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, 1999

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

                    For the quarter ended January 31, 1999

                        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: 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, 1999, was 12,555,746 shares.

<PAGE>

                 BUTLER NATIONAL CORPORATION AND SUBSIDIARIES


                                   INDEX

PART I.        FINANCIAL INFORMATION:

                                                         Page No.

    Consolidated Balance Sheets - January 31, 1999
        and April 30, 1998...............................   3

    Consolidated Statements of Income - Three
        Months ended January 31, 1999 and 1998 ..........   4

    Consolidated Statements of Income - Nine
        Months ended January 31, 1999 and 1998............  5

    Consolidated Statements of Cash Flows - Nine
        Months ended January 31, 1999 and 1998............  6

    Notes to Consolidated Financial Statements............  7-8

    Management's Discussion and Analysis
        Financial Condition and Results of Operations.....  9-14

PART II.  
     
    OTHER INFORMATION.....................................  15

          
    SIGNATURES............................................  16
     

<PAGE>
<TABLE>


                BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

ASSETS                                                 01/31/99       4/30/98
<S>                                                   (unaudited)
                                                          <C>           <C>

Current Assets:           
     Cash                                            $ 163,654      $ 160,598 
     Accounts receivable, net of allowance for
          doubtful accounts of $78,736 at January 31,  417,550        482,888 
          and $78,736 at April 30, 1998
     Note  receivable - current                        450,000        491,733 
               
     Contracts in process                                 -           551,610 
     Inventories:
          Raw materials                              1,285,419      1,039,324 
          Work in process                              252,686         76,073 
          Finished goods                                57,921         55,939 
                                                   -----------     -----------
                                                     1,596,026      1,171,336 
      Prepaid expenses and other assets                 31,624         37,880 
                                                   -----------     -----------
               Total current assets                  2,658,854      2,896,045 

Note receivable                                      3,019,217      1,770,714 

Supplemental Type Certificates                       1,420,269      1,456,249 

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                      (1,214,499)    (1,060,705)
                                                   -----------     ------------
                                                     1,128,712      1,218,504 


Other Assets (Note 1):
     Deferred costs of Indian Gaming                 2,091,755      1,277,724 
     Aircraft and aircraft parts                       555,281      2,056,281 
     Other assets                                      115,714        124,139 
                                                   -----------     -----------
               Total Other Assets                    2,762,750      3,458,144 

               Total assets                        $10,989,802    $10,799,656 
                                                    ==========     ========== 

LIABILITIES AND SHAREHOLDERS' EQUITY                  01/31/99        4/30/98 
                                                    (unaudited)
Current Liabilities:
     Bank overdraft payable                         $  148,614    $   193,205 
     Promissory notes payable                          340,208        695,718 
     Current maturities of long-term debt              299,915         17,968 
     Accounts payable                                  747,423        477,098 
     Customer Deposits                                 572,983        530,275 
     Accrued liabilities -
          Compensation and compensated absences         99,358        134,343 
          Other                                        207,614        227,896 
                                                   -----------    -----------
               Total current liabilities             2,416,115      2,276,503 
           
Long-Term Debt, net of current maturities            2,392,995      1,972,293 
Convertible debentures                                 650,000        650,000 
                                                   -----------    -----------
               Total liabilities                     5,459,110      4,898,796 

Commitments and contingencies:
Liabilities of discontinued operations                    -            39,000 
Shareholders' equity:
     Preferred stock, par value $5:
          Authorized, 200,000 shares, all classes                     
          $1,000 Class B, 6%, cumulative if earned,                   
             liquidation and redemption value $1,000,                   
             issued and outstanding, 1,120 shares
             at 4/30/98 & 785 shares at 01/31/99       355,236        506,834 
     Common stock, par value $.01:                      
          Authorized, 40,000,000 shares
          Issued 11,673,069 April 30, 1998 & 
          12,555,746 at Jan. 31, 1999,                 125,558        116,730 
          Common stock warrants                          8,807          8,807 
          Capital contributed in excess of par       7,471,739      7,232,155 
     Note receivable arising from stock
          purchase agreement                           (20,184)       (37,647)
     Unearned service contracts                       (208,424)      (286,823)
     Treasury stock, at cost (No preferred at
          01/31 &  no preferred at 4/30             (1,537,240)    (1,537,240)
          and common 775,000 at 01/31 &
          775,000 at 4/30)
     Retained earnings                                (664,800)      (140,956)
          (Deficit of $11,938,813 eliminated
           October 31, 1992)
                                                  ------------    ----------- 
               Total shareholders' equity            5,530,692      5,861,860 
                                                  ------------    ----------- 
               Total liabilities and
                shareholders' equity               $10,989,802    $10,799,656 
                                                    ==========     ==========  


     The accompanying notes are an integral part of these balance sheets.

</TABLE>
<PAGE>
<TABLE>


                 BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME


                                                      THREE MONTHS ENDED  
       
                                                           January 31,
                                                       1999           1998      
                                                   (unaudited)     (unaudited) 
<S>                                                     <C>            <C>

     Net sales                                       $594,994      $1,211,434

     Cost of sales                                    600,538         818,752
                                                   ----------      ----------
     Gross profit                                      (5,544)        392,682
                                                                         
     Selling, general and administrative expenses     582,929         183,279
                                                   ----------      ----------
          Operating income (loss)                    (588,473)        209,403
                                                                                
                             
     Other income (expense):  
          Interest expense                            (74,466)        (85,065)
          Interest income                              87,799             794
          Net gain - Settlement Agreement                -               -      
          Other                                        (4,616)        135,255
                                                   ----------       ---------
          Other income                                  8,717          50,984 
     
     Income (loss) from continuing operations        (579,756)        260,387 

     Profit or (loss) from discontinued operations       -               -
        
                                                   ----------       ---------
     Income (loss) before taxes                      (579,756)        260,387
                                                                                
                         
     Provision for income tax (benefit)               243,498         109,363
                                   
                                                   ----------       ---------
               Net income (loss)                 $   (336,258)     $  151,024
                                                    =========        ========

     Basic earnings (loss) per common share              (.03)            .02
    
     Shares used in per share calculation          11,302,885       9,275,673 

     Diluted earnings (loss) per common share            (.03)            .01
    
     Shares used in per share calculation
      (see Note 8)                                 12,737,885      10,329,192 
                         


      The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>

                BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME


                                                      NINE MONTHS ENDED        
                                                                                
                                                          January 31,
                                                      1999           1998      
                                                   (unaudited)    (unaudited) 
<S>                                                    <C>            <C>

     Net sales                                     $4,866,961     $3,718,693

     Cost of sales                                  4,094,205      2,119,180

                                                   ----------      ---------
     Gross profit                                     772,756      1,599,513
                                                                         
     Selling, general and administrative expenses   1,017,724      1,066,714
                                                   ----------      ---------
          Operating income                           (244,968)       532,799
                                                                                
                             
     Other income (expense):                                                    
                       
          Interest expense                           (162,693)      (175,026)
          Interest income                             119,285          3,230  
          Net gain - Settlement Agreement                -              
          Other                                        24,521        506,155 
                                                  -----------      ---------
          Other income (loss)                         (18,887)       334,359 
                                                  -----------      ---------
     Income (loss) from continuing operations        (263,855)       867,158 

     Profit or (loss) on discontinued operations     (259,989)          -
        
     Income(loss) before taxes                       (523,844)       867,158
                                                                                
     Provision for income tax (benefit)              (220,014)       364,206
                                   
                                                  -----------      ---------
               Net income (loss)                  $  (303,830)    $  502,952
                                                  ===========      =========
     Basic earnings (loss) per common share              (.03)           .05   

     Shares used in per share calculation          11,302,885      9,275,673

     Diluted earnings (loss) per common share            (.02)           .05
                
          Shares used in per share calculation
           (see Note 8)                            12,737,885     10,329,192
                                                   ==========     ==========

       The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>  
<TABLE>
   
               BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                 Nine Months Ended January 31,
                                                      1999           1998    
                                                   (unaudited)    (unaudited)
<S>                                                    <C>            <C> 

Cash flows from operating activities:
                                                                     
 Net income                                    $     (303,830)  $     151,025
     Adjustments to reconcile income to
        net cash used in operations:                                        
 
     Deferred income taxes (benefit)                  (220,014)       109,362 
     Depreciation                                      153,794        109,480
     Amortization of intangible assets                  79,658        198,478
     Provision for uncollectible accounts                 -            81,971 
     Provision for obsolete inventories                   -            15,940
     Amortization of service contracts                  78,399         75,677 
     
 Changes in assets and liabilities:
     Accounts receivable                                65,388         15,417
     Contracts in process                              551,610        862,673 
     Inventories (Increase)                           (424,690)      (356,834)
     Supplemental Type Certificates (Increase)         (40,628)      (135,678)
     Prepaid expenses and other current
      assets (Increase)                                  6,256         (8,911)
     Note Receivable                                    41,733        125,100   
     Other assets                                        6,832        161,864
     Accounts payable (decrease)                       270,325        (71,932)
     Customer deposits (decrease)                       42,708     (1,184,300)
     Accrued liabilities (decrease)                   (114,189)        15,923
     Settlement agreement (decrease)                     9,592        (54,000)
                                                    ----------      ---------
               Total adjustments                       506,774       (662,524)
                                                    ----------      ---------
          Cash provided by (used in) operations        202,944         79,409
                                                    ----------      ---------

     
Cash flows from investing activities:      
     Capital expenditures, net                         (64,001)       (59,736)
     Deferred costs of Indian Gaming                  (814,031)    (1,541,955)
                                                    ----------      ---------
          Cash provided by (used in) investing 
            activities                                (878,032)    (1,601,691)
                                                                                
                                                    ----------      ---------
Cash flows from financing activities:
             
     Net borrowing under promissory notes                 -         1,029,643 
     Proceeds from long term debt                    2,008,477           - 
     Retirement of convertible debentures                 -          (350,000)
     Repayments of long-term debt and lease
      obligations                                   (1,478,947)       (49,476)
     Bank overdraft payable                            148,614       (150,306)
     Stock issuance for conversions and other             -           620,441 
     Class B preferred issues                             -         1,089,959 
     Note receivable & redemption of common stock         -          (641,206)
                                                                    
                                                    ----------      ---------
          Cash provided by (used in)
           financing activities                        678,144      1,549,055
                                                                                
                                                    ----------      ---------
Net increase (decrease) in cash                          3,056         26,773


Cash, beginning of period                              160,598        208,761
                                                    ----------      ---------
Cash, end of period                             $      163,654  $     235,534
                                                                      
Supplemental disclosures of cash flow information:                       
 
     Interest paid                               $     162,69   $     175,026
     Income taxes                                      10,000          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 nine months ended 
January 31, 1999 are not indicative of the results of operations that may be 
expected for the year ending April 30, 1999.  

     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, 1998.

2.     On June 26, 1996, the Company completed a private placement in which 
the Company issued a 8.0% cumulative convertible debenture due June 26, 1998 
in the amount of $750,000.  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 $675,000, after deducting the expenses of the offering.  The proceeds of 
the offering was utilized for relocation of the Avionics segment and 
additional aircraft product development.

3.     The Company has capitalized approximately $5,569,972 and $3,353,000 at 
January 31, 1999 and April 30, 1998, respectively,  of costs related to the 
anticipated construction of three Indian gaming facilities.  These costs are 
included on the Balance Sheet at January 31, 1999 as Notes Receivable-Current 
$450,000, Notes Receivable $3,019,217 and Deferred Costs of Indian Gaming 
$2,091,755.  The Notes Receivable classifications represent advances to the 
Stables under the Management Agreement.  The cost reported as Other Assets 
represent the investments in land, buildings, and improvements including 
construction, engineering and architecture fees for the Princess Maria, 
Shawnee 206 and other properties.  In the opinion of management, these costs 
will be recoverable through the gaming activities or, in the 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  $1,813,000, $186,000, and $172,000 in 1998, 
1997, and 1996, 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 and land improvements by the Company in the amount of 
$203,000 in fiscal year 1997.

     Advances to the Indian Tribes for construction costs under an approved 
Management Contract during fiscal 1998 of  $449,423.

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 Company and the individual reached an 
agreement to settle and release all claims and counterclaims on May 1, 1997.  
The individual dismissed the lawsuit with prejudice.  The terms of the 
Settlement Agreement include payments by the Company to the individual during 
fiscal 1998 and fiscal 1999 respectively.

5.  On May 1, 1996, the Company acquired certain assets of Woodson 
Electronics, Inc. (WEI).  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, 

<PAGE>

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

6.  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 July 31, 1996, was  $338,634.  
Interest is charged at the applicable federal rate and the loan is being 
amortized over five years.  In fiscal 1997, the officer reduced the loan 
balance by $277,264 through expense reimbursement and the loan of 125,000 
shares of common stock valued at $250,000.  The loan balance is currently 
$20,184.

During fiscal 1996, an officer of the Company sold 20,000 shares of the 
Company stock to the Company at fair market value.  These shares are now held 
in the treasury.

7.  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.

8.  Income per common and common equivalent share are based on the weighted 
average number of common shares outstanding during the quarters ended January 
31, 1999 and 1998.  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 per share computations are as follows:
                                                                                
<TABLE>
<CAPTION>
  
                                  THREE MONTHS ENDED     NINE MONTHS ENDED  
                                      January 31,           January 31,
                                                                                
                                   1999       1998         1999       1998     
<S>                                 <C>        <C>          <C>        <C>

Common shares outstanding
 beginning of period            12,009,635  9,739,160   10,436,549  9,411,168

Cumulative increase in
 weighted average due to
 Common Stock Equivalent net
 of treasury stock                 588,455    319,310    1,884,556   (151,369)

Cumulative increase in
 weighted average due to
 Convertible Debenture                -      (787,038)        -          - 
    
Cumulative increase in
 weighted average due to
 issues per acquisition and
 consulting agreements                -          -            -        13,145
  
Cumulative increase in
 weighted average due to
 Convertible Preferred            139,795   1,053,519      416,780  1,053,519 

Cumulative increase in
 weighted average due to
 issues per Nonqualified
 Stock Option Plans                  -           -            -         2,729 
                                                                                
                               ----------   ---------    ---------  ---------
Weighted average shares,
 end of period                 12,737,885  10,329,192   12,737,885 10,329,192

</TABLE>

The convertible debentures ($650,000) and the convertible preferred stock 
($785,000) 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.

9.  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 year 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.

<PAGE>

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

RESULTS OF OPERATIONS

Overview: Consolidated sales were $4,866,961 for the nine months ended January 
31, 1999, compared to $3,718,693 for the nine months ended January 31, 1998, 
an increase of 30%.  Sales for the third fiscal quarter were $594,994 compared 
to  $1,211,434 for the three months ended January 31, 1998.  Sales for the 
nine month period decreased in the Avionics segment (24%), and the Monitoring 
Services segments (22%), and increased in the Aircraft Modifications segment 
(51%).  

The Company recorded a net (loss) of $(303,830) for the first nine months of 
fiscal 1999 compared to a profit of  $502,952 in the same period of fiscal 
1998.  Income was a loss of $(336,258) in the current quarter compared to a 
profit of $151,024 in the comparable period of fiscal 1998.

Selling, General and Administrative expenses increased $399,650 in the current 
quarter and decreased $48,990 for the nine months ending January 31, 1999.  
The increase of $399,650 during the current quarter was legal fees of 
approximately $147,000 related to the defense of the Company and the 
negotiation of a settlement with holders of the convertible preferred shares.
The original suit was reported in Item 3. of the Company's Annual Report on 
Form 10-K/A for the fiscal year ending April 30, 1998.

Administrative expenses related to payroll, travel and accounting fees also 
increased approximately $157,000 to support the legal defense of the company 
in this case and the analysis of the RF, Inc. bankruptcy case.  The Company 
has reserved approximately $260,000 legal expenses and bank payments to 
Industrial State Bank on the RF, Inc. case.

Avcon experienced an increase in Selling, General and Administrative cost of 
approximately $100,000 for the quarter due to the low overhead absorption 
related to the significant decrease in shipments during the quarter (see 
additional description below).

Aircraft Modifications (Avcon Industries, Inc.):  Sales at Avcon Industries, 
Inc. increased $1,288,166 (51%) from $2,491,544 in the first nine months of 
the prior year to $3,779,710 in the first nine months  ending January 31, 
1999.  Gross profit decreased from $1,055,075 in the nine months ending 
January 31, 1998 to $299,945 in the nine months ending January 31, 1999.  
Third quarter fiscal 1999 sales were $238,559 compared to $887,145 in fiscal 
1998.  Third quarter gross profit was a loss of $(170,824) and a profit of 
$304,913, respectively. This segment is experiencing increased sales demand 
from the sale of Falcon 20 Cargo Doors, AVCON FINS and fin related 
modifications.  This segment is continuing to work on the development of new 
products and expects to see an increase in sales and gross margin in the 
coming quarters of fiscal 1999.  

During the quarter, sales were down due to the failure of the customers to 
deliver the aircraft for modification as planned.  The cargo 
aircraft were busy with increased Christmas freight and a threatened strike by 
Federal Express.  All orders remained in the backlog.  Aircraft began to 
arrive as scheduled in January 1999 but not soon enough to make deliveries in 
the quarter.

Avionics (Woodson Avionics, Inc.):  Avionics  sales were $335,194 for the nine 
months ended January 31, 1999 compared to $444,624 in the comparable period of 
the preceding year, a decrease of 24%.  The decrease was a result of reduced 
sales to the Boeing McDonnell division.   Operating earnings for the nine 
months ended January 31, 1999, were $(25,634) compared to a gain of $66,061 
for the nine months ended January 31, 1998.  The Company believes the sales 
volume will remain relatively stable with steady growth from new projects for 
the next few years and hopes the relocation will allow this segment to expand 
and serve additional customers.

SCADA Systems and Monitoring Services (Butler National Services, Inc.):  Sales 
for the nine months ended January 31, 1999 were $699,388 compared to sales of 
$901,581 for the comparable period of the prior year a decrease of 22%.  Sales 
were down when compared to the prior year because of a special project 
completed in fiscal year 1998.  Gross profit for the nine months ended January 
31, 1999, was $273,758 compared to $334,264 for the nine months ended January 
31, 1998.  Sales for the third quarter of fiscal 1999 were $233,667, an 
increase of $23,614 from the same quarter of fiscal 1998. 

<PAGE>

Temporary Services (Butler Temporary Services, Inc.):   This segment did not 
recognize any revenue in the third quarter of fiscal 1998 and fiscal 1999.  
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. 

Indian Gaming Management: This segment earned interest income of $87,770 
during the current quarter and approximately $115,000 for the nine months.  
(See comments under the Stables).

<PAGE>

Management Services (Butler National Services Corporation):   

                                -General-

The Company received approximately $115,000 of interest income, reduced its 
debt by approximately $166,000 and incurred $8,299 in expenses in the first
nine months of fiscal 1999 and $29,569 in the first nine months of fiscal
1998 for general and administrative expenses associated with its continued
efforts to explore service opportunities related to the Indian Gaming Act of
1988.  

Additionally, the Company amortized $20,703 and $20,703 in the third quarter 
of 1999 and 1998, respectively, related to shares issued for services rendered 
to the Company in that regard.
 
The Company has invested $5,560,972 in land, land improvements, professional 
design fees and construction costs 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 and a house on four acres of land in Johnson County, Kansas.  
The Company believes that these tracts 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.  These development 
opportunities and the NIGC approved Management Contract for construction and 
operation of the STABLES may allow the Company to recover the majority, if not 
all, of the $5,560,972 investment (see Note 3).  

                         -Princess Maria Casino-

In 1992, the Company signed 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, by the Miami Tribe in the Federal District Court, alleging the failure 
to negotiate a compact in good faith by the State of Kansas.  This case has 
been dismissed.  The United States District 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 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 is 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 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.  The 
Tribe has resubmitted the management agreement, no approval 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 1997, the NIGC, again, found the 
land not suitable for gaming, based upon the BIA's determination that Reserve 
No. 35 is not "Indian land" pursuant to IGRA.  On August 11, 1997, the Miami 
Tribe filed another action to define the Indian land in the Federal District 
Court.  On May 12, 1998, the court ruled that the land was Indian Country 
under the jurisdiction of the Miami Tribe and remanded the question of whether 
the Tribe is exercising governmental powers to the Bureau of Indian Affairs.  
The BIA is to respond within six (6) months.  On January 15, 1999, the United 
States District Court for the District of Kansas in receipt of a Stipulation 
executed by the National Indian Gaming Commission ("NIGC") and the Miami Tribe 
ordered the case dismissed pursuant to the Stipulation.

<PAGE>

The Stipulation executed by the NIGC and the Miami Tribe acknowledges that the 
restricted Indian allotment surrounded by the State of Kansas known as the 
Maria Christiana Miami Reserve No. 35 is Indian land within the meaning of 25 
U.S.C. § 2703(4), the Indian Gaming Regulatory Act of 1988 ("IGRA"), over 
which the Miami Tribe of Oklahoma has jurisdiction and exercises governmental 
power.  These are the basic requirements for Indian gaming.

The Miami Tribe and the heirs of Princess Maria are completing plans to build 
and operate the Princess Maria Casino on the Maria Christiana Miami Reserve 
No. 35.  The Princess Maria Casino will be located upon the Maria Christiana 
Miami Reserve No. 35 which is within the extended greater metropolitan are of 
Kansas City.  The exact location is one-half mile southwest of Jingo, Kansas, 
20 miles south of the Johnson County line.  The establishment is to be managed 
by Butler National Service Corporation a wholly owned subsidiary of Butler 
National Corporation under the terms of a Management Contract signed by the 
Tribe and Butler currently under review by the NIGC.  The Company expects the 
Management Agreement to be approved by the NIGC within the next three to four 
months.  Upon final approval of the Management Agreement, the Miami Tribe is 
ready to proceed with construction and operation of the Princess Maria Casino 
in Miami County, Kansas.

                   -Stables Bingo and Off-Track Betting-

In 1994, the Company signed a Management Agreement with the Miami and Modoc 
Tribes.   A class III Indian Gaming Compact for a joint-venture by the Miami 
and Modoc Tribes, both of Oklahoma, has been approved by the State of Oklahoma 
and by the Assistant Secretary, Indian Affairs for the U.S. Department of the 
Interior.  The Compact was published in the Federal Register on February 6, 
1996, and is therefore, deemed effective.  The Compact authorizes Class III 
(Off-Track Betting "OTB") along with Class II (high stakes bingo) at a site 
within the City of Miami, Oklahoma.

The NIGC approved management contract between the Company and the Tribes to 
direct the development, the construction and to manage the joint-venture 
gaming enterprise (the STABLES) for the Tribes.  The facility is  
approximately 28,000 square-feet and to be located directly south of the Modoc 
Tribal Headquarters building in Miami.  The complex contains off-track betting 
windows, a bingo hall, electronic bingo machines, and a restaurant.  Under the 
Management Agreement as approved, the Company, as manager, is to receive a 30% 
share of the profits and reimbursement of the development costs.  The Stables 
grand opening was October 1, 1998.  Since opening, the Company has received 
payments from the Stables to reduce the Company's loan from Miller & Schroeder 
by approximately $166,000 and interest income of $115,000.

                            -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 and purchased a four acre tract contiguous to the Indian land.

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

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

<PAGE>

The tribal governments of the Shawnee Tribe and the Cherokee Nation are in the 
process of approving a land lease with the co-owners, a development agreement 
with the Company, and a long-term operating agreement between the Shawnee 
Tribe and the Cherokee Nation.  Plans are for the development of a Class II 
bingo establishment.  The Chief of the Cherokee Nation has announced his plans 
to support the formal recognition of the Shawnee Tribe by the federal 
government.  The Shawnee Tribe is working to complete the supporting 
documentation for the Bureau of Indian Affairs.

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 an NIGC approved management contract with the Modoc Tribe, to 
construct and operate a Class II Indian gaming facility on Modoc Reservation 
lands in Eastern Oklahoma.  The Tribe is working to acquire additional Indian 
land before this project can be started.


                             -Other Gaming-

The Company is currently reviewing other potential Indian gaming opportunities 
with other tribes.  These discussions are in the early stages of negotiation 
and there can be no assurance that these gaming opportunities will be 
successful.  The various management agreements have not yet been approved by 
the various governing agencies and therefore are not filed as exhibits to the 
document.
        
COSTS AND EXPENSES

The consolidated gross profit percentage declined to 15.8% for the nine months 
and .9% for the three months ended January 31, 1999, from 43.0% for the nine 
months and 32.4% for the three months ended January 31, 1998. 

Operating expenses (selling, general and administrative) in the nine months 
ended January 31, 1999, were $1,017,724 or 20.9% of sales compared to 
$1,066,714 or 28.6% of sales for the nine months ended January 31, 1998, a 
decrease of $48,990 or 1.3%.  Costs for the three month period were $582,929 
in fiscal 1999 and $183,279 in fiscal 1998. 

Interest expense for the nine months ended January 31, 1999, was $162,693 
compared to the first nine months of the prior year of $175,026.  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 Lear 35 in the first quarter of fiscal 1999 and
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 $(18,887) in the nine months ended January 
31, 1999, versus income of $334,359 for the nine months ended January 31, 
1998.  The income in 1998 resulted from the Eisenbath agreement.  

The Company employed 67 people at January 31, 1999, and 73 people at January 
31, 1998.

EARNINGS

The Company recorded a loss of $(303,830) in the nine months ended January 31, 
1999.  This is comparable to a profit of $502,952 in the nine months ended 
January 31, 1998.  Income per share is a loss of ($.02) per share and earnings 
per share of  $.05 for the nine months ending January 31, 1999, and January 
31, 1998, respectively.  Third quarter earnings were $(336,258) ($0.01 per 
share) in fiscal 1999 and a gain of $151,024 ($0.05 per share) in fiscal 1998.

CAPITAL RESOURCES

The Company had no material commitment for capital expenditures as of January 
31, 1999, except for the contingent advances to the Miami Tribe and Modoc 
Tribe for the construction of the gaming establishment.  The Company has 
advanced approximately $3,500,000 under the approved management contract.

<PAGE>

LIQUIDITY

Borrowed funds have been used primarily for working capital.  Bank debt is 
$2,308,094 at January 31, 1999, and  was $1,412,386 at January 31, 1998.  The 
Company's unused line of credit was approximately $159,793 as of January 31, 
1999, and approximately $537,614 as of January 31, 1998.  The interest rate on 
the Company's line of credit is prime plus two, as of January 31, 1999, the 
interest rate is 10%.

The Company plans to continue using the promissory notes payable due in 
February, 1999, as working capital.   The Company believes the extensions will 
continue and does not anticipate the full  repayment of these notes in fiscal
1999.  

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 has issued 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 share 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 WEI in fiscal 1997 and
88,034 shares to reduce the convertible debt by $150,000.

During fiscal 1998, the Company issued 460,722 shares for consulting,
professional services and expenses in lieu of cash payments.  To reduce the
$380,000 of convertible debt, 860,647 shares as a result of conversion were
issued.  Convertible debt was reduced by $450,000 in exchange for the issue
of 641,726 shares.

During the first nine months of fiscal 1999, 742, 722 shares were issued to
reduce the convertible preferred stock by $335,000.  In addition, the Company
issued 140,225 shares to purchase claims related to the discontinued 
operations of $140,225.

The Company's common stock is registered with the NASDAQ market system under
the symbol BUKS.  The stock was listed as a small cap stock until January 20,
1999.  The stock was delisted from the small cap category and now is listed
in the over-the-counter (OTC) category.  Since delisting, the stock continues
to trade and to be offered by twelve (12) market makers.  The Company has not
experienced a change in liquidity as a result of the delisting.  However, the
Company's depressed stock price, resulting from the constant selling pressure
of the conversion shares 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 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.  Legal Proceedings

     On September 30, 1998, the Trustee for the RF, Inc. involuntary 
bankruptcy filed suit in the U.S. Bankruptcy Court, Western District of 
Missouri, against the Company and the Directors alleging improper transfer of 
funds of approximately $1,500,000 to the Company and its subsidiaries from
RF, Inc. since April 21, 1994 asking that these funds be returned to RF, 
Inc.  The Company believes that all transfers were proper.  The Company is 
vigorously defending its position in bankruptcy court.

    On July 7, 1998 the Company stopped the conversion from Convertible
Preferred Stock to Common Stock because it believed the holders of the
Preferred Stock had violated the agreement with the Company.  The Company
and the holders of the Preferred Stock reached an agreement to settle this
dispute in February 1999 on terms favorable to the Company.  The original
suit was reported in Item 3. of the Company's Annual Report on Form 10-K/A
for the fiscal year ending April 30, 1998. 

Item 2.  Changes in Securities

     None
     
Item 4.  Submission of Matters to Vote of Security Holders

     The Company held a special meeting of the shareholders on January 4, 1999 
that did not have enough shares represented in person or by proxy to declare a 
quorum present.  The meeting was adjourned.  The purpose of the meeting was to 
consider action on a proposal to reverse split the Company's Common Stock.

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 Statement 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)




March 17, 1999                                 /S/Clark D. Stewart
     Date                                      Clark D. Stewart, (President
                                               and Chief Executive Officer)


March 17, 1999                                /S/Robert E. Leisure
     Date                                     Robert E. Leisure
                                              (Chief Financial Officer)