SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended October 31, 1995
Commission File Number 0-1678
BUTLER NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota 41-0834293
(State of incorporation) (I.R.S. Employer Identification No.)
1546 E. Spruce Road, Olathe, KS 66061
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (913) 780-9595
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months and (2) has been subject to such
filing requirements for the past ninety days: Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock, $0.01
par value, as of October 31, 1995, was 8,880,890 shares.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS <FN1>
ASSETS 10/31/95 4/30/95
Current Assets:
Cash $ 926,713 $ 212,799
Accounts receivable, net of allowance
for doubtful accounts of $110,161 in 1995 1,450,855 974,506
Contracts in process 101,957 140,092
Inventories:
Raw materials 836,001 657,032
Work in process 320,888 177,672
Finished goods 276,169 188,864
__________ __________
1,433,058 1,023,568
Prepaid expenses and other assets 86,532 69,299
__________ __________
Total current assets 3,999,115 2,420,264
Property, Plant and Equipment:
Machinery and equipment 547,887 532,152
Office furniture and fixtures 398,874 375,111
Leasehold improvements 53,318 52,318
Building 150,240 130,000
__________ __________
Total cost 1,150,319 1,089,581
Accumulated depreciation (826,232) (804,952)
__________ __________
324,087 284,629
Other Assets 1,606,101 1,488,636
__________ __________
Total assets $5,929,303 $4,193,529
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank overdraft payable 157,929 112,814
Promissory notes payable 421,722 362,495
Current maturities of long-term debt 43,372 37,506
Accounts payable 855,125 638,741
Customer Deposits 59,946 155,669
Accrued liabilities -
Compensation and compensated absences 177,786 188,609
Other 25,566 44,067
__________ __________
Total current liabilities 1,741,446 1,539,901
Long-Term Debt, net of current maturities 95,724 81,347
__________ __________
Total liabilities 1,837,170 1,621,248
Commitments and contingencies:
Shareholders' equity :
Preferred stock, par value $5 :
Authorized, 200,000 shares, all classes
$100 Class A, 9.8%, cumulative if earned,
liquidation and redemption value $100,
issued and outstanding, 20,000 shares 100,000 100,000
Capital contributed in excess of par 1,900,000 1,900,000
Common stock, par value $.01:
Authorized, 40,000,000 shares
Issued 8,231,015 shares April 30, 1995 &
8,880,890 at October 31, 1995, 88,809 82,310
Common stock warrants 8,707 8,707
Capital contributed in excess of par 4,949,251 3,645,342
Note receivable arising from stock
purchase agreement (25,145) (27,004)
Unearned service contracts (342,968) (422,185)
Treasury stock (20,000 preferred &
30,000 common) (2,037,240) (2,037,240)
Retained earnings (deficit) (549,281) (677,649)
(Deficit of $11,938,813
eliminated October 31, 1992) __________ __________
Total shareholders' equity 4,092,132 2,572,281
__________ __________
Total liabilities and shareholders' equity $5,929,303 $4,193,529
========== ==========
<FN>
<F1> See accompanying notes to financial statements.
</FN>
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)<FN1>
THREE MONTHS ENDED
October 31,
1995 1994
Net sales $4,229,528 $2,981,044
Cost of Sales 3,381,472 2,366,046
_________ _________
Gross profit 848,056 614,998
Selling, general and administrative
expenses 808,681 601,083
_________ _________
Operating income 39,375 13,915
Other income (expense):
Interest expense (13,237) (12,404)
Interest income 3,939 9,051
Other 33,901 (401)
_________ _________
Other income 24,603 (3,754)
_________ _________
Income before taxes 63,978 10,161
Provision for income tax - -
_________ _________
Net income $ 63,978 $ 10,161
========== ==========
Net income per share $ .01 $ .001
========== ==========
Shares used in per share calculation 8,744,281 8,460,214
========== ==========
<FN>
<FN1> The accompanying notes are an integral part of these statements.
</FN>
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)<FN1>
SIX MONTHS ENDED
October 31,
1995 1994
Net sales $8,083,888 $6,319,982
Cost of sales 6,547,226 5,176,379
_________ _________
Gross profit 1,536,662 1,143,603
Selling, general and administrative
expenses 1,428,917 1,107,019
_________ _________
Operating income 107,745 36,584
Other income (expense):
Interest expense (26,034) (23,636)
Interest income 7,630 19,162
Other 39,027 4,172
_________ _________
Other income 20,623 (302)
_________ _________
Income before taxes 128,368 36,282
Provision for income tax - -
_________ _________
Net income $ 128,368 $ 36,282
========== ==========
Net income per share $ .01 $ .004
========== ==========
Shares used in per share calculation 8,914,413 8,471,643
========= =========
<FN>
<FN1> The accompanying notes are an integral part of thetse statements.
</FN>
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)<FN1>
SIX MONTHS ENDED
October 31,
1995 1994
Cash flows from operating activities:
Net income $ 128,368 $ 36,282
Adjustments to reconcile income to
net cash used in operations:
Depreciation 21,280 37,871
Amortization of shares issued for
service contracts 79,217 38,250
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (476,349) 337,592
(Increase) decrease in contracts in process 38,135 (223,569)
(Increase) decrease in inventories (409,490) 30,249
(Increase) decrease in prepaid expenses and
other current assets (17,233) (9,832)
(Increase) decrease in short term investments - (250,000)
(Increase) decrease in other assets (117,465) (303,267)
Increase (decrease) in accounts payable 216,384 (120,512)
Increase (decrease) in customer deposits (95,723) 45,675
Increase (decrease) in accrued liabilities (29,325) (472,391)
_________ _________
Total adjustments (790,569) (889,934)
_________ _________
Cash provided by (used in) operations (662,201) (853,652)
_________ _________
Cash flows from investing activities:
Capital expenditures, net (60,738) (19,962)
_________ _________
Cash provided by (used in) investing activities (60,738) (19,962)
Cash flows from financing activities:
Net borrowings under line-of-credit agreement 59,227 31,594
Repayments and borrowings of long-term debt 20,243 (5,537)
Bank overdraft payable 45,115 -
Proceeds from Stock Issuances, Net 1,312,268 166,500
_________ _________
Cash provided by (used in) financing activities 1,436,853 192,557
_________ _________
Net increase (decrease) in cash 713,914 (681,057)
Cash, beginning of period 212,799 1,436,254
_________ _________
Cash, end of period $ 926,713 $ 755,197
========= =========
Supplemental disclosures of
cash flow information:
Interest paid $ 12,155 $ 22,075
Income taxes 9,500 6,650
<FN>
<FN1> The accompanying notes are an integral part of these statements.
</FN>
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with the instructions to Form 10-Q of Regulation S-X
and do not include all of the information and footnotes required be generally
accepted accounting principles for complete financial statements. In the
opinion of the management of the Company, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation have been
included. Operating results for the three and six months ended October 31,
1995, are not indicative of the results of operations that may be expected
for the year ending April 30, 1996.
For further information, refer to the Consolidated Financial Statements and
Footnotes included in the Registrant's Annual Report on Form 10-K for the
year ended April 30, 1995.
2. On October 24, 1995 the Company completed a private offering of its
securities. The Company sold 345,190 shares of common stock resulting in
gross proceeds to the Company of approximately $725,000, and net proceeds of
approximately $630,000, after deducting the expenses of the offering. The
proceeds of the offering will be utilized in the Management Services Segment
for opportunities related to the Indian Gaming Act of 1988.
3. The Company has capitalized approximately $1,070,000 related to the
anticipated construction of three Indian gaming facilities. These costs are
included in other assets in the accompanying balance sheet. In addition, the
Company has included a prepayment for construction services to be rendered in
connection with the Indian bingo facility in the amount of $242,500. The
Company issued 100,000 shares of its common stock as payment for the
construction services.
Included in $1,070,000 of capitalized costs is 228 acres of land, of which
160 acres is located adjacent to the Linn Valley Lakes resort and residential
development in Linn County, Kansas. The Company believes that the Kansas
tract could be developed and sold for residential and commerical use other
than Indian gaming, if the gaming enterprise does not open. Additional
improvements including roads, water and sewer services, etc. are planned for
this land. This may allow the Company to recover the majority, if not all,
of the $1,070,000 investment. There can be no assurance the management
agreements will be approved and the success of the Indian gaming facilities
are dependent upon their approval.
4. The Company entered into an agreement on September 13, 1995 with the
Village of Overton for the sale of the building in Overton, Nebraska. The
Company received a cash payment of $30,000 at closing on September 18, 1995
and may receive an additional $70,000 if the Village of Overton is either
able to sell or lease the building in the future.
5. After completing a three year program of restructuring the Company's
operation on October 31, 1992, by using quasi reorganization accounting, the
Company was able to adjust the accumulated deficit to a zero balance thereby
affording the Company a "fresh start". No assets or liabilities required
adjustment in this process. the amount of accumulated deficit and capital
contributed in excess of par removed as of October 31, 1992, was $11,938,813.
BUTLER NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Income per common and common equivalent share are based on the weighted
average number of common shares outstanding during the quarters ended October
31, 1995 and 1994 and during the six months ended October 31, 1995 and 1994.
Stock options are included as common stock equivalents because they are
dilutive. Shares used in the per share computations are as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
October 31, October 31,
1995 1994 1995 1994
Common shares beginning of period 8,507,100 8,205,664 8,231,015 7,888,467
Cumulative increase in weighted
average due to Common Stock
Equivalents 193,925 236,257 423,563 524,472
Cumulative increase in weighted
average due to issues per
Nonqualified Stock Option Plans 16,992 18,293 21,595 33,582
Cumulative increase in weighted
average due to issues per legal
and consulting agreements - - 447 25,122
Cumulative increase in weighted
average due to issue per private
offering 26,264 - 237,793 -
_________ _________ _________ _________
Weighted average shares,
end of period 8,744,281 8,460,214 8,914,413 8,471,643
========= ========= ========= =========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview of Operations: Sales for the second fiscal quarter and the six
months ended October 31, 1995, increased $1,248,484 (41.9%) and $1,763,906
(27.9%), respectively, as compared to the same quarter and six months of the
prior year. Increased sales occurred in the Food Distribution division
(62.5%). Relatively stable sales occurred in the Aircraft Modifications
division (0.5%). Switching Unit sales continued to decrease (19.9%). Sales
at the Monitoring Services division increased (22.7%). The Temporary Services
and Management Services divisions did not recognize any revenue in the second
quarter of fiscal 1996.
The Company recorded a profit of $128,368 in the current six month period
compared to $36,281 in the prior period. The majority of the increase in
profit relates to the increased profit in the Food distribution segment.
The majority of the increase in cash is related to the two private offerings
completed by the Company. Net proceeds of the offerings were approximately
$1,200,000. The Company used approximately $700,000 in operations.
Significant increases were in accounts receivable and inventory. The increase
in accounts receivable relates to the growth in the Food Distribution segment
and the increase in inventory relates to the aircraft modifications segment.
Food Distribution (R F, Inc.): Revenues from the Food Distribution business
segment increased 55% from $2,139,791 in the prior quarter to $3,317,382 in
the current year, due to the increasing customer base and additional sales
personnel resulting in increased product sales. Food Distribution sales for
the six months ended October 31, 1995, were $6,470,100 compared to $3,981,090
for the same period in the preceding fiscal year, an increase of $2,489,010
(62.5%). Contribution to earnings before corporate allocations increased
from $87,895 and $209,187, respectively, in the quarter and six months ending
October 31, 1994, to $207,575 and $359,847, respectively, in the quarter and
six months ending October 31, 1995.
Aircraft Modification (Avcon Industries, Inc.): Sales at Avcon decreased
$20,933 (3.4%) from $620,909 in the second quarter of the prior fiscal year
to $599,976 during the current fiscal quarter ended October 31, 1995.
Avcon sales for the six months ended October 31, 1995 were $1,091,026 compared
to $1,084,917 for the same period in the preceding fiscal year, an increase
of $6,109 (0.5%).
The gross profit percentage for the six months ended October 31, 1995 was
36.26% compared to 42.06% in the preceding six months. The decrease in the
gross margin is due to research and development costs associated with
new product development. This segment is continuing to work on the
development of new products and expects the introduction of some of these
products in the later part of fiscal 1996.
Switching Units (Woodson Avionics, Inc.): Switching unit sales for the quarter
ended October 31, 1995, of $62,969 increased $20,218 (47.3%) as compared to
switching unit sales of $42,751 for the same quarter of the prior year. Sales
for the six month period ended October 31, 1995, reflect a decrease with
current period switching unit sales totaling $86,652 versus $108,225 for the
comparable period of the previous year, a $21,573 (19.9%) decrease.
Sales to the major OEM customer increased 12.1% and sales for aircraft
repair and refurbishment declined 37.4% from the first six months of fiscal
1995 to fiscal 1996. Operating profits increased from $2,777 in the first six
months of fiscal 1995 to $7,666 in the first six months of fiscal 1996. The
decrease in sales in the Avionics division continues to be a trend, largely
due to the decrease in volume of aircraft produced by McDonnell Douglas.
SCADA Systems and Monitoring Services (Butler National Services, Inc.):
Monitoring service sales formonth and six month periods ended October 31, 1995,
were $248,522 and $436,111, respectively, compared to $177,922 and $355,432
for the same periods in 1994. Earnings from operations for the three month
and six month periods ended October 31, 1995, were $79,298 and $109,736,
respectively, compared to the same periods in the prior year of $24,927 and
$65,204.
This segment continues to maintain a relatively level volume of sales due to
long term contracts with municipalities. However this segment has had a 22.7%
increase in sales in the first six months of fiscal 1996 and a 39.6 increase
for the quarter ended October 31, 1995 due to special projects for other
municpalities. If this segment is able to continue to increase their
customer base continued increases in sales may occur.
Temporary Services (Butler Temporary Services, Inc.): This segment did not
recognize any revenue in the first and second quarters of fiscal 1996. If
and when the Company is able to open Indian gaming facilities, management
expects that a majority of the personnel in the various Indian gaming
enterprises will be staffed by Temporary Services.
Management Services (Butler National Services Corporation): The Company has a
management agreement with the Miami Tribe of Oklahoma to provide management
services in connection with the Indian Gaming Regulatory Act. The Miami Tribe
requested a compact for Class III Indian gaming on Indian land known as the
Maria Christiana Miami Reserve No. 35 located in Miami County, Kansas, on July
9, 1992. During 1995, four Kansas Gaming Compacts for Indian gaming within
the boundaries of the State were signed by the Governor of Kansas, approved
by the Legislature, and approved by the Secretary of the Interior pursuant to
the Indian Gaming Regulatory Act ("the IGRA").
The Miami Tribe's 1992 compact is the subject of a lawsuit filed in February
1993, in the Federal District Court by the Miami Tribe alleging the failure to
negotiate a compact in good faith by the State of Kansas. This case has been
stayed pending the appeal to the United States Supreme Court of the Tenth
Circuit Court's determination, relating to two of the tribes whose compacts
have now been approved, that the State is bound to negotiate with the Indian
tribes with Indian land within the boundaries of the State.
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 National
Indian Gaming Commission ("the NIGC") again requested the same determination.
Finally, in May 1995, an Associate Solicitor within the BIA issued an opinion
letter stating the Miami Tribe has not established jurisdiction over the Miami
land in Kansas. This is the first definitive statement received from the
central office of the BIA in three years. The latest opinion is contrary to a
September 1994, opinion of the Tulsa Field Solicitor, in an Indian probate
stating that the Miami Tribe has jurisdiction over the Miami Indian land in
Kansas. On July 11, 1995, the U.S. Department of Justice issued a letter to
the Associate Solicitor expressing concerns about the conclusions reached based
upon the analysis of the case.
The Miami Tribe has challenged this opinion in Federal Court to prove and
protect the sovereignty of the Miami Tribe and other Indian tribes relating
to their lands. The ultimate approval of Butler's management agreement with
the Miami Tribe depends upon the successful challenge by the Miami Tribe of
the Associate Solicitor's opinion. Even though the Company believes that it
and the tribe are in compliance with all laws and regulations, there is no
assurance that the management agreement will be approved.
Additionally, the Company has a management agreement with the Miami and
Modoc tribes. A class III Indian Gaming Compact for a joint-venture by the
Miami and Modoc Tribes, both of Oklahoma, has been approved by the State of
Oklahoma and is progressing toward final approval. The agreement provides for
Class III (Off-Track Betting "OTB") along with Class II (high stakes bingo)
at a site within the City of Miami, Oklahoma.
This compact is one of two such compacts approved in the State of Oklahoma
as permitted by the Federal Indian Gaming Regulatory Act of 1988 (IGRA). The
compact has been submitted to the U.S. Department of Interior for review and
approval.
The Company will provide management services to manage the joint-venture for
the tribes. The proposed facility is planned to be approximately 18,000
square-feet and will be located directly south of the Modoc Tribal Headquarters
building in Miami. The complex will contain off-track betting windows, a
bingo hall, and a restaurant. The Company's proposed Management Agreement
was filed in September 1994, with the National Indian Gaming Commission and
provides for a five year agreement with a two-year option. The Manager is to
receive a 30% share of the profits. Ultimate review and approval of this
management agreement may be sometime after the final approval of the compact.
The Company has a third management agreement with the Modoc Tribe of
Oklahoma, Miami, Oklahoma, to contruct and operate an Indian gaming facility
on Modoc Reservation lands. The agreement was filed with the National Indian
Gaming Commission ("NIGC") on June 7, 1994, for review and approval. No
approval date has been communicated by the NIGC.
The Company incurred $330,000 in general and administrative expenses in the
current fiscal year associated with its continued efforts to explore service
opportunities related to the Indian Gaming Act of 1988. Additionally, the
Company amortized $79,217 and $38,250 as expense in the first six months of
1996 and 1995, respectively, related to shares issued for services rendered
to the Company in that regard.
The Company has invested $1,070,000 in land, land improvements and
professional design fees related to the development of three Indian Gaming
facilities. Included in this investment is 228 acres of land. The Kansas
land (160 acres in Miami County) is located adjacent to the Linn Valley Lakes
resort and residential development in Linn County, Kansas. The Company
believes that the Kansas tract could be developed and sold for residential
and commercial use other than Indian gaming if the gaming enterprise does not
open. Additional improvements including access roads, water and sewer
services, etc. are planned for this land. After these improvments, the
land may be sold in small tracts. The other 68 acres is the proposed site for
the Modoc Tribe gaming facility. This may allow the Company to recover the
majority, if not all, of the $1,070,000 investment.
COSTS AND EXPENSES
The consolidated gross profit percentages of 20.0% for the quarter and 19.0%
for the six months ended October 31, 1995, compared to 20.6% and 18.1% for
the same periods of the prior year.
Operating expenses (selling, general and administrative) for the three and six
month periods ended October 31, 1995, were $808,681 (19.1%) and $1,428,917
(17.7%), respectively, versus $601,083 (20.2%) and $1,107,019 (17.5%) for the
comparable periods of the prior year.
Interest Expense for the three and six month periods ended October 31, 1995,
increased $833 and decreased $2,398, respectively, as compared to the same
periods of the prior year. The Company continues to use its line of credit to
maintain operations. However, the line has not been increased and no
additional debt has been incurred to sustain the general operations of the
Company.
Other Income is $39,027 in the six months ended October 31, 1995, versus
$4,172 in the six months ended October 31, 1993. Approximately $25,000
relates to a gain recognized on the sale of the building in Overton, Nebraska.
EARNINGS
The Company earned a consolidated net income of $63,978 ($.01 income per
share) for the quarter and $128,368 ($.01 income per share) for the six months
ended October 31, 1995, compared to net income of $10,161 ($.001 income per
share) and $36,282 ($.004 income per share), respectively, for the same
periods of the prior year.
CAPITAL RESOURCES
The Company had no material commitments for capital expenditures at October
31, 1995.
LIQUIDITY
Borrowed funds have been used primarily for working capital. Bank debt at
October 31, 1995, is $421,722 and was $436,945 at October 31, 1994. The
Company's unused line of credit was approximately $78,278 as of October 31,
1994.
The Company plans to continue using the promissory notes payable due in
November, 1995, as working capital. The promissory notes payable maturities
have been extended to February, 1996. The Company believes the extensions
will continue and does not anticipate the repayment of these notes in fiscal
1996. 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 has enough cash to pay off the notes without significantly affecting
the liquidity of the Company.
Prior to 1991, the Company incurred significant operating losses, which
resulted in reduced working capital, cash flow problems, and a net capital
deficiency. Accordingly, the Company began a process of voluntarily
reorganizing and financially restructuring its financial position. As a
result, the Company was successful in settling substantially all past due
liabilities from vendors and governmental taxing authorities on satisfactory
terms.
The Company recorded income from the Favorable settlement of liabilities of
$234,603 in fiscal 1992, $78,842 in fiscal 1993 and 71,230 in fiscal 1995.
This income relates to the write off of vendor payables which had been
accrued for in prior years at amounts greater than the actual cost of
settlement. During fiscal 1991, many of these vendors accepted a portion of
the debt owed in stock and a portion to be paid off over a three year period.
During fiscal 1993, many of these same vendors forgave the remaining payments
due to the significant increase in the value of the stock received and the
fact that the Company was continuing to restructure and incurring cash flow
problems. During fiscal 1995, the Company wrote off the rest of the vendor
payables related to prior to 1989 which were not settled by the restructuring.
The Company continued in fiscal 1995 to issue stock at fair market value for
various legal, marketing and consulting services, in lieu of cash payments.
During fiscal 1995, the Company issued 95,000 shares of stock at a value of
$219,668 for professional services to be provided in the future.
The Company acquired RFI on April 21, 1994. The Company exchanged 650,000
shares of the Company's common stock for 100% of the issued and outstanding
shares of RFI. At the date of acquisition, RFI's total assets were $565,605,
consisting of cash of approximately $200,000, accounts receivable of
approximately $280,000, and inventory of approximately $60,000. RFI's
liabilities included approximately $260,000 of vendor payables, and $115,000
of accrued payroll and payroll taxes.
The Company does not expect nor has it incurred any substantial costs
associated with integrating RFI's operations. The Company expects that the
majority of RFI's operations will continue to operate as it did under previous
management. The Company does plan to expand the customer base of RFI, by
hiring additional sales personnel in various locations. The additional costs
of personnel should be more than offset by the additional contribution margin
recognized. The Company hired five additional sales personnel at various
locations in fiscal 1995.
The Company has entered into a letter of intent to purchase the operating
rights and assets of Woodson Electronics, Inc. If the transaction is
consummated under the terms of the letter of intent, the Company anticipates
a purchase price of approximately 100,000 shares of the Company's common stock,
$.01 par value, and cash payments totalling approximately $34,000, over a
period of two (2) years. This transaction has not yet been finalized, but is
expected to be finalized in fiscal 1996.
The Company had an employment agreement with an individual in which the
Company terminated the relationship in April 1995. This individual filed a
lawsuit against the Company in October 1995. The individual has asserted a
significant claim for damages and proposed a settlement offer for $500,000.
It is management's opinion that the Company will defend the claim vigorously.
From a longer term perspective, the Company, through BNSC, will need
additional funds to complete its currently planned Indian gaming opportunities.
The Company will use current cash available and these additional funds for the
start up and construction of gaming facilities. The Company anticipates
initially obtaining these funds from two sources: internally generated working
capital from non-gaming operations and the proceeds from an anticipated
private placement of the Company's common stock. After a few gaming facilities
become operational, the gaming operations will generate additional working
capital for the start up and construction of other additional 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.
PART II.
OTHER INFORMATION
Responses to items 1 through 5 are omitted since these items are either
inapplicable or the response thereto would be negative.
Item 6. Exhibits and reports on Form 8-K.
(A) Exhibits.
None.
(B) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUTLER NATIONAL CORPORATION
(Registrant)
December 13, 1995 CLARK D. STEWART
Date Clark D. Stewart,
(President and Chief Executive Officer)
December 13, 1995 STEPHANIE S. RUSKEY
Date Stephanie S. Ruskey
(Vice President and Chief
Financial Officer)