SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                 FORM 10-Q/A

(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, 1998

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

                      For the quarter ended October 31, 1998

                         Commission File Number 0-1678



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


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


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


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


Former Name, former address and former fiscal year if changed since last
report:


     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, 1998, was 12,555,746 shares.

<PAGE>

              BUTLER NATIONAL CORPORATION AND SUBSIDIARIES


                                  INDEX

PART I.        FINANCIAL INFORMATION:

                                                                      Page No.

     Consolidated Balance Sheets - October 31, 1998
        and April 30, 1998................................................3

     Consolidated Statements of Income - Three
        Months ended October 31, 1998 and 1997............................4

     Consolidated Statements of Income - Six
        Months ended October 31, 1998 and 1997............................4

     Consolidated Statements of Cash Flows - Six
        Months ended October 31, 1998 and 1997............................5

        Notes to Consolidated Financial Statements........................6

     Management's Discussion and Analysis
        Financial Condition and Results of Operations.....................8

PART II.

     OTHER INFORMATION...................................................13

     SIGNATURES..........................................................14

<PAGE>
<TABLE>

                BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

ASSETS                                               10/31/98         4/30/98
                                                   (unaudited)   (As restated
                                                                  see Note 2)

<S>                                                    <C>              <C>

Current Assets:
     Cash                                           $   76,111      $ 160,598
     Accounts receivable, net of allowance for
          doubtful accounts of $78,736 at Oct. 31,     416,422        413,257
          and $78,736 at April 30, 1998
     Note receivable from Indian Gaming developments   450,000        408,333

     Contracts in process                               55,000        551,610
     Inventories:
          Raw materials                              1,635,340      1,469,324
          Work in process                              176,608         76,073
          Finished goods                                61,469         55,939
          Aircraft                                     315,281      1,816,281
                                                -------------- --------------
                                                     2,188,698      4,951,415
      Prepaid expenses and other assets                120,401        121,280
                                                -------------- --------------
               Total current assets                  3,306,632      5,072,695

Property, Plant and Equipment:
     Land & Building                                   667,628        639,130
     Machinery and equipment                         1,055,657        973,504
     Office furniture and fixtures                     585,967        632,617
     Leasehold improvements                             33,959         33,958
                                                -------------- --------------
               Total cost                            2,343,211      2,279,209

     Accumulated depreciation                       (1,162,894)   (1,060,705)
                                                 --------------   -----------
             Net Property, Plant                     1,180,317     1,218,504
              and equipment

Supplemental Type Certificates                       1,456,955     1,456,249

Indian Gaming:
     Note receivable from Indian Gaming
     developments                                    3,015,250     1,376,884

     Advances for Indian gaming developments
     (net of reserves of $1,328,475 and
      $3,008,508 at Oct. 31 and April 31, 1998,
      respectively)                                  1,567,001     1,277,724
             Total Indian Gaming                     4,582,251     2,654,608

Other Assets
     Other assets                                      462,790       468,389
                                                   -----------    -----------
               Total Other Assets                      462,790       468,389

               Total assets                        $10,988,945   $10,870,445
                                                   ===========   ===========

LIABILITIES AND SHAREHOLDERS' EQUITY                10/31/98          4/30/98
                                                   (unaudited)  (as restated)

Current Liabilities:
     Bank overdraft payable                         $ 146,368     $   193,205
     Promissory notes payable                         436,260         695,718
     Current maturities of long-term debt             261,714          63,849
     Accounts payable                                 607,102         507,698
     Customer Deposits                                 84,570         530,275
     Accrued liabilities -
          Compensation and compensated absences       117,259         170,110
          Other                                       291,859         227,896
                                                   -----------     ----------
               Total current liabilities            1,945,132       2,388,751

Long-Term Debt, net of current maturities           2,308,058       1,926,412
Convertible debentures                                650,000         650,000
Other liabilities                                        -               -
Commitments and contingencies
Liabilities of discontinued operations                   -             39,000
                                                    ---------       ---------
               Total liabilities                    4,903,190       5,004,163

Shareholders' equity:
     Preferred stock, par value $5:
       Authorized, 20,000 shares, all classes
       $1,000 Class B, 6%, convertible cumulative,
       liquidation and redemption value $1,000,
       issued and outstanding, 785 shares at
       10/31/98 & 1,120 shares at 4/30/98            355,236          506,834
     Common stock, par value $.01:
       Authorized, 40,000,000 shares
       Issued and outstanding 12,555,746 at
      10/31/98 & 11,673,069 at 4/30/98              125,557          116,730
      Common stock warrants                           8,807            8,807
      Capital contributed in excess of par        8,496,740        8,257,155
     Note receivable from officer arising from
      stock purchase agreement                      (37,647)        (37,647)
     Shares issued for future services                  -          (286,824)
     Treasury stock, at cost (No preferred at
       10/31 & no preferred at 4/30              (1,069,240)     (1,069,240)
       and common 775,000 at 10/31 & 775,000
       at 4/30)
     Retained dficit                             (1,793,698)     (1,629,533)
      (deficit of $11,938,813 eliminated
       October 31, 1992)
                                                 -----------     -----------
          Total shareholders' equity              6,085,755        5,866,282
                                                 -----------     -----------
          Total liabilities and shareholders'
          equity                                $10,988,945      $10,870,445
                                                 ==========       ==========

      The accompanying notes are an integral part of these balance sheets.
</TABLE>
<PAGE>
<TABLE>


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



                                                   THREE MONTHS ENDED
                                                        Oct 31,
                                                  1998             1997
                                              (unaudited)       (unaudited
                                                               as restated)

<S>                                                <C>               <C>

     Net sales                                $1,140,728        $1,261,369

     Cost of sales                               978,903           546,365

                                              ----------        ----------
                                                 161,825           715,004

     Selling, general and
     administrative expenses                     474,419           501,947
                                              ----------        ----------
          Operating income (loss)               (312,594)          213,057



     Other income (expense):
          Interest expense                       (46,237)          (69,602)
          Interest revenue                        31,404             1,629
          Settlement gain                         12,676            21,359
           (loss) and other                         -                 -
                                              ----------        -----------
          Other expense                            2,157           (46,614)
                                              ----------        -----------


     Income (loss)
        from continuing operations before taxes (314,751)          166,443


     Provision for income taxes from
        continuing operations                       -                 -
                                            -----------        ----------
     Income (loss) from
        continuing operations               $   (314,751)      $   166,443
                                             ===========        ==========



     Discontinued operations:
         Income (loss) from discontinued
          operations, net of taxes              (259,989)            -

        Loss on discontinued operations,
            net of taxes                            -                -

         Total discontinued operations          (259,989)            -

        Net income (loss)                       (574,740)         166,443


     Basic earnings (loss) per common share:
        Continuing operations                       (.03)            .02

        Discontinued operations                     (.02)            -
                                              ----------       ---------
                                              $     (.05)      $     .02
                                              ==========       =========

      Shares used in per share calculation    10,714,430        8,952,123

     Diluted earnings (loss) per common share
     Continuing operations                          (.03)             .02

     Discontinued operations                        (.02)             -
                                              ----------       ----------
                                                    (.05)             .02
                                              ==========       ==========

      Shares used in per share calculation    10,714,430        8,952,123


       The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>


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



                                                   SIX MONTHS ENDED
                                                        Oct 31,
                                                  1998             1997
                                              (unaudited)       (unaudited
                                                         as restated)

<S>                                                <C>               <C>

     Net sales                         $4,237,290        $2,507,259

     Cost of sales                             3,437,303         1,300,429

                                              ----------        ----------
                                                 799,987         1,206,830

     Selling, general and
     administrative expenses                     605,512           883,435
                                              ----------        ----------
          Operating income (loss)                194,475           323,395



     Other income (expense):
          Interest expense                       (88,227)         (139,616)
          Interest revenue                        31,486             2,436
          Settlement                              13,429           448,306
            loss and other
                                              ----------        ----------
          Other expense                          (43,312)          311,126
                                              ----------        ----------


     Income (loss)
        from continuing operations before taxes  151,163           634,521


     Provision for income taxes from
        continuing operations                       -                 -
                                            -----------        ----------
     Income (loss) from
        continuing operations               $    151,163       $   634,521
                                             ===========        ==========



     Discontinued operations:
         Income (loss) from discontinued
          operations, net of taxes             (315,328)          329,440

        Loss on discontinued operations,
            net of taxes                           -                 -

         Total discontinued operations         (315,328)          329,440
                                             ----------        ----------
        Net income (loss)                  $   (164,165)       $  963,961
                                             ==========        ==========

     Basic earnings (loss) per common share:
        Continuing operations                       .01              .07

        Discontinued operations                    (.03)             .04
                                              ----------        ---------
                                                   (.02)             .13

     Shares used in per share calculation    10,714,430        8,952,123

     Diluted earnings (loss) per common share
     Continuing operations                          .01              .06
     Discontinued operations                       (.03)             .06
                                              ----------        ---------
                                                   (.02)             .12

     Shares used in per share calculation    10,714,430        8,952,123


       The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>

<TABLE>

                  BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<CAPTION>
                                                 Six Months Ended Oct. 31,
                                                 1998               1997
                                             (unaudited)        (unaudited
                                                               as restated)
<S>                                               <C>                  <C>

Cash flows from operating
activities:



Net income (loss)                                $(164,165)       $   963,961
     Income (loss) from discontinued operations   (315,328)           329,440
     Income from continuing operations             151,163            634,521
     Adjustments to reconcile net income
      (loss) to net cash (used in) operations:

     Depreciation                                  102,189             72,492
     Amortization                                     (706)           112,535
     Gain on retirement of fixed assets               -                  -
     Provision for uncollectible accounts             -               181,973
     Provision for obsolete inventories               -                15,940
     Amortization of shares                           -                46,146
       issued for future services
     Noncash services and benefit plan
       contributions                                  -                   -
     Convertible debt beneficial conversion feature   -                   -
     Other noncash expenses                        286,824                -
     Gain from discontinued investment                -              (329,440)

Changes in assets and liabilities:
     Accounts receivable                            (3,165)          974,831
     Contracts in process                          496,610         1,123,673
     Inventories                                 1,468,919          (564,804)
     Prepaid expenses and other current assets         879           (12,576)
     Other assets and other                       (234,401)           21,527
     Accounts payable                               99,404           137,585
     Customer deposits                            (445,705)       (1,420,626)
     Settlement agreement                             -              (42,000)
     Accrued liabilities                           123,140          (145,895)
     Note receivable                                  -               20,850

     Cash provided by (used in) continuing            -                 -
       operations
     Cash provided by (used in) discontinued          -                 -
       operations

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

          Cash provided by (used in) operations  1,729,823         1,156,172
                                                ----------         ----------

Cash flows from investing activities:
     Capital expenditures, net                     (64,002)          (39,032)
     Indian Gaming Developments                 (1,969,310)         (661,984)
     Advances for Supplemental Type Certificates      -             (122,918)
     Aircraft and aircraft parts                      -                 -
                                                ----------         ----------
          Cash used in investing activities     (2,033,312)         (823,934)

                                                ----------         ----------
Cash flows from financing activities:
     Net borrowings under promissory note         (259,458)          324,244
     Proceeds from long-term debt                1,814,712              -
     Repayments of long-term debt and lease
      obligations                               (1,433,066)         (451,261)
     Repayment of officer note                        -                 -
     Issuance of Class B convertible
       preferred stock                                -                 -
     Issuance of warrants/stock                     96,814          (353,105)
                                                ----------         ----------
          Cash provided by
          financing activities                     219,002          (480,122)
                                                ----------         ----------
Net increase (decrease) in cash                    84,487             147,884


Cash, beginning of period                         160,598             208,761
                                                ----------         ----------
Cash, end of period                       $        76,111      $       60,877

Supplemental disclosures of cash flow
information:

     Interest paid                        $        88,227      $      114,598
     Income taxes paid                               -                 10,000

       The accompanying notes are an integral part of these statements.

</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 months and six months ended October
31, 1998 are not indicative of the results of operations that may be expected
for the year ending April 30, 1999.

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

For further information, refer to the restated Consolidated Financial
Statements and Footnotes included in the Registrant's Annual Report on Form
10-K/A for the year ended April 30, 1998 filed with the Securities and
Exchange Commission on March 24, 2000.


2.  Restatement:  Subsequent to the issuance of the Company's consolidated
financial statements for the fiscal years ended April 30, 1998 and 1997, it
was determined that the reported results for 1998 and 1997 were in error,
primarily as follows:

Beneficial Conversion Features:  The Company issued convertible debentures
in June and November of 1996 that contained beneficial conversion features
which allowed the investor to convert at 70 percent of the average common
stock closing bid price for the five days prior to issuance of the debt
security.  The conversion period on the notes were for limited periods.
The financial statements for the year ended April 30, 1997, have been
restated to reflect the accounting recognition of the value attributable
to the beneficial conversion feature ($375,000) as a noncash charge to
interest expense and an increase to the paid-in capital.

The Company also issued convertible preferred stock on December 16, 1997
which contained beneficial conversion features.  Those features allow the
holder of the security to convert the preferred stock into the Company's
common stock at 70 percent of the common stock bid price (the average of
the ending common stock price bid five days prior to issuance of the
preferred stock or the ending common stock bid price 45 days after
issuance of the preferred stock).  The financial statements for the period
ended April 30, 1998, have been restated to reflect the accounting
recognition of the value attributable to this beneficial conversion
feature as a deemed dividend and an increase to capital contributed in
excess of par of $650,000.

The accounting above is consistent with the accounting requirements
outlined in Topic D-60 of the Emerging Issues Task Force (EITF), issued in
March 1997, and what was agreed to by the EITF in their final
deliberations for Issue 98-5 on May 20, 1999.

RF, Inc. Gain:  The Company settled a dispute with a former employee in June
1997, effective April 30, 1997.  The Company initially recorded a net gain on
the settlement of approximately $433,000 in June 1998.  Costs aggregating
approximately $1,054,000 that had been deferred as of April 30, 1997, more
appropriately should have been recognized as period costs.  The financial
statements have been restated to expense these costs as part of loss from
discontinued operations in fiscal 1997.  In addition, the value assigned
to the 600,000 shares of company stock received as part of the
consideration of the settlement was reduced from $2 per share (stock price
at April 30, 1997) to $1.22 per share (stock price on June 26, 1997- the
date the shares were received).  The net effect of this transaction on the
fiscal 1998 financial statements is to change the previously reported loss
from discontinued operations of $172,281 to income from discontinued
operations of $269,219.

The following reflects selected financial information and the effects of
the aforementioned restatements:

<TABLE>
                             April 30, 1998              April 30, 1997
                      As previously        As       As previously      As
                        reported        restated       reported      restated
<S>                        <C>            <C>            <C>           <C>

Total assets            $10,799,656   $10,870,445    $11,124,008  $10,070,008

Total shareholder's
 equity                   5,861,860     5,866,282      4,872,254    3,818,254

Total net sales           5,546,106     5,456,106      4,061,775    4,061,775

Income (loss) from
 operations                 250,012       398,934       (199,633)   (574,633)

Discontinued operations    (172,281)      269,219        365,325    (688,675)

Net income (loss)            77,731       668,153        165,692  (1,263,308)

Net income (loss)
 available for common
  shareholders               77,731        18,153        165,692  (1,263,308)

Basic EPS                       .01           .00            .02        (.13)

Fully divided EPS               .01           .00            .02        (.13)

</TABLE>

3.  On September 14, 1998, Arthur Andersen LLP informed the Company that it
has declined to stand for reelection.  A new independent auditor has not been
engaged by the Company for fiscal 1999.  Appointment of a new independent
auditor will be selected by an action of the Board of Directors.  The Audit
Committee is receiving prospective candidates and expects to engage an auditor
during the fourth quarter of fiscal 1999.

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

Advances to the tribes and for gaming developments are capitalized and
recorded as receivables from the tribes.  These receivables, shown as
Advances for Indian Gaming Development on the balance sheet, represent
costs to be reimbursed to the Company pending approval of Indian gaming in
several locations.  The Company has agreements in place which require
payments to be made to the Company for the respective projects upon
opening of Indian gaming facilities.  Once gaming facilities have gained
proper approvals, the Company will enter into note receivable arrangements
with the tribe to secure reimbursement of advanced funds to the Company
for the particular project.  The Company currently has one note receivable
shown as Note Receivable From Indian Gaming Development on the balance
sheet.

We record reserves for Indian Gaming Development costs that cannot be
determined whether reimbursement from the Tribes will occur.  We have
agreements with the Tribes to be reimbursed for all costs incurred by us
to develop gaming when the facilities are constructed and opened.  Because
the Stables represents the only operations opened, there is uncertainty as
to whether reimbursement on all remaining costs that have been reserved will
occur.  It is our policy therefore, to reduce the respective reserves as
reimbursement from the Tribes is collected.

The Company has capitalized approximately $5,032,251 and $3,062,941 at
October 31, 1998 and April 30, 1998, respectively, related to the
development of Indian gaming facilities.  These amounts are net of
reserves of $2,718,928 and $3,008,508 in fiscal year 1999 and 1998,
respectively, which were established to reserve for potentially
unreimburseable costs.  In the opinion of management, the net advances will be
recoverable through the gaming activities.  Current economic projections for
the gaming activities indicate adequate future cash flows to recover the
advances.  In the event the Company and its Indian clients are unsuccessful in
establishing such operations, these net recorded advances will be recovered
through the liquidation of the associated assets.  The Company has title to
land purchased for Indian gaming.  These tracts, currently owned by the
Company, could be sold to recover costs in the projects.

As a part of a Management Contract approved by the National Indian Gaming
Commission (NIGC) on January 14, 1997, between the Company's wholly owned
subsidiary, Butler National Service Corporation, and the Miami Tribe of
Oklahoma and the Modoc Tribe of Oklahoma (the Tribes), the Company agreed
to convert their current unsecured receivable from the Tribes to a secured
note receivable with the Tribes of $3,500,000 at 2 percent over prime, to
be repaid over five years, for the construction of the Stables gaming
establishment and reimbursement for previously advanced funds.  At October
30, 1998, the Company had advanced $3,557,752 to the Tribes under the
contract and has reported $450,000 as a current note receivable and
$3,015,250 as a long-term note receivable.  Security under the contract
includes the Tribes' profits from all tribal gaming enterprises and all
assets of the Stables except the land and building.  The Company is
currently receiving payments on the note and its management fee on the
Stables' operation.

5.  Aircraft:  The Company buys aircraft, modifies the aircraft and resells
the aircraft as a part of the aircraft modification business segment.

During the quarter ended July 31, 1998, a modified Lear 35 aircraft was sold
for approximately $2.1 million.  This aircraft was carried as inventory
for approximately $1,500,000 on the Balance Sheet.  The Company plans to
continue the business of purchase, modify and sale of applicable aircraft
and is now recording the the carrying cost of these airplanes as Aircraft
Inventory on the Balance Sheet.

6.  Quasi Reorganization:  After completing a three-year program of
restructuring the Company's operation, on October 31, 1992, the Company
adjusted the accumulated deficit (earned surplus benefit) to a zero balance
thereby affording the Company a "fresh start."  No assets or liabilities
required adjustment in this process as they had been recorded at fair value.
The amount of accumulated deficit eliminated as of October 31, 1992, was
$11,938,813.  Upon consummation of the reorganization, all deficits in the
surplus accounts were eliminated against paid-in capital.

7.  Shares Issued for Future Services:  In fiscal 1998 and 1997, the Company
issued 193,000 and 25,000 shares of common stock, respectively, at a value of
$144,750 and $53,125, respectively, for professional services to be received
in the future.  The deferred portion of these service contracts were being
recognized over the service period, (generally 24-60 months) and was reflected
as a reduction in equity until such time as the services are received.
Effective May 1, 1998, the amortized balances of the issue cost of the shares
issued were expensed or transferred as advances to the gaming related
projects.  These amounts are recoverable under the terms of the approved
management agreements.

8.  New Accounting Standards:  The American Institute of Certified Public
Accountants has issued SOP 98-5, "Reporting on the costs of start-up
activities."  This standard provides a change in the capitalization policy for
start up costs.  The standard is required for the Company's fiscal year-end
1999.  The Company has evaluated this standard and concluded its adoption will
have no material effect to the financial statements.

9.  An outstanding current loan to an officer was reduced $37,647 to zero
before April 30, 1999.

10. Income per common and common equivalent share are based on the weighted
average number of common shares outstanding during the quarters ended Oct. 31,
1998 and 1997.  Stock options are included in 1998 and 1997 as common stock
equivalents to the extent that they are dilutive.  The Convertible debenture
is included in fiscal 1997 and fiscal 1998 as a common stock equivalent since
the debenture is dilutive.  The convertible preferred stock is included in
1998 since the convertible preferred stock is dilutive.  Shares used in the
diluted per share computations are as follows:
<TABLE>
<CAPTION>



                                THREE MONTHS ENDED       SIX MONTHS ENDED


                                     October 31,            October 31,


                                   1998      1997         1998        1997
<S>                                <C>       <C>          <C>         <C>
Common shares outstanding
 beginning of period           10,022,282  9,243,347    9,418,330   9,411,168

Cumulative increase in
 weighted average due to
 Common Stock Equivalent
 net of treasury stock            692,148   (291,224)   1,296,101   (470,679)

Cumulative increase in
 weighted average due to
 Convertible Debenture               -          -           -           -

Cumulative increase in
 weighted average due to
 Convertible Preferred               -          -           -           -

Cumulative increase in
 weighted average due to
 issues per acquisition
 and consulting agreements           -          -           -           8,904

Cumulative increase in
 weighted average due to
 issues per Nonqualified
 Stock Option Plans                  -          -           -           2,729


                              ----------   ---------   ----------   ---------
Weighted average shares,
 end of period                10,714,430   8,952,123   10,714,430   8,952,123

</TABLE>
<PAGE>


The convertible debentures ($650,000) and the convertible preferred stock
($506,834) are dilutive on a percentage basis of the common stock price.  For
purposes of the weighted average shares calculation, a $1.00 price has been
assumed for the dilution calculations for future conversions.

<PAGE>





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

RESULTS OF OPERATIONS

Second quarter fiscal 1999 compared to restated second quarter fiscal 1998

Overview: Consolidated sales were $4,237,290 for the six months ended October
31, 1998, compared to $2,507,259 for the six months ended October 31, 1997, an
increase of (69%).   Sales for the second fiscal quarter were $1,140,728
compared to $1,261,369 for the three months ended October 31, 1997.  Sales for
the six month period decreased in the Avionics segment (41.2%), and increased
in the Aircraft Modifications segment (121%), and decreased in the Monitoring
Services segment (32.7%). Sales for the six months included a sale by the
Aircraft Modifications segment of an aircraft after modification for
approximately $2.1 million.

The Company recorded a net income from continuing operations of $151,163 in
the current six months compared to $634,521 in the comparable period of fiscal
1998.  The loss from discontinued operations was $(315,328) for the six months
compared to a net income of $329,440 for the six months ended October 31,
1997.

Selling, General and Administrative expenses were $474,419 for the current
quarter, a decrease of $27,528 from the prior year.

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

Aircraft Modifications:  Sales from the Aircraft Modifications business
segment increased $1,936,752 (121%) from $1,604,399  in the first six months
of the prior year to $3,541,150 in the first six months ending October 31,
1998.  Gross profit decreased from $965,162 in the six months ending October
31, 1997 to $524,946 in the six months ending October 1998.  Second quarter
fiscal 1999 sales were $751,780 compared to $816,170 in fiscal 1998.  Second
quarter gross profit was $14,668 and $562,266, respectively.  The fiscal 1998
sales included the sale of a learjet for $2,100,000.

Avionics:  Avionics unit sales were $155,054 for the six months ended October
31, 1998 compared to $263,509 in the comparable period of the preceding year,
a decrease of (41.2%).  The decrease resulted from lower sales to Douglas
Aircraft.  Operating profits for the six months ended October 31, 1998, were
$(18,459) compared to  $66,262 for the six months ended October 31, 1997.  The
Company believes the sales volume will remain relatively stable with some
growth from new projects for the next few years.

SCADA Systems and Monitoring Services:  Sales for the six months ended October
31, 1998 were $465,271 compared to sales of $691,528 for the comparable period
of the prior year a decrease of 32.7%.  Sales decreased when compared to the
prior year because of a special project winding down during the year.
Operating profit for the six months was $4,803 compared to $126,388 for the
six months ended October 31, 1997.  Sales for the second quarter fiscal 1999
were $248,588, a decrease of $80,178 from the same quarter of fiscal 1998.
Fluctuations above the basic service business revenues are expected from
quarter to quarter and year to year.

Temporary Services:   This segment did not recognize any revenue in the first
quarter of fiscal 1999 and fiscal 1998.  When the Company and the Tribes open
the Kansas 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:
                           -General-

Indian Gaming Management: This segment earned interest income of $14,766
during the quarter and incurred no expenses during the current quarter and
$27,868 in the first half of fiscal 1999 for general and administrative
expenses associated with its continued efforts to explore service
opportunities related to the Indian Gaming Act of 1988.  All efforts were
advances toward the construction of the Stables.

The Company has advanced and invested a total of $7,751,179, reported as notes
receivable of $3,465,250 and net of a reserve of $2,718,928, in land, land
improvements, professional design fees and other consulting and legal costs
related to the development of Indian Gaming facilities.  Included in these
advances and investments are lands and other areas located adjacent to
residential developments.  The Company believes that these tracts could be
developed and sold for residential and commercial use other than Indian
gaming, if the gaming enterprises do not open.  Additional improvements,
including access roads, water and sewer services, etc. are planned for these
lands.   After these improvements, these lands may be sold in small tracts.
This would allow the Company to recover the majority, if not all, of the land
investments and other gaming costs.

                             -Princess Maria Casino-

The Company has a management agreement with the Miami Tribe to provide
management services to the Miami Tribe.  On July 9, 1992 the 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.

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 United
States District Court dismissed the Miami Tribe's suit against the State of
Kansas, the United States Supreme Court's ruling in Seminole v. State of
Florida.  The Supreme Court ruled that the "failure to negotiate" provision 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.

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 11, 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) was 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 newly adopted tribal amendments.  On February 22,
1996, the BIA approved the Miami Tribe's constitution and the membership of
the heirs.  The Tribe resubmitted the management agreement. 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.

The Tribe resubmitted the management agreement and land question to
the NIGC in June 1996.  In July 1996, the NIGC again requested an opinion
from the BIA.  On July 23, 1997, the Tribe and the Company were notified
that the BIA had again determined that the land was not suitable for
gaming, for political policy reasons, without consideration of the
membership in the Miami Tribe or recent case law, and the NIGC had to
again deny the management agreement.  The Tribe filed a suit in the
Federal District Court in Kansas City, Kansas.

On May 15, 1998, the Court determined that the land was suitable for gaming
and remanded the case to the BIA for the documentation.  Therefore, even
though the Company and the Tribe believe the BIA will agree with the Court
that the land is "Indian land", and in compliance with all laws and
regulations, for a variety of reasons, there is no assurance that the
Management Agreement will be approved.  Subsequent to April 30, 1998, the NIGC
approved the management agreement on January 7, 2000.  Under the Management
Agreement, as approved, the Company, as manager, is to receive a 30% share of
the profits and reimbursement of development costs.

The total advances and investment related to the Princess Maria at October 31,
1998, was $600,874.  This amount is net of a reserve of $1,413,511 which
represents the current net realizable value of the advanced receivable.

A lawsuit was filed in the United States District Court for the District
of Kansas by the State of Kansas against us, the United States, the Business
Committee members of the Miami Tribe and others on October 14, 1999,
challenging the determination by the Department of the Interior and the United
States District Court for the District of Kansas that the Miami Princess Maria
Reserve No. 35 was Indian Land.  The State of Kansas requested an order by the
Court preventing further development on the Indian land by us and further
discussions about the Indian land by us or Mr. Stewart, our President.

All of the defendants have asked the Court to dismiss the case because
they believe the determination of Indian land is a power reserved for the
United States by the constitution of the United States.  A ruling by the court
is expected in December 2000.



<PAGE>

                   -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, Bureau of 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 is providing consulting and construction management
services in the development of the facility and will manage the joint-
venture operation for the tribes.  The STABLES facility is approximately
24,000 square feet and located directly south of the Modoc Tribal
Headquarters building in Miami.  The complex will contain off-track
betting windows, a bingo hall, sports bar, and a restaurant.  The
Company's Management Agreement was approved by the NIGC on January 14,
1997.  Under the Management Agreement, as approved, the Company, as
manager, is to receive a 30% share of the profits and reimbursement of
development costs.

Construction on the STABLES began with the ground breaking on March
27, 1997.  The STABLES opened in September 1998.  The estimated project cost
is approximately $3,500,000.  Funds have been provided from the Company's
operations and long-term financing for project completion was arranged.

Long-term financing was provided by Miller & Schroeder Investments
Corporation.  The loan was dated May 29, 1998, in the amount of $1,850,000 at
a rate of prime plus 2% and was funded as needed during the phases of
construction with interest only being payable up to August 1, 1998. Commencing
on September 1, 1998, through August 1, 2003, monthly installments of
principal and interest to sufficiently fully amortize the principle balance
will be due.

As a part of the Management Contract approved by the NIGC on January
14, 1997, between the Company's wholly owned subsidiary, Butler National
Service Corporation, and the Miami Tribe of Oklahoma and the Modoc Tribe
of Oklahoma (the "Tribes"), the Company agreed to loan the Tribes
$3,500,000 at 2% over prime, to be repaid over five years, for the
construction and operation of the Stables gaming establishment.  At October
31, 1998, the Company had advanced $3,557,752 under the contract and reported
$450,000 current note receivable, $3,015,250 long-term note receivable and
$60,435 reserve for Indian gaming development.  Security under the contract
includes the Tribes' profits from all tribal gaming enterprises and all assets
of the Stables except the land and building.


                     -Shawnee Reserve No. 206-

In 1992, the Company signed a consulting agreement and 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 advances for assistance in 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 advanced
funds to purchase an additional 9 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.  The Indian land is
approximately 25 miles southwest from downtown Kansas City, Missouri.

The Company maintains a relationship and has a consulting agreement to assist
with the proposed establishment.  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 federally recognized 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 and to obtain federal recognition for the
Shawnee Tribe.

The Company believes 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 nor
that any Indian gaming will ever be established on the Shawnee Reserve, or
that the Company will be the Management Company.

The total advances and investment related to Shawnee Reserve No. 206 at
October, 1998 was $716,801.  This amount is net of a reserve of $849,222,
which represents the current net realizable value of the advanced receivable.

                              -Modoc Bingo-

The Company signed a consulting 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 approved on July 11, 1997.  The Tribe and the Company have not
determined a schedule for this project.  There is no assurance that further
action will be taken until the Stables is in operation and well established or
if ever.

The total advances and investment related to the Modoc Tribe at October 31,
1998 was $210,613.  This amount is net of a reserve of $337,436, which
represents the current net realizable value of the advanced receivable.  The
Tribe is working to acquire additional Indian land before this project can be
started.

<PAGE>

                           -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.

The total advances and investment related to other gaming at October 31, 1998,
was $6,645.  This amount is net of a reserve of $58,324 which represents the
current net realizable value of the advanced receivable.

COSTS AND EXPENSES

Operating expenses (selling, general and administrative): Expenses in the six
months ended October 31, 1998, were $605,512 or 14.3% of sales compared to
$883,435 or 35.2% of sales for the six months ended October 31, 1997, a
decrease of $277,923 or 31.4%.

Interest expense for the six months ended October 31, 1998, decreased $51,389
from $139,616 in the second quarter of the prior year to $88,227.  The Company
continues to use its line of credit to maintain operations.  The Company
acquired a Lear 35 during fiscal 1996 for debt on an inventory floor plan of
$1,500,000, the majority of the increase in interest expense relates to this
acquisition and the related debt and the increased borrowing on the credit
line.  The Company sold the Learjet model 35 resulting in reduced interest
cost for the first quarter of fiscal 1999.  The Company plans to use the
inventory floor plan to acquire a model 25 for modification and resale during
fiscal 1999.

Other income(expense) is expense of $43,312 in the six months ended October
31, 1998, versus income of $311,126 in the six months ended October 31, 1997.
The first quarter fiscal 1998 settlement gain of $426,947 is related to Note
2.

The Company employed 51 at October 31, 1998, and 60 at October 31, 1997.

EARNINGS

The Company recorded a loss of $164,165 in the six months ended October 31,
1998.  This is comparable to a profit of $963,961 (see note 2) in the six
months ended October 31, 1997.  Earnings per share is a loss of $.02 and
income per share is $.11 for the six months ending October 31, 1998, and
October 31, 1997, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Borrowed funds have been used primarily for working capital.  Bank (Industrial
State Bank) debt related to the Company's operating line was $436,260 at
October 31, 1998, and was $719,094 at October 31, 1997.

The Company's unused line of credit was approximately $63,740 as of October
31, 1998 and approximately $30,906 as of October 31, 1997.  The interest rate
on the Company's line of credit is prime plus two, as of December 15, 1998,
the interest rate is 9.75%.

The Company plans to continue using the promissory notes payable to fund
working capital.  The Company believes the extensions will continue and does
not anticipate the repayment of these notes in fiscal 2000. 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 does not, as of October 31, 1998, have any material
commitments for other capital expenditures other than the Management Services
segment's requirements under the terms of the Indian gaming Management
Agreements.  These requirements are further described in this section.

Depending upon the development schedules, the Company, through Management
Services, will need additional funds to complete its currently planned Indian
gaming opportunities.  The Company will use current cash available, and
additional funds, for the start up and construction of gaming facilities. The
Company anticipates initially obtaining these funds from:  internally
generated working capital and borrowings.  After a few gaming facilities
become operational, gaming operations will generate additional working capital
for the start up and construction of other 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.

As a part of the Management Contract approved by the NIGC on January
14, 1997, between the Company's wholly owned subsidiary, Butler National
Service Corporation, and the Miami Tribe of Oklahoma and the Modoc Tribe
of Oklahoma (the "Tribes"): the Company agreed to loan the Tribes
$3,500,000 at 2% over prime, to be repaid over five years, for the
construction and operation of the Stables gaming establishment.  At April
30, 1998, the Company had advanced $2,074,797 to the Tribes under the
contract and reported $408,333 current note receivable and $1,666,464
long-term note receivable.  Security under the contract includes the
Tribes' profits from all tribal gaming enterprises and all assets of the
Stables except the land and building.

On May 29, 1998, the Stables Management Contract was further funded
by a loan to the Company from a financial institution in the amount of
$1,850,000 at 2% over prime, to be repaid over five years.  As security
for the $1,850,000 loan, the Company pledged its contract rights to the
repayment of the $3,500,000 loan and its Manager's share (30%) of the
profits from the Stables.

On September 14, 1998, Arthur Andersen LLP informed the Company that it has
declined to stand for reelection.  A new independent auditor has not been
engaged by the Company for fiscal 1999.  Appointment of a new independent
auditor will be selected by an action of the Board of Directors.  The Audit
Committee is receiving prospective candidates and expects to engage an auditor
during the fourth quarter of fiscal 1999.

The Company's common stock is registered with the NASDAQ market system under
the symbol BUKS.  The Company's depressed stock price, resulting from the
constant selling pressure of the conversion shares may cause future delisting
and may reduce the liquidity of the Company's stock in the market and
therefore, the ability to raise capital through the issue of equity
securities.

FORWARD LOOKING INFORMATION

The information set forth below includes "forward-looking" information as
outlined in the Private Securities Litigation Reform Act of 1995.  The
Cautionary Statements, filed by the Company as Exhibit 99 to this Form 10-K,
are incorporated herein by reference and you are specifically referred to such
Cautionary Statements for a discussion of factors which could affect 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
          None

Item 4. Submission of Matters to Vote of Security Holders
          The Company held the annual meeting of shareholders on October 27,
         1998.

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 reference to
             Exhibit 3.2 of the Company's Form 10-K
             for theStatement dated August 16, 1996.

         99  Exhibit Number 99.
             Cautionary Statements for Purposes of the "Safe Harbor"
             Provisions of the Private Securities Litigation
             Reform Act of 1995, are incorporated by reference to Exhibit 99
             of the Form 10-K for the fiscal year ended April 30, 1998.

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

             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.
             None


<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)


August 7, 2000                 /S/ Clark D. Stewart
        Date                         Clark D. Stewart,
                                     (President and Chief Executive Officer)


August 7, 2000                       /S/ Robert E. Leisure
        Date                         Robert E. Leisure
                                     (Chief Financial Officer)


<PAGE>