in the current quarter and current nine month
period compared to $125,000 and $310,000 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 $56,788 and $108,749
in the first nine months of 1997 and 1996, respectively, related to shares
issued for services rendered to the Company in that regard.

The Company has invested $1,370,000 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 $1,370,000 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.   
   
<PAGE>

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.

The Miami Tribe 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.  In July 1996, the NIGC requested
another determination by the BIA of suitability for gaming.  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 for the development and management of the STABLES gaming
establishment in Miami, Oklahoma.   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 and manage the joint-venture for
the tribes.  The proposed facility is planned to be approximately 23,000
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, which requires the approval of the NIGC, was approved
by the NIGC on January 14, 1997.  The facility is expected to be operational
in the fall of 1997.  Under the Management Agreement as submitted, the
Company, as manager, is to receive reimbursement of the development costs and a
30% share of the profits.  

                 -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. 

<PAGE>

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
recognized by a 1960 federal resolution and is sovereign 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 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 opportunitieswill 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 16.97% for the quarter and 17.7%
for the nine months ended January 31, 1997, compared to 21.1% and 19.7% for
the same periods of the prior year.  The decrease in the gross profit
percentages are due to the reduced margins being recognized in the Food
Distribution segment.                  
  

Operating expenses (selling, general and administrative) for the three and nine
month periods ended January 31,1997, were $1,199,899 (24.3%) and $3,071,922
(18.76%), respectively, versus $756,616 (20.3%) and $2,185,534 (18.5%) for
the comparable periods of the prior year.  The majority of the increased
expenses are due to higher selling, general and administrative expenses being
incurred in the Food Distribution segment.  Administrative expenses increased
approximately $260,000 relating to increased commission expenses, administrative
support staff and reserve analysis for uncollectible accounts.  

Interest Expense for the three and nine month periods ended January 31, 1997,
increased $25,737 and  increased $122,800, 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 for continued research and development of products at the aircraft
modification facility and due to the growth in the Food Distribution segment.
Additionally, the Company borrowed approximately $1,500,000 for the purchase of
a Lear 35 for use in the aircraft modification division in fiscal 1996.

<PAGE>

Other Income is $(25,746) in the nine months ended January 31, 1997, versus
$51,073 in the nine months ended January 31, 1996.  Approximately $25,000
relates to a gain recognized on the sale of the building in Overton,Nebraska
in fiscal 1996.

EARNINGS

The Company incurred a consolidated net loss of $(431,486) ($.05 loss per share)
for the quarter and $(362,114) ($0.04 loss per share) for the nine months
ended January 31, 1997, compared to net income of $6,830 ($0.00 income per
share) and $134,748 ($0.02 income per share), respectively, for the same periods
of the prior year. 


CAPITAL RESOURCES

The Company had no material commitments for capital expenditures at
January 31, 1997.


LIQUIDITY 

Borrowed funds have been used primarily for working capital.  Bank debt at
January 31, 1997, is $723,334 and was $456,605 at January 31, 1996.  The
Company's unused line of credit was approximately $26,666 as of January 31,
1997.  Due to the growth in both the food distribution and aircraft modification
segments,  the Company increased their line of credit by $250,000 on October
15, 1996, to be used for operations.

The Company plans to continue using the promissory notes payable due in
February, 1996, as working capital.  The promissory notes payable maturities
have been extended to May, 1997.  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.  

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 RF, Inc. 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 RF, Inc.  The individuals who sold RF, Inc. to the Company have
sought for some time to reacquire from the Company the ownership of RF, Inc. 
In what the Company believes is an effort to enhance their bargaining
position regarding this matter, the individual has filed a lawsuit against
the Company seeking to rescind the sale of RF, Inc. stock and for damages.  The
Company's position is that the individual's allegations are without merit, and
the Company intends to proceed with a vigorous defense of this matter in court.

The Company is planning a retail market test under its trade name, Valu Foods,
of the products being distributed by RF, Inc.  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.

On May 1, 1996, 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 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
<PAGE>

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
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 January 31, 1997, is $321,489.
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. 

On November 27, 1997, the Company completed a private placement which was
executed in reliance upon the exemption from registration afforded by
Regulation S as promulgated by the Securities and Exchange Commission, under
the Securities Act of 1933, as amended.  The Company issued an 8.0% cumulative
convertible debenture due November 27, 1998 in the amount of $500,000. 
Interest to be paid at time of conversion either in cash or kind at the
option of the Company.  Net proceeds of the offering were $450,000,after
deducting the expenses of the offering.

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 through debt issuance.  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.


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

Item  1. In April 1994, Butler National Corporation  acquired 100% of the stock
of RF, Inc.  The individual has sought for some time to reacquire from Butler
National Corporation the ownership of RF, Inc.  In what Butler National
Corporation believes is an effort to enhance his bargaining position
regarding this matter, the individual has filed a lawsuit against Butler
National Corporation seeking to rescind the sale of RF, Inc. stock and for
damages.  Butler National Corporation's and RF, Inc.'s position is that the
individual's allegations are without merit, and the Company intends to
proceed with a vigorous defense of this matter in court.

Item 2.  Changes in Securities

   On November 1, 1997, the Company issued 96,266 shares of common stock, $.01
par value, for the convertible debenture in the amount of $150,000.  The
shares were issued to an accredited investor.  The transaction was executed
in reliance upon the exemption from registration afforded by Regulation S as
promulgated by the Securities and Exchange Commission, under the Securities
Act of 1933, as amended.

Item 4.  Submission of Matters to a Vote of Security Holders
  
   NONE

Item 6.   Exhibits and reports on Form 8-K.
           (A) Exhibits. 

   3.1 Articles of Incorporation, as amended are incorporated by reference to
Exhibit 3.1 of the Company's Form 10-K for the year ended April 30, 1988.

   3.2 Bylaws, as amended, are incorporated by areference to Exhibit 3.2 of the
Company's Form 10-K for the year ended April 30, 1989.

   Exhibit Number 99.

    Description

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

    The Company agrees to file with the Commission any agreement or instrument
not filed as an exhibit upon the request of the Commission.

    (B) Reports on Form 8-K.

    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)





March 13, 1997                   /S/ Clark D. Stewart        
       Date                      Clark D. Stewart, (President
                                 and Chief Executive Officer)




March 13, 1997                   /S/ Stephanie S. Ruskey  
        Date                     Stephanie S. Ruskey
                                 (Vice President and Chief
                                 Financial Officer and Principal
                                 Accounting Officer)



<PAGE>