# Butler National Corp: Form 10-Q for the period ended Jan 31, 2025

- Company: [Butler National Corp](/companies/buks.md) (CIK 15847)
- Form: 10-Q
- Filed: 2025-03-14
- Accepted by EDGAR: Mar 14, 2025, 13:17 ET
- Period: 2025-01-31
- Accession: 0001437749-25-007631
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/15847/000143774925007631/buks20250131_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/15847/000143774925007631/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-01-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-11-01 to 2025-01-31 | $21.2m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2024-05-01 to 2025-01-31 | $62.4m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Research and development | 9 months, 2024-05-01 to 2025-01-31 | $1.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-11-01 to 2025-01-31 | $4.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-05-01 to 2025-01-31 | $12.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-11-01 to 2025-01-31 | $557.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-05-01 to 2025-01-31 | $1.7m | us-gaap:InterestExpense |
| Net income | 3 months, 2024-11-01 to 2025-01-31 | $3.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-05-01 to 2025-01-31 | $9.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-11-01 to 2025-01-31 | $0.05 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-05-01 to 2025-01-31 | $0.14 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-11-01 to 2025-01-31 | $0.05 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-05-01 to 2025-01-31 | $0.14 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-11-01 to 2025-01-31 | 66,960,627 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-05-01 to 2025-01-31 | 67,861,002 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-05-01 to 2025-01-31 | $19.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-05-01 to 2025-01-31 | $6.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2024-05-01 to 2025-01-31 | $1.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-01-31 | $30.7m | us-gaap:Cash |
| Current assets | at 2025-01-31 | $52.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-01-31 | $128.6m | us-gaap:Assets |
| Current liabilities | at 2025-01-31 | $31.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-01-31 | $66.2m | us-gaap:Liabilities |
| Long-term debt | at 2025-01-31 | $31.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-01-31 | $5.2m | us-gaap:LongTermDebtCurrent |

## Management's discussion and analysis

As filed, 44,957 characters.

**THROUGHOUT THIS ITEM 2 ALL NON TABULAR FINANCIAL RESULTS ARE PRESENTED IN THOUSANDS OF U.S. DOLLARS EXCEPT WHERE MILLIONS OF DOLLARS IS INDICATED.**

### Forward-Looking Statements

Statements made in this report, other reports and proxy statements filed with the Securities and Exchange Commission, communications to stockholders, press releases, and oral statements made by representatives of the Company that are not historical in nature, or that state the Company or management intentions, plans, beliefs, expectations or predictions of the future, may constitute "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements can often be identified by the use of forward-looking terminology, such as "could," "should," "will," "intended," "continue," "believe," "may," "expect," "anticipate," "goal," "forecast," "plan," "guidance" or "estimate" or the negative of these words, variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties, and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year ended April 30, 2024, and elsewhere herein or in other reports filed with the SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time, except as expressly required by federal securities laws.

The forward-looking statements in this report are only predictions and actual events or results may differ materially. In evaluating such statements, a number of risks, uncertainties and other factors could cause actual results, performance, financial condition, cash flows, prospects and opportunities to differ materially from those expressed in, or implied by, the forward-looking statements. These risks, uncertainties and other factors include those set forth in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year ended April 30, 2024, including the following factors:

- customer concentration risk;
- dependence on government spending;
- industry specific business cycles;
- regulatory hurdles in the launch of new products;
- loss of key personnel;
- the geographic location of our casino;
- fixed-price contracts;
- international sales;
- future acquisitions;
- supply chain and labor issues;
- customer demand;
- lack of insurance for aircraft modifications;
- cyber security threats;
- fraud, theft and cheating at our casino;
- dependence on third-party platforms to offer sports wagering;
- outside factors influence the profitability of sports wagering;
- change of control restrictions;
- significant and expensive governmental regulation across our industries;
- failure by the corporation or its stockholders to maintain applicable gaming licenses;
- evolving political and legislative initiatives in gaming;
- extensive and increasing taxation of gaming revenues;
- changes in regulations of financial reporting;
- the stability of economic markets;
- potential impairment losses;
- marketability restrictions of our common stock;
- the possibility of a reverse-stock split;
- market competition by larger competitors;
- acts of terrorism and war;
- inclement weather and natural disasters; and
- rising inflation
- impact of tariffs and foreign policies

Except as expressly required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. Results of operations in any past period should not be considered indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of the Company's common stock.

Investors should also be aware that while the Company, from time to time, communicates with securities analysts; Company policy is to not disclose any material non-public information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of Butler National Corporation.

### General

Butler National Corporation (“Butler National” the “Company”, “we”, “us”, or “our”) was incorporated in 1960. Our companies design, engineer, manufacture, sell, integrate, install, repair, modify, overhaul, service and distribute a broad portfolio of aerostructures, aircraft components, avionics, accessories, subassemblies and systems (“Aerospace Products”). We serve a broad, worldwide spectrum of the aviation industry, including owners and contractors of private and commercial business, and government aircraft and suppliers to the government.

In addition, our companies provide management services in the gaming industry, which includes owning the land and building for the Boot Hill Casino and Resort in Dodge City, Kansas (“Professional Services”).

### Products and Services

The Company has two operating segments for financial reporting purposes: (a) Aerospace Products, where our revenues are derived from system design, engineering, manufacturing, sale, distribution, integration, installation, repairing, modifying, overhauling and servicing of aerostructures, avionics, aircraft components, accessories, subassemblies and systems; and (b) Professional Services, where we provide professional management services in the gaming industry and sports wagering.

***Aerospace Products***. The Aerospace Products segment includes the design, manufacture, sale and service of structural modifications, electronic equipment, and systems and technologies that enhance aircraft and electronics related equipment for control systems, test equipment, and defense related articles. Additionally, we operate Federal Aviation Administration (the “FAA”) Repair Stations. Companies in Aerospace Products concentrate on Learjets, Beechcraft King Air and Cessna turboprop aircraft.

*Products.* The aviation-related products that the companies within this group design, engineer, manufacture, integrate, install, repair and service include:

|  |  |  |  |
| --- | --- | --- | --- |
| ● | Aerial surveillance products | ● | GARMIN GTN Navigator/G700TXi displays |
| ● | Aerodynamic enhancement products | ● | TCAS (collision avoidance) |
| ● | Standby instrument systems | ● | Electrical power systems and switching equipment |
| ● | Avcon stability enhancing fins | ● | EGPWS (ground proximity warning system) |
| ● | ADS-B (transponder) systems | ● | Aircraft extended nose structures |
| ● | Cargo/sensor carrying pods and radomes | ● | Provisions to allow carrying of external stores |
| ● | Electronic navigation instruments, radios and transponders | ● | Attitude and heading reference systems |

*Modifications.* The companies in Aerospace Products have authority, pursuant to Federal Aviation Administration Supplemental Type Certificates (“STCs”) and Parts Manufacturer Approval (“PMA”), to build required parts and subassemblies and to make applicable installations. Companies in Aerospace Products perform modifications in the aviation industry including:

|  |  |  |  |
| --- | --- | --- | --- |
| ● | Aerial photograph capabilities | ● | Extended tip fuel tanks |
| ● | Aerodynamic improvements | ● | Radar systems |
| ● | Avionics systems | ● | ISR – Intelligence Surveillance Reconnaissance |
| ● | Cargo doors | ● | Special mission modifications |
| ● | Extended nose and wing tip bays | ● | Target towing capabilities |
| ● | Environmental research capabilities | ● | Traffic collision avoidance systems |

*Special Mission Electronics.* We supply defense-related, commercial off-the-shelf products to various commercial entities and government agencies and subcontractors in order to update or extend the useful life of systems. These products include:

|  |  |  |  |
| --- | --- | --- | --- |
| ● | Cabling | ● | HangFire Override Modules |
| ● | Electronic control systems | ● | Test equipment |
| ● | Gun Control Units for Apache and Blackhawk helicopters | ● | Gun Control Units for land and sea based military vehicles |

18

***Professional Services***. The Professional Services segment includes the management of a gaming and related dining and entertainment facility in Dodge City, Kansas. Boot Hill Casino and Resort features approximately 500 slot machines, 15 table games and a DraftKings branded sportsbook. A company in Professional Services previously provided licensed architectural services and was closed in January 2024.

*Boot Hill.* Butler National Service Corporation (“BNSC”) and BHCMC, LLC (“BHCMC”), companies in Professional Services, manage The Boot Hill Casino and Resort in Dodge City, Kansas (“Boot Hill”) pursuant to the Lottery Gaming Facility Management Contract, by and among BNSC, BHCMC and the Kansas Lottery, as subsequently amended (“Boot Hill Agreement”). As required by Kansas law, all games, gaming equipment and gaming operations, including sports wagering, at Boot Hill are owned and operated by the Kansas Lottery. On September 1, 2022, sports wagering became legal in the State of Kansas. The Company's subsidiaries entered into a five-year Sports Wagering management Contract with the state that, subject to extension, has a term through August 31, 2027. The Company entered into a provider contract with DraftKings (Crown KS Gaming, LLC) for interactive/mobile sports wagering. In addition to an online platform, the Company also features a DraftKings branded sports book at Boot Hill that opened on February 28, 2023.

### Results Overview

The nine months ended January 31, 2025 revenue increased 12% to $62.4 million compared to $55.7 million in the nine months ended January 31, 2024. In the nine months ended January 31, 2025 the Professional Services revenue was $28.7 million compared to $28.8 million in the nine months ended January 31, 2024. In the nine months ended January 31, 2025 the Aerospace Products revenue was $33.7 million compared to $27.0 million in the nine months ended January 31, 2024, an increase of 25%.

The nine months ended January 31, 2025 net income increased to $9.2 million compared to a net income of $8.1 million in the nine months ended January 31, 2024. The nine months ended January 31, 2025, operating income increased to $12.4 million from an operating income of $8.5 million in the nine months ended January 31, 2024.

### RESULTS OF OPERATIONS

### nine months ended January 31, 2025 COMPARED TO nine months ended January 31, 2024

*(dollars in thousands)*

| Revenue: | Nine Months Ended January 31, 2025 | Percent of Total Revenue | Nine Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Professional Services | $28,700 | 46% | $28,751 | 52% | 0% |
| Aerospace Products | 33,663 | 54% | 26,995 | 48% | 25% |
| Total revenue | 62,363 | 100% | 55,746 | 100% | 12% |
| Cost and expenses: |  |  |  |  |  |
| Costs of Professional Services | 11,834 | 19% | 11,976 | 22% | -1% |
| Cost of Aerospace Products | 23,315 | 37% | 20,095 | 36% | 16% |
| Marketing and advertising | 2,751 | 5% | 3,854 | 7% | -29% |
| General, administrative and other | 12,047 | 19% | 11,290 | 20% | 7% |
| Total costs and expenses | 49,947 | 80% | 47,215 | 85% | 6% |
| Operating income | $12,416 | 20% | $8,531 | 15% | 46% |

### Revenue:

**Revenue** increased 12% to $62.4 million in the nine months ended January 31, 2025, compared to $55.7 million in the nine months ended January 31, 2024. See "Operations by Segment" below for a discussion of the primary reasons for the increase in revenue.

- Professional Services derives its revenue from (a) professional management services in the gaming industry through Butler National Service Corporation ("BNSC") and BHCMC, LLC ("BHCMC"), and (b) management support services. Revenue from Professional Services was $28.7 million for the nine months ended January 31, 2025 compared to $28.8 million for the nine months ended January 31, 2024. Sports wagering revenues were $4.3 million for the nine months ended January 31, 2025 compared to $3.5 million in the nine months ended January 31, 2024. Effective December 15, 2024, the revenue share to the state of Kansas increased by 2% with the start of our fifteen-year contract renewal term for the management of Boot Hill.
- Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue increased 25% to $33.7 million for the nine months ended January 31, 2025 compared to $27.0 million for the nine months ended January 31, 2024. The increase in revenue is primarily due to an increase in aircraft modification business of $5.4 million along with an increase in special mission electronics business of $1.4 million.

### Costs and expenses:

**Costs and expenses** related to Professional Services and Aerospace Products include the cost of engineering, labor, materials, equipment utilization, control systems, security and occupancy. Costs and expenses increased 6% to $49.9 million in the nine months ended January 31, 2025 compared to $47.2 million in the nine months ended January 31, 2024. Costs and expenses were 80% of total revenue in the nine months ended January 31, 2025, as compared to 85% of total revenue in the nine months ended January 31, 2024.

**Costs of Professional Services** decreased 1% in the nine months ended January 31, 2025 to $11.8 million compared to $12.0 million in the nine months ended January 31, 2024. Costs were 19% of total revenue in the nine months ended January 31, 2025, as compared to 22% of total revenue in the nine months ended January 31, 2024.

**Costs of Aerospace Products** increased 16% in the nine months ended January 31, 2025 to $23.3 million compared to $20.1 million for the nine months ended January 31, 2024. Costs were 37% of total revenue in the nine months ended January 31, 2025, as compared to 36% of total revenue in the nine months ended January 31, 2024.

**Marketing and advertising expenses** decreased 29% in the nine months ended January 31, 2025, to $2.8 million compared to $3.9 million in the nine months ended January 31, 2024. Expenses were 5% of total revenue in the nine months ended January 31, 2025, as compared to 7% of total revenue in the nine months ended January 31, 2024. The decrease is due to a change in marketing strategy and methods to attract customers. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

**General, administrative and other expenses** as a percent of total revenue were 19% in the nine months ended January 31, 2025, compared to 20% in the nine months ended January 31, 2024. These expenses increased 7% to $12.0 million in the nine months ended January 31, 2025, from $11.3 million in the nine months ended January 31, 2024. The increase is primarily due to increased labor costs of $600 thousand in the nine months ended January 31, 2025 as compared to the nine months ended January 31, 2024.

### Other income (expense):

**Other income (expense)** was $220 thousand in the nine months ended January 31, 2025 compared to $2.5 million in the nine months ended January 31, 2024. Interest expense was $1.7 million in the nine months ended January 31, 2025, compared with $1.9 million in the nine months ended January 31, 2024. The decrease in interest expense is due to the paydown of long term debt. Interest income was $331 thousand in the nine months ended January 31, 2025 compared to $199 thousand in the nine months ended January 31, 2024. Gain on sale of assets was $1.5 million in the nine months ended January 31, 2025, compared to a $4.2 million gain on sale of airplanes in the nine months ended January 31, 2024.

### Operations by Segment

We have two operating segments, Professional Services and Aerospace Products. The Professional Services segment includes revenue contributions and expenditures associated with casino management services and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft.

The following table presents a summary of our operating segment information for the nine months ended January 31, 2025 and January 31, 2024:

*(dollars in thousands)*

| Professional Services Revenue | Nine Months Ended January 31, 2025 | Percent of Total Revenue | Nine Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Boot Hill Casino | $28,700 | 100% | $28,687 | 100% | 0% |
| Management/Professional Services | - | 0% | 64 | 0% | -100% |
| Total revenue | 28,700 | 100% | 28,751 | 100% | 0% |
| Costs of Professional Services | 11,834 | 41% | 11,976 | 42% | -1% |
| Expenses | 9,890 | 35% | 10,785 | 37% | -8% |
| Total costs and expenses | 21,724 | 76% | 22,761 | 79% | -5% |
| Professional Services operating income | $6,976 | 24% | $5,990 | 21% | 16% |

*(dollars in thousands)*

| Aerospace Products | Nine Months Ended January 31, 2025 | Percent of Total Revenue | Nine Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total revenue | $33,663 | 100% | $26,995 | 100% | 25% |
| Costs of Aerospace Products | 23,315 | 69% | 20,095 | 75% | 16% |
| Expenses | 4,908 | 15% | 4,359 | 16% | 13% |
| Total costs and expenses | 28,223 | 84% | 24,454 | 91% | 15% |
| Aerospace Products operating income | $5,440 | 16% | $2,541 | 9% | 114% |

21

### Professional Services

- Revenue from Professional Services was $28.7 million for the nine months ended January 31, 2025 compared to $28.8 million for the nine months ended January 31, 2024. The sports wagering revenue was $4.3 million for the nine months ended January 31, 2025 compared to $3.5 million in the nine months ended January 31, 2024. In the nine months ended January 31, 2025, Boot Hill Casino received gross receipts for the State of Kansas of $38.7 million compared to $38.3 million for the nine months ended January 31, 2024. Mandated fees, taxes and distributions reduced gross receipts by $11.3 million resulting in gaming revenue of $27.4 million for the nine months ended January 31, 2025, compared to a reduction to gross receipts of $11.2 million resulting in gaming revenue of $27.1 million for the nine months ended January 31, 2024. Sports wagering revenue was $4.3 million in the nine months ended January 31, 2025 compared to $3.5 million in the nine months ended January 31, 2024. Non-gaming revenue at Boot Hill Casino increased to $3.5 million for the nine months ended January 31, 2025, compared to $3.4 million for the nine months ended January 31, 2024. Effective December 15, 2024, the revenue share to the state of Kansas increased by 2% with the start of our fifteen-year contract renewal term for the management of Boot Hill.
- Costs of Professional Services decreased 1% in the nine months ended January 31, 2025 to $11.8 million compared to $12.0 million in the nine months ended January 31, 2024. Costs were 41% of segment total revenue in the nine months ended January 31, 2025, as compared to 42% of segment total revenue in the nine months ended January 31, 2024.
- Expenses decreased 8% in the nine months ended January 31, 2025 to $9.9 million compared to $10.8 million in the nine months ended January 31, 2024. Expenses were 35% of segment total revenue in the nine months ended January 31, 2025, as compared to 37% of segment total revenue in the nine months ended January 31, 2024.

### Aerospace Products

- Revenue increased 25% to $33.7 million in the nine months ended January 31, 2025, compared to $27.0 million in the nine months ended January 31, 2024. The increase in revenue is mainly due to a $5.4 million increase in aircraft modification business and an increase in special mission electronics business of $1.4 million.
- Costs of Aerospace Products increased 16% in the nine months ended January 31, 2025 to $23.3 million compared to $20.1 million for the nine months ended January 31, 2024. Costs were 69% of segment total revenue in the nine months ended January 31, 2025, as compared to 75% of segment total revenue in the nine months ended January 31, 2024.
- Expenses increased 13% in the nine months ended January 31, 2025 to $4.9 million compared to $4.4 million in the nine months ended January 31, 2024. Expenses were 15% of segment total revenue in the nine months ended January 31, 2025, as compared to 16% of segment total revenue in the nine months ended January 31, 2024. The increase is primarily due to labor costs of $600 thousand in the nine months ended January 31, 2025 as compared to the nine months ended January 31, 2024.

### THREE MONTHS ENDED JANUARY 31, 2025 COMPARED TO THE THREE MONTHS ENDED JANUARY 31, 2024

*(dollars in thousands)*

| Revenue: | Three Months Ended January 31, 2025 | Percent of Total Revenue | Three Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Professional Services | $9,813 | 46% | $9,941 | 52% | -1% |
| Aerospace Products | 11,361 | 54% | 9,019 | 48% | 26% |
| Total revenue | 21,174 | 100% | 18,960 | 100% | 12% |
| Costs and expenses: |  |  |  |  |  |
| Costs of Professional Services | 4,033 | 19% | 4,023 | 21% | 0% |
| Cost of Aerospace Products | 8,316 | 39% | 5,918 | 31% | 41% |
| Marketing and advertising | 885 | 5% | 1,216 | 7% | -27% |
| General, administrative and other | 3,914 | 18% | 4,008 | 21% | -2% |
| Total costs and expenses | 17,148 | 81% | 15,165 | 80% | 13% |
| Operating income | $4,026 | 19% | $3,795 | 20% | 6% |

### Revenue:

**Revenue** increased 12% to $21.2 million in the three months ended January 31, 2025, compared to $19.0 million in the three months ended January 31, 2024. See "Operations by Segment" below for a discussion of the primary reasons for the increase in revenue.

- Professional Services derives its revenue from (a) professional management services in the gaming industry through Butler National Service Corporation ("BNSC") and BHCMC, LLC ("BHCMC"), and (b) management support services. Revenue from Professional Services decreased 1% to $9.8 million for the three months ended January 31, 2025 compared to $9.9 million for the three months ended January 31, 2024. The sports wagering revenues were $1.8 million for the three months ended January 31, 2025 compared to $1.5 million in the three months ended January 31, 2024. Effective December 15, 2024, the revenue share to the state of Kansas increased by 2% with the start of our fifteen-year contract renewal term for the management of Boot Hill.
- Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue increased 26% to $11.4 million for the three months ended January 31, 2025 compared to $9.0 million for the three months ended January 31, 2024. The increase in revenue is primarily due to an increase in aircraft modification business of $2.7 million along with an increase in special mission electronics business of $422 thousand.

### Costs and expenses:

**Costs and expenses** related to Professional Services and Aerospace Products include the cost of engineering, labor, materials, equipment utilization, control systems, security and occupancy. Costs and expenses increased 13% to $17.1 million in the three months ended January 31, 2025 compared to $15.2 million in the three months ended January 31, 2024. Costs and expenses were 81% of total revenue in the three months ended January 31, 2025, as compared to 80% of total revenue in the three months ended January 31, 2024.

**Costs of Professional Services** remained constant in the three months ended January 31, 2025 at $4.0 million compared to $4.0 million in the three months ended January 31, 2024. Costs were 19% of total revenue in the three months ended January 31, 2025, as compared to 21% of total revenue in the three months ended January 31, 2024.

**Costs of Aerospace Products** increased 41% in the three months ended January 31, 2025 to $8.3 million compared to $5.9 million for the three months ended January 31, 2024. Costs were 39% of total revenue in the three months ended January 31, 2025, as compared to 31% of total revenue in the three months ended January 31, 2024.

**Marketing and advertising expenses** decreased 27% in the three months ended January 31, 2025, to $885 thousand compared to $1.2 million in the three months ended January 31, 2024. Expenses were 5% of total revenue in the three months ended January 31, 2025, as compared to 7% of total revenue in the three months ended January 31, 2024. The decrease is due to a change in marketing strategy and methods to attract customers. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

**General, administrative and other expenses** as a percent of total revenue was 18% in the three months ended January 31, 2025, compared to 21% in the three months ended January 31, 2024. These expenses decreased 2% to $3.9 million in the three months ended January 31, 2025, from $4.0 million in the three months ended January 31, 2024.

### Other income (expense):

**Other income (expense)** was $608 thousand in the three months ended January 31, 2025 compared to ($532) thousand in the three months ended January 31, 2024. Interest expense was $557 thousand in the three months ended January 31, 2025, compared with interest expense of $615 thousand in the three months ended January 31, 2024. The decrease in interest expense is due to the paydown of long term debt. Interest income was $125 thousand in the three months ended January 31, 2025 compared to $83 thousand in the three months ended January 31, 2024. Gain on sale of assets was $1.0 million in the three months ended January 31, 2025.

### Operations by Segment

We have two operating segments, Professional Services and Aerospace Products. The Professional Services segment includes revenue contributions and expenditures associated with casino management services and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft.

The following table presents a summary of our operating segment information for the three months ended January 31, 2025 and January 31, 2024:

*(dollars in thousands)*

| Professional Services Revenue | Three Months Ended January 31, 2025 | Percent of Total Revenue | Three Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Boot Hill Casino | $9,813 | 100% | $9,929 | 100% | -1% |
| Management/Professional Services | - | 0% | 12 | 0% | 100% |
| Revenue | 9,813 | 100% | 9,941 | 100% | -1% |
| Costs of Professional Services | 4,032 | 41% | 4,023 | 40% | 0% |
| Expenses | 3,313 | 34% | 3,746 | 38% | -12% |
| Total costs and expenses | 7,345 | 75% | 7,769 | 78% | -5% |
| Professional Services operating income | $2,468 | 25% | $2,172 | 22% | 14% |

*(dollars in thousands)*

| Aerospace Products | Three Months Ended January 31, 2025 | Percent of Total Revenue | Three Months Ended January 31, 2024 | Percent of Total Revenue | Percent Change 2024-2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $11,361 | 100% | $9,019 | 100% | 26% |
| Costs of Aerospace Products | 8,316 | 73% | 5,918 | 66% | 41% |
| Expenses | 1,487 | 13% | 1,478 | 16% | 1% |
| Total costs and expenses | 9,803 | 86% | 7,396 | 82% | 33% |
| Aerospace Products operating income | $1,558 | 14% | $1,623 | 18% | -4% |

23

### Professional Services

- Revenue from Professional Services decreased 1% for the three months ended January 31, 2025 to $9.8 million compared to $9.9 million for the three months ended January 31, 2024. Sports wagering revenues were $1.8 million for the three months ended January 31, 2025 compared to $1.5 million in the three months ended January 31, 2024. In the three months ended January 31, 2025, Boot Hill Casino received gross receipts from the State of Kansas of $13.1 million compared to $13.2 million for the three months ended January 31, 2024. Mandated fees, taxes and distributions reduced gross receipts by $3.7 million resulting in gaming revenue of $9.4 million for the three months ended January 31, 2025, compared to a reduction to gross receipts of $3.8 million resulting in gaming revenue of $9.4 million for the three months ended January 31, 2024. Sports wagering revenue was $1.8 million in the three months ended January 31, 2025 compared to $1.5 million in the three months ended January 31, 2024. Non-gaming revenue at Boot Hill Casino decreased slightly to $1.1 million for the three months ended January 31, 2025, compared to $1.2 million for the three months ended January 31, 2024. Effective December 15, 2024, the revenue share to the state of Kansas increased by 2% with the start of our fifteen-year contract renewal term for the management of Boot Hill.
- Costs of Professional Services remained constant in the three months ended January 31, 2025 at $4.0 million compared to the three months ended January 31, 2024. Costs were 41% of segment total revenue in the three months ended January 31, 2025, as compared to 40% of segment total revenue in the three months ended January 31, 2024.
- Expenses decreased 12% in the three months ended January 31, 2025 to $3.3 million compared to $3.7 million in the three months ended January 31, 2024. Expenses were 34% of segment total revenue in the three months ended January 31, 2025, as compared to 38% of segment total revenue in the three months ended January 31, 2024.

### Aerospace Products

- Revenue increased 26% to $11.4 million in the three months ended January 31, 2025, compared to $9.0 million in the three months ended January 31, 2024. The increase in revenue is primarily due to a $2.7 million increase in aircraft modification business along with an increase in special mission electronics business of $105 thousand.
- Costs of Aerospace Products increased 41% in the three months ended January 31, 2025 to $8.3 million compared to $5.9 million for the three months ended January 31, 2024. Costs were 73% of segment total revenue in the three months ended January 31, 2025, as compared to 66% of segment total revenue in the three months ended January 31, 2024.
- Expenses remained constant in the three months ended January 31, 2025 at $1.5 million compared to the three months ended January 31, 2024. Expenses were 13% of segment total revenue in the three months ended January 31, 2025, as compared to 16% of segment total revenue in the three months ended January 31, 2024.

### Employees

Other than persons employed by our gaming subsidiaries, there were 145 full time and 3 part time employees on January 31, 2025, compared to 133 full time and 3 part time employees on January 31, 2024. Our staffing at Boot Hill Casino & Resort on January 31, 2025 was 198 full time and 39 part time employees compared to 203 full time and 52 part time employees on January 31, 2024. None of the employees are subject to any collective bargaining agreements.

### Liquidity and Capital Resources

### Overview

Butler National is a holding company. Our ability to fund our obligations depends on existing cash on hand, cash flow from our subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital resources have been cash on hand, cash flow from operations, borrowings under our lines of credit and notes payable and proceeds from the issuance of debt and equity securities. We assess liquidity in terms of the ability to generate cash or obtain financing in order to fund operating, investing and debt service requirements. Our primary ongoing cash requirements include the funding of operations, capital expenditures, acquisitions and other investments in line with our business strategy and debt repayment obligations and interest payments. Our strategy has been to maintain moderate leverage and substantial capital resources in order to take advantage of opportunities, to invest in our businesses and develop new streams of income that may be profitable. As such, we have continued to invest in developing and marketing new STCs and growing our casino business including sports wagering. We believe that our current banks will provide the necessary capital for our business operations. However, we continue to maintain contact with other banks that have an interest in funding our working capital needs to continue our growth in operations in 2025 and beyond.

### Operating Activities

During the nine months ended January 31, 2025 our cash position increased by $12.9 million. Net income was $9.2 million for the nine months ended January 31, 2025. Cash flow provided by operating activities was $19.6 million for the nine months ended January 31, 2025. Non-cash activities consisting of depreciation and amortization provided $5.0 million, deferred compensation added $206 thousand, and gain on sale of assets used $1.5 million. Contract assets increased our cash position by $666 thousand. Contract liability increased our cash position by $2.7 million. Inventories decreased our cash position by $846 thousand. Accounts receivable decreased our cash position by $510 thousand. Gaming facility mandated payments decreased our cash position by $488 thousand. Prepaid expenses and other assets decreased our cash by $243 thousand. Accounts payable increased our cash position by $8.6 million. Accrued liabilities decreased our cash position by $550 thousand. An increase in lease liabilities and other current liabilities increased our cash by $511 thousand. Income tax payable decreased our cash position by $3.1 million.

On January 30, 2025, the Company completed the sale of its “Jet Autopilot Product Line” for $1.5 million cash. We included the operating results associated with this business in our aerospace products segment. The Company will continue to perform and transfer services through April 2025. As a result of this sale, we recorded reductions in (i) inventory of $460 thousand, (ii) machinery and equipment of $1.3 million, (iii) accumulated depreciation of $1.3 million, (iv) other assets (gross) of $1.4 million, and (v) other assets (accumulated amortization) of $1.4 million.

### Investing Activities

Cash used in investing activities was $3.3 million for the nine months ended January 31, 2025. We invested $573 thousand towards STCs, $2.9 million toward an airplane, and $635 thousand on buildings and improvements, $2.0 million on equipment and furnishings. Proceeds from the sale of assets provided $2.8 million.

### Financing Activities

Cash used by financing activities was $3.4 million for the nine months ended January 31, 2025. We borrowed $2.0 million on our debt and made repayments of $3.7 million. We made repayments on lease right-to-use of $201 thousand. We purchased Company stock of $1.5 million. The stock acquired was placed in treasury.

### Capital Expenditures

The Company anticipates remaining capital expenditures in fiscal 2025 to be approximately $4.0 million, consisting of $1.3 million on STC's, $946 thousand on buildings and improvements, and $1.8 million on equipment. We anticipate our cash balance will be sufficient to cover our cash requirements through the current fiscal year.

### Critical Accounting Policies and Estimates

We believe that there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amount of revenue and other significant areas involving management judgments and estimates. These significant accounting policies relate to revenue recognition, inventory and long-lived assets. These policies and our procedures related to these policies are described in detail below and under specific areas within this "Management's Discussion and Analysis of Financial Condition and Results of Operations."

**Revenue from Contracts with Customers – Aerospace Contracts**

#### Methodology

We recognize revenue and profit based upon either (1) the percent completion method, in which sales and profit are recorded based upon the ratio of labor costs incurred to date to estimated total labor costs to complete the performance obligation, or (2) the point-in-time method, in which sales are recognized at the time control is transferred to the customer. For aerospace contracts that involve airplane modifications based on customer specific requirements, we generally recognize revenue and income using the percent completion method because of continuous transfer of control to the customer. Revenue is generally recognized using the percent completion method based on the extent of progress towards completion of the performance obligation, which allows for recognition of revenue as work on a contract progresses. Our general contract term is between one to twelve months.

Management performs detailed quarterly reviews of all of our significant long-term contracts. Based upon these reviews, we record the effects of adjustments in profit estimates each period. If at any time management determines that in the case of a particular contract total costs will exceed total contract revenue, we record a provision for the entire anticipated contract loss at that time.

#### Judgment and Uncertainties

The percent completion revenue recognition model requires that we estimate future revenues and costs over the life of a contract. Revenues are estimated based upon the original contract price, with consideration being given to exercised contract options, change orders and, in some cases, projected customer requirements. Contract costs may be incurred over a period of several months, and the estimation of these costs requires significant judgment based upon the acquired knowledge and experience of program managers, engineers and financial professionals. Estimated costs are based primarily on anticipated purchase contract terms, historical performance trends, business base and other economic projections.

#### Effect if Actual Results Differ From Assumptions

While we do not believe there is a reasonable likelihood there will be a material change in estimates or assumptions used to calculate our revenue contracts and costs, estimating the percentage of work complete on certain programs is a complex task. As a result, changes to these estimates could have a significant impact on our results of operations. These products and services are an important element in our continuing strategy to increase operating efficiencies and profitability as well as broaden our business base. Management continues to monitor and update program cost estimates quarterly for these contracts. A significant change in an estimate on one or more of these contracts could have a material effect on our financial position and results of operations.

### Inventory Valuation

#### Methodology

We have four types of inventory (a) raw materials, (b) contracts in process, (c) other work in process and (d) finished goods. Raw material includes certain general stock materials but primarily relates to purchases that were made in anticipation of specific programs that have not been started as of the balance sheet date. Raw materials are stated at the lower of the cost of the inventory or its fair market value. Contracts in process, other work in process and finished goods are valued at production cost comprised of material, labor and overhead. Contracts in process, other work in process and finished goods are reported at the lower of cost or net realizable value.

#### Judgment and Uncertainties

The process for evaluating inventory obsolescence or market value often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be sold in the normal course of business. We adjust our inventory by the difference between the estimated market value and the actual cost of our inventory to arrive at net realizable value. Changes in estimates of future sales volume may necessitate future write-downs of inventory value.

#### Effect if Actual Results Differ From Assumptions

Management reviews the inventory balance on an annual basis to determine whether any additional write-downs are necessary. Following the write-down of the inventory as discussed above, we believe this inventory is stated at net realizable value at January 31, 2025, although an unanticipated lack of demand for aircraft or spare parts in the future could result in additional write-downs of the inventory value. Overall, management believes that our inventory is appropriately valued at January 31, 2025.

### Long-lived Assets

#### Methodology

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses the recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.

#### Judgment and Uncertainties

In years that management performs a qualitative assessment we consider the following qualitative factors: general economic conditions in the markets served by the segment, relevant industry-specific performance statistics, and forecasted results of operations.

For the quantitative impairment tests, management estimated the fair value of the long-lived asset group using an income methodology based on management's estimates of forecasted undiscounted cash flows over the estimated life of the assets. Changes in these estimates and assumptions could materially affect the results of our impairment testing.

An impairment loss is recognized for any excess of the carrying amount of the estimated undiscounted cash flows over the remaining life of the assets. No impairment charges were recorded during the nine months ended January 31, 2025.

#### Effect if Actual Results Differ From Assumptions

As with all assumptions, there is an inherent level of uncertainty and actual results, to the extent they differ from those assumptions, could have a material impact on fair value. For example, a reduction in customer demand would impact our assumed growth rate resulting in a reduced fair value. Potential events or circumstances could have a negative effect on the estimated fair value. The loss of a major customer or program could have a significant impact on the future cash flows associated with a long-lived asset group. We do not currently believe there to be a reasonable likelihood that actual results will vary materially from estimates and assumptions used to test our long-lived assets for impairment losses. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to additional impairment charges that could be material.

### Changing Prices and Inflation

We have experienced upward pressure from inflation in fiscal year 2025. From fiscal year 2024 to fiscal year 2025 most of the increases we experienced were in material and labor costs. This additional cost may not be transferable to our customers resulting in lower income in the future. We anticipate fuel, material and labor costs to rise in fiscal 2025 and 2026.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

## Market risk

As filed, 175 characters.

We are a smaller reporting company as defined by Rule 12b-2 under the Securities Exchange Act of 1934 and are not required to provide the information required under this item.

## Controls and procedures

As filed, 4,440 characters.

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Our principal executive and financial officers have evaluated our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q and have determined that such disclosure controls and procedures are effective, based on criteria in the Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

**Evaluation of disclosure controls and procedures:** Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Interim Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this Form 10-Q, our Chief Executive Officer and our Interim Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of January 31, 2025. Based on that evaluation, our Chief Executive Officer and our Interim Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of January 31, 2025.

### Internal Control Over Financial Reporting

### Limitations on Controls

Our management, including the Chief Executive Officer and Interim Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

**Changes in Internal Control Over Financial Reporting:** In our opinion there were no changes in the Company's internal control over financial reporting during the quarter ended January 31, 2025 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

### PART II. OTHER INFORMATION

| Item 1. | LEGAL PROCEEDINGS. |
| --- | --- |
|  | As of January 31, 2025, there are no significant known legal proceedings pending against us. We consider all such unknown proceedings, if any, to be ordinary litigation incident to the character of the business. We believe that the resolution of any 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 1A.** | **RISK FACTORS.** |
|  | Smaller reporting companies are not required to provide the information required by this item. |

27

Filed Mar 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001437749-25-007631. Last ingested by Listed: Oct 24, 2026, 14:51 ET. No prices; not investment advice.