SECURITIES AND EXCHANGE COMMISSION
                 Washington, D.C.

                   FORM 10-K/A

(Mark One)     Annual Report Pursuant to Section 13 or
    X          15(d) of the 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.

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.



                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 orcommissions, 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.


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      1997

                                   (Restated) (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 SheetInformation

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
Unite  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.


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.


               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:
Clark D. Stewart (61)

Served Since:  1989

Principal Occupation for Last Five Years and Other
Directorships:

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.

Name of Nominee and Director and Age:
R. Warren Wagoner (49)

Served Since:  1986

Principal Occupation for Last Five Years and Other
Directorships:

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.

Name of Nominee and Director and Age:
William E. Logan (63)

Served Since:  1990

Principal Occupation for Last Five Years and Other
Directorships:

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.

Name of Nominee and Director and Age:
William A. Griffith

Served Since:  1990

Principal Occupation for Last Five Years and Other
Directorships:

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.

Name of Nominee and Director and Age:
David B. Hayden

Served Since:  1996

Principal Occupation for Last Five Years and Other
Directorships:

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
R. Warren Wagoner

Age
49

Position
Chairman of the Board of Directors

Name
Clark D. Stewart

Age
61

Position
President and Chief Executive Officer

Name
Larry W. Franke

Age
57

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

Name
Jon C. Fischrupp

Age
61

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

Name
Stanley D. Nolind

Age
57

Position
Chief Financial Officer

Name
William A. Griffith

Age
54

Position
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.

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
Clark D. Stewart
President and CEO, Director

Annual Compensation
Year       Salary($)   Bonus($)     Other Annual

Compensation($)
01          237,986      ---       ---
00          237,986      ---       ---
99          218,743      ---       ---


Name and Principal Position
Clark D. Stewart
President and CEO, Director

Long Term Compensation
Year           Awards                        Payouts
01             -              -
00             -              -
99             -              -

Restricted Stock Award(s)($)Securities
Underlying Options (no.)(1)
01   250,000
00   575,000
99   (820,000)

LTIP Payouts($)
01   -
00   -
99   -

All Other Compensation($)
01   -
00   -
99   -

  (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
Clark D. Stewart, Chief Executive Officer (1)

Number of Securities Underlying Options Granted (#)
250,000

Percent of Total Options Granted to Employees in
Fiscal Year
8.8%

Exercise or Base Price ($/Sh)
 .09

Name and Position
Clark D. Stewart, Chief Executive Officer (1)

Expiration Date
12/31/2010

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

5% ($)               10% ($)
-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
exercisable.

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 and Position
Clark D. Stewart, Chief Executive Officer

Shares Acquired on Exercise (no.)
0

Value Realized ($)
0

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

Exercisable/Unexercisable

2,225,000  /   0


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

Exercisable/Unexercisable

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

Amount and Nature of Beneficial Ownership (1)
5,096,390(2)

Percent of Class
13.7%

Name and Address of Beneficial Owner
William E. Logan
19920 West 161st Street
Olathe, Kansas 66062

Amount and Nature of Beneficial Ownership (1)
2,073,683(3)

Percent of Class
5.6%

Name and Address of Beneficial Owner
R. Warren Wagoner
19920 West 161st Street
Olathe, Kansas 66062

Amount and Nature of Beneficial Ownership (1)
3,988,983(4)

Percent of Class
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
power 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 exercisable.

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     Percent
                              of  Nature of  Class
                              Beneficial
                             Ownership (1)

Larry B. Franke               420,600(6)     1.1%
William A. Griffith           1,381,983(5)   3.7%
David B. Hayden               1,363,683(7)   3.7%
William E. Logan              2,073,683(3)   5.6%
Clark D. Stewart              5,096,390(2)   13.7%
R. Warren Wagoner             3,988,983(4)   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
          incorporated by 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).


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

/s/ R. Warren Wagoner
R. Warren Wagoner
Chairman of the Board and Director
Date:  August 14, 2001

/s/ William A. Griffith
William A. Griffith
Director
Date:  August 14, 2001

/s/ William E. Logan
William E. Logan
Director
Date:  August 14, 2001

/s/ David B. Hayden
David B. Hayden
Director
Date:  August 14, 2001

/s/ Stanley D. Nolind
Stanley D. Nolind
Chief Financial Officer
Date:  August 14, 2001


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)

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      Common
                                   Stock          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        Note
                                   Contributed    Receivable
                                   in Excess of   Arising
                                   Par            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 by issuing common stock         53,369

Net loss

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


                                   Shares         Treasury
                                   Issued for     Stock
                                   Future         (common)
                                   Services

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                185,573
contracts to 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    Total
                                   Earnings    Shareholders'
                                   (deficit)   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         (54,397)         -
paid 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    Common
                                Stock        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          Treasury
                            Contributed      Stock
                            in Excess of     (common)
                            Par

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   Total
                              Earnings   Shareholders'
                              (deficit)  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      Common
                              Stock          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        Treasury
                              Contributed    Stock
                              in Excess of   (common)
                              Par

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    Total
                              Earnings    Shareholders'
                              (deficit)   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
SIGNIFICANTACCOUNTING 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.

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.

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       April 30
                                       2001            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

Exercise                  (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.


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
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
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 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
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
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 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
operations

Income taxes

Loss from
discontinued
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
operations

Income taxes

Loss from
discontinued
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 operations         (281,714)

Income taxes                                -

Loss from discontinued 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     Additions
                    Beginning of   Charged to
                    Year           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     Additions
                    Beginning of   Charged to
                    Year           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     Additions
                    Beginning of   Charged to
                    Year           Costs and
                                   Expenses

Year ended April 30, 1999

Allowance for
doubtful
accounts   $         78,736        $      -

Reserve for
inventory
obsolescen ce        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.