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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 January 31, 2024

 

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.)

 

One Aero Plaza, New Century, Kansas 66031

(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 Issuer's Common Stock, $0.01 par value, as of March 15, 2024 was 68,850,856 shares.

   

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I. FINANCIAL INFORMATION

 

 

 

PAGE

NO. 

Item 1

Financial Statements (Unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets – January 31, 2024 (unaudited) and April 30, 2023

3

 

 

 

  Condensed Consolidated Statements of Operations - Three Months Ended January 31, 2024 and 2023 4
     
  Condensed Consolidated Statements of Operations - Nine Months Ended January 31, 2024 and 2023 5
     
 

Condensed Consolidated Statements of Stockholders' Equity - Nine Months Ended January 31, 2024 and 2023

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 31, 2024 and 2023

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

Item 2

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

17

 

 

 

Item 3

Quantitative and Qualitative Disclosures about Market Risk

27

 

 

 

Item 4

Controls and Procedures

27

 

PART II. OTHER INFORMATION

 

Item 1

Legal Proceedings

27

 

 

 

Item 1A

Risk Factors

27

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

28

 

 

 

Item 3

Defaults Upon Senior Securities

28

 

 

 

Item 4

Mine Safety Disclosures

28

 

 

 

Item 5

Other Information

28

 

 

 

Item 6

Exhibits

28

 

 

 

Signatures

29

 

 

Exhibit Index

30

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of January 31, 2024 and April 30, 2023

(in thousands except per share data) 

 

  

January 31, 2024

  

April 30, 2023

 
  

(unaudited)

     

ASSETS

        

CURRENT ASSETS:

        

Cash

 $17,885  $21,997 

Accounts receivable, net

  6,140   3,793 

Inventory, net

  10,537   8,947 

Contract asset

  2,134   1,893 

Prepaid expenses and other current assets

  2,090   3,532 

Total current assets

  38,786   40,162 
         

LEASE RIGHT-TO-USE ASSET, net

  2,939   3,081 
         

PROPERTY, PLANT AND EQUIPMENT, net

  59,385   59,067 
         

SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of $11,509 at January 31, 2024 and $10,603 at April 30, 2023)

  9,383   8,722 
         

OTHER ASSETS:

        

Other assets (net of accumulated amortization of $12,831 at January 31, 2024 and $12,290 at April 30, 2023)

  1,313   1,401 

Deferred tax asset, net

  1,473   1,473 

Total other assets

  2,786   2,874 

Total assets

 $113,279  $113,906 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

        

CURRENT LIABILITIES:

        

Accounts payable

 $8,496  $5,320 

Current maturities of long-term debt

  4,900   4,987 

Current maturities of lease liability

  63   145 

Contract liability

  5,673   6,031 

Gaming facility mandated payment

  1,435   1,730 

Compensation and compensated absences

  1,796   6,722 

Income taxes payable

  2,205   228 

Other current liabilities

  658   214 

Total current liabilities

  25,226   25,377 
         

LONG-TERM LIABILITIES

        

Long-term debt, net of current maturities

  34,785   38,418 

Lease liability, net of current maturities

  3,356   3,330 

Total long-term liabilities

  38,141   41,748 

Total liabilities

  63,367   67,125 
         

COMMITMENTS AND CONTINGENCIES

          
         

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 79,721,211 shares, and outstanding 68,850,856 shares at January 31, 2024 and issued 80,871,211 shares, and outstanding 76,891,689 shares at April 30, 2023

  797   808 

Capital contributed in excess of par

  13,791   13,647 

Treasury stock at cost, 10,870,355 shares at January 31, 2024 and 3,979,522 shares at April 30, 2023

  (7,192)  (2,138)

Retained earnings

  42,516   34,464 

Total stockholders' equity

  49,912   46,781 

Total liabilities and stockholders' equity

 $113,279  $113,906 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED January 31, 2024 AND 2023

(in thousands, except per share data)

(unaudited)

 

  

THREE MONTHS ENDED

 
  

January 31,

 
  

2024

  

2023

 

REVENUE:

        

Professional services

 $9,941  $9,574 

Aerospace products

  9,019   10,890 

Total revenues

  18,960   20,464 
         

COSTS AND EXPENSES:

        

Cost of professional Services

  4,023   3,789 

Cost of aerospace products

  5,918   7,189 

Marketing and advertising

  1,216   1,324 

General, administrative and other

  4,008   4,777 

Total costs and expenses

  15,165   17,079 
         

OPERATING INCOME

  3,795   3,385 
         

OTHER INCOME (EXPENSE):

        

Interest expense

  (615)  (677)

Interest income

  83   - 

Total other income (expense)

  (532)  (677)
         

INCOME BEFORE INCOME TAXES

  3,263   2,708 
         

PROVISION FOR INCOME TAXES:

        

Provision for income taxes

  881   731 
         

NET INCOME

 $2,382  $1,977 
         

BASIC EARNINGS PER COMMON SHARE

 $0.03  $0.03 
         

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

  69,634,335   76,663,867 
         

DILUTED EARNINGS PER COMMON SHARE

 $0.03  $0.03 
         

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

  69,634,335   76,663,867 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE Nine MONTHS ENDED January 31, 2024 AND 2023

(in thousands, except per share data)

(unaudited)

 

   

NINE MONTHS ENDED

 
   

January 31,

 
   

2024

   

2023

 

REVENUE:

               

Professional Services

  $ 28,751     $ 28,280  

Aerospace Products

    26,995       26,813  

Total revenue

    55,746       55,093  
                 

COSTS AND EXPENSES:

               

Cost of Professional Services

    11,976       11,164  

Cost of Aerospace Products

    20,095       18,598  

Marketing and advertising

    3,854       4,023  

General, administrative and other

    11,290       12,296  

Total costs and expenses

    47,215       46,081  
                 

OPERATING INCOME

    8,531       9,012  
                 

OTHER INCOME (EXPENSE):

               

Interest expense

    (1,869 )     (2,107 )

Gain on sale of airplanes

    4,169       -  

Gain on sale of building

    -       69  

Interest income

    199       -  

Total other income (expense)

    2,499       (2,038 )
                 

INCOME BEFORE INCOME TAXES

    11,030       6,974  
                 

PROVISION FOR INCOME TAXES

               

Provision for income taxes

    2,978       1,603  

Deferred income tax

    -       280  
                 

NET INCOME

  $ 8,052     $ 5,091  
                 

BASIC EARNINGS PER COMMON SHARE

  $ 0.11     $ 0.07  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

    70,984,870       76,633,871  
                 

DILUTED EARNINGS PER COMMON SHARE

  $ 0.11     $ 0.07  
                 

WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION

    70,984,870       76,633,871  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

 BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE nine MONTHS ENDED January 31, 2024 AND 2023

(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

 

Balance, April 30, 2022

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

Deferred compensation, restricted stock

    (75,000 )     -       132       -       -       -       132  
                                                         

Stock repurchase

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

Stock awarded to Director

    400,000       4       348       -       -       -       352  
                                                         

Net Income

    -       -       -       -       -       431       431  
                                                         

Balance, July 31, 2022

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

Deferred compensation, restricted stock

    -       -       146       -       -       -       146  
                                                         

Stock repurchase

    -       -       -       150       -       -       -  
                                                         

Net Income

    -       -       -       -       -       2,683       2,683  
                                                         

Balance, October 31, 2022

    80,673,572     $ 807     $ 12,786       3,892,215     $ (2,079 )   $ 33,062     $ 44,576  
                                                         

Deferred compensation, restricted stock

    (800,000 )     (8 )     (41 )     -       -       -       (49 )
                                                         

Stock repurchase

    -       -       -       85,307       (58 )     -       (58 )
                                                         

Net Income

    -       -       -       -       -       1,977       1,977  
                                                         

Balance, January 31, 2023

    79,873,572     $ 799     $ 12,745       3,977,522     $ (2,137 )   $ 35,039     $ 46,446  

 

   

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

 

Balance, April 30, 2023

    80,871,211     $ 808     $ 13,647       3,979,522     $ (2,138 )   $ 34,464     $ 46,781  
                                                         

Stock repurchase

    -       -       -       6,863,789       (5,035 )     -       (5,035 )
                                                         

Deferred compensation, restricted stock

    (1,300,000 )     (13 )     (236 )     -       -       -       (249 )
                                                         

Net Income

    -       -       -       -       -       719       719  
                                                         

Balance, July 31, 2023

    79,571,211     $ 795     $ 13,411       10,843,311     $ (7,173 )   $ 35,183     $ 42,216  
                                                         

Deferred compensation, restricted stock

    -       -       104       -       -       -       104  
                                                         

Stock repurchase

    -       -       -       2,300       (1 )     -       (1 )
                                                         

Stock award to Director

    300,000       3       219       -       -       -       222  
                                                         

Net Income

    -       -       -       -       -       4,951       4,951  
                                                         

Balance, October 31, 2023

    79,871,211     $ 798     $ 13,734       10,845,611     $ (7,174 )   $ 40,134     $ 47,492  
                                                         

Deferred compensation, restricted stock

    (150,000 )     (1 )     57       -       -       -       56  
                                                         

Stock repurchase

    -       -       -       24,744       (18 )     -       (18 )
                                                         

Net Income

    -       -       -       -       -       2,382       2,382  
                                                         

Balance, January 31, 2024

    79,721,211     $ 797     $ 13,791       10,870,355     $ (7,192 )   $ 42,516     $ 49,912  

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 

 

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE nine MONTHS ENDED January 31, 2024 AND 2023

(in thousands)

(unaudited) 

 

   

NINE MONTHS ENDED

 
   

January 31,

 
   

2024

   

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 8,052     $ 5,091  

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

               

Depreciation and amortization

    4,558       4,323  

Stock awarded to director

    222       352  

Deferred income tax expense

    -       280  

Gain on sale of airplanes

    (4,169 )     -  

Gain on sale of building

    -       (69 )

Deferred compensation, restricted stock

    (89 )     229  
                 

Changes in operating assets and liabilities:

               

Accounts receivable

    (2,347 )     (1,118 )

Inventory

    (2,062 )     (503 )

Contract assets

    (241 )     (1,252 )

Prepaid expenses and other assets

    1,443       (2,545 )

Accounts payable

    3,176       3,899  

Contract liability

    (358 )     4,043  

Lease liability

    140       141  

Accrued liabilities

    (4,926 )     1,095  

Gaming facility mandated payment

    (295 )     (257 )

Income tax payable

    1,977       (933 )

Other liabilities

    444       262  

Net cash provided by operating activities

    5,525       13,038  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Capital expenditures

    (5,571 )     (4,298 )

Proceeds from sale of airplanes

    4,904       -  

Proceeds from sale of building

    -       164  

Net cash used in investing activities

    (667 )     (4,134 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Repayments of long-term debt

    (3,720 )     (3,941 )

Repayments on right-to-use lease liability

    (196 )     (194 )

Repurchase of common stock

    (5,054 )     (60 )

Net cash used in financing activities

    (8,970 )     (4,195 )
                 

NET INCREASE (DECREASE) IN CASH

    (4,112 )     4,709  
                 

CASH, beginning of period

    21,997       12,487  
                 

CASH, end of period

  $ 17,885     $ 17,196  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

               

Interest paid

  $ 1,873     $ 2,114  

Income taxes paid

  $ 1,000     $ 2,536  
                 

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, 2023. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and nine months ended January 31, 2024 are not indicative of the results of operations that may be expected for the fiscal year ending April 30, 2024.

 

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)

Identify 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)

Determine 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)

Allocate 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.

 

8

 
 

5)

Recognize 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 unless modified with a change order.  Significant payment terms are generally included in these contracts, requiring a 30% to 50% down payment on arrival of the aircraft and include milestone payments throughout the project.  Typically, contracts are less than one year in duration.  Revenue from fixed-priced contracts is recognized on the percentage-of-completion method, measured by the direct labor incurred compared to total estimated direct labor.  Direct labor best represents the progress on a contract.

 

 

Revenue from Aircraft Avionics and Special Mission Electronics are recognized when shipped. Payment for these Avionics products is due within 30 days of the invoice date after shipment.

 

 

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. Effective September 1, 2022, sports wagering became legal in the State of Kansas. The company is currently managing sports wagering through DraftKings sports wagering platform. The Company shares a percentage of the gross sports wagering win with its platform partner. Revenue from Gaming Management and other Corporate/Professional Services is recognized as the service is rendered. Food, beverage, and other revenue is recorded when the service is received and paid.

 

9

 

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 January 31, 2024

  

Three Months Ended January 31, 2023

 
  

Professional Services

  

Aerospace Products

  

Total

  

Professional Services

  

Aerospace Products

  

Total

 

Geographical Markets

                        

North America

 $9,941  $5,163  $15,104  $9,574  $8,258  $17,832 

Europe

  -   2,255   2,255   -   90   90 

Asia

  -   876   876      92   92 

Australia and Other

  -   725   725   -   2,450   2,450 
  $9,941  $9,019  $18,960  $9,574  $10,890  $20,464 
                         

Major Product Lines

                        

Casino Gaming Revenue

 $7,319  $-  $7,319  $7,210  $-  $7,210 

Sportsbook Revenue

  1,457   -   1,457   1,160   -   1,160 

Casino Non-Gaming Revenue

  1,153   -   1,153   1,102   -   1,102 

Professional Services

  12   -   12   102   -   102 

Aircraft Modification

  -   5,402   5,402   -   7,188   7,188 

Aircraft Avionics

  -   810   810   -   679   679 

Special Mission Electronics

  -   2,807   2,807   -   3,023   3,023 
  $9,941  $9,019  $18,960  $9,574  $10,890  $20,464 
                         

Contract Types / Revenue Recognition Timing

                        

Percentage of completion contracts

 $-  $4,756  $4,756  $-  $6,875  $6,875 

Goods or services transferred at a point of sale

  9,941   4,263   14,204   9,574   4,015   13,589 
  $9,941  $9,019  $18,960  $9,574  $10,890  $20,464 

   

  

Nine Months Ended January 31, 2024

  

Nine Months Ended January 31, 2023

 
  

Professional Services

  

Aerospace Products

  

Total

  

Professional Services

  

Aerospace Products

  

Total

 

Geographical Markets

                        

North America

 $28,751  $19,347  $48,098  $28,280  $22,553  $50,833 

Europe

  -   3,873   3,873   -   396   396 

Asia

  -   1,235   1,235   -   503   503 

Australia and Other

  -   2,540   2,540   -   3,361   3,361 
  $28,751  $26,995  $55,746  $28,280  $26,813  $55,093 
                         

Major Product Lines

                        

Casino Gaming Revenue

 $21,816  $-  $21,816  $22,745  $-  $22,745 

Sportsbook Revenue

  3,471   -   3,471   1,985   -   1,985 

Casino Non-Gaming Revenue

  3,400   -   3,400   3,284   -   3,284 

Professional Services

  64   -   64   266   -   266 

Aircraft Modification

  -   16,967   16,967   -   16,902   16,902 

Aircraft Avionics

  -   2,332   2,332   -   1,917   1,917 

Special Mission Electronics

  -   7,696   7,696   -   7,994   7,994 
  $28,751  $26,995  $55,746  $28,280  $26,813  $55,093 
                         

Contract Types / Revenue Recognition Timing

                        

Percentage of completion contracts

 $-  $15,369  $15,369  $-  $15,750  $15,750 

Goods or services transferred at a point of sale

  28,751   11,626   40,377   28,280   11,063   39,343 
  $28,751  $26,995  $55,746  $28,280  $26,813  $55,093 

 

10

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

 

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

 

  January 31,  April 30, 
  

2024

  

2023

 

Accounts Receivable, net

 $6,140  $3,793 

Contract Asset

  2,134   1,893 

Contract Liability

  5,673   6,031 

 

Accounts receivable, net consist of $6,140 and $3,793 from customers as of  January 31, 2024 and April 30, 2023, respectively. At January 31, 2024 and April 30, 2023, the allowance for doubtful accounts was $205 and $205, respectively.

 

Contract assets are net of progress payments and performance based payments from our customers totaling $2,134 and $1,893 as of January 31, 2024 and April 30, 2023. Contract assets increased $241 during the nine months ended January 31, 2024, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the nine months ended January 31, 2024. There were no significant impairment losses related to our contract assets during the nine months ended January 31, 2024. We expect to bill our customers for the majority of the January 31, 2024 contract assets during fiscal year end 2025.

 

Contract liabilities decreased $358 during the nine months ended January 31, 2024, primarily due to the revenue recognized on these performance obligations being less than the payments received.

 

 

6. Inventory

 

Inventories are priced at the lower of cost, determined on a first-in, first-out basis, 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. 

 

Inventory is comprised of the following, net of the estimate for obsolete inventory of $275 at January 31, 2024 and $275 at April 30, 2023.

 

  

January 31, 2024

  

April 30, 2023

 

Parts and raw material

 $6,743  $5,704 

Work in process

  

3,734

   3,194 

Finished goods

  60   49 

Total Inventory, net of allowance

 $10,537  $8,947 

 

 

7. Property, Plant and Equipment

 

Property, plant and equipment is comprised of the following:

 

  January 31, 2024  

April 30, 2023

 

Land

  $4,751   $4,751 

Building and improvements

  49,448   47,867 

Aircraft

  4,046   8,515 

Machinery and equipment

  6,949   5,547 

Office furniture and fixtures

  14,448   13,881 

Leasehold improvements

  4,032   4,032 
   83,674   84,593 

Accumulated depreciation

  (24,289)  (25,526

)

Total property, plant and equipment

 $59,385  $59,067 

 

Property and Related Depreciation: Machinery and equipment are recorded at cost and depreciated over their estimated useful lives. Depreciation is provided on a straight-line basis. Depreciation expense was $3,112 for the nine months ended January 31, 2024 and $2,882 for thnine months ended January 31, 2023. Depreciation expense is included in cost of sales and general and administrative costs.

 

Description

 

Estimated useful life

Building and improvements

 

39 years or the shorter of the estimated useful life of the asset or the underlying lease term

Aircraft

 

5 years

Machinery and equipment

 

5 years

Office furniture and fixtures

 

5 years

Leasehold improvements

 

Shorter of the estimated useful life of the asset or the underlying lease term

 

11

 

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

 

 

8. 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. 
 
 

9. Research and Development:

 

We invested in research and development activities. The amount invested in the nine months ended January 31, 2024 and 2023 was $2,184 and $2,335, respectively.

 

 

10. Debt:

 

At  January 31, 2024 , the Company has a line of credit with Kansas State Bank in the form of a promissory note with an interest rate 8.4% totaling $2,000. The unused line at January 31, 2024  was $2,000. There were no advances made on the line of credit during the quarter ended  January 31, 2024. The line of credit is due