SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                        _________________
                                 
                            FORM 10-Q
                        _________________

(Mark One)
             Quarterly Report Pursuant to Section 13 or 15(d) of the
      X      Securities Exchange Act of 1934
                                 
             For the quarter ended October 31, 1997

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

             For the quarter ended October 31, 1997

             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.)


              1546 East Spruce Road, Olathe, Kansas             66061
             (Address of Principal Executive Office)          (Zip Code)


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


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

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


The number of shares outstanding of the Registrant's Common Stock, $0.01
par value, as of October 31, 1997, was 9,164,179 shares.



<PAGE>
<TABLE>

                       BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS

<CAPTION>                                             
ASSETS   
                                              10/31/97             4/30/97   
                                             (unaudited)
<S>                                              <C>                 <C>
                           
Current Assets:                              
  Cash                                        $ 202,751         $  256,449 
   Accounts receivable, net of allowance for
   doubtful accounts of $360,709 at October
   31, and $178,736 at April 30, 1997           686,436          1,289,571 
   
   Note  receivable - current                    83,400               -     
                                             
   Contracts in process                             -            1,123,673 
   Inventories:
      Raw materials                             883,581            711,762 
      Work in process                           161,772            121,687 
      Finished goods                            860,471            596,158 
                                           -------------      -------------
                                              1,905,824          1,429,607 
   Prepaid expenses and other assets            134,985            122,409 
                                           -------------      -------------
         Total current assets                 3,013,396          4,221,709 

Note receivable                                 145,950                -     

Supplemental Type Certificates                1,375,284          1,364,901 

Property, Plant and Equipment:                           
     Building                                   136,126            138,809 
     Machinery and equipment                  1,141,258          1,108,650 
     Office furniture and fixtures              505,481            498,830 
     Leasehold improvements                      94,333             58,474 
                                          -------------      --------------
         Total cost                           1,877,198          1,804,763 

     Accumulated depreciation                (1,018,756)          (938,058)
                                           -------------    ---------------
                                                858,442            866,705 

Other Assets (Note 1):
     Deferred costs of Indian Gaming          2,201,877          1,539,893 
     Aircraft and aircraft parts              2,056,281          2,056,281 
     Deferred costs: Eisenbath Agreement         -                 808,994 
     Other assets                               185,115            265,525 
                                          --------------       ------------
         Total Other Assets                   4,443,273          4,670,693 

         Total assets                        $9,836,345        $11,124,008 
                                              =========           ========
The accompanying notes are an integral part of these balance sheets. 




LIABILITIES AND SHAREHOLDERS' EQUITY      

Current Liabilities:
     Bank overdraft payable                 $     -            $    150,306 
     Promissory notes payable                 1,528,062             382,743 
     Current maturities of long-term debt        45,942              50,683 
     Accounts payable                           751,709             904,559 
     Customer Deposits                           99,409           1,520,035 
     Accrued liabilities -
      Compensation and compensated absences     157,536             312,812 
          Other                                 201,657             217,898 
                                            ------------       -------------
               Total current liabilities      2,784,315           3,539,036 
           
Long-Term Debt, net of current maturities     1,494,501           1,540,718 
Convertible debenture                           850,000           1,100,000 
Settlement agreement                             30,000              72,000 
                                           ------------       --------------
               Total liabilities              5,158,816           6,251,754 

Commitments and contingencies:

Shareholders' equity:
 Preferred stock, par value $5:
  Authorized, 200,000 shares, all classes                     
  $100 Class A, 9.8%, cumulative if earned,                   
  liquidation and redemption value $100,                   
  issued and outstanding, 20,000 shares         100,000            100,000 
 Capital contributed in excess of par         1,900,000          1,900,000 
Common stock, par value $.01:                      
  Authorized, 40,000,000 shares
  Issued 9,524,156 April 30, 1997 & 
  9,939,179 at October 31, 1997,                 99,499             95,242 
  Common stock warrants                           8,807              8,707 
  Capital contributed in excess of par        5,997,052          5,725,618 
Note receivable arising from stock
 purchase agreement                             (69,350)           (81,762)
Unearned service contracts                     (217,292)          (263,438)
Treasury stock, at cost (20,000
 preferred at 10/31 & 4/30                   (3,537,240)        (2,337,240)
 and common 775,000 at 10/31 &
 175,000 at 4/30)
Retained earnings                               396,053           (274,973)
 (Deficit of $11,938,813 eliminated
  October 31, 1992)
                                          --------------       ------------
 Total shareholders' equity                   4,677,529          4,872,254 
                                          --------------     --------------
 Total liabilities and shareholders' equity  $9,836,345        $11,124,008 
                                              =========          ========  

<FN>
<F1> The accompanying notes are an intregal part of these statements
</FN>
</TABLE>

<PAGE>
<TABLE>

                        BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF INCOME


<CAPTION>

                                                    THREE MONTHS ENDED         
                                                        October 31
                                                  1997               1996      
                                               (unaudited)        (unaudited) 
<S>                                                <C>                <C>

  Net sales                                     $2,227,450         $6,117,711 

  Cost of sales                                  1,439,461          5,087,388 

                                          ----------------   ----------------
 Gross profit                                      787,989          1,030,323 
                                                                         
 Selling, general and administrative expenses      674,344            948,540 
                                          ----------------   ----------------
  Operating income                                 113,645             81,783 
                                              
 Other income (expense):                                
  Interest expense                                 (52,604)           (66,742)
  Interest income                                    1,629             10,451 
    Net gain - Eisenbath Agreement                    -                   -     
  Other                                             19,403            (11,310) 
                                          ----------------   ----------------
  Other income                                     (31,572)           (67,601)
                                          ----------------   ----------------
 Income before taxes                                82,073             14,182 
                                                               
 Provision for income tax                           34,471              8,000 
                                          ----------------   ----------------
    Net income                               $      47,602     $        6,182 
                                                  ========            ========

    Net income per share                     $         .01     $          .01
                                                  ========            ========

  Shares used in per share calculation           9,739,160          9,505,144 
                                                  ========            ========


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



                       BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF INCOME



                                                     SIX MONTHS ENDED         
                                                        October 31
                                                      
                                                     1997             1996      
                                                 (unaudited)      (unaudited)
<S>                                                  <C>              <C> 

    Net sales                                     $5,180,360     $11,424,788 

  Cost of sales                                    3,431,028       9,366,536 

                                            ----------------    ----------------
 Gross profit                                      1,749,332       2,058,252 
                                                                         
 Selling, general and administrative expenses      1,412,214       1,854,332 
                                            ----------------    ----------------
  Operating income                                   337,118         203,920 
                                                        
 Other income (expense):                                         
  Interest expense                                  (127,107)       (123,097)
  Interest income                                      2,436          20,276 
    Net gain - Eisenbath Agreement                   456,345             -     
  Other                                                2,235         (14,027) 
                                            ----------------    ----------------
  Other income                                       333,909        (116,848)
                                            ----------------    ----------------
 Income before taxes                                 671,026          87,072 
                                                                         
 Provision for income tax                            281,831          17,700 
                                            ----------------    ----------------
    Net income                              $        389,195   $      69,372 
                                                    ========        =========

    Net income per share                    $            .04   $         .01
                                                   =========        =========

  Shares used in per share calculation             9,739,160       9,505,144 
                                                   =========        =========


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

 
                       BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                            Six Months Ended October 31,
                                                    1997            1996    
                                                  (unaudited)    (unaudited) 
<S>                                                  <C>            <C>   
Cash flows from operating activities:                         
               
 Net income                                    $    389,195     $   69,372   
  Adjustments to reconcile income to
  net cash used in operations:                                 
  Deferred income taxes                             281,831            -     
  Depreciation                                       80,698         43,287    
  Application of Supplemental Type Certificates     112,535            -      
  Provision for uncollectible accounts              181,973            -     
  Provision for obsolete inventories                 15,940            -     
  
Changes in assets and liabilities:                                              
  Accounts receivable                               421,162       (883,769)  
  Contracts in process                            1,123,673        355,961   
  Inventories (Increase)                           (492,157       (246,685)    
  Supplemental Type Certificates (Increase)        (122,918)           -     
  Prepaid expenses and other current
   assets (Increase)                                (12,576)      (409,786)
  Eisenbath Note                                     20,850            -
  Other assets                                       80,410       (527,447)    
  Accounts payable (decrease)                      (152,850)       263,174
  Customer deposits (decrease)                   (1,420,626)      (208,525)    
  Accrued liabilities (decrease)                   (171,517)       (42,268)    
  Settlement agreement (decrease)                   (42,000)           -     
                                           ----------------- ---------------
         Total adjustments                          (95,573)    (1,656,058)
 
                                          ------------------ ----------------  
     Cash provided by (used in) operations          293,622     (1,586,686) 
                                           -----------------  ---------------   
Cash flows from investing activities:      
 Capital expenditures, net                          (72,435)       (42,066)
 Deferred costs of Indian Gaming                   (661,984)           -
                                           -----------------  --------------   
 Cash provided by (used in)
 investing activities                              (734,419)       (42,066) 
                                           -----------------  --------------
Cash flows from financing activities:                                     
 Net borrowing under promissory notes             1,145,319         98,039 
   Proceeds from increase in line-of-credit            -           250,000     
    Retirement of convertible debentures           (250,000)           -       
    Repayments of long-term debt and
    lease obligations                               (50,955)        51,819
    Bank overdraft payable                         (150,306)       (83,666)
    Amortization of service contracts                46,146         33,229 
    Debenture conversion and other stock issues     288,101        805,997 
    Note receivable & redemption of common
    stock - Eisenbath Agreement                    (641,206)           -     
                                           -----------------  ---------------   
    Cash provided by (used in) financing
    activities                                      387,099      1,155,418 
                                           -----------------  ---------------  
   Net increase (decrease) in cash                  (53,698)      (473,334)   


   Cash, beginning of period                        256,449        745,647    
                                               -------------  -------------    
   Cash, end of period                        $     202,751   $    272,313    
                                                                      
Supplemental disclosures of cash flow
 information:                 
  Interest paid                               $     127,107   $    100,080     
  Income taxes                                       10,000         17,580 
                          
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, 1997 are not indicative of the results of operations that
may be expected for the year ending April 30, 1998.  

     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, 1997.

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 $2,201,877 and $1,539,893 at
October 31, 1997 and April 30, 1997, respectively,  of costs related to the
anticipated construction of three Indian gaming facilities.  These costs are
included in other assets in the accompanying balance sheet.   In the opinion
of management, these costs will be recoverable through the gaming activities
or, in event the Company is unsuccessful in establishing such operations,
these costs will be recovered through the liquidation of the associated
assets.  These costs include the following:

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

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

  Cash payments of approximately $82,000, $172,000, $65,000 and $57,000 in
1997, 1996, 1995, and 1994, respectively, for architectural, engineering and
construction services.

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

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

  Advances to the Indian Tribes for construction costs under an approved
Management Contract during fiscal 1998 of $661,984.

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 term of the
Settlement Agreement include payments by the Company to the individual
during fiscal 1998 and fiscal 1999.

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, 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.  

<PAGE>

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 October 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 transfer
of 125,000 shares of common stock valued at $250,000.  The loan balance is
currently $69,350.

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
October 31, 1997 and 1996.  Stock options are included in 1997 and 1996 as
common stock equivalents to the extent that they are dilutive.  The
Convertible debenture is included in fiscal 1996 and fiscal 1997 as a common
stock equivalent since the debenture is dilutive.  Shares used in the per
share computations are as follows:

<TABLE>
<CAPTION>

                                    THREE MONTHS ENDED    SIX MONTHS ENDED  
                                        October 31,          October 31,
                                   1997          1996      1997      1996
                                           <C>                   <C>     

Common shares outstanding
beginning of period               9,651,757  9,387,890   9,524,156  9,280,890   

Cumulative increase in weighted
average due to Common Stock
Equivalent net of treasury stock    (97,019)   192,005     (97,019)   147,413

Cumulative increase in weighted
average due to Convertible
Debenture                           171,922     85,284     299,523     97,303 
    
Cumulative increase in weighted
average due to issues per
acquisition and consulting
agreements                           12,500     31,576      12,500    115,245 
    
Cumulative increase in weighted
average due to issues per
Nonqualified Stock Option Plans        -           489         -        4,277 
                                         -------------         -------------
Weighted average shares, end of
period                            9,739,160  9,697,244   9,739,160  9,645,128

</TABLE>


9.  The Company acquired RF, Inc. on April 21, 1994.  The Company exchanged
650,000 shares of the Company's common stock for 100% of the issued and
outstanding shares of RF, Inc.  The individuals who sold RF, Inc. to the
Company have sought for some time to reacquire from the Company the ownership
of RF, Inc.  The Company and the individual reached an agreement to settle
and release all claims and counterclaims effective April 30, 1997,
("Eisenbath Agreement").  The individual dismissed the lawsuit with
prejudice.  In addition to the releases, under the terms of the agreement,
the Company received on June 26, 1997, 600,000 shares of the Company's
common stock and certain payments over the next three years.  The Company
released the individual from the terms of his employment contract and the
April 24, 1994, Stock Purchase Agreement.  These documents released the
individual from his agreement not to compete with the Company in the food
distribution industry.

The Company recorded a net gain (principally noncash) during the first
quarter of 1998 per the terms of the April 30, 1997, agreement.  Although
the effective date of the transaction as agreed to by  both parties is April
30, 1997, the transfer of the stock and related proceeds was not fully
completed until June 1997.

<PAGE>

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

RESULTS OF OPERATIONS

Overview: Consolidated sales were $5,180,360 for the six months ended
October 31, 1997, compared to $11,424,788 for the six months ended October
31, 1996, a decrease of 55%.  Sales for the second fiscal quarter were
$2,227,450 compared to  $6,117,711 for the three months ended October 31,
1996.  Sales for the six month period increased in the Avionics segment
(314%), the Aircraft Modifications segment (54%) and the Monitoring Services
segments (19%). Sales decreased in the Food Distribution segment (73%).  

The Company recorded a net income of $389,195 for the first half of fiscal
1998 compared to $69,372 in the same period of fiscal 1997.  Income was
$47,602 in the current quarter compared to $6,182 in the comparable period
of fiscal 1997.

Aircraft Modifications (Avcon Industries, Inc.):  Sales at Avcon Industries,
Inc. increased $564,630 (54%) from $1,039,769 in the first half of the prior
year to $1,604,399 in the first half  ending October 31, 1997.  Gross profit
increased from $293,007 in the six months ending October 31, 1996 to $529,705
in the six months ending October 31, 1997.  Second quarter fiscal 1998 sales
were $816,170 compared to $640,895 in fiscal 1997.  Second quarter gross
profit was $454,766 and $184,571, respectively. This segment is experiencing
increased sales volume from the sale of 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 1998.  

Avionics (Woodson Avionics, Inc.):  Avionics  sales were $321,789 for the
six months ended October 31, 1997 compared to $77,795 in the comparable
period of the preceding year, an increase of 314%.  Operating earnings for
the six months ended October 31, 1997, were $54,359 compared to a loss of
$86,553 for the six months ended October 31, 1996.   A portion of the loss
relates to expenses incurred due to the relocation of the facility to
Phoenix, Arizona.   The increase revenue is due to a closer location to
major customers like Boeing (McDonnell Douglas) and the increased
marketability of the new location.   The Company believes the sales volume
will remain relatively stable with steady growth 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 six months ended October 31, 1997 were $691,528 compared to
sales of $582,135 for the comparable period of the prior year an increase of
19%. Gross profit for the six months ended October 31, 1997, was $297,842
compared to $216,374 for the six months ended October 31, 1996.  Sales for
the second quarter of fiscal 1998 were $328,766, an increase of $373,247
from the same quarter of fiscal 1997.  This segment was awarded the
contracts with three additional municipalities to provide, install
and maintain Telemetry Systems to be performed totaling $500,000 during
fiscal 1997 and 1998.  Additionally, each of the contracts allow for the
continued maintenance of the systems which could be renewed on an annual
basis.  This work is in addition to the sales to its current customers.  The
Company believes with the acquisition of Woodson Electronics, Inc. operating
rights and assets, this segment will continue to develop and expand its
customer base.
 
Food Distribution (R F, Inc.):  Revenues from the Food Distribution business
segment decreased 73% from $9,716,938 in the first six months of  fiscal
1997 to $2,631,412 in the first six months of fiscal 1998.  The second
quarter revenues were $5,053,804 and $924,392 respectively.   As a result of
the redirection of the business toward the VALU FOODS concept and the
Eisenbath Agreement, RFI is being changed to emphasize the brand name
concept in the distribution of seconds, overruns, etc.  Gross profit
decreased from $642,007 in the six months ending October 31, 1996, to $529,704
in the six months ending October 31, 1997.  The segment operated with a net
income contribution of $11,579 for the six months and a loss of $87,055 for
the second quarter.

Temporary Services (Butler Temporary Services, Inc.):   This segment did not
recognize any revenue in the first quarter of fiscal 1997 and fiscal 1998. 
When the Company and the Tribes open the Indian gaming facilities, management
expects that a majority of the personnel in the various Indian gaming
enterprises will be staffed by Temporary Services. 

<PAGE>

Management Services (Butler National Services Corporation):   

                                         -General-
                                             
The Company received no revenue and incurred $34,365 in the first six months
of fiscal 1998 and $230,000 in the first six months of fiscal 1997 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 $46,146 and 33,229 in the first quarter
of 1998 and 1997, respectively, related to shares issued for services
rendered to the Company in that regard.
 
The Company has invested $2,201,877 in land, land improvements, professional
design fees and construction cost 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 $2,201,877 investment.  

                                  -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.  The Company and
the Tribe believe the land is in compliance with all laws and regulations. 
There can be no assurance that the Tribe will win in court.

<PAGE>
                                             
                           -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 proposed facility is
planned to be approximately 28,000 square-feet and to be located directly
south of the Modoc Tribal Headquarters building in Miami.  As currently
designed and under construction, the complex will contain off-track betting
windows, a bingo hall, 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.  

                                 -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.

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.

<PAGE>

     
COSTS AND EXPENSES

The consolidated gross profit percentage improved to 33.8% for the six
months and 35.4% for the three months ended October 31, 1997, from 18%
for the six months and 16.8% for the three months ended October 31, 1996.
This increase is related to the relative mix of sales volume between the
higher profit business segments and the lower profit food distribution
segment. 

Operating expenses (selling, general and administrative) in the six months
ended October 31, 1997, were $1,412,214 or 27.3% of sales compared to
$1,854,322 or 16.2% of sales for the six months ended October 31, 1996, a
decrease of $442,108 or 23.8%.  Costs for the three month period were
$675,267 in fiscal 1998 and $1,028,093 in fiscal 1997.  The majority of the
decreased expenses directly relate to the decreased activity at the Food
Distribution segment.

Interest expense for the six months ended October 31, 1997, was $127,106
compared to the first six months of the prior year of $123,097.  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.

Other income(expense) is income of $457,915, primarily from the Eisenbath
deal, in the six months ended October 31, 1997, versus expense of $14,027 
for the six months ended October 31, 1996.  

The Company employed 60 people at October 31, 1997, and 68 people at October
31, 1996.

EARNINGS

The Company recorded a profit of $389,195 in the six months ended October 31,
1997.  This is comparable to a profit of $69,372 in the six months ended
October 31, 1996.  Income per share is $.04 and income per share is $.01 for
the six months ending October 31, 1997, and October 31, 1996, respectively.
Second quarter earnings were $47,602 ($0.01 per share) in fiscal 1998 and
$6,182 in fiscal 1997.

CAPITAL RESOURCES

The Company had no material commitment for capital expenditures as of
October 31, 1997, except for the advances to the Miami Tribe and Modoc Tribe
for the construction of the gaming establishment.  The Company has advanced
approximately $1,000,000 under the approved management contract.  The
Company is working with potential investors to fund the remaining $2,000,000
to complete the opening.

 LIQUIDITY

Borrowed funds have been used primarily for working capital.  Bank debt is
$1,528,062 at October 31, 1997, and was $649,473 at October 31, 1996.
The Company's unused line of credit was approximately $423,888 as of October
31, 1997, and approximately $216,951 as of October 31, 1996.  The interest
rate on the Company's line of credit is prime plus two, as of December 15,
1997, the interest rate is 10.25%.

The Company plans to continue using the promissory notes payable due in
February, 1998, as working capital.   The Company believes the extensions
will continue and does not anticipate the repayment of these notes in fiscal
1998.  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.

<PAGE>

The Company is operating a retail market test under its registered trade
name, VALU FOODS , of the products being distributed by RFI.  Two or more
test stores are planned in smaller communities.  Capital to finance this
planned test marketing of approximately $500,000 may be required during
fiscal 1998.

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

FORWARD LOOKING INFORMATION

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

<PAGE>
                       
                  PART II.
                                      OTHER INFORMATION
Responses to items 1, 3, and 5 are omitted since these items are either
inapplicable or the response thereto would be negative.

  Item 2. Changes in Securities

  On September 15, 1997, the Company issued 115,500 shares of restricted
  common stock, $.01 par value, for the amended warrants exercised under the
  1933 Regulation D offering in the amount of $103,950.  The shares were
  issued to the 1993 accredited investors.

  On September 16, 1997, the Company issued 61,538 shares of common stock,
  $.01 par value, for the convertible debenture in the amount of $50,000
  face value plus interest.  The shares were issued to an accredited 
  investor.  The transaction was executed in reliance upon the exemption
  from registration afforded by Regulation S as promulgated by the
  Securities and Exchange Commission, under the Securities Act of 1933, as
  amended.

  On October 14, 1997, the Company issued 110,384 shares of common stock,
  $.01 par value, for the convertible debenture in the amount of $100,000
  face value plus interest.  The shares were issued to an accredited
  investor.  The transaction was executed in reliance upon the exemption
  from registration afforded by Regulation S as promulgated by the
  Securities and Exchange Commission, under the Securities Act of 1933, as
  amended.

Item 4. Submission of Matters to Vote of Security Holders

  The Company held the annual meeting of shareholders on October 21, 1997.
  In addition to the election of directors, the following items were
  submitted to and approved by the shareholders.

  The ratification of the selection of Arthur Andersen LLP as auditors for
  the fiscal year ending April 30, 1998.  Shares voting for appointing
  Arthur Andersen LLP wer 6,198,238, against 402,510, and abstentions were
  84,788.

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

  Articles of Incorporation, as amended are incorporated by reference to
  Exhibit B of the Company's Proxy Statement dated August 16, 1996.

  Bylaws, as amended, are incorporated by reference to Exhibit C the
  Company's Proxy Statement dated August 16, 1996.

  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-Q for the quarter ended January
  31, 1997.

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




  (B) Reports on Form 8-K.

  The Company filed a Form 8-K dated September 16, 1997 reporting under Item 9.
  Sales of Equity Securities pursuant to Regulation S.

  The Company filed a Form 8-K dated October 14, 1997 reporting under Item 9.  
  Sales of Equity Securities pursuant to Regulation S.


<PAGE>

                                         SIGNATURES



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



BUTLER NATIONAL CORPORATION
(Registrant)





December 19, 1997            /S/ Clark D. Stewart       
      Date                   Clark D. Stewart, (President
                             and Chief Executive Officer)


December 19, 1997            /S/ Edward J. Matukewicz
      Date                   Edward J. Matukewicz,
                             (Treasurer and Chief
                             Financial Officer)

<PAGE>