SECURITIES AND EXCHANGE COMMISSION
           Washington, D.C.
          __________________

               FORM 10-K
            _______________

(Mark One)        Annual Report Pursuant to Section 13 or 15(d) of the
        X                       Securities Exchange Act of 1934 (Fee Required)

For the fiscal year ended April 30, 2001

Transition Report Pursuant to Section 13 or 15(d) of the

Security Exchange Act of 1934 (No Fee Required)
For the Transition Period from __________ to __________.

     Commission File Number 0-1678

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:

     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   X
  No ____

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10- K. [ ]

     The aggregate market value of the voting stock held by
nonaffiliates of the Registrant was approximately $3,077,031 at July 30,
2001, when the average bid and asked prices of such stock was $0.14.

     The number of shares outstanding of the Registrant's Common
Stock, $0.01 par value, as of July 30, 2001, was 37,283,278 shares.



DOCUMENTS INCORPORATED BY REFERENCE: NONE

This Form 10-K consists of 51 pages (including exhibits).  The index to
exhibits is set forth on pages 23-25.
<PAGE>
PART I

Item 1.  BUSINESS

Forward Looking Information

The information set forth below includes "forward-looking" information
as outlined in the Private Securities Litigation Reform Act of 1995.  The
Cautionary Statements, filed by the Company as Exhibit 99 to this Form
10-K, are incorporated herein by reference and you are specifically
referred to such Cautionary Statements for a discussion of factors which
could affect the Company's operations and forward-looking statements
contained herein.

General

Butler National Corporation (the "Company" or "BNC") is a Delaware
corporation formed in 1960, with corporate headquarters at 19920 West
161st Street, Olathe, Kansas 66062.

Current Activities.  The Company's current product lines and services
include:

  Aircraft Modifications - principally includes the modification of
     customer and company owned business-size aircraft from
     passenger to freighter configuration, addition of aerial
     photography capability, and stability enhancing modifications
     for Learjet, Beechcraft, Cessna, and Dassault Falcon aircraft
     along with other modifications.  We provide these services
     through our subsidiary, Avcon Industries, Inc. ("Aircraft
     Modifications" or "Avcon").  Avcon also acquires, modifies and
     resells aircraft, principally Learjets.

  Avionics - principally includes the manufacture of airborne
     switching units used in DC-9, DC-10, DC-9/80, MD-80, MD-90
     and the KC-10 aircraft and Transient Suppression Devices
     (TSD's) for fuel tank protection on Boeing Classic aircraft.  We
     provide these services through our subsidiary, Butler National
     Corporation - Tempe, Arizona ("Switching Units", "Avionics"
     or "WAI").

  Gaming - principally includes business management services and
     advances to Indian tribes in connection with the Indian Gaming
     Regulatory Act of 1988.  We provide these advances through
     our subsidiary, Butler National Service Corporation
     ("Management Services", "Gaming" or "BNSC").

  SCADA Systems and Monitoring Services - principally includes
     the monitoring of water and wastewater remote pumping
     stations through electronic surveillance for municipalities and
     the private sector and related repair services.  We provide these
     services through our subsidiary, Butler National Services, Inc.
     ("Monitoring Services" or "BNS").

  Temporary Services - provides temporary employee services for
     corporate clients.  We provide these services through our
     subsidiary, Butler Temporary Services, Inc. ("Temporary
     Services" or "BTS").







     Assets as of April 30, 2001 and Net Revenues for the year
ended April 30, 2001.


Industry Segment
Assets
Revenue


Aircraft Modifications
46.2%
54.7%


Avionics
4.4%
17.1%


Gaming
37.4%
7.3%


Monitoring Services
1.6%
18.9%


Temporary Services
0.0%
0.0%


Corporate Office
10.4%
2.0%



Regulations

Regulation Under Federal Aviation Authority:  The Company's
Avionics and Modifications segments are subject to regulation by the
Federal Aviation Authority (the "FAA").  The Company manufactures
products and parts under FAA Parts Manufacturing Authority (PMA)
requiring qualification and traceability of all materials and vendors used
by the Company.  The Company makes aircraft modifications pursuant to
the authority granted by Supplemental Type Certificates issued by the
FAA.  The Company repairs aircraft parts pursuant to the authority
granted by its FAA Authorized Repair Station.  Violation of the FAA
regulations could be detrimental to the Company's operation in these
business segments.

Licensing and Regulation under Indian Law:  Before commencing
gaming operations (Class II or Class III) on Indian Land, the Company
must obtain the approval of various regulatory entities.  Gaming on
Indian Land is extensively regulated by Federal, State and Tribal
governments and authorities.  Regulatory changes could limit or
otherwise materially affect the types of gaming that may be conducted on
Indian Land.  All aspects of the Company's proposed business operations
on Indian Lands are subject to approval, regulation and oversight by the
BIA, the Secretary of the United States Department of the Interior (the
"Secretary") and the National Indian Gaming Commission.  The
Company's proposed management of Class III gaming operations in
Kansas and Oklahoma are also subject to approval of a Class III Gaming
Compact between the Indian Tribe and the States of Kansas and/or
Oklahoma.   Failure of the Company to comply with applicable laws or
regulations, whether Federal, State or Tribal, could result in, among other
things, the termination of any management agreements which would have
a material adverse effect on the Company.  Management agreement terms
are also regulated by the IGRA, which restricts initial terms to five years
and management fees to 30% of the net profits of the casino, except in
certain circumstances where the term may be extended to seven years and
the management fee increased to 40%.  Management agreements with
Indian Tribes will not be approved by the Commission unless, among
other things, background checks of the directors and officers of the
manager and its ten largest holders of capital stock have been
satisfactorily completed.  The Company will also be required to comply
with background checks as specified in Tribal-State Compacts before it
can manage gaming operations on Indian Land.  Background checks by
the Commission may take up to 180 days, and may be extended to 270
days by written notice to the Indian Tribe. There can be no assurance that
the Company would be successful in obtaining the necessary regulatory
approvals for its proposed gaming operations on a timely basis, or at all.


Licensing and Regulation under Kansas Law:  Present and future
shareholders of the Company are and will continue to be subject to
review by regulatory agencies.  In connection with the Company's
proposed operation of a Class III Shawnee Tribe casino or a Class III
Miami Tribe casino in Kansas, the Company, the appropriate Indian
Tribe and the key personnel of all entities may be required to hold Class
III licenses approved in the respective state prior to conducting
operations.  The failure of the Company or the key personnel to obtain or
retain a license in these states could have a material adverse effect on the
Company or on its ability to obtain or retain Class III licenses in other
jurisdictions. Each such State Gaming Agency has broad discretion in
granting, renewing and revoking licenses. Obtaining such licenses and
approvals will be time consuming and cannot be assured. The State of
Kansas has approved pari-mutuel dog and/or horse racing for non-Indian
organizations.  The State of Kansas operates lottery and keno games for
the benefit of the State.  There is no assurance that a Tribal/State
Compact between the Tribes and the State of Kansas can be completed.
If the Compact is not approved, there could be a material adverse effect
on the Company's plans for Class III gaming in Kansas.

As a condition to obtaining and maintaining a Class III license, the
Company must submit detailed financial and other reports to the Indian
Tribe and the Agency.  Any person owning or acquiring 5% or more of
the Common Stock of the Company must be found suitable by the
Agency, and the Agency has the authority to require a finding of
suitability with respect to any shareholder regardless of the percentage of
ownership.  If found unsuitable by the Agency or the Indian Tribe, the
shareholder must offer all of the Ownership Interest held by such
shareholder to the Company for cash at the current market bid price less
a fifteen percent (15%) administrative charge and the Company must
purchase such Interest within ten days of the offer.  The shareholder is
required to pay all costs of investigation with respect to a determination
of his/her suitability.  In addition, each member of the board of directors
and certain officers of the Company are subject to a finding of suitability
by the Agency and the Indian Tribe.


Financial Information about Industry Segments

Information with respect to the Company's industry segments are found
at Note 14 of Notes to Consolidated Financial Statements for the year
ended April 30, 2001, located herein at page 46.

Narrative Description of Business

Aircraft Modifications:  Our subsidiary, Avcon, modifies business type
aircraft at Newton, Kansas.  The modifications include aircraft
conversion from passenger to freighter configuration, addition of aerial
photography capability, stability enhancing modifications for Learjets,
and other special mission modifications.  Avcon offers aerodynamic and
stability improvement products for selected business jet aircraft.  Avcon
makes these modifications on Company owned aircraft for resale and
customer owned aircraft.

Sales of the Aircraft Modifications product line are handled directly
through Avcon.  Specialty modifications are quoted individually by job.
The Company is geographically located in the marketplace for Aircraft
Modifications products.  The Company believes there are two primary
competitors (AAR of Oklahoma, and Raisbeck Engineering) in the
industry in which the Aircraft Modifications division participates.

The Aircraft Modifications business derives its ability to modify aircraft
from the authority granted to it by the Federal Aviation Administration
("FAA").  The FAA grants this authority by issuing a Supplemental Type
Certificate ("STC") after a detailed review of the design, engineering and
functional documentation, and demonstrated flight evaluation of the
modified aircraft.  The STC authorizes Avcon to build the required parts
and assemblies and to perform the installations on applicable customer-
owned aircraft.

Avcon owns over 200 STC's.  When the STC is applicable to a multiple
number of aircraft it is categorized as Multiple-Use STC.  These
multiple-use STC's are considered a major asset of the Company.  Some
of the Multiple-Use STC's include the Beechcraft Extended Door, Learjet
AVCON FINS, Learjet Extended Tip Fuel Tanks, Learjet Weight
Increase Package and Dasault Falcon 20 Cargo Door.

On May 3, 1996, Avcon received approval from the Federal Aviation
Administration of a Supplemental Type Certificate ("STC") (no.
ST00432WI) for its AVCON FIN Modification for installation on
Learjet Model 35 and 36 Aircraft.  FAA pilots thoroughly evaluated the
test aircraft, and determined that the fins substantially increase the
aerodynamic stability in all flight conditions.  The AVCON FIN STC
eliminates the operational requirement for Yaw Dampers which are
otherwise required in both Learjet models to control adverse yaw
tendencies in certain flight conditions, particularly during approach and
landing.  Learjets equipped with AVCON FINS exhibit the same
aerodynamic stability and improved operating efficiency offered on
newer Learjet models, while maintaining the outstanding range, speed
and load-carrying capabilities that made the Learjet Models 35 and 36
among the most popular Business Jets ever produced.  Mounted like the
fins of an arrow on the rear of the aircraft, Learjets equipped with
AVCON FINS have a new look much the same as the current production
aircraft.  This modification will give the Learjets produced in the 1970's
and 1980's the look of the 21st century.

Aircraft - Acquisition, Modification and Sales:  The Company through
its Avcon subsidiary actively pursues airplanes, principally Learjets,
modifies the planes and sells the planes directly to customers or receives
a broker fee for finding a specific airplane.  In fiscal 1999, the Company
sold a Learjet for $2,100,000.

Avionics - Switching Units:  The Company has an agreement with
Boeing McDonnell Douglas to manufacture and repair airborne
switching systems for Boeing McDonnell Douglas and its customers.
The Company subcontracts with its wholly owned subsidiary, Butler
National Corporation - Tempe, Arizona, (formerly Woodson Avionics,
Inc.), for the manufacture and repair of Switching Units.  Switching Units
are used to switch the presentation to the flight crew from one radio
system to another, from one navigational system to another and to switch
instruments in the aircraft from one set to another.  The Switching Units
are designed and manufactured to meet Boeing McDonnell Douglas and
FAA requirements.  Most Boeing McDonnell Douglas commercial
aircraft are equipped with one or more Butler National Switching Units.

Marketing is accomplished directly between the Company and Boeing
McDonnell Douglas.  Competition is minimal.  However, sales are
directly related to Boeing McDonnell Douglas' production of DC-9, DC-
10, DC9/80, MD-80, MD-90, MD-11 and KC-10 tanker aircraft.  The
current Boeing McDonnell Douglas contract was completed in fiscal
2000.  The customer stopped aircraft production in the year 2000. The
impact on our business of stopping production will be minimal due to
planning on this issue for many years.  The Company has received
additional contracts for these products, which has sustained our business.

Avionics provides new replacement units and overhaul service directly to
the major airlines using the aircraft manufactured by McDonnell
Douglas.  This part of the Avionics business segment is growing to offset
the loss of sales from the original equipment units.

The Company sells to Boeing McDonnell Douglas on terms of 2% 10
days, net 30 days.  This means that the terms offered to this customer
represent that if the entire invoice is paid within 10 days then there will
be a 2% discount.  If not, then the total amount due is payable within 30
days.

Most payments have been and continue to be within those terms.  The
Company has ordinary course of business purchase orders from the
commercial division (Douglas Aircraft Company) for products with
scheduled shipment dates into the fiscal year 2000.  However, should
Boeing McDonnell Douglas financially reorganize or for some other
reason not accept shipment against these orders, the Company could
suffer significant loss of revenue.

Avionics - Safety Products: Our mission is to provide and support
economical products for older aircraft, often referred to as "Classic"
aircraft.  As a result of more than 35 years in the aircraft switching unit
business, we recognize the need to support many aircraft in the last half
of their expected service life.  We have adopted a business theme that
promotes us as a designer and supplier of "Classic Aviation Products".
These Classic products are a part of our Avionics business segment.  A
part of the Classic products are directed to supporting safety of flight for
the older aircraft ("Safety Products").

We worked with Honeywell to design the Butler National Transient
Suppression Device ("TSD").  The TSD is approved and certified by the
Federal Aviation Administration ("FAA") under STC number
ST00846SE and is owned, manufactured and marketed by us.  We sell
the TSD to the owners and/or operators of Boeing 747 Classic aricraft
with a Honeywell Fuel Quantity Indicating System ("FQIS").  The TSD
is one solution to the requirements of AD 98-20-40 issued by the FAA to
protect the aircraft fuel tanks from hazardous energy levels introduced
through the wiring of the FQIS.  The AD was issued as a result of the
TWA 800 accident in July 1996.  The industry has until November 3,
2001 to comply with AD 98-20-40.

There are approximately 400 Boeing 747 Classic aircraft with Honeywell
FQIS.  The actual number of aircraft needing our TSD is hard to estimate
because a number of these aircraft will be permanently removed from
service, a number will have the FQIS system converted from the
Honeywell system to a BF Goodrich digital or Smiths digital system, and
a number will be protected by a Boeing/BF Goodrich protection device.
We believe that all of the other protection alternatives are more
expensive and more complex than our TSD.

We have been shipping the Butler National Boeing 747 TSD since April
2001 and expect sales and shipments to continue through the compliance
date.  In addition, we expect to provide TSD protection for the Boeing
747 Classic aircraft coming out of storage after the compliance date.  We
expect to make some TSD sales because the other alternative solutions
may not be available by the compliance date.

We have applied to the FAA for an STC approval for installation of the
TSD on the Boeing 737 Classic aircraft.  The TSD is one solution to
meet the requirements of AD 99-03-04 issued by the FAA to protect the
Boeing 737 aircraft fuel tanks from hazardous energy levels introduced
through the wiring of the FQIS.  The industry has until March 9, 2003 to
comply with AD 99-03-04.

There are approximately 1,000 Boeing 737 Classic aircraft in this
market.  Estimating the volume of Butler National 737 TSD sales is
subject to the same contingencies as described above.

The FAA issued a Special Federal Aviation Requirement ("SFAR") No.
88 titled "Fuel Tank System Fault Tolerance Evaluation Requirements"
applicable to turbine-powered aircraft certified to carry 30 or more
passengers or a certified payload capacity of 7,500 pounds or more.  We
believe that SFAR-88 will open the market for Butler National designed
TSD products to many more aircraft than the Boeing 747 and 737
Classics.  The initial compliance date for the requirements of the SFAR
is December 6, 2002.  The second compliance date is June 7, 2004.

SFAR-88 requires protection for all systems that might provide an
ignition source to the aircraft fuel tank system.  In general, we believe
that this requirement will require protective devices on all aircraft parts
using electrical power in the fuel system such as fuel pumps, fuel valves,
float switches, etc.  To address this market, we have applied to the FAA
for an STC for a Ground Fault Interruption ("GFI") for the Boeing 747
and 737 Classic aircraft.  The Butler GFI product line will be sensitive to
unusual power requirements of the electrical systems related to the fuel
system.  We have not determined the scope and size of this market.

We have a number of additional STC applications on file with the FAA
related to the Safety Products group, and addressing the expected future
requirements of SFAR-88 and the Federal Aviation Regulations.

Management Services:  BNSC is engaged in the business of providing
management services to Indian tribes in connection with the Indian
Gaming Regulatory Act of 1988.  The Company has three management
agreements in place; however, the performance of these agreements is
contingent upon and subject to approval by the Secretary of Interior,
Bureau of Indian Affairs, National Indian Gaming Commission and the
appropriate state, if required.  Also, the Company has signed consulting
engagement letters with two tribes to study and develop plans for Indian
gaming.  See Liquidity and Capital Resources, Page 15.

The Management Agreement between the Indian tribe (the owner and
operator) and Butler National Service Corporation (the manager) is the
final approval document issued by the National Indian Gaming
Commission ("NIGC") before Indian gaming is authorized.  The
Management Agreement or Contract is authorized and approved by the
NIGC pursuant to the Indian Gaming Regulatory Act of 1988, PL 100-
497, 102 Stat. 2467,25 U.S.C. 2701-2721 (sometimes referred to as
"IGRA").  Before the Management Agreement is approved by the NIGC,
all required contracts with other parties must be approved; including, (a)
the compact with the state for class III gaming, if applicable, (b)
compliance with the requirements of the National Environmental
Protection Agency ("NEPA"), (c) a Tribal Gaming Ordinance approved
by the NIGC, and (d) Indian land leases, if applicable approved by the
Bureau of Indian Affairs ("BIA").

The management consulting engagement letters provide for advances of
funds to the Indian tribes by BNSC for professional services, fees,
licenses, travel, administrative costs, documentation, procedure manuals,
purchases of property and equipment and other costs related to the
approval and opening of an establishment.  These advances are
considered to be a receivable from the Tribe and to be repaid by the
Tribe from the funding to open the enterprise. The ability to collect the
funds related to these advances depends upon the opening of the
establishment or in the alternative the liquidation of the inventory and
receivable accumulated in the event the establishment is not opened.
However, if the collection and/or liquidation efforts are not successful,
BNSC may suffer a significant loss of asset value.  See Liquidity and
Capital Resources, page 15.

Butler National Service Corporation is in the process of maintaining and
obtaining the required licenses for the opening and operation of any
future gaming establishments.  BNSC follows the law and regulations of
the Indian Gaming Regulatory Act of 1988 and the state laws as they may
apply.  At this time, BNSC does not foresee any substantial risks
associated with maintaining and obtaining any required licenses needed
to assist the Indian tribes.

During fiscal 1997, the Company received approval by the National
Indian Gaming Commission of the management agreement between the
Miami Tribe of Oklahoma, the Modoc Tribe of Oklahoma and its
subsidiary, Butler National Service Corporation, to construct and manage
a Class II (High Stakes Bingo) and Class III (Off-Track Betting)
establishment.  Construction of this project, known as the STABLES,
was completed and opened in September 1998.

The services to be provided by the Company include consulting and
construction management for the Tribes.  The Company provided the
necessary funds to construct the facilities and is being repaid the
principal plus interest out of the profits of the operation.  The principal
amount of $3.5 million carries an interest rate of prime plus 2%.
Additionally, the Company is receiving a 30% share of the profits for its
management services.  The Company has obtained construction and
operating financing of the establishment.

The Princess Maria Casino, an Indian gaming establishment, is under
construction and is expected to open for business in July 2004.  The
Management Agreement between the Miami Tribe (the owner and
operator) and Butler National Service Corporation (the Manager)
originally filed in 1992 was approved January 7, 2000.  The State of
Kansas has challenged the BIA's determination of Indian land.
However, the Miami Tribe expects a favorable determination by the
Federal District Court for the District of Kansas.

The Shawnee 206 Casino, an Indian gaming establishment, is in the land
clearing and approval phase under the terms of a 1992 consulting
agreement between the Shawnee Tribe, the land owner members of the
Shawnee Tribe and Butler National Service Corporation.

The Company has other consulting agreements with other tribes and an
NIGC approved Management Agreement with the Modoc Tribe for
casino construction and openings scheduled after the opening of the
Princess Maria and the Shawnee 206.

The risk associated with advances of funds for assets and services on
behalf of the tribes under the consulting agreements is that a
Management Agreement will not be approved and the liquidation of the
assets and related services does not recover enough funds to cover the
advances.  The Company has been involved in this business segment
since 1991 and has not experienced any project stopping determinations
by the federal courts or the regulatory agencies.  All Management
Agreements submitted for approval have been approved by the NIGC.
There can be no assurance that future management agreements will be
approved and that Congress will not outlaw Indian gaming.  Should any
of these events occur, the Company would choose alternative uses of the
Indian land in cooperation with the Tribes to recover the advances to the
Tribes.

SCADA Systems and Monitoring Services:  BNS is engaged in the sale
of monitoring and control equipment and the sale of monitoring services
for water and wastewater remote pumping stations through electronic
surveillance by radio or telephone.  BNS contracts with government and
private owners of water and wastewater pumping stations to provide both
monitoring and preventive maintenance services for the customer.

We expect a high percentage of BNS business to come from municipally
owned pumping stations.  Currently, BNS is soliciting business in Florida
only.  While the Company has exposure to competitive forces in the
monitoring and preventive maintenance business, management believes
the competition is limited.

Temporary Services:  BTS provides managed temporary personnel to
corporate clients to cover personnel shortages on a short and/or long term
basis.  This service is being marketed in Kansas and Missouri.  Currently,
this Company is inactive.  BTS plans to provide contract staffing for the
Princess Maria establishment planned to open in 2004.

Raw Materials:  Raw materials used in the Company's products are
currently available from several sources.  Certain components, used in
the manufacture of the Switching Units, are long lead time components
and are single sourced.

Patents:  There are no patents, trademarks, licenses, franchises, or
concessions held by us that need to be held to do business other than the
FAA, PMA and Repair Station licenses.  However, we maintain certain
airframe alteration certificates, commonly referred to as Supplemental
Type Certificates ("STC's"), issued to us by the FAA, for the Aircraft
Modification and Avionics businesses.  The STC, PMA and Repair
Station licenses are not patents or trademarks.  The FAA will issue an
STC to anyone, provided that the person or entity documents and
demonstrates to the FAA that a change to an aircraft configuration does
not endanger the safety of flight.  The PMA and Repair Station licenses
are available to any person or entity, provided that the person or entity
maintains the appropriate documentation and follows the appropriate
manufacturing, repair and/or service procedures.  The FAA requires the
aircraft owner to have the STC document in the aircraft log after each
modification is complete.

Seasonality:  Our business is generally not seasonal. Demand for the
Falcon 20 cargo aircraft modifications is related to seasonal activity of
the automotive industry in the United States.  Many of these modified
aircraft are used to carry automotive parts to automobile manufacturing
facilities. The peak modification demand occurs in late spring and early
summer.  Peak usage of the modified aircraft is from June to December.
Future changes in the automotive industry could result in the fluctuation
of revenues at the Aircraft Modifications Division.

Customer Arrangements:  Most of our products are custom-made.
Except in isolated situations no special inventory-storage arrangements,
merchandise return and allowance policies, or extended payment
practices are involved in the Company's business.  We are not dependent
upon any single customer except for Switching Units.  Switching Units
are sold to Boeing McDonnell Douglas and Douglas Aircraft Company
customers.  We have required deposits from our customers for aircraft
modification production schedule dates.








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Backlog:  Our backlog as of April 30, 2001, 2000, and 1999, was as
follows:



Industry segment

                               2001

                               2000

                               1999



                               Aircraft
                          Modifications

                              1,303,000

                              1,653,000


                              2,274,000



                               Avionics

                              1,719,002

                                145,000

                                295,000



                             Monitoring
                               Services

                                226,714

                                362,238

                                504,736



                              Corporate

                                 75,390

                                 47,500

                                -



            Total
          backlog



                             $3,324,106


                             $2,207,738


                             $3,073,736


Our backlog as of July 30, 2001 totaled $5,458,499; consisting of
$1,581,400, $1,582,000, $2,154,783 and $140,316 respectively, for
Aircraft Modifications, Avionics, Monitoring Services, and Corporate.
The backlog includes firm orders, which may not be completed within
the next twelve months.  Backlog that we expect not to be filled within
the next year totals $2,357,275; consisting of $730,000, $0, $1,627,275,
and $0.  These numbers represent firm orders that may not be completed
within the year.  This is standard for the industry in which modifications
and related contracts may take several months or years to complete.
Such actions force backlog as additional customers request
modifications, but must wait for other projects to be completed.

Our backlog in Monitoring Services increased due to our annual contract
with a customer (City of Plantation) being extended to a five-year
contract. Two years remain on this contract.

Employees:  We employed 56 people on April 30, 2001 compared to 62
people on April 30, 2000, and 59 people on April 30, 1999. As of July
30, 2001, we employed 47 people.  None of our employees are subject to
any collective bargaining agreements.

Financial Information about Foreign and Domestic Operations, and
Export Sales: Information with respect to Domestic Operations may be
found at Note 14 of Notes to Consolidated Financial Statements for the
year ended April 30, 2001, located herein at page 46.  There are no
foreign operations.  All product sales, title passes to the customer in the
USA.

Distribution of the Indian Gaming business.  On May 14, 1999 we
reported that on May 4, 1999 the Board of Directors determined that the
interests of the shareholders would be best served by distributing the
common stock of our Indian Gaming Subsidiary ("IGS") to the
shareholders.  This would allow the management of each business to
focus solely on that business segment.  This would also provide
incentives to the employees directly related to the profitable operation of
the business segment and enhance the access to financing by allowing the
financial community to focus on the business activities and opportunities
of the business segment.

We announced plans to distribute the IGS common stock to the
shareholders of record owning our common stock at the close of business
on May 24, 1999.  The shares of the IGS were planned to be distributed
to the shareholders at a ratio of one share of common stock of the IGS for
each share of our stock owned at the close of business on May 24, 1999.
The original date of an Information Statement and distribution was
expected to be July 31, 1999.   Distribution will be made as soon as the
Form 10 is completed and approved by the SEC.  A draft of the Form 10
was filed with the SEC on March 7, 2001.  As a result of this filing,
among other things, the SEC directed the Company to report all gaming
operations as a part of this Form 10-K until such time as the distribution
is approved by the SEC.  No date has been defined for this approval.


Item 2.  PROPERTIES

Our corporate headquarters are located in a 9,000 square foot owned
facility for office and storage space at 19920 West 161st Street, in
Olathe, Kansas.  The facilities are adequate for current and anticipated
operations.

Our Company's Aircraft Modifications Division is located at the
municipal airport in Newton, Kansas, in facilities occupied under a long-
term lease extending to March 31, 2003, at an annual rent of $73,860.
The lease is renewable for an additional five-year term.  These facilities
are adequate for current and anticipated operations.

Our wholly owned subsidiary, Butler National Services, Inc. has its
principal offices in Ft. Lauderdale, Florida, in facilities occupied under a
three-year lease ending March 31, 2002.  The annual rental is
approximately $32,220.  The facilities are adequate for current and
anticipated operations.

Our wholly owned subsidiary, Butler National Corporation - Tempe,
Arizona (formerly Woodson Avionics, Inc.), had its principal offices and
manufacturing operations in Tempe, Arizona.  As of January 1, 2000, the
Company rents 8,300 square foot of space for $4,128 per month.  The
lease expires December 31, 2003.  The facilities are adequate for current
and anticipated operations.

Item 3.  LEGAL PROCEEDINGS

We had an employment agreement with an individual (Brenda Shadwick
"BBS"), whom the Company terminated in April 1995.  BBS filed a
lawsuit against the Company, the President of the Company, and various
corporate subsidiaries, alleging the Company wrongfully terminated
BBS's employment in breach of the contract.  The suit was filed in
October 1995 in State Court in Johnson County, Kansas.

We reached an agreement with BBS to settle and release all claims and
counterclaims on May 1, 1997.  BBS dismissed the lawsuit with
prejudice. The terms of the settlement required monthly payments by us
to BBS in the amount of $6,000 per month during fiscal 1998 and fiscal
1999, which were made.

We acquired RF, Inc. from Marvin and Donna Eisenbath (MJE) on April
21, 1994.  We exchanged 650,000 shares of the Company's common
stock for 100% of the issued and outstanding shares of RF, Inc.  The
Eisenbaths sought for some time to reacquire from us the ownership of
RF, Inc.  MJE filed a lawsuit against us seeking to rescind the sale of RF,
Inc. stock and for damages.

We reached an agreement with MJE to settle and release all claims and
counterclaims effective April 30, 1997, ("Release Agreement").  MJE
dismissed the lawsuit with prejudice.  In addition to the releases, under
the terms of the agreement, we received on June 26, 1997, 600,000
shares of the Company's common stock and certain payments over the
next three years.  We released MJE from the terms of his employment
contract and the April 24, 1994, Stock Purchase Agreement.  These
documents released MJE from his agreement not to compete with us in
the food distribution industry.

We recorded a gain (principally noncash) of approximately $1,043,000
in the first quarter of 1998 for this transaction.  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 completed until June
1997, see also Item 1, General, Discontinued Operations, page 3,
regarding the bankruptcy of RF, Inc.

On September 20, 1998, the RFI bankruptcy trustee filed an action
alleging a number of claims against Butler National and its officers
including a claim for repayment of preferential payments to the
bankruptcy estate.  Butler National settled the lawsuit on July 26, 1999,
by the payment of $250,000 to the court.

In December 1997, we sold Convertible Preferred Stock to certain
offshore investors.  Beginning in February 1998, these investors began
converting the Preferred Stock into Common Stock and the price of our
stock declined.  As reported earlier, we received notice from NASDAQ
stating that the Common Stock of the Company would be delisted by
NASDAQ if the price did not trade at a bid price of $1.00 or more for ten
business days prior to August 6, 1998.  The delisting of the Company's
Common Stock would be a default under the terms of the Convertible
Preferred Stock, as well as under the terms of certain Convertible
Debentures previously issued.  We considered a number of alternative
actions including a reverse stock split, a repurchase of common shares on
the open market and/or the repurchase of the convertibles at a premium
to increase the price of the Common Stock.

After evaluation of various alternatives and as a result of what we
believed were inappropriate actions and representations by the holders of
the Convertible Preferred Stock and the Convertible Debentures, we
announced plans to stop conversions of the Convertible Preferred Stock
and Convertible Debentures at prices below $2.75 per share.  On July 17,
1998, two of the holders of the Convertible Preferred Stock filed a
lawsuit (the "Action") against us in Chancery Court in Delaware alleging
among other things, breach of contract, violation of Delaware law and
violation of the terms of the Convertible Preferred Stock. The Action
seeks an injunction to force us to convert the Convertible Preferred Stock
in accordance with its terms and for unspecified monetary damages.

On January 25, 1999 Butler National announced that an agreement had
been reached with the Holders of the Class B Convertible Preferred
Stock to settle the lawsuit against the Company.  Under the agreement,
the Holders of the Preferred are allowed to convert up to ten percent
(10%) of the face value of the Preferred into common stock in any month
until the entire issue is converted.  The face value at the time of
settlement was $785,000 allowing $78,500 per month to be converted
under the plan.  However, if the bid price is above $1.45 for three trading
days, the Holders will be allowed to convert up to a total of thirty percent
(30%) per month or $235,500 of face value of the Preferred.  The
conversion amount will increase five percent (5%) for each $.20 increase
in market price.  The agreed conversion price is seventy percent (70%) of
the average bid price for the previous five trading days.

With the exception of 30,000 common shares owned at settlement by the
Holders, sales of the previous converted common shares, 148,849 shares,
plus any newly converted common shares, will be limited to the greater
of $30,000 or twenty-five percent (25%) of the previous weeks trading
volume.  Additionally, accrued dividends ($54,397) on the Preferred
Stock will be paid in shares of common stock.  The holders agreed to
waive all future dividends.  All transactions are being handled through
one broker and all activity is reported on a weekly basis.  The Holders
also received 770,000 three-year warrants to purchase restricted common
stock at $1.45 per share.  As of April 30, 2001, the members of the
Board of Directors purchased the outstanding convertible preferred stock
and converted the preferred stock to common stock of the Company.

On April 30, 1999 Butler National entered into an agreement with the
Holders of the Convertible Debentures similar to the agreements with the
Holders of the Convertible Preferred.  The face value at the time of this
agreement was $650,000 allowing $65,000 per month to be converted
under the plan at a conversion price equal to eighty percent (80%) of the
five (5) day average closing bid for the five (5) trading days prior to the
conversion, provided, however, that if the closing price increases to
$1.45 per share or more for three (3) consecutive trading days, the
Holder will have the option to convert an additional twenty percent
(20%), or $130,000 of outstanding principal amount of Debentures.  All
transactions are being handled through one broker and all activity is
reported on a weekly basis.  The Holders also received 325,000 three-
year warrants to purchase restricted common stock at $1.45 per share.

We used an outside engineering firm to assist with the Aircraft
Modification Avcon Fin project and the related STC's.  The individual
filed suit against us for final payment under the contract.  However, we
did not feel that all work products had been delivered.  On October 19,
1998, the case was settled when we made final payment and the work
products were delivered.

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

All of the defendants have asked the Courts to dismiss the case because
they believe the determination of Indian land is a power reserved for the
United States by the constitution of the United States.  The Miami Tribe
expects a favorable determination by the Federal District Court for the
District of Kansas.

As of July 30, 2001, there are no other known legal proceedings pending
against the Company.  The Company considered all such unknown
proceedings, if any, to be ordinary litigation incident to the character of
the business.  The Company believes that the resolution of those
unknown claims will not, individually or in the aggregate, have a material
adverse effect on the financial position, results of operations, or liquidity
of the Company.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

The Company did not submit any matter to a vote of its security holders
during the fourth quarter of fiscal 2001.





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                PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED
      STOCKHOLDER MATTERS

COMMON STOCK (BUKS):

(a)   Market Information:  The Company was initially listed in the
  national over-the-counter market in 1969, under the symbol
  "BUTL."  Effective June 8, 1992, the symbol was changed to
  'BLNL.'  On February 24, 1994, the Company was listed on the
  NASDAQ Small Cap Market under the symbol "BUKS."   The
  Company's common stock has been delisted from the small cap
  category effective January 20, 1999 and is now listed in the over-
  the-counter (OTCBB) category.  Approximately twelve (12) market
  makers offer and trade the stock.

  The range of the high and low bid prices per share of the Company's
  common stock, for fiscal years 2001 and 2000, as reported by
  NASDAQ, is set forth below.  Such market quotations reflect intra-
  dealer prices, without retail mark-up, markdown or commissions,
  and may not necessarily represent actual transactions.





           Year Ended April
               30, 2001

           Year Ended April
               30, 2000





                 High

                  Low

                 High

                  Low



             First Quarter

                 5/32

                 9/64

                 23/32

                  1/8



                Second
                Quarter

                 5/32

                 9/64

                 3/16

                 7/128



             Third Quarter

                 7/64

                 3/32

                  1/8

                 3/64



                Fourth
                Quarter

                 1/10

                 1/10

                 19/64

                 7/64



(b)   Holders:  The approximate number of holders of record of the
  Company's common stock, as of July 30, 2001, was 2,900.

(c)   Dividends:  The Company has not paid any cash dividends on its
  common stock, and the Board of Directors does not expect to
  declare any cash dividends in the foreseeable future.


SECURITIES CONVERTIBLE TO COMMON STOCK:

As of July 30, 2001 there were no Convertible Preferred or Convertible
Debenture shares outstanding.







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Item 6.  SELECTED FINANCIAL DATA

The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and with the Consolidated Financial Statements and
related Notes included elsewhere in the report.


       Year Ended April 30

(In thousands except per share date)






                                   2001


                                   2000


                                   1999


                                   1998
                             (Restated)

                                   1997
                             (Restated)













                              Net Sales

                                $6,008

                                $4,606

                              $  6,612

                               $ 5,456

                                $4,062





Income (Loss)
from
Continuing
Operations
(485)
(1,136)

                                  (282)

                                   399

                                  (575)





Income (Loss)
from/on
Discontinued
Operations
       -
       -

                                (1,698)

                                   269

                                  (688)





Net Income
(Loss)
($485)
($1,136)

                               $(1,980)

                               $    668


                               $(1,263)



















                              Basic Per
                                  Share













Income (Loss)
from
Continuing
Operations
$(0.02)
$(0.06)

    $ (0.03)

                              $   0.03

                               $ (0.06)





Income (Loss)
from/on
Discontinued
Operations
      -
     -

                                 (0.14)

                                 (0.03)

                                 (0.07)





Net Income
(Loss)
$(0.02)
$(0.06)

                                $(0.17)

                              $   0.00

                               $ (0.13)



















Selected
Balance Sheet
Information














Total Assets
$10,607
$10,272

                               $11,729

                               $10,870

                              $ 10,070





Long-term
Obligations
(excluding
current
maturities)
$ 3,254
$ 2,940

                               $ 3,065

                              $  1,926

                             $   1,541






Cash dividends
declared per
common share
None
None

                   None

                    None

                    None



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS

Results of Operations

Fiscal 2001 compared to Fiscal 2000
The Company's sales for fiscal 2001 were $6,008,963, an increase of
30.4% from fiscal 2000 sales of $4,606,809.  Discussion of specific
changes by operation follows.

Aircraft Modification:  Sales from the Aircraft Modifications business
segment increased 5%, from $3,130,835 in fiscal 2000, to $3,288,669 in
2001.  This segment had an operating profit of $57,525 in 2001,
compared to a $667,939 loss in 2000.

Avionics:  Sales from the Avionics business segment increased 276%,
from $274,335 in fiscal 2000, to $1,030,445 in fiscal 2001.  This
increase is directly related to the sales of the Butler National Transient
Suppression Device (TSD) for the Boeing 747 Classic aircraft.  Sales of
switching units to the major OEM customer decreased due to the phase
out schedule of this type of aircraft.  Sales for aircraft repair and
refurbishment increased 4%, from fiscal 2000 to fiscal 2001.  Operating
profits increased from ($117,658) in fiscal 2000 to $187,431 in fiscal
2001. Management expects this business segment to continue to increase
in future years due to the additional new TSD products.

SCADA Systems and Monitoring Services:  Revenue from Monitoring
Services increased from $1,118,081 in fiscal 2000 to $1,135,804 in fiscal
2001, an increase of 1.6%.  During fiscal 2001, the Company maintained
a relatively level volume of long-term contracts with municipalities.
Revenue fluctuates due to the introduction of new products and services
and the related installations of these products.  The Company's contracts
with its two largest customers have been renewed for fiscal 2001.  An
operating loss of $9,644 in Monitoring Services was recorded in fiscal
2001, compared to a fiscal 2000 loss of $5,836.

The Company believes the service business of this segment will continue
to grow at a moderate rate.  This segment has experienced general
increases over the past few years and the Company expects this trend to
continue.

Temporary Services:  BTS provides managed temporary personnel to
corporate clients to cover personnel shortages on a short and/or long term
basis.  This service is being marketed in Kansas and Missouri.  Currently,
this Company is inactive.  BTS plans to provide contract staffing for the
Princess Maria establishment planned to open in early 2004.


Management Services
               -General-

The Company has advanced and invested a total of $8,080,304 in land,
land improvements, professional design fees and other consulting and
legal costs related to the development of Indian Gaming facilities.
Included in these advances and investments are lands and other areas
located adjacent to residential developments.  The Company believes that
these tracts could be developed and sold for residential and commercial
use, other than Indian gaming, if the gaming enterprises do not open.
Additional improvements, including access roads, water and sewer
services, etc. are planned for these lands.  After these improvements,
these lands may be sold in small tracts.  This would allow the Company
to recover the majority, if not all, of the land investments and other
gaming costs.


        -Princess Maria Casino-

The Company has a management agreement with the Miami Tribe to
provide management services to the Miami Tribe.  On July 9, 1992, the
Tribe requested a compact with the State of Kansas for Class III Indian
gaming, on Indian land, known as the Maria Christiana Miami Reserve
No. 35, located in Miami County, Kansas.

The Miami Tribe's 1992 compact was the subject of a lawsuit filed in
February 1993, in the Federal District Court, by Miami Tribe, alleging
the failure to negotiate a compact in good faith by the State of Kansas.
The United States District Court dismissed the Miami Tribe's suit against
the State of Kansas, citing the United States Supreme Court's ruling in
Seminole v. State of Florida.  The Supreme Court ruled that the "failure
to negotiate" provision of the IGRA did not allow an Indian tribe to
compel a state by litigation to negotiate a compact.

 In February 1993, former Kansas Governor Finney requested a
determination of the suitability of the Miami Indian land for Indian
Gaming, under the IGRA, from the Bureau of Indian Affairs (the "BIA").
In May 1994, the NIGC again requested the same determination.  Finally
in May 1995, an Associate Solicitor within the BIA issued an opinion
letter stating that the Miami Tribe has not established jurisdiction over
the Miami land in Kansas.  This was the first definitive statement
received from the central office of the BIA in three years.  The latest
opinion is contrary to a September 1994 opinion of the Tulsa Field
Solicitor, in an Indian probate, stating that the Miami Tribe has
jurisdiction over the Miami Indian land in Kansas.  On July 11, 1995, the
U.S. Department of Justice issued a letter to the Associate Solicitor
expressing concern about the conclusions reached, based upon the
analysis of the case.

The Miami Tribe challenged this opinion in Federal Court.  To prove and
protect the sovereignty of the Miami Tribe, and other Indian tribes,
relating to their lands, on April 11, 1996, the Court ruled that the Miami
Tribe did not have jurisdiction because the BIA had not approved the
Tribal membership of the Princess Maria heirs, at the time the
management agreement was submitted; therefore, the Court ordered that
the NIGC's determination (that Reserve No. 35 is not "Indian land",
pursuant to IGRA) was affirmed.  However, the Court noted in its ruling
that nothing precludes the Tribe from resubmitting its management
agreement to the NIGC, along with evidence of the current owners'
consent, and newly adopted tribal amendments.  On February 22, 1996,
the BIA approved the Miami Tribe's constitution and the membership of
the heirs.  The Tribe resubmitted the management agreement.  Although
the Court noted that the Tribe could resubmit the management
agreement, the Court did not pass on whether or not a new submission
will obtain approval.

The Tribe resubmitted the management agreement and land question to
the NIGC in June 1996.  In July 1996, the NIGC again requested an
opinion from the BIA.  On July 23, 1997, the Tribe and the Company
were notified that the BIA had again determined that the land was not
suitable for gaming, for political policy reasons, without consideration of
the membership in the Miami Tribe or recent case law, and the NIGC had
to again deny the management agreement.  The Tribe filed a suit in the
Federal District Court in Kansas City, Kansas.  On May 15, 1998, the
Court determined that the land was suitable for gaming and remanded the
case to the BIA for the documentation.  Therefore, even though the
Company and the Tribe believe the BIA will agree with the Court that the
land is "Indian land", and in compliance with all laws and regulations, for
a variety of reasons, there is no assurance that the Management
Agreement will be approved.  Subsequent to April 30, 1998, the NIGC
approved the management agreement on January 7, 2000.  Under the
Management Agreement, as approved, the Company, as manager, is to
receive a 30% share of the profits and reimbursement of development
costs.

The total advances and investment related to the Princess Maria at April
30, 2001, was $832,336.  This amount is net of a reserve of $1,413,511,
which represents the current net realizable value of the advanced
receivable.

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

All of the defendants have asked the Courts to dismiss the case because
they believe the determination of Indian land is a power reserved for the
United States by the constitution of the United States.  The Miami Tribe
expects a favorable determination by the Federal District Court for the
District of Kansas.

 -Stables Bingo and Off-Track Betting-

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

The Company is providing consulting and construction management
services in the development of the facility and  manages the joint-venture
operation for the tribes.  The STABLES facility is approximately 22,000
square feet and located directly south of the Modoc Tribal Headquarters
building in Miami.  The complex contains off-track betting windows, a
bingo hall, bar and a restaurant.  The Company's Management
Agreement was approved by the NIGC on January 14, 1997.  Under the
Management Agreement, as approved, the Company, as manager, is to
receive a 30% share of the profits and reimbursement of development
costs.

The STABLES opened in September 1998.  The estimated project cost is
approximately $3,500,000.  Funds have been provided from the
Company's operations and long-term financing was obtained.



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

The Management Contract was approved by the NIGC on January 14,
1997.  Security under the contract includes the Tribes' profits from all
tribal gaming enterprises and all assets of the Stables except the land and
building.

       -Shawnee Reserve No. 206-

In 1992, the Company signed a consulting agreement and has maintained
a business relationship with approximately seventy Indian and non-Indian
heirs (the "Owners") of the Newton McNeer Shawnee Reserve No. 206
("Shawnee Reserve No. 206").  This relationship includes advances for
assistance in the defense of the property against adverse possession (by
one family member) in exchange for being named the manager of any
Indian gaming enterprises that may be established on the land.  As a
result of the Company's assistance, the Owners are in the process of
becoming the undisputed beneficial owners of approximately 72 acres of
the Shawnee Reserve No. 206, as ordered by the United States District
Court for the District of Kansas.  The Company has advanced funds to
purchase an additional 9 acres contiguous to the Indian land providing
access.

Shawnee Reserve No. 206 has been a part of the Shawnee Reservation in
Kansas Territory since 1831 and was reserved as Indian land and not a
part of the State of Kansas, when Kansas became a state in 1861.  The
Indian land is approximately 25 miles southwest from downtown Kansas
City, Missouri.

The Company maintains a relationship and has a consulting agreement to
assist with the proposed establishment.  This agreement is signed by the
owners and 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 federally
recognized Cherokee Nation of Oklahoma.  The Indian Owners of
Shawnee Reserve No. 206 have federal Indian membership cards
showing them to be Cherokee-Shawnee members of the Cherokee Nation
of Oklahoma.  The Shawnee and the Cherokee are currently working to
reaffirm the Shawnee's jurisdiction over the Indian land and to obtain
federal recognition for the Shawnee Tribe.

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

The total advances and investment related to Shawnee Reserve No. 206
at April 30, 2001, was $827,982.  This amount is net of a reserve of
$849,222, which represents the current net realizable value of the
advanced receivable.

             -Modoc Bingo-

The Company signed a consulting agreement with the Modoc Tribe on
April 21, 1993.  As a part of this project, the Company has a
management agreement with the Modoc Tribe to construct and operate
an Indian gaming facility on Modoc Reservation lands in Eastern
Oklahoma.  The Management Agreement was filed with the NIGC on
June 7, 1994 for review and approved on July 11, 1997.  The Tribe and
the Company have not determined a schedule for this project.  There is
no assurance that further action will be taken until the Stables is in
operation and well established, if ever.

The total advances and investment related to Modoc Tribe at April 30,
2001, was $148,336.  This amount is net of a reserve of $337,436, which
represents the current net realizable value of the advanced receivable.

        - Other Opportunities -

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 this
document.

The total advances and investment related to Other Gaming at April 30,
2001, was $18,112.  This amount is net of a reserve of $58,324 which
represents the current net realizable value of the advanced receivable.

Selling, General and Administrative (SG&A):  Expenses increased
$676,304 (40.7%) in fiscal year 2001.  These expenses were $2,337,888,
or 38.9% of revenue, in fiscal 2001, and $1,661,584, or 36.1% of
revenue in fiscal 2000.

Other Income (Expense): Other expense increased from $33,944 in
fiscal 2000 to $147,963 in fiscal 2001.  This increase is a result of higher
interest costs.

Fiscal 2000 compared to restated fiscal 1999

The Company's sales for fiscal 2000 were $4,606,809, a decrease of
30.3% from fiscal 1999 sales of $6,612,121.  Discussion of specific
changes by operation follows.

Aircraft Modification:  Sales from the Aircraft Modifications business
segment decreased 40.4%, from $5,217,138 in fiscal 1999, to $3,130,835
in 2000.  This segment had an operating loss of $667,939 in 2000,
compared to $315,291 profit in 1999.  Primarily product sales decreased
from 1999 due to the efforts to produce a new  Supplemental Type
Certificates ("STC").

Switching Units:  Sales from the Avionics Switching Unit business
segment decreased 41%, from $465,830 in fiscal 1999, to $274,335 in
fiscal 2000.  Sales to the major OEM customer decreased 67% due to the
phase out schedule of this type of aircraft.  Sales for aircraft repair and
refurbishment increased 4%, from fiscal 1999 to fiscal 2000.  Operating
profits decreased from ($46,370) in fiscal 1999 to ($117,658) in fiscal
2000.

SCADA Systems and Monitoring Services:  Revenue from Monitoring
Services increased from $929,153 in fiscal 1999 to $1,118,081 in fiscal
2000, an increase of 20%.  During fiscal 2000, the Company maintained
a relatively level volume of long-term contracts with municipalities.
Revenue fluctuates due to the introduction of new products and services
and the related installations of these products.  An operating loss of
$5,836 in Monitoring Services was recorded in fiscal 2000, compared to
fiscal 1999 operating profit of $14,809.

The Company believes the service business of this segment will continue
to grow at a moderate rate.  This segment has experienced general
increases over the past few years and the Company expects this trend to
continue.

Temporary Services:  BTS provides managed temporary personnel to
corporate clients to cover personnel shortages on a short and/or long term
basis.  This service is being marketed in Kansas and Missouri.  Currently,
this Company is inactive.  BTS plans to provide contract staffing for the
Princess Maria establishment planned to open in early 2001.

Selling, General and Administrative (SG&A):  Expenses decreased
$4,072 (.3%) in fiscal year 2000.  These expenses were $1,661,584, or
36.1% of revenue, in fiscal 2000, and $1,665,656, or 25.2% of revenue
in fiscal 1999.

Other Income (Expense): Other expense decreased from $57,317 in
fiscal 1999 to $33,944 in fiscal 2000.  This decrease is a result of
decreased interest charges.

Liquidity and Capital Resources

Borrowed funds have been used primarily for working capital.  Bank
(Industrial State Bank) debt related to the Company's operating line was
$348,590 at April 30, 2001, and $615,174 at April 30, 2000.

The Company's unused line of credit at April 30, 2001 was $3,746.  As
of July 30, 2001, the Company's unused line of credit was $149,456.
The Company's line of credit is $500,000.  The interest rate on the
Company's line of credit is prime plus two as of July 30, 2001, the
interest rate is 8.75%.

The Company plans to continue using the promissory notes-payable to
fund working capital.  The Company believes the extensions will
continue and does not anticipate the repayment of these notes in fiscal
2002.  The extensions of the promissory notes-payable is consistent with
prior years.  If the Bank were to demand repayment of the notes-payable
the Company currently does not have enough cash to pay off the notes
without materially adversely affecting the financial condition of the
Company.

The Company does not, as of April 30, 2001, have any material
commitments for other capital expenditures other than the Management
segment's requirements under the terms of the Indian gaming
Management Agreements.  These requirements are further described in
this section.

Depending upon the development schedules, the Company will need
additional funds to complete its currently planned Indian gaming
opportunities.  The Company will use current cash available as well as
additional funds, for the start up and construction of gaming facilities.
The Company anticipates initially obtaining these funds from internally
generated working capital and borrowings.  After a few gaming facilities
become operational, gaming operations will generate additional working
capital for the start up and construction of other gaming facilities.  The
Company expects that its start up and construction financing of gaming
facilities will be replaced by other financial lenders, long term financing
through debt issue, or equity issues.

Analysis of Cash Flow

During fiscal 2001, the Company's cash position decreased by $52,019.
A majority of the cash flow in fiscal 2001 is due to the proceeds of the
outside loans.

Operating Activities:  Modification customer's deposits decreased
approximately $453,143.  These funds are fully earned upon completion
of the projects.  Inventories increased $186,623 because of an increase in
TSD parts.

Investing Activities: The $637,079 decrease in the note receivable are
advances under the note from the Stables bingo facility.

The remaining cash used in investing activities is due to the use of
approximately $81,282 related to the development of Indian gaming and
approximately $14,516 to purchase tooling and equipment at
Modifications and Services.

Changing Prices and Inflation

The Company did not experience any significant pressure from inflation
in 2001.





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Item 7(a).  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

The table below provides information about the Company's other
financial instruments that are sensitive to changes in interest rates
including debt obligations.

For debt obligations, the table presents principal cash flows and related
weighted average interest rates by expected maturity dates.  Weighted
average variable rates are based on implied forward rates based upon the
rate at the reporting date.

        Expected Maturity Date
        (Dollars in thousands)






                                   2002


                                   2003


                                   2004


                                   2005





Assets
Note receivable:

                                $   647

                                 $ 647

                                  $ 639

                             $   -





                          Variable rate









                  Average interest rate

                                  11.5%

                                  11.5%

                                  11.5%

                                  11.5%






Liabilities
Long-term debt:

$  1,321

$ 2,240

$ 420

$ 194





   Variable rate









   Average interest rate

                                  11.5%
                                  11.5%
                                  11.5%
                                  11.5%















                                   2006


                                  Total

                                   Fair
                                  Value





Assets
Note receivable:

$   -

$1,933

$1,933





   Variable rate








   Average interest rate

11.5%

11.5%

11.5%






Liabilities
Long-term debt:

$ 186

 $4,575

$4,575





   Variable rate








   Average interest rate
11.5%

11.5%

11.5%










Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL
DATA

The Financial Statements of the Registrant are set forth on pages 27
through 47 of this report.

Item 9.  DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Company has had no disagreements with their current accountants.


The rest of this page intentionally left blank.
               PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT

The names and ages of the directors, their principal occupations for at
least the past five years are set forth below, based on information
furnished to the Company by the directors.



Name of Nominee
and Director and
Age


                Served
  Since




     Principal Occupation for Last
         Five Years and Other
             Directorships



           Clark D. Stewart
                 (61)

                 1989

     President of the Company from
    September 1, 1989 to present.
    President of Tradewind Systems,
     Inc. (consulting and computer
   sales) 1980 to present; Executive
         Vice President of RO
      Corporation (manufacturing)
      1986 to 1989; President of
      Tradewind Industries, Inc.
     (manufacturing) 1979 to 1985.



           R. Warren Wagoner
                 (49)

                 1986

       Chairman of the Board of
    Directors of the Company since
     August 30, 1989 and President
     of the Company from July 26,
      1989 to September 1, 1989.
       Sales Manager of Yamazen
    Machine Tool, Inc. from March,
    1992 to March, 1994; President
    of Stelco, Inc. (manufacturing)
    1987 to 1989; General Manager,
      AmTech Metal Fabrications,
          Inc., Grandview, MO
             1982 to 1987.



           William E. Logan
                 (63)

                 1990

    Vice President and Treasurer of
        WH of KC, Inc. (Wendy's
       franchisee) June, 1984 to
     present.  Vice President and
       Treasurer of Valley Foods
    Services, Inc. (wholesale food
   distributor) June, 1988 to April,
   1993.  Professional practice as a
      Certified Public Accountant
             1965 to 1984.



          William A. Griffith
                 (54)

                 1990

       Secretary of the Company,
       President of Griffith and
        Associates (management
       consulting) since 1984.
       Management consultant for
     Diversified Health Companies
     (management consulting) from
    1986 to 1989 and for Health Pro
   (health care) from 1984 to 1986.
      Chief Executive Officer of
       Southwest Medical Center
     (hospital) from 1981 to 1984.



            David B. Hayden
                 (55)

                 1996

       Co-owner and President of
    Kings Avionics, Inc. since 1974
  (avionics sales and service).  Co-
      owner of Kings Aviation LLP
    (aircraft fixed base operation
     and maintenance) since 1994.
     Field Engineer for King Radio
         Corporation (avionics
     manufacturing) 1966 to 1974.



The executive officers of the Company are elected each year at the
annual meeting of the Board of Directors held in conjunction with the
annual meeting of shareholders and at special meetings held during the
year.  The executive officers are as follows:


                 Name

                  Age

               Position



           R. Warren Wagoner

                  49

            Chairman of the
          Board of Directors



           Clark D. Stewart

                  61

             President and
            Chief Executive
                Officer



            Larry W. Franke

                  57

             President of
           Avcon Industries,
            Inc., a wholly-
           owned subsidiary
                  of
              the Company



           Jon C. Fischrupp

                  61

             President of
            Butler National
           Services, Inc., a
             wholly-owned
           subsidiary of the
                Company



           Stanley D. Nolind

                  57

            Chief Financial
                Officer



          William A. Griffith

                  54

               Secretary


R. Warren Wagoner was General Manager, Am-Tech Metal Fabrications,
Inc. from 1982 to 1987.  From 1987 to 1989, Mr. Wagoner was President
of Stelco, Inc.  Mr. Wagoner was Sales Manager for Yamazen Machine
Tool, Inc. from March 1992 to March 1994.  Mr. Wagoner was President
of the Company from July 26, 1989, to September 1, 1989.  He became
Chairman of the Board of the Company on August 30, 1989.

Clark D. Stewart was President of Tradewind Industries, Inc., a
manufacturing company, from 1979 to 1985. From 1986 to 1989, Mr.
Stewart was Executive Vice President of RO Corporation.  In 1980, Mr.
Stewart became President of Tradewind Systems, Inc.  He became
President of the Company in September 1989.

Larry W. Franke was Vice President and General Manager of Kansas
City Aviation Center from 1984 to 1992. From 1993 to 1994 he was Vice
President of Operations and Sales for Marketlink, an aircraft marketing
company. Mr. Franke joined the Company in July 1994 as Director of
Marketing and was promoted in August 1995 to Vice President of
Operations and Sales.  Mr. Franke is currently Vice President of Aircraft
Modifications at Avcon.

Jon C. Fischrupp was President of Lauderdale Services, Inc. ("LSI")
from June 14, 1978, until May 1, 1986, at which time the Company
acquired LSI and he became President of LSI (now known as Butler
National Services, Inc.).

Stanley D. Nolind was a Senior Accountant with Arthur Andersen & Co.
from June 1969 until May 1972.  Mr. Nolind was Treasurer of Forslunds,
Inc., and industrial distributor, from June 1972 until December 1984.  He
was Controller/Treasurer at Kaw Transport Company from January 1985
until December 2000.  Mr. Nolind joined the Company in January 2001.

William A. Griffith was Chief Executive Officer of Southwest Medical
Center (hospital) from 1981 to 1984. Mr. Griffith was a management
consultant for Health Pro from 1984 to 1986 and for Diversified Health
Companies from 1986 to 1989.  Mr. Griffith has been President of
Griffith and Associates, management consulting, since 1984. Mr. Griffith
became Secretary of the Company in 1992.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16(a)-3(e) during the most
recent fiscal year and Form 5 and amendments thereto furnished to the
Company with respect to the most recent fiscal year, the Company
believes that no person who at any time during the fiscal year was a
director, officer, beneficial owner of more than 10% of any class of
equity securities registered pursuant to Section 12 of the Exchange Act
failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year or prior fiscal years.












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Item 11.  EXECUTIVE COMPENSATION

SUMMARY

The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officer and each of the other most highly
compensated executive officers of the Company whose salary and bonus
exceeded $100,000 (determined as of the end of the last fiscal year) for
the fiscal years ended April 30, 2001, 2000 and 1999:

      SUMMARY COMPENSATION TABLE


               Name and
          Principal Position



          Annual Compensation









                 Year


                Salary
                  ($)


                 Bonus
                  ($)

Other Annual
  Compensation
        ($)



Clark D. Stewart,
President and
CEO, Director

                  01
                  00
                  99


                237,986
                237,986
                218,743


                  ---
                  ---
                  ---

                  ---
                  ---
                  ---





Name and
Principal
Position


        Long Term Compensation
          Awards               Payouts











                   Y
                   e
                   a
                   r
              Restricted
                 Stock
             Award(s)  ($)
              Securities
              Underlying
                Options
               (no.)(1)

                 LTIP
                 Payo
                  uts
                  ($)

                  All
                 Other
                 Compe
                nsation
                  ($)



               Clark D.
               Stewart,
             President and
                 CEO,
               Director

                  01
                  00
                  99


                  ---
                  ---
                  ---

                250,000
                575,000
               (820,000)


                  ---
                  ---
                  ---

                  ---
                  ---
                  ---



  (1)  Represents options granted or (cancelled) pursuant to the
Company's Nonqualified Stock Option Plans 250,000 in 2001;
575,000 in 2000; and (820,000) in 1999.



 OPTION GRANTS, EXERCISES AND HOLDINGS

The following table provides further information concerning grants of
stock options pursuant to the 1989 Nonqualified Stock Option Plan
during the fiscal 2001 year to the named executive officers:

   OPTION GRANTS IN LAST FISCAL YEAR

Individual Grants







Name and Position


               Number of
              Securities
              Underlying
                Options
              Granted (#)
              Percent of
                 Total
                Options
              Granted to
             Employees in
              Fiscal Year



              Exercise or
              Base Price
                ($/Sh)



           Clark D. Stewart,
        Chief Executive
              Officer(1)

                250,000


                 8.8%


                  .09











Name and Position




Expiration
Date
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term

5% ($)               10% ($)



Clark D. Stewart,
Chief Executive
Officer(1)

              12/31/2010


                  -0-



                10,000



(1)       Except in the event of death or retirement for disability, if Mr.
Stewart ceases to be employed by the Company, his option shall
terminate.  Upon death or retirement for disability, Mr. Stewart (or his
representative) shall have three months or one year, respectively,
following the date of death or retirement, as the case may be, in which
to exercise such options.  All such options are immediately
exe           rcisable.






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The following table provides information with respect to the named
executive officers concerning options exercised and unexercised options
held as of the end of the Company's last fiscal year:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
       AND FY-END OPTION VALUES












      Name

            Shares Acquired
           on Exercise (no.)


          Value Realized ($)



           Clark D. Stewart,
        Chief Executive Officer

                   0

                   0









         Number of Securities
        Underlying Unexercised
        Options at FY-End (no.)

               Value of
              Unexercised
             In-the-Money
              Options at
              FY-End ($)




      Name

             Exercisable/
             Unexercisable

             Exercisable/
             Unexercisable



           Clark D. Stewart,
        Chief Executive Officer

             2,225,000 / 0

                  0/0


       COMPENSATION OF DIRECTORS

Each non-officer director is entitled to a director's fee of $100 for
meetings of the Board of Directors which he attends.  Officer-directors
are not entitled to receive fees for attendance at meetings.

 EMPLOYMENT CONTRACTS, TERMINATION OF
   EMPLOYMENT AND CHANGE-IN-CONTROL
             ARRANGEMENTS.

On April 30, 2001, the Company extended employment agreement
through August 31, 2006 with Clark D. Stewart under the terms of which
Mr. Stewart was employed as the President and Chief Executive Officer
of the Company.  The contract provides a minimum annual salary of
$265,700, $278,900, $292,900, $307,600, 322,980, 339,129 respectively
in the next six years.  In the event Mr. Stewart is terminated from
employment with the Company other than "for cause," Mr. Stewart shall
receive as severance pay an amount equal to the unpaid salary for the
remainder of the term of the employment agreement. Mr. Stewart is also
granted an automobile allowance of $600 per month.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
             PARTICIPATION

The Compensation Committee of the Board of Directors is comprised of
Mr. Wagoner, Mr. Stewart, Mr. Griffith and Mr. Logan.  Mr. Wagoner is
the Chairman, Mr. Stewart is the President and Chief Executive Officer
of the Company and Mr. Griffith is the Secretary of the Company.

During fiscal 2001, the consulting firm of Griffith & Associates was paid
for business consulting services rendered to the Company in the
approximate amount of $92,993.  William A. Griffith, who is a director
for the Company, is a principal at Griffith & Associates.  It is anticipated
that Griffith & Associates will continue to provide services for the
               Company.

During fiscal 2001, the Company paid consulting fees of approximately
$0 to Mr. Logan for business consulting services.  It is anticipated that
Mr. Logan will continue to provide services for the Company.  Mr.
Logan was granted an option to purchase 500,000 shares of common
stock at an exercise price of $0.50 per share on November 2, 1998.  Mr.
Logan exercised this option by agreeing to provide consulting services to
the Company for an additional three years without receiving any further
cash payments other than for out of pocket expenses.  The cost of the
consulting services are charged to various projects including advances
under the Indian consulting agreements.

During fiscal 2001, the consulting firm of Butler Financial Corporation
was paid for business consulting services rendered to the Company in the
approximate amount of $56,000.  R. Warren Wagoner, who is a director
for the Company, is a principal at Butler Financial Corporation.  It is
anticipated that Butler Financial Corporation will continue to provide
       services for the Company.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
         OWNERS AND MANAGEMENT

The following table sets forth, with respect to the Company's common
stock (the only class of voting securities), the only persons known to be
beneficial owners of more than five percent (5%) of any class of the
Company's voting securities as of July 30, 2001.






Name and Address of
      Beneficial Owner

Amount and
Nature of
Beneficial
Ownership (1)




Percent of Class



Clark D. Stewart
19920 West 161st Street
Olathe, Kansas 66062

William E. Logan
19920 West 161st Street
Olathe, Kansas 66062

R. Warren Wagoner
19920 West 161st Street
Olathe, Kansas 66062

       5,096,390(2)



       2,073,683(3)



       3,988,983(4)

           13.7%



           5.6%



          10.7%








(1)  Unless otherwise indicated by footnote, nature of
beneficial ownership of securities is direct, and beneficial
ownership as shown in the table arises from sole voting
pow  er and sole investment power.
(2)  Includes 1,975,000 shares which may be acquired by Mr.
Stewart pursuant to the exercise of stock options which are
exe            rcisable.













The following table sets forth, with respect to the Company's common
stock (the only class of voting securities), (i) shares beneficially owned
by all directors and named executive officers of the Company, and (ii)
total shares beneficially owned by directors and officers as a group, as of
            April 30, 2001.


Name of
Beneficial Owner
Amount and
Nature of
Beneficial
Ownership (1)

Percent of Class



Larry B. Franke
William A. Griffith
David B. Hayden
William E. Logan
Clark D. Stewart
R. Warren
Wagoner

420,600(6)
1,381,983(5)
1,363,683(7)
2,073,683(3)
5,096,390(2)
3,988,983(4)

1.1%
3.7%
3.7%
5.6%
 13.7%
10.7%



All Directors and
Executive Officers
as a Group (12
persons)

14,325,320(8)
38.4%



  (1)     Unless otherwise indicated by footnote, nature of beneficial
     ownership of securities is direct and beneficial ownership as
     shown in the table arises from sole voting power and sole
     investment power.
  (2)     Includes 2,225,000 shares, which may be acquired by Mr. Stewart
     pursuant to the exercise of stock options, which are exercisable.
  (3)     Includes 785,000 shares, which may be acquired by Mr. Logan
     pursuant to the exercise of stock options which are exercisable.
  (4)     Includes 1,325,000 shares, which may be acquired by Mr.
     Wagoner pursuant to the exercise of stock options, which are
     exercisable.
  (5)     Includes 575,000 shares, which may be acquired by Mr. Griffith
     pursuant to the exercise of stock options, which are exercisable.
(6)   Includes 420,600 shares, which may be acquired by Mr. Franke
pursuant to the exercise of stock options, which         are exercisable.
(7)   Includes 625,000 shares, which may be acquired by Mr. Hayden
pursuant to the exercise of stock options, which         are exercisable.
  (8)   Includes 5,955,600 shares for all directors and executive officers
     as a group, which may be acquired pursuant to the exercise of
     stock options, which are exercisable.




Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

None.















                PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K

(a)  Documents Filed As Part of Form 10-K Report.

  (1)  Financial Statements:


Description

Page No.



Report of Independent Accountants

                                     27


Consolidated Balance Sheet as of April 30, 2001 and
                                   2000

            28



Consolidated Statements of Operations for
the years ended April 30, 2001, 2000 and 1999
     29




Consolidated Statements of Shareholders' Equity
for the years ended April 30, 2001, 2000 and 1999

    30-32




Consolidated Statements of Cash Flows for
the years ended April 30, 2001, 2000 and 1999

   33




Notes to Consolidated Financial Statements

  34-51


  (2)  Financial Statement Schedules:


               Schedule

              Description

               Page No.



                  II.

       Valuation and Qualifying
     Accounts and Reserves for the
   years ended April 30, 2001, 2000
               and 1999

                     48









All other financial statements and schedules not listed have been omitted
because the required information is inapplicable or the information is
presented in the financial statements or related notes.

   (3) Exhibits Index:

     No.    Description
        Page No.
          3.1  Articles of Incorporation, as amended, are
        incorporated by reference to Exhibit 3.1
               of the Company's Form 10-K for the year
        ended April 30, 1988                 *

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


     4.1  Certificate of Rights and Preferences of
        $100 Class A Preferred Shares of the Company,
               are incorporated by reference to Exhibit
        4.1 of the Company's Form 10-K/A, as amended,
               for the year ended April 30, 1994.                     *

     4.2  Certificate to Set Forth Designations, Voting
        Powers, Preferences, Limitations,
               Restrictions, and Relative Rights of Series
        B 6% Cumulative Preferred Stock, $5.00
               Par Value Per Share, is incorporated by
        reference to Exhibit 4.1 of the Company's
               Form 10Q/A, as amended, for the quarter
        ending January 31, 1998.                  *

     4.3  Private Placement of Common Stock, as
        afforded by Reg S, dated November 27, 1996,
               is incorporated by reference to the Company's
        Form 8-K filed on December 12, 1996.           *

     10.1      1989 Nonqualified Stock Option Plan is
        incorporated by reference to the Company's
              Form 8-K filed on September 1, 1989                     *

     10.2 Nonqualified Stock Option Agreement dated
        September 8, 1989 between the Company and
              Clark D. Stewart is incorporated by reference
              to the Company's Form 8-K filed on
              September 1, 1989                        *


     10.3 Agreement dated March 10, 1989 between the
        Company and Woodson Electronics, Inc. is
              incorporated by reference to the Company's
              Form 10-K for the fiscal year ended April 30, 1989      *


     10.4 Agreement of Stockholder to Sell Stock dated
        January 1, 1992, is incorporated by reference
              to the Company's Form 8-K filed on January 15,
              1992                                *

     10.5 Private Placement of Common Stock pursuant to
        Regulation D, dated December 15, 1993, is    *
        incorporated by reference to the Company's Form 8-K
        filed on January 24, 1994

     10.6 Stock Acquisition Agreement of RFI dated April 21,
        1994, is incorporated by reference to
              Company's Form 8-K filed on July 21, 1994          *

     10.7 Employment Agreement between the Company and
        Brenda Lee Shadwick dated July 6, 1994,
        are incorporated by reference to Exhibit 10.7 of the
        Company's Form 10-K/A, as amended,
        for the year ended April 30, 1994.**           *

     10.8 Employment Agreement between the Company and
        Clark D. Stewart dated March 17, 1994,
               are incorporated by reference to Exhibit 10.8 of the
               Company's Form 10-K/A, as amended,
               for the year ended April 30, 1994.**                        *

     10.9 Employment Agreement among the Company,
         R.F., Inc. and Marvin J. Eisenbath dated
         April 22, 1994, are incorporated by reference to
         Exhibit 10.9 of the Company's Form 10-K/A,
         as amended, for the year ended April 30, 1994.              *


     10.10  Real Estate Contract for Deed and Escrow Agreement
         between Wade Farms, Inc. and the
               Company, are incorporated by reference to
         Exhibit 10.10 of the Company's Form 10-K/A,
               as amended, for the year ended April 30, 1994.              *

     10.11  1993 Nonqualified Stock Option Plan, are
         incorporated by reference to Exhibit 10.11 of
                the Company's Form 10-K/A, as amended, for
          the year ended April 30, 1994.               *

     10.12  1993 Nonqualified Stock Option Plan II, are
         incorporated by reference to Exhibit 10.12
          of the Company's Form 10-K/A, as amended, for the
          year ended April 30, 1994.              *


     10.13  Industrial State Bank principal amount of $500,000
         revolving credit line, as amended, are
          incorporated by reference to Exhibit 10.13 of the
          Company's Form 10-K/A, as amended,
                for the year ended April 30, 1994.                         *

     10.14  Bank IV guaranty for $250,000 dated October 14,
         1994, are incorporated by reference to
          Exhibit 10.14 of the Company's Form 10-K/A, as
          amended, for the year ended April 30, 1994        *

     10.15  Bank IV loan in principal amount of $300,000 dated
         December 30, 1993, are incorporatedby reference to
         Exhibit 10.15 of the Company's Form 10-K/A, as
         amended, for the year ended April 30, 1994.       *

     10.16     Letter of Intent to acquire certain assets of Woodson
         Electronics, Inc., is incorporated by reference to Exhibit
         10.16 of the Company's Form 10-K, as amended for the
         year ended
                 April 30, 1995.                       *

     10.17     Asset Purchase Agreement between the Company
         and Woodson Electronics, Inc. dated May 1,
          1996, is incorporated by reference to Exhibit 10.17 of
          the Company's Form 10-K, as amended
                  for the year ended  April 30, 1996.            *

     10.18     Non-Exclusive Consulting, Non-Disclosure and Non-
         Compete agreement with Thomas E. Woodson dated
         May 1, 1996, is incorporated by reference to Exhibit
         10.18 of the Company's Form 10-K, as amended for the
         year ended April 30, 1996.              *

     10.19     1995 Nonqualified Stock Option Plan dated December
         1, 1995, is incorporated by reference to Exhibit 10.19 of
         the Company's Form 10-K, as amended for the year
         ended April 30, 1996.                   *

      10.20    Settlement Agreement and Release - Marvin J.
          Eisenbath and the Company dated April 30, 1997, is
          incorporated by reference to Exhibit 10.20 of the
          Company's Form 10-K, as amended for the year ended
          April 30, 1997                     *

     10.21   Settlement Agreement and Release - Brenda Shadwick
          and the Company dated May 1, 1997, is incorporated
          by reference to Exhibit 10.21 of the Company's Form
          10-K, as amended for the  year ended April 30, 1997.   *

          21        List of Subsidiaries                           49

          23.1     Consent of Independent Public Accountants                 50

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

     99  Cautionary Statement for Purpose of the
         "Safe Harbor" Provisions of the Private
         Securities Reform Act of 1995.                  51

*    Incorporated by reference
**  Relates to executive officer employment compensation

          (b)      Reports On Form 8-K.

                Change in Registrant's Certifying Accountant is  *
                incorporated by reference to the Company's
                Form 8-K filed on June 27, 2000.

                         Change in Registrant's Certifying Accountant is   *
                incorporated by reference to the Company's
                Form 8-K filed on July 11, 2000.

                Report of future filings is incorporated by reference      *
         to the Company's Form 8-K filed on August 15, 2000.

         Report of Transient Suppression Device in incorporated*
         by reference to the Company's Form 8-K(s) filed on
         October 12, 2000, October 18, 2000 and April 12, 2001.

         (c)      Exhibits.
                         Reference is made to Item 14(a)(3).

     (d)      Schedules.
                         Reference is made to Item 14(a)(2).










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              SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.

August 14,  2001

BUTLER NATIONAL CORPORATION

/s/ Clark D. Stewart

Clark D. Stewart, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated:

Signature                                    Title
     Date

/s/ Clark D. Stewart          President, Chief
Clark D. Stewart         Executive Officer
                                        and Director (Principal
                                        Executive Officer)
Date:  August 14, 2001

/s/ R. Warren Wagoner         Chairman of the Board
R. Warren Wagoner        and Director

Date:  August 14, 2001

/s/ William A. Griffith       Director
William A. Griffith

Date:  August 14, 2001

/s/ William E. Logan          Director
William E. Logan

Date:  August 14, 2001

/s/ David B. Hayden      Director
David B. Hayden

Date:  August 14, 2001

/s/ Stanley D. Nolind         Chief Financial Officer
Stanley D. Nolind

Date:  August 14, 2001             
<PAGE>
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

         FINANCIAL STATEMENTS

         AS OF APRIL 30, 2001

TOGETHER WITH AUDITORS' REPORT OF INDEPENDENT
          PUBLIC ACCOUNTANTS





To the Shareholders of Butler National Corporation:

We have audited the accompanying consolidated balance sheets of Butler
National Corporation as of April 30, 2001 and 2000 and the related
consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended April 30, 2001. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a).  These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatements.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Butler
National Corporation as of April 30, 2001 and 2000 and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended April 30, 2001, in conformity with accounting
principles generally accepted in the United States.  Also, in our opinion,
the related financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.


                              WEAVER &
                              MARTIN, LLC


Kansas City, Missouri,
July 30, 2001













        BUTLER NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
as of April 30, 2001 and 2000


2001

2000


ASSETS











CURRENT ASSETS:





  Cash
$108,071

$160,090


  Accounts receivable, net of allowance for doubtful





    accounts of $11,703 in 2001 and $25,600 in
2000
642,564

237,018


      Due from affiliate
       -

308,181


  Note receivable from Indian Gaming
Developments
647,285

347,285


  Contracts in process
       -

385,500


  Inventories -





    Raw materials
1,639,080

1,524,391


    Work in process
 208,036

132,699


    Finished goods
70,920

86,428


            Aircraft
1,467,771

1,455,666



3,385,807

3,199,184








 Prepaid expenses and other current assets
9,730

 6,184








       Total current assets
4,793,457

4,643,442








PROPERTY, PLANT AND EQUIPMENT:





 Land and building
948,089

948,089


 Machinery and equipment
1,161,220

1,159,154


 Office furniture and fixtures
607,736

607,736


 Leasehold improvements
 4,249

 4,249


       Total cost
2,721,294

2,719,228








 Accumulated depreciation
(1,590,048)

(1,401,922)



1,131,246

1,317,306








SUPPLEMENTAL TYPE CERTIFICATES
1,338,372

1,397,967








INDIAN GAMING:





 Note receivable from Indian Gaming
1,285,326

 936,340


 Advances for Indian Gaming Developments





    (net of reserves of $2,718,928)
1,861,376

1,780,094


       Total Indian Gaming
3,146,702

2,716,434






































OTHER ASSETS
196,837

196,837








Total assets
$10,606,614

$10,271,986






2001

2000


LIABILITIES AND SHAREHOLDERS' EQUITY











CURRENT LIABILITIES:





 Bank overdraft payable
$149,859

$76,234


 Promissory notes payable
348,590

615,174


 Current maturities of long-term debt and capital
 lease obligations
1,321,030

375,480


 Accounts payable
807,114

735,237


 Customer deposits
167,530

620,673


 Accrued liabilities -





    Compensation and compensated absences
120,304

 137,496


    Other
118,837

91,481


       Total current liabilities
3,033,264

2,651,775








LONG-TERM DEBT, AND CAPITAL LEASE
OBLIGATIONS,





            NET OF CURRENT MATURITIES
3,253,612

2,939,821


CONVERTIBLE DEBENTURES
 78,000

273,000


COMMITMENTS AND CONTINGENCIES











       Total liabilities
6,364,876

5,864,596








SHAREHOLDERS' EQUITY:





 Preferred stock, par value $5:





    Authorized, 200,000 shares, all classes





    $1,000 Class A, 9.8%, cumulative if earned,





       liquidation and redemption value $100,





       no shares issued and outstanding
-

-


    $1,000 Class B, 6%, convertible cumulative,





       liquidation and redemption value





       $1,000 issued and outstanding, no
       shares in 2001 and 283.5 shares in
       2000
-

112,136


 Common stock, par value $.01:





    Authorized, 40,000,000 shares





    Issued and outstanding 36,904,111 shares





    in 2001 and 27,181,828 in 2000
369,041

271,818








 Capital contributed in excess of par
9,890,268

9,558,549




















 Treasury stock at cost (600,000 shares)
(732,000)

(732,000)








 Retained deficit (deficit of $11,938,813 eliminated





    October 31, 1992)
(5,285,571)

(4,803,113)


       Total shareholders' equity
4,241,738

4,407,390


Total liabilities and shareholders' equity

$10,606,614

$10,271,986





                  BUTLER NATIONAL CORPORATION AND SUBSIDIARIES  CONSOLIDATED
                                 STATEMENTS OF OPERATIONS
                      FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999





















                                            2001

                                            2000

                                            1999







































                                             NET
                                            SALES




                                         $6,008,963

                                         $4,606,809

                                         $6,612,121















                                           COST OF
                                            SALES




                                          4,008,589

                                         4,047,353

                                         5,170,862








                                          2,000,374

                                           559,456

                                         1,441,259


                                    SELLING, GENERAL AND
                                   ADMINISTRATIVE EXPENSES
                                         (2,337,888)

                                         (1,661,584)

                                         (1,665,656)


OPERATING
INCOME (LOSS)



(337,514)

(1,102,128)

(224,397)















OTHER INCOME
(EXPENSES)










Interest expense



(486,104)

(199,436)

(238,519)



Interest revenue



255,496

165,492

201,928



Other


82,645

   -

(20,726)



Other
expense




(147,963)

(33,944)

(57,317)















INCOME (LOSS) FROM
CONTINUING OPERATIONS








BEFORE TAXES



(485,477)

(1,136,072)

(281,714)















PROVISION FOR INCOME
TAXES










FROM CONTINUING
OPERATIONS


-

  -

   -















INCOME (LOSS) FROM
CONTINUING OPERATIONS
(485,477)

(1,136,072)

(281,714)















DISCONTINUED
OPERATIONS










Income (loss) from discontinued
operations









     net of taxes



           -

      -

(1,698,379)



Total discontinued
operations


      -

-

(1,698,379)















NET INCOME
(LOSS)



(485,477)

(1,136,072)

(1,980,093)















DIVIDENDS TO PREFERRED
STOCKHOLDERS
        -

        -

(54,398)











NET INCOME (LOSS) AVAILABLE
TO COMMON   SHARE
SHAREHOLDERS
($485,477)

($1,136,072)

($2,034,491)



SHAREHOLDERS



















BASIC EARNINGS (LOSS) PER
COMMON SHARE








Continuing
operations



($0.02)

($0.06)

($0.03)



Discontinued
operations



         -

    -

(0.14)








($0.02)

($0.06)

($0.17)



Shares used in per share
calculation

28,487,816

18,634,447

11,845,875















DILUTED EARNINGS (LOSS) PER
COMMON SHARE








Continuing
operations



($0.02)

($0.06)

($0.03)



Discontinued
operations



      -

-

 (0.14)








($0.02)

($0.06)

($0.17)



Shares used in per share
calculation

28,487,816

18,634,447

11,845,875

















The accompanying notes are an integral part of these financial
                                     statements.










BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 2001, 2000, AND 1999



Preferred
Stock
Common
Stock


BALANCE, April 30, 1998
$506,834
$116,730







     Reduction in note receivable




          from stock purchase
agreement









   Retirement of Treasury Stock

(1,750)







    Conversion to common stock
(193,231)
12,580







   Issuance of stock - Other

23,532







     Transfer of service contracts to




          advances for Indian Gaming




          developments









     Amortization of service contracts









     Dividends on Preferred Stock
paid

1,029


          by issuing common stock




     Net loss




BALANCE, April 30, 1999
$313,603
$152,121
















Capital
Contributed
in Excess of
Par
Note
Receivable
Arising
From Stock
Purchase
Agreement


BALANCE, April 30, 1998
$8,265,962
($37,647)







     Reduction in note receivable

37,647


       from stock purchase
agreement









 Retirement of Treasury Stock
(335,490)








    Conversion to common stock
180,651








 Issuance of stock - Other
816,556








   Transfer of service contracts to




          advances for Indian Gaming




          developments









   Amortization of service contracts









     Dividends on Preferred Stock
paid
53,369



          by issuing common stock




   Net loss




BALANCE, April 30, 1999
$8,981,048
$          -

















Shares
Issued for
Future
Services
Treasury
Stock
(common)


BALANCE, April 30, 1998
($286,824)
($1,069,240)







   Reduction in note receivable




     from stock purchase
agreement









 Retirement of Treasury Stock

337,240







    Conversion to common stock









 Issuance of stock - Other









   Transfer of service contracts to
185,573



          advances for Indian Gaming




          developments









   Amortization of service contracts
101,251








     Dividends on Preferred Stock
paid




          by issuing common stock




   Net loss




BALANCE, April 30, 1999
$           -
($732,000)


















































Retained
Earnings
(deficit)
Total
Shareholder
s' Equity


BALANCE, April 30, 1998
($1,629,533)
$5,866,282







   Reduction in note receivable

37,647


     from stock purchase
agreement









 Retirement of Treasury Stock

-







    Conversion to common stock

-







 Issuance of stock - Other

840,088







   Transfer of service contracts to

185,573


          advances for Indian Gaming




          developments









   Amortization of service contracts

101,251







     Dividends on Preferred Stock
paid
(54,397)
-


          by issuing common stock




   Net loss
(1,980,093)
(1,980,093)


BALANCE, April 30, 1999
($3,664,023)
$5,050,749


The accompanying notes are an integral part of these financial statements.



















BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 2001, 2000, AND 1999



Preferred
Stock
Common
Stock


BALANCE, April 30, 1999
$313,603
$152,121












    Conversion to common stock
(201,467)
51,393







  Issuance of stock - Other

18,709







  Conversion of Convertible

49,595


          Debentures









     Dividends on Common Stock paid









  Net loss




BALANCE, April 30, 2000
$112,136
$271,818

























Capital
Contributed
in Excess of
Par
Treasury
Stock
(common)


BALANCE, April 30, 1999
$8,981,048
($732,000)












    Conversion to common stock
150,074








  Issuance of stock - Other
100,022








  Conversion of Convertible
327 405



          Debentures









     Dividends on Common Stock paid









  Net loss




BALANCE, April 30, 2000
$9,558,549
($732,000)






























Retained
Earnings
(deficit)
Total
Shareholders
' Equity


BALANCE, April 30, 1999
($3,664,023)
$5,050,749












    Conversion to common stock

-







  Issuance of stock - Other

118,731







  Conversion of Convertible

377,000


          Debentures









     Dividends on Common Stock paid
(3,018)
(3,018)







  Net loss
(1,136,072)
(1,136,072)


BALANCE, April 30, 2000
($4,803,113)
$4,407,390


The accompanying notes are an integral part of these financial statements.





























BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 2001, 2000, AND 1999



Preferred
Stock
Common
Stock


BALANCE, April 30, 2000
$112,136
$271,818












    Conversion to common stock
(112,136)
64,800







  Issuance of stock - Other

13,534







  Conversion of Convertible




          Debentures

18,889







Miscellaneous









  Net loss




BALANCE, April 30, 2001
$         -
$369,041

























Capital
Contributed
in Excess of
Par
Treasury
Stock
(common)


BALANCE, April 30, 2000
$9,558,549
($732,000)












    Conversion to common stock
47,336








  Issuance of stock - Other
108,272








  Conversion of Convertible




          Debentures
176,111








Miscellaneous









  Net loss




BALANCE, April 30, 2001
$9,890,268
($732,000)































Retained
Earnings
(deficit)
Total
Shareholders
' Equity


BALANCE, April 30, 2000
($4,803,113)
$4,407,390












    Conversion to common stock

-







  Issuance of stock - Other

121,806







  Conversion of Convertible




          Debentures

195,000







Miscellaneous
3,019
3,019







  Net loss
(485,477)
(485,477)


BALANCE, April 30, 2001
($5,285,571)
$4,241,738


The accompanying notes are an integral part of these financial statements.



























    BUTLER NATIONAL CORPORATION AND SUBSIDIARIES





            CONSOLIDATED STATEMENTS OF CASH FLOWS






        FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999























                                2001



























                CASH FLOWS FROM OPERATING ACTIVITIES







Net income (loss)




$                                                            (485,477)





Income (loss) from discontinued operations


           -





Income (loss) from continuing operations
(485,477)





Adjustments  to reconcile net income (loss) to net cash







provided by (used in) operations -









Depreciation




200,576






Amortization




59,595






Provision for obsolete inventories


-






Amortization of shares issued for future services



       -






Noncash services and benefit plan contributions

121,806






Miscellaneous



3,018













Changes in assets and liabilities -










Accounts receivable



(405,546)






Contracts in process



385,500






Inventories




(186,623)






Prepaid expenses and other current assets

(3,546)






Other assets and other



308,181






Accounts payable



145,502






Customer deposits



(453,143)






Accrued liabilities



10,164





Cash provided by (used in) continuing operations

(299,992)





Cash provided by (used in) discontinued operations

                -






Cash provided by (used in) operations


(299,992)















CASH FLOWS FROM INVESTING ACTIVITIES







Capital expenditures, net



(14,516)




Advances for Indian Gaming Developments


(81,282)




Indian Gaming note receivable, net



637,079




Supplemental Type Certificates



-





Cash (provided by) used in investing activities


541,281















CASH FLOWS FROM FINANCING ACTIVITIES







Net borrowings under promissory notes


133,416




Proceeds from long-term debt and capital lease obligations
537,603




Repayments of long-term debt and capital lease obligations
(964,327)




Repayment of officer note



      -





Cash provided (used in) by financing activities


(293,308)















NET INCREASE (DECREASE) IN CASH



(52,019)















CASH, beginning of year




160,090















CASH, end of year




$                                                              108,071















SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION





Interest paid




$                                                              486,000




Income taxes paid




-















NON CASH FINANCING ACTIVITIES





Conversion of preferred stock to common stock
$                                                              112,136




Conversion of convertible notes to common stock
195,000




Cancelled treasury stock
-




Common stock issued for preferred stock dividends
-













The accompanying notes are an integral part of these
financial statements.


















































                              2000
























              CASH FLOWS FROM OPERATING ACTIVITIES






Net income (loss)




$                                                       (1,136,072)




Income (loss) from discontinued operations


           -




Income (loss) from continuing operations
(1,136,072)




Adjustments  to reconcile net income (loss) to net cash






provided by (used in) operations -








Depreciation




226,370





Amortization




 77,144





Provision for obsolete inventories


233,571





Amortization of shares issued for future services



       -





Noncash services and benefit plan contributions

118,731





Miscellaneous



(3,018)











Changes in assets and liabilities -









Accounts receivable



198,305





Contracts in process



 20,437





Inventories




(1,004,443)





Prepaid expenses and other current assets

66,450





Other assets and other



(268,108)





Accounts payable



(227,558)





Customer deposits



38,359





Accrued liabilities



59,937




Cash provided by (used in) continuing operations

(1,599,895)




Cash provided by (used in) discontinued operations

                -





Cash provided by (used in) operations


(1,599,895)













CASH FLOWS FROM INVESTING ACTIVITIES






Capital expenditures, net



(52,264)



Advances for Indian Gaming Developments


(57,458)



Indian Gaming note receivable, net



486,726



Supplemental Type Certificates



(82,500)




Cash (provided by) used in investing activities


294,504













CASH FLOWS FROM FINANCING ACTIVITIES






Net borrowings under promissory notes


143,599



Proceeds from long-term debt and capital lease obligations
1,669,769



Repayments of long-term debt and capital lease obligations
(512,810)



Repayment of officer note



      -




Cash provided (used in) by financing activities


1,300,558













NET INCREASE (DECREASE) IN CASH



(4,833)













CASH, beginning of year




164,923













CASH, end of year




$                                                           160,090













SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION




Interest paid




$                                                           200,826



Income taxes paid




-













NON CASH FINANCING ACTIVITIES




Conversion of preferred stock to common stock
$                                                           201,467



Conversion of convertible notes to common stock
377,000



Cancelled treasury stock
-



Common stock issued for preferred stock dividends
-











The accompanying notes are an integral part of these
financial statements.













































                              1999
























              CASH FLOWS FROM OPERATING ACTIVITIES






Net income (loss)




$                                                       (1,980,093)




Income (loss) from discontinued operations


(1,698,379)




Income (loss) from continuing operations
(281,714)




Adjustments  to reconcile net income (loss) to net cash






provided by (used in) operations -








Depreciation




223,157





Amortization




167,316





Provision for obsolete inventories


-





Amortization of shares issued for future services



101,251





Noncash services and benefit plan contributions

540,088





Miscellaneous



-











Changes in assets and liabilities -









Accounts receivable



(22,066)





Contracts in process



145,673





Inventories




 989,305





Prepaid expenses and other current assets

48,646





Other assets and other



231,479





Accounts payable



338,126





Customer deposits



  52,039





Accrued liabilities



(228,965)




Cash provided by (used in) continuing operations

2,304,335




Cash provided by (used in) discontinued operations

(1,737,379)





Cash provided by (used in) operations


566,956













CASH FLOWS FROM INVESTING ACTIVITIES






Capital expenditures, net



(221,854)



Advances for Indian Gaming Developments


(233,550)



Indian Gaming note receivable, net



(1,592,776)



Supplemental Type Certificates



(103,678)




Cash (provided by) used in investing activities


(2,151,858)













CASH FLOWS FROM FINANCING ACTIVITIES






Net borrowings under promissory notes


(224,143)



Proceeds from long-term debt and capital lease obligations
3,494,332



Repayments of long-term debt and capital lease obligations
(1,718,599)



Repayment of officer note



37,647




Cash provided (used in) by financing activities


1,589,227













NET INCREASE (DECREASE) IN CASH



4,325













CASH, beginning of year




160,598













CASH, end of year




$         164,923













SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION




Interest paid




$          237,128



Income taxes paid




-













NON CASH FINANCING ACTIVITIES




Conversion of preferred stock to common stock
$                                                           193,231



Conversion of convertible notes to common stock
-



Cancelled treasury stock
337,240



Common stock issued for preferred stock dividends
54,398











The accompanying notes are an
integral part of these financial
statements.








BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2001



1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES:

The accompanying consolidated financial statements include the accounts of
Butler National Corporation (BNC) and its wholly-owned subsidiaries, Avcon
Industries, Inc., Kansas International Corporation, BCS Design, Inc., Butler
National Services, Inc., Butler Temporary Services, Inc., Butler National
Service Corporation, Butler National Corporation-Tempe (formerly Woodson
Avionics, Inc.), BCS Design, Inc. and Butler National, Inc., (collectively, The
Company). Kansas International Corporation was inactive during the years
ended April 30, 2001, 2000 and 1999.  All significant intercompany
transactions have been eliminated in consolidation.

Avcon Industries, Inc. modifies business category aircraft at its Newton, Kansas
facility.  Modifications can include passenger-to-freighter configuration,
addition of aerial photography capability, and stability enhancing
modifications.  Avcon also acquires airplanes, principally Learjets, to
refurbish and sell.  Butler National Corporation-Tempe is primarily engaged in
the manufacture of airborne switching units used in Boeing McDonnell
Douglas aircraft and transient suppression devices for Boeing 747
Classic aircraft.  Butler National Services is principally engaged in monitoring
remote water and wastewater pumping stations through electronic surveillance.
Butler National Service Corporation is a management consulting and
administrative services firm providing business planning and financial
coordination to Indian tribes interested in owning and operating casinos under
the terms of the Indian Gaming Regulatory Act of 1988.

a.        Use of Estimates:  The preparation of financial statements in
          conformity with generally accepted accounting principles requires
          management to make estimates and assumptions that affect the
          reported amounts of assets and liabilities at the date of the
  financial statements and the reported amounts of revenues and
  expenses during the reporting period.  Actual results could differ
  from those estimates.

b.   Inventories:  Inventories are priced at the lower of cost, determined
     on a first-in, first-out basis, or market. Inventories include material,
     labor and factory overhead required in the production of the
     Company's products.

c.   Property and Related Depreciation:  Machinery and equipment are
  recorded at cost and depreciated over their estimated useful lives.
  Depreciation is provided on a straight-line basis. Leasehold
  improvements are amortized on a straight-line basis over the term
  of the lease.  The lives used for the significant items within each
  property classification are as follows:


Life in Years


Building
23 to 39


Machinery and equipment
5 to 17


Office furniture and fixtures
5 to 17


Leasehold improvements
3 to 20


  Maintenance and repairs are charged to expense as incurred.  The
  cost and accumulated depreciation of assets retired are removed
  from the accounts and any resulting gains or losses are reflected as
  income or expense.

  Included in machinery and equipment and office furniture and
  fixtures are capital lease items totaling $303,900 at April 30, 2001
  and 2000.  Accumulated amortization on capital lease items at
  April 30, 2001 and 2000 was $157,084 and $97,800 respectively.

d.   Long-Lived Assets:  Long-lived assets and identifiable intangibles
  to be held and used are reviewed for impairment whenever events
  or changes in circumstances indicate that the carrying amount may
  not be recoverable.  Impairment is measured by comparing the
  carrying value of the long-lived asset to the estimated undiscounted
  future cash flows expected to result from use of the assets and their
  eventual disposition.  The Company determined that as of April 30,
  2001, there had been no impairment in the carrying value of long-
  lived assets.

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

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

  Reserves were recorded for Indian gaming development costs that
  cannot be determined whether reimbursement from the tribes will
  occur.  There are agreements with the Tribes to be reimbursed for
  all costs incurred to develop gaming when the facilities are
  constructed and opened.  Because the Stables represents the only
  operations opened, there is uncertainty as to whether
  reimbursement on all remaining costs that have been reserved will
  occur.  It is the Company's policy therefore, to reduce the
  respective reserves as reimbursement from the Tribes is collected.

  Capitalized costs totaled  approximately $4,580,304 and
  $4,499,022 at April 30, 2001 and April 30, 2000, respectively,
  related to the development of Indian gaming facilities.  These
  amounts are net of reserves of $2,718,928 in 2001 and 2000, which
  were established to reserve for potentially unreimburseable costs.
  In the opinion of management, the net advances will be recoverable
  through the gaming activities.  Current economic projections for
  the gaming activities indicate adequate future cash flows to recover
  the advances.  In the event the Company and its Indian clients are
  unsuccessful in establishing such operations, these net recorded
  advances will be recovered through the liquidation of the
  associated assets.  The Company has title to land purchased for
  Indian gaming.  These tracts, currently owned by the Company,
  could be sold to recover costs in the projects.

  As a part of a Management Contract approved by the National
  Indian Gaming Commission (NIGC) on January 14, 1997, between
  the Company's (then) wholly owned subsidiary, Butler National
  Service Corporation, and the Miami Tribe of Oklahoma and the
  Modoc Tribe of Oklahoma (the Tribes), the Company agreed to
  convert their current unsecured receivable from the Tribes to a
  secured note receivable with the Tribes of $3,500,000 at 2 percent
  over prime, to be repaid over five years, for the construction of the
  Stables gaming establishment and reimbursement for previously
  advanced funds.  Security under the contract includes the Tribes'
  profits from all tribal gaming enterprises and all assets of the
  Stables except the land and building.  The Company is currently
  receiving payments on the note on the Stables' operation.  Amounts
  to be received on the notes are 2002 - $647,285; 2003 - $647,285
  and 2004 - $638,041.

f.   Supplemental Type Certificates:  Supplemental Type Certificates
  (STCs) are authorizations granted by the Federal Aviation
  Administration (FAA) for specific modification of a certain
  aircraft.  The STC authorizes the Company to perform
  modifications, installations and assemblies on applicable customer-
  owned aircraft.  Costs associated with obtaining these STCs from
  the FAA are capitalized and subsequently amortized against
  revenues being generated from aircraft modifications associated
  with the STC.  The costs are expensed as services are rendered on
  each aircraft through costs of sales using the units of production
  method.  Current company estimates of future orders indicate the
  life for these costs to be approximately five years.  The legal life of
  these STCs is indefinite.  Consultant costs, as shown below,
  include costs of engineering, legal and aircraft specialists.
  Components of the capitalized costs are as follows:




2001

2000


Direct labor

 $                               206,752

 $       206,752


Direct materials

          187,129

          187,129


Consultant costs

       1,453,920

       1,453,920


Labor overhead

          326,669

          326,669



Subtotal
       2,174,470

       2,174,470


Less- Amortized costs
836,098

          776,503


Net STC balance
$                               1,338,372

 $    1,397,967


  The recoverability of these costs are dependent upon the
  Company's ability to obtain and sustain future orders.  Failure to
  gain these orders and subsequently recover these costs could have
  a material adverse impact on the Company's financial position and
  results of operations.
g.        Bank Overdraft Payable:  The Company's cash management
          program results in checks outstanding in excess of         bank
          balances in the general disbursement account.  When checks are
          presented to the bank for payment, cash deposits in amounts
          sufficient to fund the checks are made from funds provided under
          the terms of the Company's promissory notes agreement.

h.   Financial Instruments:  The carrying value of the Company's cash
     and cash equivalents, short-term investments, accounts receivable,
     accounts payable, accrued expenses and accrued employee costs
     approximate fair value because of the short-term maturity of these
     instruments.  Fair values are based on quoted market prices and
     assumptions concerning the amount and timing of estimated future
     cash flows and assumed discount rates reflecting varying degrees
     of perceived risk.  Based upon borrowing rates currently available
     to the Company with similar terms, the carrying value of notes
     payable long-term debt and capital lease obligations approximate
     fair value.

i.   Revenue Recognition:  The Company performs aircraft
     modifications under fixed-price contracts.  Revenues from fixed-
     price contracts are recognized on the percentage-of- completion
     method, measured by the direct labor costs incurred compared to
     total estimated direct labor costs.

j.   Earnings Per Share:  Earnings per common share is based on the
     weighted average number of common shares outstanding during the
     year.  Stock options, convertible preferred, and convertible
     debentures have been considered in the dilutive earnings per share
     calculation, but not used in 2001, 2000 and 1999 because they are
     anti-dilutive.

k.   New Accounting Pronouncements: In June 1998, the Financial
     Accounting Standards Board issued SFAS No. 133, "Accounting
     for Derivative Instruments and Hedging Activities".  The Statement
     will require the Company to recognize all derivatives on the
     balance sheet at fair value.  SFAS No. 133 requires that derivative
     instruments used to hedge be identified specifically to assets,
     liabilities, unrecognized firm commitments or forecasted
     transactions.  The gains or losses resulting from changes in the fair
     value of derivative instruments will either be recognized in current
     earnings or in other comprehensive income, depending on the use
     of the derivative.  This Statement, as amended, is effective for
     fiscal years beginning after June 15, 2000.  Management believes
     that the adoption of this Statement will not have a material effect
     on the Company's consolidated financial position, results of
     operations or cash flows.

  In March 2000, the Financial Accounting Standards Board released
  Interpretation No. 44, "Accounting for Certain Transactions
  Involving Stock Compensation" ("Fin 44").  FIN 44 addresses
  certain practice issues related to Accounting Principles Board
  Opinion No. 25, Accounting for Stock Issued to Employees ("APB
  25").  FIN 44 applies only to companies that have chosen not to
  adopt SFAS 123, Accounting for Stock-based Compensation, for
  transactions with employees.  Among other issues, FIN 44 clarifies
  (a) the definition of an employee for purposes of applying APB 25,
  (b) the criteria for determining whether a plan qualifies as a
  noncompensatory plan, (c) the accounting consequences of various
  modifications to the terms of a previously fixed stock option or
  award, and (d) the accounting for an exchange of stock
  compensation awards in a business combination.  The Company
  adopted FIN 44 July 1, 2000.  The adoption of FIN 44 did not have
  a material effect on the financial position or operation.

  During the fourth quarter of 2000, the Emerging Issues Task Force
  (EITF) issued consensus 00-27 "Application of EITF No. 98-5.
  Accounting for Convertible Securities with Beneficial Conversion
  Features of Contingency Adjustable Conversion Ratios, to certain
  Convertible Instrument" ("EITF No. 00-27).  EITF No. 00-27
  requires the re-measurement of the original issue discount on
  convertible debt.  This accounting change required the value of the
  warrants issued with the convertible debt to be included in
  calculating the beneficial conversion value.  The adoption of EITF
  No. 00-27 did not have a material effect on the Company's
  financial position or previously reported results of operations.

l.     Stock-based Compensation: The Company accounts for non-
  employee stock-based awards in which goods or services are the
  consideration received for the equity instruments issued in
  accordance with the provisions of SFAS No. 123 and Emerging
  Issues Task Force No. 96-18, "Accounting for Equity Instruments
  that are Issued to Employees for Acquiring, or in Conjunction with
  Selling, Goods or Services".

m.   Income Taxes: Amounts provided for income tax expense are
     based on income reported for financial statement purposes and do
     not necessarily represent amounts currently payable under tax laws.
     Deferred taxes, which arise principally from temporary differences
     between the period in which certain income and expense items are
     recognized for financial reporting purposes and the period in which
     they affect taxable income, are included in the amounts provided
     for income taxes.  Under this method, the computation of deferred
     tax assets and liabilities give recognition to enacted tax rates in
     effect in the year the differences are expected to affect taxable
     income.  Valuation allowances are established when necessary to
     reduce deferred tax assets to amounts that the Company expects to
     realize.


n.    Cash and Cash Equivalents: Cash and cash equivalents consist
  primarily of cash and investments in a money market fund.  The
  Company considers all highly liquid investments with an original
  maturity of three months or less to be cash equivalents.  The
  Company maintains its cash in bank deposit accounts that, at times,
  may exceed federally insured limits.

o.    Concentration of Credit Risk: The Company extends credit to
  customers based on an evaluation of their financial condition and
  collateral is not required.  The Company performs ongoing credit
  evaluations of its customers and maintains an allowance for
  doubtful accounts.

p.   Research and Development: The Company charges to operations
  research and development costs.  The amount charged in the year
  ended April 30, 2001 and 2000 was approximately $805,835 and
  $539,427 respectively.

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


2.   DIVIDEND OF SUBSIDIARY STOCK TO SHAREHOLDERS

  On May 4, 1999 the Company announced it would distribute to its
  shareholders the stock in the subsidiary Butler National Service
  Corporation (BNSC).  The assets of the subsidiary totaled
  approximately $1,623,000 and liabilities totaled approximately
  $1,620,000.  The distribution will be made when the filings are
  approved by the Security and Exchange Commission.  BNSC holds
  a contract to manage an Indian Gaming facility (The Stables) and
  will manage all Indian Gaming facilities when there is a contract
  between the Tribe and BNSC.







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<PAGE>
3.  DEBT:

Principal amounts of debt at April 30, 2001 and 2000, consist of the
following:



Promissory Notes

2001
2000



Interest at prime plus 2%
(9.5% at April 30, 2001),
due August 25, 2001,
collateralized by a first or
second position on all assets
of the Company.

$                                 348,590
$                                 615,174























The Company has promissory notes in which it may borrow a maximum of
$500,000 and an extension agreement allowing borrowing of $200,000.
The notes matured in August, 2001, and were renewed under similar terms
for another quarter.  Interest rates were 11% and 10.5% for the years ended
2001 and 2000 respectively.

















Other Notes Payable and Capital Lease
Obligations






Note payable, interest at prime
plus 2%, (9.5% at April
30, 2001) due May 24, 2004
collateralized by Aircraft
Security Agreements.

$                               1,585,018
$                               1,619,964
























Note payable, interest at prime
plus 2% (9.5% at April 30,
2001) due August 1, 2003.

933,421
-










Note payable, interest at prime
plus 1%, (8.5% at April
30, 2001) due Sept. 1, 2002
collateralized by real estate.

374,117
380,918

















Note payable, interest at prime
plus 2% (9.5% at April 30,
2001) collateralized by a first
or second position on all
of the Company.

142,088
103,000
























Note payable, interest at prime
plus 2% (9.5% at April 30,

844,813
978,028



2001) due May 13, 2009,
collateralized by a first or






second position on all assets
of the Company.













Note payable, interest
generally at 10.5%,
collateralized by a second
position on cash flow of the
Stables.

400,000
-

















Other Notes Payable and
Capital Lease Obligations

295,185
233,391





4,574,642
3,315,301



Less: Current maturities

1,321,030
375,480





$                               3,253,612
$                               2,939,821










Maturities of long-term debt and capital lease obligations are as
follows:


Year Ending





30-Apr

Amount









2002

1,321,030



2003

2,240,204



2004

419,761



2005

193,587



2006

186,216


                             Thereafter

                                213,844





                              4,574,642
















           4.  DISCONTINUED OPERATIONS:

On April 14, 1998, the Company discontinued the operation of its food
distribution operations conducted by RF, Inc., and Valu Foods, Inc.,
wholly owned subsidiaries of the Company.  These operations were
liquidated and the Company does not plan any future operations in the
            food distribution industry.

The Company acquired RF, Inc., on April 21, 1994.  The individuals
who sold RF, Inc. to the Company had sought for some time to
reacquire the ownership of RF, Inc. The individual (the Employee) filed
a lawsuit against the Company seeking to rescind the sale of RF, Inc.
stock and for damages.  The Company and the Employee reached an
agreement to settle and release all claims and counterclaims effective
April 30, 1997.  The Employee 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 a commitment for certain payments over the next three years.
On June 21, 1997, the Company released the Employee from the terms
of his employment contract and the April 24, 1994 Stock Purchase
Agreement, including his agreement not to compete with the Company
in the food distribution industry.  Costs associated with this transaction
totaled $1,054,000 and were expensed in fiscal year 1997.  As a result
of resolving the dispute and the ultimate release from the employment
agreement, the Company received compensation and recorded a gain of
$1,043,000, restated herein, (principally noncash) in the first quarter of
                                 1998.

On March 27, 1998, three companies filed a petition for involuntary
bankruptcy against RF, Inc.  On May 12, 1998, the court determined
that RF, Inc. was bankrupt and a trustee was appointed on June 11,
1998. All the assets of RF, Inc. were pledged as security for the bank
                       line of credit.

The bank was to obtain control of all the assets of RF, Inc. and the
Company planned to cooperate in the collection of accounts receivable
through a law firm, the liquidation of the inventory and to purchase the
fixed assets, primarily office equipment, from the bank.  The RF, Inc.
bank debt was approximately $638,000, plus interest and legal
collection costs.  The Company believed that an orderly liquidation of
the assets and the sale of the fixed assets would allow the bank to
recover the amount due on the bank line of credit.

As of April 30, 1998, the operations of RF, Inc. were deconsolidated
because of the Chapter 7 involuntary bankruptcy liquidation.  The entire
investment in RF, Inc. was written-off through the 1998 loss from
discontinued operations.  The assets and liabilities of RF, Inc. at April
30, 1998, were comprised of accounts receivable $716,478, inventory
$359,103, other assets $44,423, bank liabilities $637,947 and other
accrued liabilities $397,903.  The revenues associated with RF, Inc. for
   the year ended 1998 was $3,783,132.

The Company also discontinued in 1998 the operation of its retail food
store, Valu Foods, Inc.  The loss on discontinued operations in fiscal
1998 was $23,965 (net of tax).  The loss includes anticipated legal
      costs, rental costs and payroll.

The bankruptcy court ruled July 20, 1999, on the bankruptcy filing of
the Company.  Subsequent to April 30, 1998, the bank was not allowed
to immediately assume control of the collateralized assets for
liquidation and as such, required the Company to pay the bank the
amount due and the court costs in total, including interest, aggregating
$1,089,000. An additional charge for this payment and other fees
relating to RF, Inc. totaling $1,698,379 was recorded in fiscal year
1999.  At April 30, 2001 the remaining notes payable (including
   deferred interest) totaled $844,813.

            5.  CONVERTIBLE DEBENTURES:

The Company completed a private placement on June 26, 1996, in
which the Company issued an eight percent (8.0%) cumulative
convertible debenture due June 26, 1998, in the amount of $750,000.
Net proceeds of the offering were $675,000.  The debenture is
convertible only to common stock at 70 percent of the average closing
price of the common stock for the five (5) days prior to issuance of the
debenture.  At June 26, 1998, the end of the two-year term, the balance
not yet converted must be converted to common stock.  The eight
percent (8.0%) interest is payable in stock or cash at the option of the
                             Company.

The Company completed a private placement on November 1, 1996, in
which the Company issued an eight percent (8.0%) cumulative
convertible debenture due November 1, 1998, in the amount of
$500,000.  Net proceeds of the offering were $450,000.  The debenture
is convertible only to common stock at seventy percent (70%) of the
average closing bid price of the common stock for the five days prior to
issuance of the debenture.  At November 1, 1998, the end of the two-
year term, the balance not yet converted must be converted to common
stock.  The eight percent (8.0%) interest is payable in stock or cash at
             the option of the Company.

On January 25, 1999, a change was made to the issuance documents
changing the conditions of the conversions.  The face value at the time
of this agreement was $650,000 allowing $65,000 per month to be
converted under the plan at a conversion price equal to eighty percent
(80%) of the five (5) day average closing bid for the five (5) trading
days prior to the conversion, provided, however, that if the closing price
increases to $1.45 per share or more for three (3) consecutive trading
days, the Holder will have the option to convert an additional 20
percent or $130,000 of outstanding principal amount of Debentures.
All transactions are being handled through one broker and all activity is
reported on a weekly basis.  The Holders also received 325,000 three-
year warrants to purchase restricted common stock at $1.45 per share,
and all past and future interest payments were rescinded.  At April 30,
2001, based on a bid price of $.10 of the Company stock, the number of
shares the debentures could be converted into totaled 975,000.



The rest of this page intentionally left blank.




6.  INCOME TAXES:

Deferred taxes are determined based on the estimated future tax effects
of differences between the financial statement and tax basis of assets
and liabilities given the provision of the enacted tax laws.  The
Company has net operating loss carryforwards and cumulative
temporary differences, which would result in the recognition of net
deferred tax assets.  A valuation allowance has been provided which
reduces the net deferred tax asset to zero.  At April 30, 2001, the
Company had approximately $7.2 million of net operating losses, which
expire in 2002 to 2015.


The deferred taxes are comprised of the following components:





April 30,
2001
April 30,
2000










Current
deferred
taxes -







Current assets

$                                 432,000
$                                 429,000



Current liabilities

-
-




Total current
deferred taxes

432,000
429,000










Noncurrent deferred taxes -






Non current assets

3,296,000
3,043,000



Non current liabilities

(235,000)
(267,000)




Total non current
deferred taxes

3,061,000
2,776,000










Total deferred taxes

3,493,000
3,205,000


Less - Valuation allowance

(3,493,000)
(3,205,000)




Total deferred
taxes, net

$                -
$                -















        April 30,






                 2001

                 2000












     Accounts receivable reserves
$                                   5,000

$                                  10,000



Inventory reserve
406,000

399,000



Net operating loss
2,776,000

2,523,000



Depreciation
(146,000)

(154,000)



Indian gaming development
520,000

520,000




Accrued interest
(88,000)

(113,000)



Other
20,000

20,000






Net deferred tax items
$          3,493,000

$          3,205,000











A reconciliation of the provision for income taxes to the statutory federal
rate for continuing operations is as follows:






2001

2000

1999












Statutory federal income tax rate

-34.0%

-34.0%

-34.0%


Changes in valuation allowances

31.7%

32.4%

33.0%


Nondeductible expenses

1.6%

1.6%

1.0%



Effective tax rate

0.0%

0.0%

0.0%


7.  SHAREHOLDERS' EQUITY:

Quasi Reorganization

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

Common Stock Transactions

During the year ended April 30, 2001, the Company issued 1,353,395
shares valued at $121,806 were issued as the match to the Company's
401(k) plan; 6,480,000 were issued under the exchange provisions of
the Preferred Stock and 1,888,888 were issued under the exchange
provisions of the Convertible Debentures.

During the year ended April 30, 2000, the Company issued 134,600
shares of stock valued at $10,212 in various non-cash transactions;
1,736,302 shares valued at $108,519 were issued as the match to the
Company's 401(k) plan; 5,139,345 were issued under the exchange
provisions of the Preferred Stock and 4,959,494 were issued under the
exchange provisions of the Convertible Debentures.

During the year ended April 30, 1999, the Company issued 3,713,658
shares of stock valued at $894,485 in various non-cash transactions:
2,089,126 shares valued at $732,787 were issued for services rendered;
264,124 shares valued at $107,300 were issued as the Company match
to the employee 401-K plan; 1,258,012 shares were issued under
exchange provisions of the Preferred Stock; and 102,396 shares valued
at $54,398 were issued for Preferred Stock dividends.

Convertible Preferred Stock

The Company completed a private placement on December 16, 1997, to
issue Series B, 6 percent Convertible Preferred Stock in the amount of
$1,500,000.  Dividends when declared, are payable quarterly at 6
percent of stated value per share.  Net proceeds of the offering were
$1,315,959.  The terms of conversion allow the holder, at its option, at
any time commencing 45 days after issuance of the preferred stock to
convert the preferred stock into shares of the Company's Common
Stock, at a conversion price equal to seventy percent (70%) of the
common stock bid price (the average of the ending common stock bid
price five days prior to issuance of the preferred stock or the ending bid
price of the common stock 45 days after issuance of the preferred stock.
The shares are subject to a mandatory, 24-month conversion feature at
the end of which all shares outstanding will be automatically converted.
Liquidation rights upon dissolution are equal to the stated value per
share and all unpaid dividends.  The preferred shareholders have no
voting rights.

The aforementioned security includes a nondetachable conversion
feature that is "in the money" at the date of issuance.  This feature,
known as beneficial conversion features, allows for securities to be
convertible into common stock at a fixed discount to the common
stock's market price at the date of conversion.  This feature is
recognized and measured by allocating a portion of the proceeds equal
to the intrinsic value of this feature to additional paid-in capital.  This
amount is calculated as the difference between the conversion price and
the fair value of the common stock into which the security is
convertible, multiplied by the number of shares into which the security
is convertible.  The allocation of the proceeds is considered to be
analogous to a dividend to the preferred security holder and is
recognized over the minimum period in which the security holders can
realize that return.

On January 25, 1999, Butler National reached an agreement with the
Holders of the Class B Convertible Preferred Stock to change the
conversion conditions of the preferred stock.  Under the agreement, the
Holders of the Preferred are allowed to convert up to ten percent (10%)
of the face value of the Preferred into common stock in any month until
the entire issue is converted.  The face value at the time of settlement
was $785,000 allowing $78,500 per month to be converted under the
plan.  However, if the bid price is above $1.45 for three trading days,
the Holders will be allowed to convert up to a total of 30 percent per
month or $235,500 of face value of the Preferred.  The conversion
amount will increase five percent (5%) for each $.20 increase in market
price.  The agreed conversion price is 70 percent of the average bid
price for the previous five (5) trading days.

With the exception of 30,000 common shares owned at settlement by
the Holders, sales of the previous converted common shares, 148,849
shares, plus any newly converted common shares, will be limited to the
greater of $30,000 or twenty-five percent (25%) of the previous week's
trading volume.  The Company issued 102,396 shares of its stock
valued at $54,398 in lieu of any past or future dividends.   All
transactions are being handled through one broker and all activity is
reported on a weekly basis.  The Holders also received 770,000 three-
year warrants to purchase restricted common stock at $1.45 per share.
At April 30, 2001 all preferred shares have been converted into
common stock.

8.  STOCK OPTIONS AND INCENTIVE PLANS:

The Company has established nonqualified stock option plans to
provide key employees and consultants an opportunity to acquire
ownership in the Company.  Options are granted under these plans at
exercise prices equal to fair market value at the date of the grant,
generally exercisable immediately and expire in 10 years.  All options
terminate if the employee leaves the Company.  The Company accounts
for these plans under Accounting Principles Board Opinion No. 25
under which no compensation cost has been recognized.  Had
compensation cost been recognized in accordance with Financial
Accounting Standards Board Statement No. 123, Accounting for Stock
Based Compensation, the Company's operating income would have
been effected as follows:



2001
2000
1999


Dividend yield
0%
0%
0%


Weighted
average
expected stock
volatility
 17.0%
 13.50%
  4.50%


Weighted
average risk
free interest
rate
4.92%
6.35%
4.78%


Expected
option lives
10 years
10 years
10 years


Net loss





As reported
$                               (485,777)
$                             (1,136,071)
$                             (2,034,491)


Pro forma
$                               (595,777)
$                             (1,280,801)
$                             (2,493,911)


Basic earnings
per share






As reported
$                                  (0.02)
$                                  (0.06)
$                                  (0.17)


Pro forma
$                                  (0.02)
$                                  (0.07)
$                                  (0.21)


Diluted
earnings per
share





As reported
$                                  (0.02)
$                                  (0.06)
$                                  (0.17)


Pro forma
$                                  (0.02)
$                                  (0.07)
$                                  (0.21)



The following table summarizes the Option Plans.



Shares
Weighted




Average Price


Outstanding at April
30, 1998
6,375,800
   0.90


Granted
2,418,000
       0.50


Exercised
(600,000)
0.50


Canceled
(2,514,500)
           0.90


Outstanding at April
30, 1999

5,679,300
        0.77


Granted
4,260,000
   0.08


Canceled
(299,000)
0.51


Exercised
-
-


Outstanding at April
30, 2000
9,615,300
0.48


Granted
2,835,000
0.09


Canceled
(705,000)
0.36


Exercised
 -
-


Outstanding at April
30, 2001
11,745,300
0.48


9.  COMMITMENTS:

Lease Commitments

The Company leases space under operating leases with initial terms of
three (3) years.  Total rental expense incurred for the years ended April
30, 2001, 2000 and 1999, was $146,000, $139,000 and $259,000,
respectively.

Minimum lease commitments under noncancellable operating leases for
the next five (5) years are as follows:

Year Ending




30-Apr

Amount







2002

     153,000


2003

       88,000


2004

          -


2005

          -


2006

          -


                             Thereafter

                                      -


                   10.   CONTINGENCIES:

The Company is involved in various lawsuits incidental to its business.
Management believes the ultimate liability, if any, will not have an
adverse effect on the Company's financial position or results of
                            operations.














Due to the Company's financial condition, and the need to reduce
expenses, the board of directors approved the elimination of product
liability insurance in August, 1989.

       11.  RELATED-PARTY TRANSACTIONS:

During fiscal 2001 and 2000, the Company paid consulting fees of
approximately $197,000 and $172,324 to board members and board
member's consulting companies for business consulting services.  In
fiscal 1999 the Company advanced as part of the Indian Gaming
Advances $350,320 to board members and board members consulting
companies for business consulting services.

               12.  401(K) SAVINGS PLAN

The Company has a defined contribution plan authorized under Section
401(k) of the Internal Revenue Code.  All benefits-eligible employees
with at least one year of service are eligible to participate in the plan.
Employees may contribute up to twelve percent of their pre-tax covered
compensation through salary deductions.  The Company contributed
100 percent of every pre-tax dollar an employee contributes.
Employees are 100 percent vested in the employer's contributions after
five years of service.  All employer contributions are tax deductible by
the Company.  The Company's matching contribution expense in 2001,
2000 and 1999 was approximately $121,806, $108,519 and $107,300
                          respectively.

















13.  COMMON SHARES USED IN EARNINGS PER SHARE
                          CALCULATIONS:

The following table shows the amounts used in computing earnings per
share and the effect on income and weighted average number of shares
    of potential dilutive common stock.




                                   2001
                                   2000
                                   1999














                      Earnings (losses)
                          available for





                          Common shares
$                               (485,477)
$                             (1,136,072)
$                             (1,980,093)


     Preferred dividend
        -
        -
(54,398)








Earnings (losses)
available for common
$                               (485,477)
$                             (1,136,072)
$                             (2,034,491)


shares after assumed
conversion of dilutive
securites











Earnings (loss) per
share -





     Basic -





          Earnings from
  continuing
  operations
$                                  (0.02)
$                                  (0.06)
$                                  (0.03)


          Income (loss)
  from/on
      discontinued
  operations
      -
      -
(0.14)


          Earnings (loss)
  available for
  common shares
$                                 (0.02)
$                                 (0.06)
$                                 (0.17)








Earnings (loss) per
share -





     Diluted -





          Earnings from
  continuing
  operations
$                                  (0.02)
$                                  (0.06)
$                                  (0.03)


          Income (loss)
  from/on
      discontinued
  operations
       -
       -
 (0.14)


          Earnings (loss)
  available for
  common shares
$                                  (0.02)
$                                  (0.06)
$                                  (0.17)








Weighted average
number of common
shares used in





 Basic EPS
28,487,816
18,634,447
11,845,875


 Per share effect of
 dilutive securities





  Convertible
  debenture
 securities
-
-
-


  Convertible
  preferred
 securities
 -
 -
 -


  Options
-
-
-








Weighted number of
common shares and
dilutive  potential
common shares used
in dilutive EPS






28,487,816
18,634,447
11,845,875






































14.  INDUSTRY SEGMENTATION AND SALES BY MAJOR CUSTOMER:

Industry Segmentation

The Company's operations have been classified into six segments in 2001, 2000
and 1999.

1.   Avionics - principally includes the manufacture of airborne switching units
  used in DC-9, DC-10, DC- 9/80, MD-80, MD-90 and the KC-10 aircraft
  and Transient Suppression Devices (TSD's) for fuel tank protection on
  Boeing Classic aircraft.

2.   Aircraft Modifications - principally includes the modification of business
  type aircraft from passenger to freighter configuration, addition of aerial
  photography capability, stability enhancing modifications for Learjets, and
  other modifications.

3.   Aircraft Sales - acquires and sells aircraft, principally Learjets.

4.   Gaming - business management services to Indian tribes in connection
  with the Indian Gaming Act of 1988.

5.   Monitoring Services - principally includes the monitoring of water and
  wastewater remote pumping stations through electronic surveillance, for
  municipalities and the private sector.

6.   Temporary Services - provides temporary employee services for corporate
  clients.



The rest of this page intentionally left blank.










































Year ended April 30, 2001


Gaming
Avionics
Modifications


Net Sales
$                                  437,041
$                                1,030,445
$                                3,288,669


Depreciation
-
21,846
95,475


Operating profit (loss) (a)
$                                 (51,408)
187,431
52,725


Capital Expenditures
81,282
-
-


Interest, net





Other income





Loss from continuing
operationsons





    operations





Income taxes





Net loss





Identifiable assets
$                                3,973,157
$                                  470,610
$                                3,435,781




Services
Aircraft
Corporate


Net Sales
$                                1,135,804
$          -
$                                  117,004


Depreciation
28,983
-
54,272


Operating profit (loss) (a)
(9,644)
-
(516,618)


Capital Expenditures
14,516
-
-


Interest, net





Other income





Loss from continuing
operationsons





    operations





Income taxes





Net loss





Identifiable assets
$                                  167,713
$                                1,467,771
$                                1,091,582




Consolidated (b)


Net Sales
$                                6,008,963


Depreciation
200,576


Operating profit (loss) (a)
(337,514)


Capital Expenditures
95,798


Interest, net
(230,608)


Other income
82,645


Loss from continuing
operationsons



    operations
(485,477)


Income taxes
-


Net loss
$                                (485,477)


Identifiable assets
$                               10,606,614



















Year ended April 30, 2000


Gaming
Avionics
Modifications


Net Sales
$                   -
$                                  274,335
$                                3,130,835


Depreciation
-
45,689
 99,009


Operating profit (loss) (a)
         -
   (117,658)
    (667,939)


Capital Expenditures
            57,458
-
       -


Interest, net





Loss from continuing
operationsons





    operations





Income taxes





Net loss





Identifiable assets
$                                3,383,232
$                                  485,742
$                                3,747,388




Services
Aircraft
Corporate


Net Sales
$                                1,118,081
$            -
$                                   83,558


Depreciation
24,775
-
 56,897


Operating profit (loss) (a)
    (5,836)
       -
   (310,695)


Capital Expenditures
30,495
-
21,769


Interest, net





Loss from continuing
operationsons





    operations





Income taxes





Net loss





Identifiable assets
$                                  235,221
$                                1,455,666
$                                  964,737




Consolidated (b)


Net Sales
$                                4,606,809


Depreciation
226,370


Operating profit (loss) (a)
(1,102,128)


Capital Expenditures
       109,722


Interest, net
(33,944)


Loss from continuing
operationsons



    operations
(1,136,072)


Income taxes
-


Net loss
$                              (1,136,072)


Identifiable assets
$                               10,271,986























Year ended April 30, 1999


Gaming
Avionics
Modifications


Net Sales
$                -
$                                  465,830
$                                3,117,138


Depreciation
-
33,667
110,469


Operating profit (loss) (a)
52,765
(46,370)
(284,709)


Capital Expenditures
1,704,319
-
140,034


Interest, net





Other expense





Loss from continuing
operationsons





    operations





Income taxes





Loss from discontinued
operations





    operations





Net loss





Identifiable assets
$                                5,131,363
$                                  594,496
$                                4,371,602




Services
Aircraft
Corporate


Net Sales
$                               929,153
$                             2,100,000
$            -


Depreciation
23,851
-
55,170


Operating profit (loss) (a)
14,809
600,000
(560,892)


Capital Expenditures
16,867
-
64,953


Interest, net





Other expense





Loss from continuing
operationsons





    operations





Income taxes





Loss from discontinued
operations





    operations





Net loss





Identifiable assets
$                               225,742
$                               295,281
$                             1,110,207




Consolidated (b)


Net Sales
$                             6,612,121


Depreciation
223,157


Operating profit (loss) (a)
(224,397)


Capital Expenditures
1,926,173


Interest, net
(36,591)


Other expense
(57,317)


Loss from continuing
operationsons



    operations
(281,714)


Income taxes
-


Loss from discontinued
operations



    operations
(1,698,379)


Net loss
$                           (1,980,093)


Identifiable assets
$                            11,728,691




(a)           Operating expenses not specifically identifiable are allocated
              based upon sales, costs of sales, square footage or other factors
              as considered appropriate.
(b)           Segment of Temporaries had no activity in the three year
period ended April 30, 2001.








Major Customers:  Sales to major customers (10 percent or
more of consolidated sales) were as follows:



2001
2000
1999


Aircraft modifications
(GFD)
-
-
14%


Monitoring services
(Plantation)
14%
14%
-


Aircraft sales (Private
corporation)
-
-
32%


    Total major
customers
14%
14%
56%



                     SCHEDULE II

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              AND RESERVES

FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999





Description

Balance at
Beginning of
Year
Additions
Charged to
Costs and
Expenses







Year ended April 30, 2001




              Allowance for doubtful
              accounts
$                                  25,600
$             -


              Reserve for inventory
obsolescence
308,133
-


              Reserve for Indian  gaming
development
2,718,928
-


              Deferred interest (1)
293,000
-


              Income tax valuation
allowance
3,205,000
288,000






Description



Deductions


Balance at
End of Year







Year ended April 30, 2001




              Allowance for doubtful
              accounts
$                                  13,900
$                                  11,700


              Reserve for inventory
obsolescence
-
308,133


              Reserve for Indian  gaming
development
-
2,718,928


              Deferred interest (1)
63,000
230,000


              Income tax valuation
allowance
-
3,493,000







Description

Balance at
Beginning of
Year
Additions
Charged to
Costs and
Expenses







Year ended April 30, 2000




              Allowance for doubtful
              accounts
$                                  68,886
$             -


              Reserve for inventory
obsolescence
74,562
233,571


              Reserve for loss on note
              receivable
27,327
-


              Reserve for Indian  gaming
              development
2,718,928
-


              Deferred interest (1)
351,000
-


              Income tax valuation
allowance
3,159,000
46,000







Description



Deductions


Balance at
End of Year







Year ended April 30, 2000




              Allowance for doubtful
              accounts
$                                  42,386
$                                  25,600


              Reserve for inventory
obsolescence
-
308,133


              Reserve for loss on note
              receivable
27,327
-


              Reserve for Indian  gaming
              development
-
2,718,928


              Deferred interest (1)
58,000
293,000


              Income tax valuation
allowance
-
3,205,000








Description

Balance at
Beginning of
Year
Additions
Charged to
Costs and
Expenses







Year ended April 30, 1999




              Allowance for doubtful
              accounts
$                                  78,736
$             -


              Reserve for inventory
obsolescence
74,562
-


              Reserve for loss on note
              receivable
27,327
-


              Reserve for Indian  gaming
              development
3,008,508
-


              Deferred interest (1)
-
351,000


              Income tax valuation
allowance
2,699,762
459,238








Description



Deductions


Balance at
End of Year







Year ended April 30, 1999




              Allowance for doubtful
              accounts
$                                   9,850
$                                  68,886


              Reserve for inventory
              obsolescence
-
74,562


              Reserve for loss on note
              receivable
-
27,327


              Reserve for Indian gaming
              development
289,580
2,718,928


              Deferred interest (1)
-
351,000


              Income tax valuation
              allowance
-
3,159,000




(1) Interest to be paid as part of the note payable on discontinued
operations.