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Table of Contents

UNITED STATES 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 quarterly period ended July 31, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to _____________

 

Commission File Number 0-1678

 

BUTLER NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Kansas

 

41-0834293

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

19920 West 161st Street, Olathe, Kansas 66062

(Address of principal executive offices)(Zip Code)

 

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

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

 

 

   

   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ☒

 

The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of September 14, 2022 was 76,781,507 shares.

   

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I. FINANCIAL INFORMATION

 

 

 

PAGE

NO. 

Item 1

Financial Statements (Unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets – July 31, 2022 (unaudited) and April 30, 2022

3

 

 

 

  Condensed Consolidated Statements of Operations - Three Months Ended July 31, 2022 and 2021 4
     
 

Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended July 31, 2022 and 2021

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows - Three Months Ended July 31, 2022 and 2021

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

15

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

21

 

 

 

Item 4

Controls and Procedures

21

 

PART II. OTHER INFORMATION

 

Item 1

Legal Proceedings

22

 

 

 

Item 1A

Risk Factors

22

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

22

 

 

 

Item 3

Defaults Upon Senior Securities

22

 

 

 

Item 4

Mine Safety Disclosures

22

 

 

 

Item 5

Other Information

22

 

 

 

Item 6

Exhibits

22

 

 

 

Signatures

23

 

 

Exhibit Index

24

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of July 31, 2022 and April 30, 2022

(in thousands except per share data) 

 

   

July 31, 2022

 

April 30, 2022

   

(unaudited)

       

ASSETS

               

CURRENT ASSETS:

               

Cash

  $ 14,796   $ 12,487

Accounts receivable, net of allowance for doubtful accounts

  3,615   3,636

Inventories

               

Parts and raw materials

  4,916   4,722

Work in process

  4,333   4,080

Finished goods

  72   70

Total inventory, net of allowance

  9,321   8,872

Contract asset

  1,144   1,470

Prepaid expenses and other current assets

  1,602   1,361

Total current assets

  30,478   27,826
                 

PROPERTY, PLANT AND EQUIPMENT:

               

Lease right-to-use assets

  3,781   3,240

Construction in progress

  -   6,417

Land

  4,751   4,751

Building and improvements

  47,772   40,962

Aircraft

  8,798   8,719

Machinery and equipment

  5,027   4,917

Office furniture and fixtures

  12,399   11,826

Leasehold improvements

  4,032   4,032
    86,560   84,864

Accumulated depreciation

  (24,170 )   (23,290 )

Total property, plant and equipment

  62,390   61,574
                 

SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $9,681 at July 31, 2022 and $9,336 at April 30, 2022)

  8,084   8,018
                 

OTHER ASSETS:

               

Other assets (net of accumulated amortization of $11,745 at July 31, 2022 and $11,575 at April 30, 2022)

  1,524   1,621

Deferred tax asset, net

  1,490   1,770

Total other assets

  3,014   3,391

Total assets

  $ 103,966   $ 100,809
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

CURRENT LIABILITIES:

               

Current maturities of long-term debt

  $ 5,054   $ 5,165

Current maturities of lease liability

  136   106

Accounts payable

  2,736   2,773

Contract liability

  4,164   820

Gaming facility mandated payment

  1,322   1,630

Compensation and compensated absences

  1,539   1,911

Income taxes payable

  1,309   1,049

Other current liabilities

  348   211

Total current liabilities

  16,608   13,665
                 

LONG-TERM LIABILITIES

               

Long-term debt, net of current maturities

  42,220   43,411

Lease liability, net of current maturities

  3,391   2,899

Total long-term liabilities

  45,611   46,310

Total liabilities

  62,219   59,975
                 

COMMITMENTS AND CONTINGENCIES

                 

STOCKHOLDERS' EQUITY:

               

Butler National Corporation's stockholders' equity

               

Preferred stock, par value $5: Authorized 50,000,000 shares, all classes; Designated Classes A and B 200,000 shares; $100 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, no shares issued and outstanding

  -   -

Common stock, par value $.01: authorized 100,000,000 shares issued 80,673,572 shares, and outstanding 76,781,507 shares at July 31, 2022 and issued 80,348,572 shares, and outstanding 76,458,146 shares at April 30, 2022

  807   803

Capital contributed in excess of par

  12,640   12,160

Treasury stock at cost, 3,892,065 shares at July 31, 2022 and 3,890,426 shares at April 30, 2022

  (2,079 )   (2,077 )

Retained earnings

  30,379   29,948

Total stockholders' equity

  41,747   40,834

Total liabilities and stockholders' equity

  $ 103,966   $ 100,809

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED July 31, 2022 AND 2021

(in thousands, except per share data)

(unaudited)

 

   

THREE MONTHS ENDED

   

July 31,

   

2022

 

2021

REVENUE:

               

Professional Services

  $ 8,962   $ 9,326

Aerospace Products

  6,342   8,419

Total revenue

  15,304   17,745
                 

COSTS AND EXPENSES:

               

Cost of Professional Services

  3,623   3,325

Cost of Aerospace Products

  4,827   6,012

Marketing and advertising

  1,331   1,180

Employee benefits

  614   575

Depreciation and amortization

  771   702

General, administrative and other

  2,513   1,929

Total costs and expenses

  13,679   13,723
                 

OPERATING INCOME

  1,625   4,022
                 

OTHER INCOME (EXPENSE):

               

Interest expense

  (723 )   (614 )

Forgiveness of debt

  -   2,001

Gain on sale of building

  69   -

Total other income (expense)

  (654 )   1,387
                 

INCOME BEFORE INCOME TAXES

  971   5,409
                 

PROVISION FOR INCOME TAXES

               

Provision for income taxes

  260   631

Deferred income tax

  280   -
                 

NET INCOME

  431   4,778

Net income attributable to noncontrolling interest in BHCMC, LLC

  -   (1,872 )

NET INCOME ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION

  $ 431   $ 2,906
                 

BASIC EARNINGS PER COMMON SHARE

  $ 0.01   $ 0.04
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

  76,456,284   75,366,749
                 

DILUTED EARNINGS PER COMMON SHARE

  $ 0.01   $ 0.04
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

  76,456,284   75,366,749

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

 BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE three months ended July 31, 2022 and 2021

(dollars in thousands) (unaudited)

 

    Shares of Common Stock   Common Stock   Capital Contributed in Excess of Par   Shares of Treasury Stock   Treasury Stock at Cost   Retained Earnings   Total Stock-holders’ Equity BNC   Non controlling Interest in BHCMC   Total Stock-holders’ Equity

Balance, April 30, 2021

  79,070,382   $ 790   $ 16,900   3,703,633   $ (1,909 )   $ 19,580   $ 35,361   $ 6,018   $ 41,379
                                                                         

Deferred compensation, restricted stock

  -   -   148   -   -   -   148   -   148
                                                                         

Net Income

  -   -   -   -   -   2,906   2,906   1,872   4,778
                                                                         

Balance, July 31, 2021

  79,070,382   $ 790   $ 17,048   3,703,633   $ (1,909 )   $ 22,486   $ 38,415   $ 7,890   $ 46,305

 

    Shares of Common Stock   Common Stock   Capital Contributed in Excess of Par   Shares of Treasury Stock   Treasury Stock at Cost   Retained Earnings   Total Stock-holders’ Equity BNC   Non controlling Interest in BHCMC   Total Stock-holders’ Equity

Balance, April 30, 2022

  80,348,572   $ 803   $ 12,160   3,890,426   $ (2,077 )   $ 29,948   $ 40,834   $ -   $ 40,834
                                                                         

Stock repurchase

  -   -   -   1,639   (2 )   -   (2 )   -   (2 )
                                                                         

Deferred compensation, restricted stock

  (75,000 )   -   132   -   -   -   132   -   132
                                                                         

Stock awarded to Director

  400,000   4   348   -   -   -   352   -   352
                                                                         

Net Income

  -   -   -   -   -   431   431   -   431
                                                                         

Balance, July 31, 2022

  80,673,572   $ 807   $ 12,640   3,892,065   $ (2,079 )   $ 30,379   $ 41,747   $ -   $ 41,747

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE three months ended July 31, 2022 and 2021

(in thousands)

(unaudited) 

 

   

THREE MONTHS ENDED

   

July 31,

   

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net income

  $ 431   $ 4,778

Adjustments to reconcile net income to net cash provided by operating activities

               

Depreciation and amortization

  1,458   1,314

Gain on sale of building

  (69 )   -

Deferred income tax expense

  280   -

Stock awarded to director

  352   -

Forgiveness of debt

  -   (2,001 )

Deferred compensation, restricted stock

  132   148
                 

Changes in operating assets and liabilities

               

Accounts receivable

  21   (996 )

Inventories

  (449 )   113

Contract assets

  326   (157 )

Prepaid expenses and other current assets

  (241 )   (18 )

Accounts payable

  (37 )   423

Contract liability

  3,344   (2,994 )

Lease liability

  45   38

Accrued liabilities

  (372 )   (234 )

Gaming facility mandated payment

  (308 )   (227 )

Income tax payable

  260   631

Other liabilities

  137   80

Net cash provided by operating activities

  5,310   898
                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Capital expenditures

  (1,797 )   (1,275 )

Proceeds from sale of building

  164   -

Net cash used in investing activities

  (1,633 )   (1,275 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Repayments of long-term debt

  (1,302 )   (988 )

Repurchase of common stock

  (2 )   -

Repayments on lease right-to-use

  (64 )   (72 )

Net cash used in financing activities

  (1,368 )   (1,060 )
                 

NET INCREASE (DECREASE) IN CASH

  2,309   (1,437 )
                 

CASH, beginning of period

  12,487   22,022
                 

CASH, end of period

  $ 14,796   $ 20,585
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

               

Interest paid

  $ 713   $ 630

Income taxes paid

  $ -   $ -
                 

NON CASH INVESTING AND FINANCING ACTIVITY

               

Lease right-of-use assets purchased

  $ 541   $ -

Lease liability for purchase of assets under lease

  $ 541   $ -

 

See accompanying notes to condensed consolidated financial statements (unaudited)

   

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(unaudited)

 

 

1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the annual report on Form 10-K for the fiscal year ended April 30, 2022. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2022 are not indicative of the results of operations that may be expected for the fiscal year ending April 30, 2023.

 

Certain reclassifications within the condensed financial statement captions have been made to maintain consistency in presentation between years. These reclassifications have no impact on the reported results of operations. Financial amounts are in thousands of dollars except per share amounts.

 

 

2. Net Income Per Share: Butler National Corporation (“the Company”) follows ASC 260 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net earnings per share would be excluded. 

 

 

3. Revenue Recognition: ASC Topic 606, “Revenue from Contracts with Customers”

 

Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration we expect to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps:

 

 

1)

Identify the contract, or contracts, with a customer

 

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

 

 

2)

Identification of the performance obligations in the contract

 

 

At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

 

3)

Determination of the transaction price

 

 

The transaction price is the amount that an entity allocates to the performance obligations identified in the contract and, therefore, represents the amount of revenue recognized as those performance obligations are satisfied. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

 

 

4)

Allocation of the transaction price to the performance obligations in the contract

 

 

Once a contract and associated performance obligations have been identified and the transaction price has been determined, ASC 606 requires an entity to allocate the transaction price to each performance obligation identified. This is generally done in proportion to the standalone selling prices of each performance obligation (i.e., on a relative standalone selling price basis). As a result, any discount within the contract generally is allocated proportionally to all of the separate performance obligations in the contract. The Company is applying the right to invoice practical expedient to recognize revenue. As a result, the entity bypasses the steps of determining the transaction price, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as billed by multiplying the price assigned to the good or service, by the units.

 

7

 
 

5)

Recognition of revenue when, or as, we satisfy a performance obligation

 

 

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control transfers either over time or at a point in time. Revenue is recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

 

 

Aircraft modifications are performed under fixed-price contracts. Revenue from fixed-priced contracts are recognized on the percentage-of-completion method, measured by the direct labor incurred compared to total estimated direct labor.

 

 

Revenue from Avionics products are recognized when shipped. Payment for these Avionics products is due within 30 days of the invoice date after shipment. Revenue from Gaming Management and other Corporate/Professional Services is recognized as the service is rendered.

 

 

Regarding warranties and returns, our products are special order and are not suitable for return. Our products are unique upon installation and tested prior to their release to the customer and acceptance by the customer. In the rare event of a warranty claim, the claim is processed through the normal course of business and may include additional charges to the customer. In our opinion, any future warranty work would not be material to the consolidated financial statements.

 

 

Gaming revenue is the gross gaming win as reported by the Kansas Lottery casino reporting systems, less the mandated payments by and for the State of Kansas. Electronic games-slots and table games revenue is the aggregate of gaming wins and losses. Liabilities are recognized for chips and "ticket-in, ticket-out" coupons in the customers' possession, and for accruals related to anticipated payout of progressive jackpots. Progressive gaming machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are deducted from revenue as the value of jackpots increase. Food, beverage, and other revenue is recorded when the service is received and paid.

 

 

 

4. Disaggregation of Revenue

 

In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.

 

   

Three Months Ended July 31, 2022

 

Three Months Ended July 31, 2021

   

Professional Services

 

Aerospace Products

 

Total

 

Professional Services

 

Aerospace Products

 

Total

Geographical Markets

                                               

North America

  $ 8,962   $ 5,997   $ 14,959   $ 9,326   $ 7,443   $ 16,769

Europe

  -   183   183   -   842   842

Asia

  -   137   137   -   88   88

Australia and Other

  -   25   25   -   46   46
    $ 8,962   $ 6,342   $ 15,304   $ 9,326   $ 8,419   $ 17,745
                                                 

Major Product Lines

                                               

Casino Gaming Revenues

  $ 7,816   $ -   $ 7,816   $ 8,189   $ -   $ 8,189

Casino Non-Gaming Revenues

  1,077   -   1,077   1,066   -   1,066

Professional Services

  69   -   69   71   -   71

Aircraft Modification

  -   3,836   3,836   -   5,782   5,782

Aircraft Avionics

  -   715   715   -   875   875

Special Mission Electronics

  -   1,791   1,791   -   1,762   1,762
    $ 8,962   $ 6,342   $ 15,304   $ 9,326   $ 8,419   $ 17,745
                                                 

Contract Types / Revenue Recognition Timing

                                               

Percentage of completion contracts

  $ -   $ 3,251   $ 3,251   $ -   $ 5,275   $ 5,275

Goods or services transferred at a point of sale

  8,962   3,091   12,053   9,326   3,144   12,470
    $ 8,962   $ 6,342   $ 15,304   $ 9,326   $ 8,419   $ 17,745

 

9

 
 
5. Accounts receivable, net, contract asset and contract liability:

 

Accounts Receivables, net, contract asset and contract liability were as follows (in thousands):

 

    July 31,   April 30,
   

2022

 

2022

Accounts Receivable, net

  $ 3,615   $ 3,636

Contract Asset

  1,144   1,470

Contract Liability

  4,164   820

 

Accounts receivable, net consist of $3,615 and $3,636 from customers as of  July 31, 2022 and April 30, 2022, respectively. At July 31, 2022 and April 30, 2022, the allowance for doubtful accounts was $205 and $205, respectively.

 

Contract assets are net of progress payments and performance based payments from our customers as well as advance payments from customers totaling $1,144 and $1,470 as of July 31, 2022 and April 30, 2022. Contract assets decreased $326 during the three months ended July 31, 2022, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the three months ended July 31, 2022. There were no significant impairment losses related to our contract assets during the three months ended July 31, 2022. We expect to bill our customers for the majority of the July 31, 2022 contract assets during fiscal year end 2023.

 

Contract liabilities increased $3,344 during the three months ended July 31, 2022, primarily due to payments received in excess of the revenue recognized on these performance obligations.

 

 
6. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) 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 revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our consolidated financial statements. Significant estimates include assumptions about percentage-of-completion, collection of accounts receivable, the valuation, and recognition of stock-based compensation expense, valuation for deferred tax assets and useful life of fixed assets.
 
 

7. Inventories: Inventories are determined on a first-in, first-out basis, valued at lower of cost or net realizable value. Inventories include material, labor and factory overhead required in the production of our products.

 

Inventory obsolescence is examined on a regular basis. When determining our estimate of obsolescence, we consider inventory that has been inactive for five years or longer and the probability of using that inventory in future production. The obsolete inventory generally consists of Falcon and Learjet parts and electrical components.  At July 31, 2022 and April 30, 2022, the estimate of obsolete inventory was $240 and $240 respectively.

 

8. Research and Development: We invested in research and development activities. The amount invested in the three months ended July 31, 2022 and 2021 was $631 and $326 respectively.

 

 

9. Debt: At July 31, 2022, the Company has a line of credit with Kansas State Bank in the form of a promissory note with an interest rate of 3.65% totaling $2,000. The unused line at July 31, 2022 was $2,000. There were no advances made on the line of credit during the three months ended  July 31, 2022. The line of credit is due on demand and is collateralized by the first and second positions on all assets of the Company.

 

At  July 31, 2022, One note with Academy Bank, N.A. for $32,229 (net of unamortized deferred finance costs of $252) collateralized by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.32% payable over seven years with an initial twenty-year amortization and a balloon payment of $19,250 at the end of seven years. The second note with Academy Bank, N.A. for $12,097 (net of unamortized deferred finance costs of $118) collateralized by all of BHCMC's assets and compensation under the State management contract with an interest rate of 5.75% payable in full over five years. These notes contain a covenant to maintain a debt service coverage ratio of 1.3 to 1.0. These notes also contain a liquidity covenant requiring the Company to maintain an aggregate sum of $1.5 million of unrestricted cash. We are in compliance with these covenants at July 31, 2022.

 

At July 31, 2022, there was one note with 1st Source Bank with an interest rate of 6.25% collateralized by aircraft security agreements totaling $377. This note was used for the purchase and modifications of collateralized aircraft. This note matures in January 2023.

 

At July 31, 2022, there is one note with Fidelity State Bank and Trust Company totaling $175 collateralized by real estate in Dodge City, Kansas. The interest rate on this note is 6.25%. This note matures in June 2024.

 

At July 31, 2022, there is a note payable with Bank of America, N.A. collateralized by real estate with a balance of $1,067. The interest rate on this note is at SOFR plus 1.75%. This note matures in March 2029.

 

At July 31, 2022, there is a note payable with Bank of America, N.A. collateralized by real estate with a balance of $489. The interest rate on this note is at SOFR plus 1.75%. This note matures in March 2029.

 

At July 31, 2022, there is a note payable with Patriots Bank collateralized by aircraft security agreements with a balance of $1,160. The interest rate on this note is 4.35%. This note matures in March 2029.

 

At July 31, 2022, there is a note payable with an interest rate of 8.13% collateralized by equipment with a balance of $50. This note matures in October 2025.

 

10

 

In May 2020, the Company received a Paycheck Protection Program (PPP) loan for $2,001. In June 2021, the Company received notice of forgiveness from the Small Business Administration.

 

We are not in default of any of our notes as of July 31, 2022.

 

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 2022 and beyond.

 

 

10. Other Assets: Our other asset account includes assets of $5,500 related to the Kansas Expanded Lottery Act Management Contract privilege fee, $6,224 of gaming equipment we were required to pay for ownership by the State of Kansas Lottery, JET autopilot intellectual property of $1,417 and miscellaneous other assets of $128. BHCMC expects the $5,500 privilege fee to have a value over the remaining life of the initial Management Contract with the State of Kansas which will end in December 2024. The State of Kansas approved a renewal management contract and an amendment to the current management contract for our Professional Services company BNSC via BHCMC. The renewal will take effect December 15, 2024, and continue to 2039, another 15 years. The Managers Certificate asset for use of gaming equipment is being amortized over a period of three years based on the estimated useful life of gaming equipment. The JET intellectual property is being amortized over a period of fifteen years.

 

 

11. Stock Options and Incentive Plans:

 

In November 2016, the shareholders approved and adopted the Butler National Corporation 2016 Equity Incentive Plan. The maximum number of shares of common stock that may be issued under the Plan is 12.5 million.


On April 12, 2019, the Company granted 2.5 million restricted shares to employees. These shares have voting rights at date of grant and become fully vested and nonforfeitable on April 11, 2024. The restricted shares were valued at $0.38 per share, for a total of $950. On March 17, 2020, the Company granted 5.0 million restricted shares to employees. These shares have voting rights at date of grant and become fully vested and non-forfeitable on March 16, 2025. The restricted shares were valued at $0.41 per share, for a total of $2.0 million. The deferred compensation related to these grants will be expensed on the financial statements over the five year vesting period.

 

In July 2022, the Company granted a board member 400,000 shares under the plan. These shares were fully vested and nonforfeitable on the date of grant. These shares were valued at $0.88 per share, for a total of $352. The compensation related to this grant was expensed in the current period. No other equity awards have been made under the plan.

 

For the three months ended July 31, 2022 and July 31, 2021, the Company expensed $484 and $148, respectively.

 

   

Number of Shares

 

Weighted Average Grant Date Fair Value

Total shares issued

  7,900,000   $ 0.42

Forfeited, in prior periods

  (50,000 )   $ 0.40

Forfeited, during the year ended April 30, 2022

  (50,000 )   $ 0.40

Forfeited, during the quarter ended July 31, 2022

  (75,000 )   $ 0.40

Total

  7,725,000   $ 0.42

 

 

12. Stock Repurchase Program

 

The Board of Directors approved a stock purchase program authorizing the repurchase of up to $4,000 of its common stock. The timing and amount of any share repurchases will be determined by Butler National’s management based on market conditions and other factors. The program is currently authorized through May 1, 2023.

 

The table below provides information with respect to common stock purchases by the Company through July 31, 2022.

 

Period

  Total Number of Shares Purchased   Average Price Paid per Share   Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs   Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs

Shares purchased in prior periods

  3,103,633   $ 0.38   3,103,633   $ 2,823

Quarter ended July 31, 2021 (a)

  -   $ -   -   $ 2,823

Quarter ended October 31, 2021 (a)

  6,290   $ 0.62   6,290   $ 2,819

Quarter ended January 31, 2022 (a)

  -   $ -   -   $ 2,819

Quarter ended April 30, 2022 (a)

  180,503   $ 0.91   180,503   $ 2,655

Quarter ended July 31, 2022 (a)

  1,639   $ 0.84   1,639   $ 2,653

Total

  3,292,065   $ 0.41   3,292,065        

 

(a)

These shares of common stock were purchased through a private transaction

 

11

 
 

13. Lease Right-to-Use

 

We lease hangars and office space with initial lease terms of five, forty-six, and fifty years.

 

   

July 31, 2022

Lease right-to-use assets

  $ 3,781

Less accumulated depreciation

  558

Total

  $ 3,223

 

Future minimum lease payments for assets under finance leases at July 31, 2022 are as follows:

 

2023

  $ 260

2024

  252

2025

  114

2026

  116

2027

  119

Thereafter

  12,918

Total minimum lease payments

  13,779

Less amount representing interest

  10,252

Present value of net minimum lease payments

  3,527

Less current maturities of lease liability

  136

Lease liability, net of current maturities

  $ 3,391

 

Finance lease costs at July 31, 2022 and  July 31, 2021 are as follows: 

 

FinanceLeaseCost

               
   

July 31, 2022

 

July 31, 2021

Finance lease cost:

               

Amortization of right-of-use assets

  $ 46   $ 52

Interest on lease liabilities

  45   38

Total finance lease cost

  $ 91   $ 90
                 
   

July 31, 2022

 

July 31, 2021

Weighted average remaining lease term - Financing leases

 

46 years

 

44 years

Weighted average discount rate - Financing leases

  5.8 %   5.0 %

 

 

14. Purchase of Noncontrolling Interest:

 

On October 18, 2021, Butler National Service Corporation (“BNSC”), a wholly-owned subsidiary of Butler National Corporation (“Company”), acquired the remaining BHCMC equity and the Company now indirectly owns 100% of BHCMC. BNSC acquired the remaining BHCMC equity from BHC Investment Company L.C. (“Seller”) for approximately $16.4 million paid at closing (the “Transaction”).


The closing was effected pursuant to a Sale and Purchase Agreement for Preferred Member Interest Units between Seller and BNSC (“Purchase Agreement”). BNSC and Seller agreed to utilize an effective date for the Transaction of August 1, 2021. 

 

The Transaction purchase price was paid by a combination of available cash and an $8.0 million borrowing on a commercial loan with Academy Bank, N.A. (“Academy Bank”). BHCMC executed a Loan Modification Agreement with Academy, dated October 18, 2021 (“Manager Loan”) and BNSC executed a guaranty of the obligations thereunder. The Manager Loan amended and restated the original $7.0 million loan executed  December 22, 2020 with Academy to acquire the casino land and buildings. The other $35 million loan executed in connection with the casino land acquisition in 2020 was unchanged by the Transaction. As of July 31, 2022, approximately $12.1 million is outstanding under the Manager Loan and it remains collateralized by real estate in Dodge City with an interest rate of 5.75% fully amortizing over five years. The Manager Loan will now mature on October 18, 2026. 

 

The following table summarizes the purchase price and accounting of the transaction:

 

Purchase Price Summary:

       

Secured notes payable, net of financing costs

  $ 7,914

Forgiven note receivable from seller

  780

Cash paid

  7,659

Total

  $ 16,353
         

Accounting Summary:

       

Capital contributed in excess of par

  $ 6,119

Book basis of the noncontrolling interest in BHCMC, LLC

  7,890

Deferred tax asset related to step up in basis

  2,344

Total

  $ 16,353

 

12

 
 

15. Segment Reporting and Sales by Major Customer:

 

Industry Segmentation

 

Current Activities - The Company focuses on two primary activities, Professional Services and Aerospace Products.

 

Aerospace Products:

 

Aircraft Modifications principally includes the modification of customer and company owned business-size aircraft for specific operations or special missions such as addition of aerial photography capabilities and ISR modifications. We provide these services through our subsidiary, Avcon Industries, Inc. ("Aircraft Modifications" or "Avcon").

 

Special mission electronics principally includes the manufacture, sale, and service of electronics upgrades for classic weapon control systems used on commercial and military aircraft and vehicles. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona.

 

Butler Avionics sells, installs and repairs aircraft avionics equipment (airplane radio equipment and flight control systems). These systems are flight display systems which include intuitive touchscreen controls with large display that enhance pilot situational awareness and give users unprecedented access to high-resolution terrain mapping, graphical flight planning, geo-referenced charting, traffic display, satellite weather and much more. Butler Avionics is also recognized nationwide for its troubleshooting and repair work particularly on autopilot systems.

 

Professional Services:

 

Butler National Service Corporation ("BNSC") provides management services to the Boot Hill Casino, a "state-owned casino".

 

BCS Design, Inc. provides licensed architectural services. These services include commercial and industrial building design.

 

 

Three Months Ended July 31, 2022

 

Gaming

 

Aircraft Modification

 

Aircraft Avionics

 

Special Mission Electronics

 

Other

 

Total

Revenues from customers

  $ 8,893   $ 3,836   $ 715   $ 1,791   $ 69   $ 15,304

Interest expense

  642   66   -   7   8   723

Depreciation and amortization

  626   53   2   39   51   771

Operating income (loss)

  2,642   54   48   616   (1,735 )   1,625

 

Three Months Ended July 31, 2021

 

Gaming

 

Aircraft Modification

 

Aircraft Avionics

 

Special Mission Electronics

 

Other

 

Total

Revenues from customers

  $ 9,255   $ 5,782   $ 875   $ 1,762   $ 71   $ 17,745

Interest expense

  548   55   -   6   5   614

Depreciation and amortization

  578   45   2   33   44   702

Operating income (loss)

  3,544   1,143   (19 )   503   (1,149 )   4,022

 

Our Chief Operating Decision Maker (CODM) does not evaluate operating segments using asset or liability information.

 

Major Customers: Revenue from major customers (10 percent or more of consolidated revenue) were as follows:

 

   

Three Months Ended July 31, 2022

 

Three Months Ended July 31, 2021

Aerospace Products – one customer in the three months ended July 31, 2022, one customer in the three months ended July 31, 2021

  11.7 %   10.7 %

Professional Services

  -   -

 

In the three months ended July 31, 2022 the Company derived 28.7% of total revenue from five Aerospace customers. The top customer provided 11.7% of total revenue while the next top four customers ranged from 2.2% to 9.8%.

 

13

 
 
16. COVID- 19 Overview:

 

The pandemic caused by COVID-19 has caused volatility in world-wide financial markets since 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic. Although many experts believe the pandemic has ended in 2022, the threat of outbreaks and new variations of the virus continue to affect operations and finances of businesses like ours. 

 

We have experienced lower customer headcount, which has been off-set by a larger net revenue per customer. We are experiencing, and expect to continue experiencing, lower demand for our professional services and increased costs and other challenges related to COVID-19 that adversely affects our business.

 

The COVID-19 pandemic has impacted our business operations and financial results and continues to impact us in fiscal 2023. We face numerous uncertainties in estimating the direct and indirect effects on our present and future business operations, financial condition, results of operations, and liquidity. Due to several rapidly changing variables related to the COVID-19 pandemic, we cannot reasonably estimate future economic trends and the timing of when stability will return. Refer to Item 1A. “Risk Factors” for a disclosure of risk factors related to COVID-19.

 

As the economy in general slowly recovers, and vaccinations rates in our operating territory improve and new infections decline, we have continued to see improvements in customer headcount. However, the unpredictable nature of the pandemic could again lead to closures, decreased traffic and demand, and increased COVID-19- related operating expenses, for the foreseeable future. While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to emerge from the pandemic.

 

 

17. Extension of the Shareholder Rights Plan:

 

On July 22, 2021, the Company extended the shareholder rights plan between the Company and UMB Bank, N.A. as rights agent dated as of August 2, 2011 (the “Rights Plan”). The Rights Plan is intended to protect the interests of the Company’s stockholders and enable them to realize the full potential value of their investment by reducing the likelihood that any person or group gains control of the Company, through open market accumulation or other tactics, without appropriately compensating all stockholders. Pursuant to the Rights Plan, the Company issued, by means of a dividend, one preferred share purchase right (a "Right") for each outstanding share of our Common Stock to shareholders of record on the close of business on August 2, 2011. Shares issued after August 2, 2011 also include one Right. Until a triggering event, these Rights will trade with, and be represented by, the shares of our Common Stock. The Rights will generally become exercisable only if any person (or any persons acting as a group) acquires 15% or more of our outstanding Common Stock (the “Acquiring Person”) in a transaction not approved by the Board, subject to certain exceptions.

 

If the Rights become exercisable, all holders of Rights, other than the Acquiring Person, will be entitled to acquire shares of the Company’s common stock at a 50% discount. In such situation, Rights held by the Acquiring Person would become void and will not be exercisable.

 

Each Right entitles the registered holder to purchase from the Company one two-hundredth of a share of Series C Participating Preferred Stock, par value $5.00 per share (the “Preferred Shares”), of the Company at a price of $10 per one two-hundredth of a Participating Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment. Unless a triggering event occurs, the value of the Right is considered de minimis. 

 

Unless earlier redeemed, terminated or exchanged pursuant to the terms of the Rights Plan, or the Rights Plan is extended, the Rights will expire at the close of business on  August 2, 2031. The Board may terminate the Rights Plan before that date if the Board determines that there is no longer a threat to shareholder value.

 

 

18. Subsequent Events:

 

Effective September 1, 2022, the Kansas Lottery launched the operation of intrastate sports wagering. The Company is currently managing online sports wagering on behalf of the Kansas Lottery through DraftKings sports wagering platform. At this time, the Company cannot reasonably quantify the impact on the financial statements.

 

The Company evaluated its July 31, 2022 financial statements for subsequent events through the filing date of this report. The Company is not aware of any other subsequent events that would require recognition or disclosure in the consolidated financial statements.

 

14

 
 

 

ITEM 2.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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, hopes, 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," "hope," "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, 2022, 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.

 

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, 2022, including the following factors:

 

  the geographic location of our casino;
 

customer concentration risk;
 

executive officers are family members;

 

industrial business cycles;

 

fixed-price contracts;

 

development, production, testing and marketing of new products;

 

loss of key personnel;

 

risks associated with international sales;

 

future acquisitions and investments;

 

change of control restrictions;

  launching new online gaming or sports wagering channels;
  ability to generate returns on sports wagering operations;
  fraud, theft, and cheating;
 

cyber-security threats;

 

extensive regulation across our industries;

  evolving government regulations and law;
 

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;

 

stock dilution caused by the annual employer match to our 401(k) plan;

 

market competition;

 

acts of terrorism and war;

  inclement weather and natural disasters;
 

pandemics or other national health crisis (including COVID-19);

 

fluctuating fuel and energy costs;

  rising inflation;
 

extensive taxation;

 

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; it is against its policy to 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.

   

 

Management Overview

 

Management is focused on increasing long-term shareholder value from increased cash generation, earnings growth, and prudently managing capital expenditures. We plan to do this by continuing to drive increased revenue from product and service innovations, strategic acquisitions, and targeted marketing programs.

 

We have two separate reporting segments: Aerospace Products and Professional Services. Aerospace Products and Professional Services do not share the same customers and suppliers and have substantially distinct businesses. The Aerospace Products operating segment provides products and services in the aerospace industry. Companies in Aerospace Products derive their revenue from system design, engineering, manufacturing, integration, installation, repairing, overhauling, servicing and distribution of aerostructures, avionics, aircraft components, accessories, subassemblies and systems. The Professional Services operating segment provides services in the gaming industry. Professional Services companies manage a gaming and entertainment facility and provide architectural and engineering services. These reporting segments operate through various subsidiaries and affiliates listed in the Company’s fiscal year 2022 Annual Report on Form 10-K.

 

Aerospace Products. The Aerospace Products segment includes the manufacture, sale and service of electronic equipment and systems and technologies to enhance and support products related to aircraft. Additionally, we also operate several Federal Aviation Administration (the "FAA") Repair Stations. Companies in Aerospace Products concentrate on Learjet, Beechcraft King Air, Cessna turbine engine, Cessna multi-engine piston and Dassault Falcon 20 aircraft. Specifically, the design, distribution and support for products for older aircraft, or “Classic” aircraft are areas of focus for companies in Aerospace Products.

 

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

 

Aerial surveillance products

 

GARMIN GTN Global Position System Navigator with Communication Transceiver

         

Aerodynamic enhancement products

 

J.E.T autopilot products

         

Airspeed and altimeter systems

 

Electrical systems and switching equipment

         

Avcon Fins

 

Noise suppression systems

         

ADS-B (transponder) systems

 

Rate gyroscopes

         

Conversion of passenger configurations to cargo

 

Replacement vertical accelerometers

         

Cargo/sensor carrying pods and radomes

 

Provisions for external stores

         

Electronic navigation instruments, radios and transponders

 

Attitude 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

         

Conversion from passenger to freighter configuration

 

Stability enhancements

         

Extended doors

 

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 aircraft with older components and technology. 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

 

Professional Services. The Professional Services segment includes the management of a gaming facility and related dining and entertainment facilities in Dodge City, Kansas. Boot Hill Casino and Resort features approximately 450 slot machines and 14 table games. Companies in Professional Services also provide licensed architectural services, including commercial and industrial building design, and engineering services.

 

Boot Hill. Butler National Service Corporation (“BNSC”), and BHCMC, LLC (“BHCMC”), a company in Professional Services, manages 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. In July 2022, in anticipation of the legalization of sports wagering in the state of Kansas, the Company entered into provider contracts for sports wagering platforms with DraftKings, Golden Nugget Online Gaming LLC, and Bally Corporation subject to regulatory approval.

 

Architectural and Engineering Services. Companies in Professional Services provide licensed architectural, including commercial and industrial building design, and engineering services.

 

 

COVID-19 Overview

 

The pandemic caused by COVID-19 has caused volatility in world-wide financial markets since 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic. Although many experts believe the pandemic has ended in 2022, the threat of outbreaks and new variations of the virus continue to affect operations and finances of businesses like ours. 

 

We have experienced lower customer headcount, which has been off-set by a larger net revenue per customer. We are experiencing, and expect to continue experiencing, lower demand for our professional services and increased costs and other challenges related to COVID-19 that adversely affects our business.

 

The COVID-19 pandemic has impacted our business operations and financial results and continues to impact us in fiscal 2023. We face numerous uncertainties in estimating the direct and indirect effects on our present and future business operations, financial condition, results of operations, and liquidity. Due to several rapidly changing variables related to the COVID-19 pandemic, we cannot reasonably estimate future economic trends and the timing of when stability will return. Refer to Item 1A. “Risk Factors” for a disclosure of risk factors related to COVID-19.

 

As the economy in general slowly recovers, and vaccinations rates in our operating territory improve and new infections decline, we have continued to see improvements in customer headcount. However, the unpredictable nature of the pandemic could again lead to closures, decreased traffic and demand, and increased COVID-19- related operating expenses, for the foreseeable future. While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to emerge from the pandemic.

 

Results Overview

 

The three months ended July 31, 2022 revenue decreased 14% to $15.3 million compared to $17.7 million in the three months ended July 31, 2021. In the three months ended July 31, 2022 the professional services revenue was $9.0 million compared to $9.3 million in the three months ended July 31, 2021, a decrease of 4%. In the three months ended July 31, 2022 the Aerospace Products revenue was $6.3 million compared to $8.4 million in the three months ended July 31, 2021, a decrease of 25%.

 

The three months ended July 31, 2022 net income decreased to $431 compared to a net income of $2.9 million in the three months ended July 31, 2021.  The three months ended July 31, 2022, operating income decreased to $1.6 million from an operating income of $4.0 million in the three months ended July 31, 2021.

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDING JULY 31, 2022 COMPARED TO THREE MONTHS ENDING JULY 31, 2021

 

(dollars in thousands)

  Three Months Ended July 31, 2022   Percent of Total Revenue   Three Months Ended July 31, 2021   Percent of Total Revenue   Percent Change 2021-2022

Revenue:

                                       

Professional Services

  $ 8,962   59 %   $ 9,326   53 %   -4 %

Aerospace Products

  6,342   41 %   8,419   47 %   -25 %

Total revenue

  15,304   100 %   17,745   100 %   -14 %
                                         

Costs and expenses:

                                       

Costs of Professional Services

  3,623   24 %   3,325   19 %   9 %

Cost of Aerospace Products

  4,827   31 %   6,012   34 %   -20 %

Marketing and advertising

  1,331   9 %   1,180   6 %   13 %

Employee benefits

  614   4 %   575   3 %   7 %

Depreciation and amortization

  771   5 %   702   4 %   10 %

General, administrative and other

  2,513   16 %   1,929   11 %   30 %

Total costs and expenses

  13,679   89 %   13,723   77 %   0 %

Operating income

  $ 1,625   11 %   $ 4,022   23 %   -60 %

 

Revenue:

 

Revenue decreased 14% to $15.3 million in the three months ended July 31, 2022, compared to $17.7 million in the three months ended July 31, 2021. See "Operations by Segment" below for a discussion of the primary reasons for the decrease 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) professional architectural, engineering and management support services. Revenue from Professional Services decreased 4% for the three months to $9.0 million at July 31, 2022 compared to $9.3 million at July 31, 2021.

 

 

Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft. Aerospace Products revenue decreased 25% for the three months to $6.3 million at July 31, 2022 compared to $8.4 million at July 31, 2021. The decrease in revenue is primarily due to a decrease in aircraft modification revenue of $2.0 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 remained constant in the three months ended July 31, 2022 at $13.7 million compared to $13.7 million in the three months ended July 31, 2021. Costs and expenses were 89% of total revenue in the three months ended July 31, 2022, as compared to 77% of total revenue in the three months ended July 31, 2021.

 

Costs of Professional Services increased 9% in the three months ended July 31, 2022 to $3.6 million compared to $3.3 million in the three months ended July 31, 2021. Costs were 24% of total revenue in the three months ended July 31, 2022, as compared to 19% of total revenue in the three months ended July 31, 2021.

 

Costs of Aerospace Products decreased 20% in the three months ended July 31, 2022 to $4.8 million compared to $6.0 million for the three months ended July 31, 2021. Costs were 31% of total revenue in the three months ended July 31, 2022, as compared to 34% of total revenue in the three months ended July 31, 2021. The decrease is directly related to the decrease in aircraft modification revenue.

 

Marketing and advertising expenses increased 13% in the three months ended July 31, 2022, to $1.3 million compared to $1.2 million in the three months ended July 31, 2021. Expenses were 9% of total revenue in the three months ended July 31, 2022, as compared to 6% of total revenue in the three months ended July 31, 2021. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

 

Employee benefits expenses as a percent of total revenue was 4% in the three months ended July 31, 2022, compared to 3% in the three months ended July 31, 2021. These expenses increased 7% to $614 in the three months ended July 31, 2022, from $575 in the three months ended July 31, 2021. These expenses include the employers' share of all federal, state and local taxes, paid time off for vacation, holidays and illness, employee health and life insurance programs and employer matching contributions to retirement plans.

 

Depreciation and amortization expenses as a percent of total revenue was 5% in the three months ended July 31, 2022, compared to 4% in the three months ended July 31, 2021. These expenses increased 10% to $771 in the three months ended July 31, 2022 from $702 in the three months ended July 31, 2021. These expenses include depreciation related to owned assets being depreciated over various useful lives and amortization of intangible items including the Kansas privilege fee related to the Boot Hill Casino being expensed over the initial term of the gaming contract with the State of Kansas. BHCMC, LLC depreciation and amortization expense for the three months ended July 31, 2022 was $626 compared to $578 in the three months ended July 31, 2021.

 

General, administrative and other expenses as a percent of total revenue was 16% in the three months ended July 31, 2022, compared to 11% in the three months ended July 31, 2021. These expenses increased 30% to $2.5 million in the three months ended July 31, 2022, from $1.9 million in the three months ended July 31, 2021. The increase is primarily due to the stock award and cash compensation awarded to a board member of $492.

 

Other expense:

 

Interest expense was $723 in the three months ended July 31, 2022, compared with interest expense of $614 in the three months ended July 31, 2021. Interest related to obligations of BHCMC, LLC was $642 in the three months ended July 31, 2022 compared to $548 in the three months ended July 31, 2021.

 

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 professional architectural, engineering 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 July 31, 2022 and July 31, 2021:

 

(dollars in thousands)

  Three Months Ended July 31, 2022   Percent of Total Revenue   Three Months Ended July 31, 2021   Percent of Total Revenue   Percent Change 2021-2022

Professional Services

                                       

Revenue

                                       

Boot Hill Casino

  $ 8,893   99 %   $ 9,255   99 %   -4 %

Management/Professional Services

  69   1 %   71   1 %   -3 %

Revenue

  8,962   100 %   9,326   100 %   -4 %
                                         

Costs of Professional Services

  3,623   41 %   3,325   36 %   9 %

Expenses

  3,328   37 %   3,007   32 %   11 %

Total costs and expenses

  6,951   78 %   6,332   68 %   10 %

Professional Services operating income

  $ 2,011   22 %   $ 2,994   32 %   -33 %

 

(dollars in thousands)

  Three Months Ended July 31, 2022   Percent of Total Revenue   Three Months Ended July 31, 2021   Percent of Total Revenue   Percent Change 2021-2022

Aerospace Products

                                       

Revenue

  $ 6,342   100 %   $ 8,419   100 %   -25 %
                                         

Costs of Aerospace Products

  4,827   76 %   6,012   72 %   -20 %

Expenses

  1,901   30 %   1,379   16 %   38 %

Total costs and expenses

  6,728   106 %   7,391   88 %   -9 %
                                         

Aerospace Products operating income (loss)

  $ (386 )   -6 %   $ 1,028   12 %   -138 %

 

 

Professional Services

 

 

Revenue from Professional Services decreased 4% for the three months ended July 31, 2022 to $9.0 million compared to $9.3 million for the three months ended July 31, 2021.

In the three months ended July 31, 2022 Boot Hill Casino received gross receipts for the State of Kansas of $12.2 million compared to $12.6 million for the three months ended July 31, 2021. Mandated fees, taxes and distributions reduced gross receipts by $3.8 million resulting in gaming revenue of $8.4 million for the three months ended July 31, 2022, compared to a reduction to gross receipts of $4.0 million resulting in gaming revenue of $8.6 million for the three months ended July 31, 2021.  Non-gaming revenue at Boot Hill Casino remained constant at  $1.1 million for the three months ended July 31, 2022, compared to $1.1 million for the three months ended July 31, 2021.

The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed architectural services.  Professional Services revenue excluding Boot Hill Casino decreased 3% to $69 for the three months ended July 31, 2022, compared to $71 for the three months ended July 31, 2021.

 

 

Costs of Professional Services increased 9% in the three months ended July 31, 2022 to $3.6 million compared to $3.3 million in the three months ended July 31, 2021. Costs were 41% of segment total revenue in the three months ended July 31, 2022, as compared to 36% of segment total revenue in the three months ended July 31, 2021.

  

 

Expenses increased 11% in the three months ended July 31, 2022 to $3.3 million compared to $3.0 million in the three months ended July 31, 2021. Expenses were 37% of segment total revenue in the three months ended July 31, 2022, as compared to 32% of segment total revenue in the three months ended July 31, 2021.

 

Aerospace Products

 

 

Revenue decreased 25% to $6.3 million in the three months ended July 31, 2022, compared to $8.4 million in the three months ended July 31, 2021. The decrease in revenue is primarily due to a decrease in aircraft modification business of $2.0 million. 

 

 

Costs of Aerospace Products decreased 20% in the three months ended July 31, 2022 to $4.8 million compared to $6.0 million for the three months ended July 31, 2021.  Costs were 76% of segment total revenue in the three months ended July 31, 2022, as compared to 72% of segment total revenue in the three months ended July 31, 2021. The decrease is directly related to the decrease in aircraft modification revenue.

 

 

Expenses increased 38% in the three months ended July 31, 2022 to $1.9 million compared to $1.4 million in the three months ended July 31, 2021.  Expenses were 30% of segment total revenue in the three months ended July 31, 2022, as compared to 16% of segment total revenue in the three months ended July 31, 2021. The increase is primarily due to the stock award and cash compensation awarded to a board member of $492.

 

Employees

 

Other than persons employed by our gaming subsidiaries there were 113 full time and 5 part time employees on July 31, 2022, compared to 118 full time and 4 part time employees on July 31, 2021. As of September 9, 2022, staffing is 109 full time and 4 part time employees. Our staffing at Boot Hill Casino & Resort on July 31, 2022 was 194 full time and 57 part time employees compared to 161 full time and 55 part time employees on July 31, 2021. At September 9, 2022 there are 192 full time and 61 part time employees. None of the employees are subject to any collective bargaining agreements.

 

 

Liquidity and Capital Resources

  

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 fiscal 2023 and beyond. Please see footnote 9 to the Company's financial statements regarding "Debt" for additional details concerning our liquidity and capital resources.

 

Analysis and Discussion of Cash Flow

 

During the three months ended July 31, 2022 our cash position increased by $2.3 million. Net income was $431 for the three months ended July 31, 2022. Cash flows provided by operating activities was $5.3 million for the three months ended July 31, 2022. Non-cash activities consisting of depreciation and amortization provided $1.5 million, while deferred compensation provided $132, gain on the sale of a building used $69, deferred income tax expense provided $280, and stock awarded to director provided $352. Contract assets increased our cash position by $326. Contract liability increased our cash position by $3.3 million. Inventories decreased our cash position by $449. Accounts receivable increased our cash position by $21. Gaming facility mandated payments decreased our cash position by $308. Prepaid expenses and other assets decreased our cash by $241. A decrease in accounts payable, a decrease in accrued liabilities and lease liabilities, and an increase in other current liabilities decreased our cash by $227. Income tax payable increased our cash position by $260.

  

Cash used in investing activities was $1.6 million for the three months ended July 31, 2022. We invested $411 towards STCs, and $1.0 million on equipment and furnishings and $534 on the construction of new hangers. We received $164 in proceeds from the sale of a building.

  

Cash used by financing activities was $1.4 million for the three months ended July 31, 2022. We made repayments on our debt of $1.3 million. We made repayments on lease right-to-use of $64. We purchased company stock of $2. The stock acquired was placed in treasury.

 

During the quarter ended July 31, 2022, the Company spent an additional $534 on the completion of its hangars in contruction in progress. At July 31, 2022, these new hangars have been reclassified from construction in progress to building and improvements on the balance sheet.

 

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, the use of estimates, long-lived assets, and Supplemental Type Certificates. 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 Recognition: See footnote 3 to the condensed consolidated financial statements.

 

Lease Right-to-Use: See footnote 13 to the condensed consolidated financial statements.

 

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) 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 revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements. Significant estimates include assumptions about percentage-of-completion, collection of accounts receivable, inventory obsolescence, the valuation of long-lived assets, including the STC’s, valuation for deferred tax assets and useful life of fixed and other long-term assets.

  

Long-lived Assets: 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 recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value.

  

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 us to perform modifications, installations, and assemblies on applicable customer-owned aircraft. Costs incurred to obtain STCs are capitalized and subsequently amortized over a seven year life. The legal life of an STC is indefinite.

    

Changing Prices and Inflation

  

We have experienced upward pressure from inflation in fiscal year 2023. From fiscal year 2022 to fiscal year 2023 most of the increases we experienced were in material costs. This additional cost may not be transferable to our customers resulting in lower income in the future. We anticipate fuel costs and possibly interest rates to rise in fiscal 2023 and 2024.

  

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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.

 

Item 4.  CONTROLS AND PROCEDURES

  

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 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 Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2022. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of July 31, 2022.

  

Internal Control Over Financial Reporting

 

Limitations on Controls

 

Our management, including the Chief Executive Officer and 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 three months ended July 31, 2022 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 July 31, 2022, 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.

 

 

 

Item 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

    The table below provides information with respect to common stock purchases by the Company during the first quarter of fiscal 2023.

 

Period

  Total Number of Shares Purchased (a)   Average Price Paid per Share   Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs   Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs

May 1, 2022 - May 31, 2022

  -   $ -   -   $ 2,655,000

June 1, 2022 - June 30, 2022

  -   $ -   -   $ 2,655,000

July 1, 2022 - July 31, 2022

  1,639   $ 0.84   1,639   $ 2,653,000

Total

  1,639   $ 0.84   1,639        

 

(a) Our Board of Directors authorized the repurchase of shares of Butler National common stock in the open market or otherwise, at an aggregate purchase price of $4,000,000. The timing and amount of any share repurchases will be determined by Butler National's management based on market conditions and other factors. The program is currently authorized through May 1, 2023.

 

Item 3.

 

DEFAULTS UPON SENIOR SECURITIES.

 

 

None.

 

 

 

Item 4.

 

MINE SAFETY DISCLOSURES.

 

 

Not applicable.

 

 

 

Item 5.

 

OTHER INFORMATION.

 

 

None.

 

 

 

Item 6.

 

EXHIBITS.

 

 

 

 

3.1

Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.

     
  3.2 Bylaws, as amended, are incorporated by reference to Exhibit 3.2 of our Form 10-Q filed on March 14, 2013.

 

 

 

 

4.1

Rights Agreement, dated August 2, 2011, by and between Butler National Corporation and UMB Bank, N.A., as Rights Agent, incorporated by reference to Exhibit 4.1 of our 10-Q filed on December 13, 2016.

     
  4.2 Amendment One to Rights Agreement between Butler National Corporation and UMB Bank, N.A. dated July 22, 2021, incorporated by reference to Exhibit 4.2 of our Form 8-K filed on July 26, 2021.
     
  10.1 Employment agreement between Butler National Corporation and Joe A. Peters dated February 4, 2020, incorporated by reference to Exhibit 10.1 of our Form 8-K filed on June 22, 2022.
     

 

31.1

Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).

 

 

 

 

31.2

Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).

 

 

 

 

32.1

Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.2

Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

101

The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 2022, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of July 31, 2022 and April 30, 2022, (ii) Condensed Consolidated Statements of Operations for the three months ended July 31, 2022 and 2021, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended July 31, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2022 and 2021, and (v) the Notes to Consolidated Financial Statements, with detail tagging.
     
  104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2022, formatted in Inline XBRL (included as Exhibit 101)

    

 

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)

 

 

September 14, 2022

/s/ Clark D. Stewart

Date

Clark D. Stewart

 

(President and Chief Executive Officer)

 

 

September 14, 2022

/s/ Tad M. McMahon

Date

Tad M. McMahon

 

(Chief Financial Officer)  

   

 

Exhibit Index

  

Exhibit

Number

Description of Exhibit

3.1

Articles of Incorporation, as amended and restated are incorporated by reference to Exhibit 3.1 of our Form DEF 14A filed on December 26, 2001.

 

 

3.2

Bylaws, as amended, are incorporated by reference to Exhibit 3.2 of our Form 10-Q filed on March 14, 2013.

 

 

4.1

Rights Agreement, dated August 2, 2011, by and between Butler National Corporation and UMB Bank, N.A., as Rights Agent, incorporated by reference to Exhibit 4.1 of our 10-Q filed on December 13, 2016.

   
4.2 Amendment One to Rights Agreement between Butler National Corporation and UMB Bank, N.A. dated July 22, 2021, incorporated by reference to Exhibit 4.2 of our Form 8-K filed on July 26, 2021.
   
10.1 Employment agreement between Butler National Corporation and Joe A. Peters dated February 4, 2020, incorporated by reference to Exhibit 10.1 of our Form 8-K filed on June 22, 2022.

 

 

31.1

Certificate of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).

 

 

31.2

Certificate of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).

 

 

32.1

Certifications of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

32.2

Certifications of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101

The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 2022, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of July 31, 2022 and April 30, 2022, (ii) Condensed Consolidated Statements of Operations for the three months ended July 31, 2022 and 2021, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended July 31, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2022 and 2021, and (v) the Notes to Consolidated Financial Statements, with detail tagging.
   
104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2022, formatted in Inline XBRL (included as Exhibit 101)

 

24
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