|SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.                                                                                                                                                                                                                                        
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|----------------------------------FORM 10-Q-----------------------------------                                                                                                                                                                                                            
|(Mark One)
X                                                                                                                                                                                                                                                                              
|For the quarter ended July 31, 2004                                                                                                                                                                                                                                                       
|Transition Report Pursuant to Section 13 or 15(d) of the Security Exchange Act of 1934 (No Fee Required)                                                                                                                                                                                  
|For the quarter ended July 31, 2004                                                                                                                                                                                                                                                       
|Commission File Number 0-1678                                                                                                                                                                                                                                                             
|BUTLER NATIONAL CORPORATION(Exact name of Registrant as specified in its charter)                                                                                                                                                                                                         
|Kansas(State of Incorporation)                                                                                                                                                                                                                                                            
|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                                                                                                                                                                                           
|Common Stock $.01 Par Value(Title of Class)                                                                                                                                                                                                                                               
|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 XNo ____
|The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of September 10, 2004 was 40,075,871 shares.                                                                                                                                                       

|BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
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|INDEX                                       
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|PART I.                                     
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|Part_II.                                    
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|BUTLER NATIONAL CORPORATION                                                        
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|CONDENSED CONSOLIDATED BALANCE SHEETS                                              
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|ASSETS                                                                             
|CURRENT ASSETS:                                                                    
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|PROPERTY, PLANT AND EQUIPMENT:                                                     
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|SUPPLEMENTAL TYPE CERTIFICATES                                                     
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|ADVANCES FOR INDIAN GAMING DEVELOPMENTS                                            
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|OTHER ASSETS                                                                       
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|Total assets                                                                       
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|The accompanying notes are an integral part of these condensed financial statements
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|BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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|NET SALES                                                                               
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|COST OF SALES                                                                           
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|GROSS PROFIT                                                                            
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|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                            
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|OPERATING INCOME (LOSS)                                                                 
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|OTHER INCOME (EXPENSE)                                                                  
|Interest expense                                                                        
|Interest revenue                                                                        
|Other                                                                                   
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|Other expense                                                                           
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|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES                                         
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|PROVISION FOR INCOME TAXES                                                              
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|NET INCOME (LOSS)                                                                       
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|BASIC EARNINGS (LOSS) PER COMMON SHARE                                                  
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|Shares used in per share calculation                                                    
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|DILUTED EARNINGS (LOSS) PER COMMON SHARE                                                
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|Shares used in per share calculation                                                    
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|The accompanying notes are an integral part of these condensed financial statements.    



|BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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|CASH FLOWS FROM OPERATING ACTIVITIES                                                        
|Net income (loss)                                                                           
|Adjustments to reconcile net income (loss) to net cash provided by                          
|(used in) operations -                                                                      
|Depreciation                                                                                
|Changes in assets and liabilities:                                                          
|Accounts receivable                                                                         
|Inventories                                                                                 
|Prepaid expenses and other current assets                                                   
|Accounts payable                                                                            
|Customer deposits                                                                           
|Accrued liabilities                                                                         
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|Cash provided by (used in) operations                                                       
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|CASH FLOWS FROM INVESTING ACTIVITIES                                                        
|Capital expenditures, net                                                                   
|Advances for Indian Gaming Developments, net                                                
|Payments received on Indian Gaming note receivable                                          
|Supplemental Type Certificates                                                              
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|Cash provided by (used in) investing activities                                             
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|CASH FLOWS FROM FINANCING ACTIVITIES                                                        
|Proceeds from stock option exercises                                                        
|Net borrowings under promissory note                                                        
|Repayments of long-term debt and capital lease obligations                                  
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|Cash provided by (used in) financing activities                                             
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|NET INCREASE (DECREASE) IN CASH                                                             
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|CASH, beginning of period                                                                   
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|CASH, end of period                                                                         
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|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                           
|Interest paid                                                                               
|Income taxes paid                                                                           
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|The accompanying notes are an integral part of these condensed financial statements.        

|BUTLER NATIONAL CORPORATION AND SUBSIDIARIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|1.   The accompanying unaudited condensed 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.  Therefore, these financial statements should be read in conjunction with the annual report on Form 10-K dated April 30, 2004.  In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included.  Operating results for the three months ended July 31, 2004 are not indicative of the results of operations that may be expected for the year ending April 30, 2005.
Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2.  Advances for Indian Gaming Development: We are advancing funds for the establishment of Indian gaming. These funds have been capitalized in accordance with Statements of Financial Accounting Standards (SFAS) 67 "Accounting for Costs and Initial Rental Operations of Real Estate Projects."  Such standard requires costs associated with the acquisition, development, and construction of real estate and real estate related projects to be capitalized as part of that project.  The realization of these advances is predicated on the ability of the Company and their Indian gaming clients to successfully open and operate the proposed casinos.  There is no assurance that we will be successful.  The inability to recover these advances could have a material adverse effect on our financial position and results of operations.
Advances to the tribes and for gaming developments are capitalized and recorded as receivables from the tribes.  These receivables, shown as Advances for Indian Gaming Development on the balance sheet, represent costs to be reimbursed to us pending approval of Indian gaming in several locations.  We have agreements in place which require payments to be made to us for the respective projects upon opening of Indian gaming facilities.  Once gaming facilities have gained proper approvals, we will enter into note receivable arrangements with the tribe to secure reimbursement of advanced funds for the particular project.  However, reserves have been recorded for Indian gaming development costs when we are unable to determine whether reimbursement from the tribes will occur.  We have agreements with the Tribes to be reimbursed for all costs incurred to develop gaming when the facilities are constructed and open.  
Advances for Indian Gaming Developments totaled approximately $4,718,991 and $4,718,991 at July 31, 2004 and April 30, 2004 respectively, related to the development of Indian gaming facilities.  These amounts are net of reserves of $2,712,440 at April 30, 2004.  Current economic projections for the gaming activities indicate adequate future cash flows to recover the advances.  In the event we are unsuccessful in establishing gaming operations, these net advances will be recovered through the liquidation of the associated assets.
|3.  Earnings Per Share: Earnings per common share is based on the weighted average number of common shares outstanding during the year.  Stock options have been considered in the dilutive earnings per share calculation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.  Research and Development: We charge to operations research and development costs.  The amount charged in the quarters ended July 31, 2004 and 2003 were approximately $328,127 and $313,000 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
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|AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|First quarter fiscal 2005 compared to first quarter fiscal 2004Our sales for the three months ended July 31, 2004 were $5,171,758 compared to $2,024,107 for the three months ended July 31, 2003, an increase of (155%).  CAUTION:  Modification and Avionics currently contribute to this increase.  There can be no assurance that activity will continue at this level.Discussion of the specific changes by operation follows:Aircraft Modifications:  Sales from the Aircraft Modifications business segment including modified aircraft increased $2,054,097 (198.5%) from $1,034,867 in the first quarter of the prior fiscal year to $3,088,964 in the current first quarter of fiscal 2005.  First quarter operating income was $473,157 in fiscal 2005 compared to income of $74,495 in fiscal 2004.  Our emphasis is on the Learjet 20 series including the purchase, modification and resale of upgraded twenty-first century Learjets.  Our long-term effort is to enhance our position in the market and increase market share of all modification products. Avionics:  Sales from the Avionics business segment were $637,389 for the three months ended July 31, 2004 compared to $323,710 in the comparable period of the preceding year, an increase of (97%).  The increase resulted from Defense Military related Classic Aviation products sales.  Operating profit for the three months ended July 31, 2004, was $51,964 compared to a loss of $43,364 for the three months ended July 31, 2003.  Defense and Military related Classic Avionics products are being designed, manufactured and sold to military aircraft manufacturers.  Management plans for this business segment to continue to increase in future years due to the additional new Classic Aviation Products.Services - SCADA Systems and Monitoring Services:  Sales from the Scada Systems and Monitoring Services business segment for the three months ended July 31, 2004 were $284,745 compared to sales of $274,233 for the comparable period of the prior year an increase of (3.8%).  Operating profit for the three months was $1,861 compared to $3,919 for the three months ended July 31, 2003.  Revenue fluctuates due to the introduction of new products and services and related installations of these products.  Our contracts with its two largest customers have been renewed for fiscal 2005.  Corporate / Professional Services:  We provide as a management service licensed architectural services through our subsidiary, BCS Design, Inc.  These services include commercial and industrial building design and graphic representation.  We also provide as a management service professional design, development and management of Indian gaming establishments.  These services include the architectural services of BCS Design, Inc., arrangements for financing, and on site contract management of establishments for Indian tribes and others.  Management consulting and professional service fees for the three months ended July 31, 2004 were $455,971 compared to $391,928 in the comparable period of the preceding year, an increase of (16.5%).  Sales recorded from the development programs related to these services for pass-thru costs were $704,690 for the three months ended July 31, 2004.
Selling, General and Administrative (SG&A): Expenses in the three months ended July 31, 2004, were $772,577 or (15%) of sales compared to $509,394 or (25%) of sales for the three months ended July 31, 2003, an increase of $263,183 or 51.7%.Other Income (Expense): Other income is $3,644 in the quarter ended July 31, 2004, versus $4,034 in the quarter ended July 31, 2003.
Interest expense for the three months ended July 31, 2004, increased $37,304 from $32,854 in the first quarter of the prior year to $70,158.  We continue to use our line of credit to maintain operations.
We employed 74 at July 31, 2004, and 65 at July 31, 2003.
|EARNINGSWe recorded income of $423,929 in the three months ended July 31, 2004.  This is comparable to income of $200,601 in the three months ended July 31, 2003.  Income (Loss) per share is $0.01 and $0.01 for the three months ending July 31, 2004, and July 31, 2003, respectively.LIQUIDITY AND CAPITAL RESOURCESBorrowed funds have been used primarily for working capital.  Bank (Industrial State Bank) debt related to our operating line was $309,934 at July 31, 2004, and was $200,841 at July 31, 2003.  Our unused line of credit was approximately $190,066 as of July 31, 2004 and approximately $107,126 as of July 31, 2003.  The interest rate on our line of credit is prime plus two (with a floor of 7%).  As of September 10, 2004, the interest rate is 7.0%.
We opened a new line of credit at ISB February 10, 2004 to support the additional inventory requirements of the RVSM product line.  The current debt relating to this line of credit was $1,177,758 at July 31, 2004.
We have additional short-term promissory notes with two other banks to finance the increased RVSM related activities.  Net advances against these loans were $635,194 during the three months ended July 31, 2004.
We plan to continue using the promissory notes payable to fund working capital.  We believe the extensions will continue and do not anticipate the repayment of these notes in fiscal 2005.  The extension of the promissory notes-payable is consistent with prior years.  If the Bank were to demand repayment of the notes payable we currently do not have enough cash to pay off the notes without materially adversely affecting the financial condition of the Company.
We do not, as of July 31, 2004 have any material commitments for other capital expenditures other than the terms of the Indian gaming Management Agreements.  Depending upon the development schedules, we will need additional funds to complete its currently planned Indian gaming opportunities.  We will use current cash available as well as additional funds, for the start up and construction of gaming facilities. We anticipate initially obtaining these funds from internally generated working capital and borrowings.  After a few gaming facilities become operational, gaming operations will generate additional working capital for the start up and construction of other gaming facilities.  We expect that our 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 INFORMATIONThe information set forth below includes "forward-looking" information as outlined in the Private Securities Litigation Reform Act of 1995.  The Cautionary Statements, filed by us as Exhibit 99 to its Form 10-K, are incorporated herein by reference and you are specifically referred to such Cautionary Statements for a discussion of factors which could affect our operations and forward-looking statements contained herein                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Part I Item 3:
Quantitative and Qualitative Disclosures about Market RiskNone Part I Item 4Controls and ProceduresWe maintain a set of disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Our principal executive and financial officers have evaluated our disclosure controls and procedures within 90 days prior to the filing of this Quarterly Report on Form 10-Q and have determined that such disclosure controls and procedures are effective.
Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|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.
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|SIGNATURES                                                                                                                                                                              
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|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.
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|September 14, 2004
Date                                                                                                                                                                 
|September 14, 2004
Date