BUKS 10-K & 10-Q changes, risk factors and insider trading

The following statements on risk factors contain “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements can often be identified by the use of forward-looking terminology, such as “could,” “should,” “will,” “intended,” “continue,” “believe,” “may,” “expect,” “anticipate,” “goal,” “forecast,” “plan,” “guidance” or “estimate,” or the negative of these words, variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance or result and involve risks, uncertainties, and assumptions. Stockholders should be aware of certain risks, including those described below and elsewhere in this Form 10-K, which could adversely affect the value of their holdings and could cause our actual results to differ materially from those projected in any forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time, except as expressly required by federal securities laws.

During the fiscal year endingended April 30, 2026, we derived 39.1% of our revenue from five customers, and we had two “major customers” (10 percent or more of consolidated revenue) that provided 29.9% of total revenue. During the fiscal year ended April 30, 2025, we derived 25.4% of our revenue from five customers, and we had one "major customer" (10 percent or more of consolidated revenue) that provided 14.8% of total revenue. During the fiscal year ending April 30, 2024, we derived 28.5% of our revenue from five customers, and we had one major customer that provided 15.2% of total revenue. At April 30, 20252026 and 2024,2025, we had one customer that accounted for 32.4%22.7% and 42.5%,32.4%, respectively, of our total accounts receivable. Our business operations in Tempe, Arizona sell almost entirely to one customer. A loss of business from, or the bankruptcy or insolvency of, one or more of any of these major customers may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

We are a supplier, either directly or as a subcontractor, to the U.S. Government, its agencies and to friendly foreign countries. We rely heavily on government spending for a significant portion of our business. The United States financing or assistance in facilitating foreign objectives around the world impacts our business at our Avcon Industries, Inc. and Butler National - Tempe subsidiaries. If the flow of United States government support globallyfor wouldinternational programs were to decrease, it would have a detrimental impact.impact on our business. We depend upon U.S. military spending and the demand for military equipment upgrades. If the U.S. Government or friendly foreign countries ceased doing business with us or significantly decreased the amount of business they do with us, it may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Our Aerospace Products business is subject to the general health of the aviation industry, which may be cyclical. During periods of economic expansion, when capital spending normally increases, we generally benefit from greater demand for our aviation products and services. During periods of economic contraction, when capital spending normally decreases, we generally are adversely affected by declining demand for our aerospace products and services. Similarly, the availability of aircraft from manufacturersmanufacturers, or availability of used aircraft for sale, has an impact on the orders received from customers requiring new aircraft.or used aircraft, as applicable. Such conditions may also inhibit our ability to obtain products and materials from our suppliers or may negatively impact the affordability of such products and materials. Aviation industry conditions are impacted by numerous factors over which we have no control, including political, regulatory, economic, technical staffing and military conditions, environmental concerns, weather conditions and fuel pricing. Any prolonged cyclical downturn may adversely affect customer demand in our Aerospace Products business and may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

We rely on highly skilled personnelpersonnel, including our executive officers and, if we are unable to retain or motivate key personnel or hire qualified personnel, our results of operations could be impacted.

Recruitment and retention of employees are important to the financial condition and business objectives of the Company. Our cost-effective and quality products and services depend on well-trained employees. The continued success of our gaming business depends upon our recruitment and retention of experienced personnel in the technologygaming industry. The loss of such employees could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

We also depend on a limited number of key personnel to manage and operate our businesses, including our executive officers. Our continued growth and success are dependent on the leadership of these key personnel. The Company does not have an employment contractscontract with ourMr. executiveSefchick. officers.Additionally, Severalseveral of the tasks eachthat Mr. Sefchick performs, and Mr. Reedy formerly performed, lack redundancy. For example, Mr. Reedy’s extensive experience with Kansas gaming regulations, FAA regulations and approval of our executiveSTC officersprojects performwill lackbe redundancy. The departure, death or disability of any one of our executive officers or other extended or permanent loss of any of their services, or any negative industry perception with respectdifficult to any of them or their loss, could have a material adverse effect on our business.replace. Our success depends heavily upon the continued contributions of theseour key persons, whose knowledge, leadership and technical expertise would beare difficult to replace, and on our ability to attract and retain experienced professional staff. The unexpected loss of services of any of our key personnel, or our failureFailure to manage executive succession successfully, including identifying and hiring of our next Chief Executive Officer, may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

Boot Hill Casino is located in Dodge City, Kansas. Consequently, a significant portion of our gaming business is dependent upon attracting local residents, for both patronage and employees,employment, as well as out of town visitors and is subject to the general economic health of the region around Dodge City. The economy of Dodge City is significantly influenced by the agricultural sector of the national and local economy, which includes both agricultural farming and meat processing, and the oil and gas industry. As a result, changes in the economic climate, tariffs impacting foreign demand for crops, weather patterns, the unemployment rate, the availability of rural medical care, and market fluctuations for agricultural and petroleum products could cause our customers to see a decrease in discretionary income which may negatively impact our revenues from gaming. ThisWe believe the 5% decrease in traditional casino gaming in fiscal 2026 as compared to fiscal 2025 was in part due to broader economic pressures affecting the regional agricultural economy in western Kansas. Continued economic pressure in the local economy may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

Due to fixed contract pricing, increasing contract costs exposesexpose us to reduced profitability.

Changing policies and priorities in the U.S. government and other nations’ administrations, including recently announced tariffs, may continue to adversely impact our operations. U.S. trade policy has recently been significantly changed. OnSince April 2,February 2025, the U.S. government implementedhas aissued baselineseveral tariffexecutive oforders 10%under various statutes, imposing tariffs on product imports from almost allmost countries andwith individualizedwhom higherthe U.S. engages in trade. As such, during 2025, the United States reached bilateral trade agreements with multiple countries. Moreover, the United States applies a diverse range of reciprocal tariffs onto certainimports otheroriginating countries.from Followingcountries that have not concluded bilateral trade agreements with the announcementUnited of the tariffs, limited exceptions and temporary pauses have been enacted, such as the 90-day pause on the country-specific tariffs for all countries except China, while maintaining the 10% baseline tariff. Certain foreign governments have either taken or are threatening to take retaliatory actions in response. These significant changes may continue to adversely affect our financial condition, results of operations, liquidity and cash flows.States.

These changes in U.S. trade policy and tariffstariffs, and potential future changes, have caused uncertainty and volatility in financial markets. Tariffs (imposed or threatened), sanctions, embargoes, export and import controls, and other trade restrictions, along with any retaliatory measures, could increase our costs, decrease demand for our products and services, disrupt our supply chain, adversely affect our operations, or adversely affect our ability to meet contractual and financial obligations. Tariffs or other trade restrictions may also lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions, declining consumer confidence, inflation or an economic slowdown. Tariffs or other trade restrictions could create adverse political relations with our global customers which could result in the termination of certain contracts or a decrease in international customers. These tariffs or other trade restrictions, including other countries’ retaliatory measures, could continue to cause a reduction in our profit margins. Tariffs or other trade restrictions may cause equipment prices to significantly increase, which could adversely affect our growth efforts. Tariffs or other trade restrictions imposed on the importation of parts, raw materials, and products may impact the sale and delivery of products and may increase our costs, which may adversely affect our financial condition, results of operations, liquidity and cash flows.

Our aircraft modification business is extremely complex. Customer projects are often scheduled based upon the availability of certain components and specific airplane models. These components are frequently acquired by the customer or by our Avcon Industries, Inc. subsidiary. Our customers may desire modification to specific airplane models that may become scarce due to competing demand, and limited new or used aircraft availability, aircraft manufactured parts, manufacturing or labor challenges, among other factors. Operational issues, including delays or defects in parts or supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, could result in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers. We and our suppliers have been experiencing supply chain disruptions as a result of global supply chain constraints and labor instability. Supply chain issues could impact overall productivity and may adversely affect our financial condition, results of operations, liquidity and cash flows.

We increasingly rely on information technology and other systems, including our own systems and those of service providers and third parties, to manage our business and employee data and maintain and transmit customers’ personal and financial information, payment settlements, and payment funds transmissions. In addition, third-party service providers and other business partners process and maintain our proprietary business information and data. Our collection of such data is subject to extensive regulation by private groups, such as the payment card industry, as well as governmental authorities, including gaming regulatory authorities. Privacy regulations continue to evolve, and we have taken, and will continue to take, steps to comply by implementing processes designed to safeguard the confidential and personal information of our business, employees and customers. Our reliance on information technology and other systems may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

Our information and processes and those of our service providers and other third parties, including our contractors and contractors of our service providers and vendors, are subject to the ever-changing threat of compromised security, in the form of a risk of potential breach, system failure, computer virus, or unauthorized or fraudulent use by customers, Company employees, Company contractors and other third parties including employees and contractors of third-party vendors. The steps we take to deter and mitigate the risks of breaches may not beprotect successful,us against increasingly sophisticated and anyaggressive resultingthreats, compromiseand disruptions in our computer systems can occur notwithstanding the data security measures and disaster recovery plans that we have in place. The cost and operational consequences of implementing further data security measures could be significant and there is no certainty that such measures, if purchased, could thwart all threats. Compromise or loss of data or systems could adversely impact operations or regulatory compliance and could result in remedial expenses, fines, litigation, disclosures, and loss of reputation, potentially impacting our financial results. CompromisedIf securityhackers gain access to sensitive, confidential or otherwise protected information, they may attempt to force us to pay a ransom before stopping their attack. Any hacker penetration could cause loss of data and interruptions or systemsdelays in our business, cause us to incur remediation costs or subject us to claims and damage our reputation. Additionally, while we maintain cyber risk insurance to assist in the cost of recovery from a significant cyber event, such coverage may alsonot havebe a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.sufficient.

Further, as cyber-attacks continue to evolve and become more sophisticated, we may incur significant costs in our attempts to modify or enhance our protective measures or investigate or remediate any actual or perceived vulnerability. Increased instances of cyber-attacks may also have a negative reputational impact that may result in a loss of customer confidence. Any failure to prevent or mitigate security breaches or cyber risk could result in interruptions to the services we provide and cause our customers to lose confidence in our products and services. The unauthorized access, acquisition or disclosure of consumer information could compel us to comply with disparate breach notification laws and otherwise subject us to proceedings by governmental entities, including gaming regulatory authorities, or others and substantial legal and financial liability. This could harm our business and reputation, disrupt our relationships with partners and diminish our competitive position. Cyber-attacks and costs expended on deterrence measures may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

Any system or service disruptions, including those caused by projects to improve our information technology systems, third party software updates or inadvertently through routine maintenance activities, if not anticipated and appropriately mitigated, could disrupt our business, and impair our ability to effectively provide products and related services to our customers and could have a material adverse effect on our business. We could also be subject to systems failures, including network, software, or hardware failures, whether caused by us, third-party service providers, intruders or hackers, computer viruses, natural disasters, power shortages, or terrorist attacks. The failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. Moreover, expenditures incurred in implementing cybersecurity and other procedures and controls, including rising insurance costs, could impact our financial condition. Any cybersecurity incident or breach of our data or information systems may adversely affect our financial condition, results of operations, liquidity and cash flows.

We have an agreement with DraftKings to facilitate online and mobile sports wagering. In September of 2022, we commenced mobile sports wagering with DraftKings. Our Sports Wagering Management Contract with DraftKings is scheduled to expire in September of 2027. If we cannot renew,renew such agreement, we may have to enter into a similar contract with a different service provider. There is no guarantee that we will be able to negotiate favorable terms in any renewal or new contract. Our management contract with the Kansas Lottery also expires in 2027.2027, Uncertaintyand inwe theexpect futureto ofenter Kansas’into sportsnegotiations bettingto market may interrupt our gaming business operations. In April 2025, the Kansas Legislature included a ban in the state budget bill prohibiting the Kansas Lottery from spending state money on negotiating any renewals, extensionsrenew or newextend contractssuch with sports wagering managers until July 2026.agreement. Termination of our Sports Wagering Management Contract with the State of Kansas or a failure to extend our relationship with DraftKings may adversely affect our financial condition, results of operations, liquidity and cash flows.

TheIn 2022, Kansas legislaturelegalized placedintra-state asports provisowagering and established extensive state licensing and regulatory requirements governing any such intra-state sports wagering. We offer the sports wagering on abehalf budget bill duringof the 2025Kansas legislativeLottery sessionpursuant thatto restrictsstate thestatute renewaland or extension ofa sports wagering management contractscontract forthat was effective September of 2022 and has a five-year term. We expect to enter into negotiations with the nextKansas two yearsLottery to approvalrenew byor theextend legislature.such Weagreement, havebut there are no assurances withthat respectwe towill thebe successful in obtaining a renewal or extension of our sports wagering management contract.extension. We launched online and mobile sports wagering applications in the fall of 2022. Our contracted sports wagering platform competes in an evolving and highly competitive market against a number of competitors. The increasingly competitive market may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

Additionally, we have entered into an agreement with sports wagering vendor DraftKings, and may enter into additional agreements with strategic partners and other third-party vendors to provide market access. There can be no assurance that the Kansas audience will continue to engage in sports wagering and online gaming products to the extent that we expect. The success of our sports wagering activity is dependent on a number of additional factors, many of which are beyond our control, including the ultimate revenue share rates and license fees charged by the state of Kansas; our ability to maintain market share in Kansas; the access to online or mobile sports wagering in other states; the timeliness and the technological and popular viability of our products; new technology that may be used to facilitate sports wagering that may better appeal to our customers; our ability to compete with new entrants in the marketmarket, which now includes sports prediction markets; changes in consumer demographics and public tastes and preferences; cancellations and delays in sporting seasons and sporting matches as a result of events such as players strikes or lockouts; and the availability and popularity of other forms of entertainment. There can be no assurance that we will be able to compete effectively or that our offerings will be successful and generate sufficient returns on our investment. Any of the factors that impede sports wagering may adversely affect our financial condition, results of operations, liquidity and cash flows.

Gaming management operations areare, and will becontinue to be, subject to extensive gaming laws and regulations, many of which were recently adopted andadopted, have not been the subject of definitive interpretationsinterpretations, and are stillremain subject to proposed amendments andor new regulation. The political and regulatory environment in which the Company is and will be operating with respect to gaming activities is dynamic and rapidly changing. For example, in April 2025, the Kansas Legislature included a ban in the state budget bill prohibiting the Kansas Lottery from spending state money on negotiating any renewals, extensions or new contracts with sports wagering operators until July 2026.

Some legislative efforts seek to enact a smoking ban that would impact our casino facility. Smoking is permitted in Native American casinos in the State of Kansas and in casinos in neighboring states. Such a ban, if enacted, would put us at a competitive disadvantage and may adversely affect our operations. Additionally, certainthe politicalKansas effortsgovernor seekrecently entered into a significantcompact regulatorywith change fora Native American gaming that, if enacted, could leadtribe to allow Native American casinosports gaming over the internetwagering throughout the state.state Propositionsand to increase the permissible types of games in certain casino locations. Further, propositions have also been made that would make it easier for Native American tribes to place land into trust that would enable the tribes to conduct gaming operations. Additionally, we must compete with predictions markets in our sports betting operations. The regulatory environment for predictions markets remains uncertain. Additional gaming would increaseincreases competition for discretionary income from our gaming patrons. The State of Kansas may enact new legislation involving the expansion of gaming including with respect to internet and mobile gaming. Furthermore, regulatory costs may continue to rise. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or proposed products and services or increase our expenses in providing these products and services. Adoption or changes in gaming laws and regulations could adversely affect our financial condition, results of operations, liquidity and cash flows.

The federal government has, from time to time, considered a federal tax on casino revenues and may consider such a tax in the future. If such an increase were to be enacted, our ability to incur additional indebtedness in the future to finance casino development projects could be materially adversely affected. Additionally, gaming companies are currently subject to significant state and local taxes and fees, in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. The Boot Hill Casino, pursuant to its Management Contract extension with the State of Kansas, pays a total revenue share of 29% of gross legacy gaming revenue (sports wagering revenue share is 10% to the State). The Boot Hill Casino is contractually obligated to pay its proportionate share of certain expenses incurred by the Kansas Lottery Commission and the Kansas Racing and Gaming Commission, which amounted to $2.7$2.6 million during fiscal year ended April 30, 2025.2026. On December 15, 2024, the tax rate to the state increased by 2% and we begincommenced our second 15-year management contract for traditional gaming at Boot Hill Casino. Such taxes and expenses may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

Our ability to manage and grow our business and to execute our business strategy is dependent, in part, on the continued availability of financing. Access to financing may be limited by various factors, including the condition of overall credit markets, the current high interest rate environment, general economic factors, state of the aviation or gaming industry, our financial performance, and credit ratings. In December 2027, a balloon payment in the approximate amount of $20.6 million, which is secured by certain of our assets. Financing to repay such indebtedness, and for other purposes, may not continue to be available to us on favorable terms, or at all. If we are unable to obtain additional capital when required, or on satisfactory terms, we may default on outstanding debt obligations, be precluded from maintaining or enhancing our properties, taking advantage of future opportunities, growing our business, acquiring new properties, or responding to competitive pressures. Our dependence on financing may have a material adverse effect on the Company’s financial condition, results of operations, liquidity and cash flows.

The Bureau of Labor Statistics reported that the Consumer Price Index increased 2.42.0 percent in 2025 thus far.2026. Many of our operating expenses are sensitive to increases in inflation including equipment prices, fuel costs, and employee-related costs. Insurance costs have also significantly increased with most major carriers. Furthermore, current inflationary pressures may increase costs for materials, supplies, and services. Rising inflation may also drive demand for increases in compensation for employees, which may result in increased labor costs. With increasing costs, we may have to increase our prices to maintain the same level of profitability. If we are unable to increase our prices sufficiently to offset increasing expenses, then inflation may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

The following Management Discussion and Analysis (MD&A) is intended to help the reader understand our results of operations and financial condition for fiscal years 20252026 and 20242025 by discussing principleprincipal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of the Company and its wholly-owned subsidiaries and affiliates. This MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes to the consolidated financial statements.

We have two separate reporting segments: Aerospace Products and Professional Services. Aerospace Products and Professional Services do not share the same customers or 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 previously provided architectural services.facility. These reporting segments operate through various subsidiaries and affiliates listed on Exhibit 21 to this Form 10-K.

Our fiscal 20252026 revenue increased 7%17% to $98.0 million compared to $84.0 million compared to $78.4 million in fiscal 2024.2025. In fiscal 20252026 the Professional Services revenue decreased less than 1%2% primarily due to a decrease in casino gaming revenue, offset by an increase in sportsbook revenue. There was an increase of 15%33% in the Aerospace Products revenue in fiscal 20252026 which can be attributed to targeted marketing efforts for our new STC’sSTC’s, executing large aircraft modifications, in particular systems integrations, and special mission products.

Our fiscal 20252026 net income was $12.6$21.9 million compared to net income of $12.5$12.6 million in fiscal 2024.2025. Earnings per share was $0.19$0.34 for fiscal 20252026 compared to $0.18$0.19 in fiscal 2024.2025. We continue focusing on our margin expansion initiatives, including efficiencies in our implementation of improved operational processes and controlling general and administrative expenses. We have made a deliberate shift toward higher-margin product lines and improved operational alignment. We expanded our fabrication capabilities through the new facility in Newton, Kansas, and continued growth at our KC Machine location. At the same time, we’rewe are optimizing our workforce by balancing production between Newton and New Century to address labor availability and demand. As a result, the fiscal 20252026 operating income was $16.8$28.5 million, an increase of 27%69% from $13.2$16.8 million in fiscal 2024.2025. This represents an operating margin of 29% in fiscal 2026, compared to 20% in fiscal 2025, compared to 17% in fiscal 20242025 (operating income as a percentage of revenue), an increase of approximately9 18%.percentage points.

Professional Services derives its revenue from professional management services in the gaming industry through Butler National Service Corporation (“BNSC”) and BHCMC, LLC (“BHCMC”). Prior to the closure of BCS Design, Inc. (“BCS”) in January 2024, the Professional Services segment also included architectural and management support services. Revenue from Professional Services decreased by less2% thanto 1%$37.4 million in fiscal 2026 compared to $38.3 million in fiscal 2025 compared to $38.6 million in fiscal 2024.2025. Sports wagering through the DraftKings sports wagering platform brought in $5.8$6.5 million of revenue during fiscal 20252026 compared to $4.6$5.8 million in fiscal 2024.2025. Traditional casino gaming revenue decreased $1.5$1.3 million.

Costs and expenses increased 3%4% in fiscal 20252026 to $67.1$69.5 million, compared to $65.1$67.1 million in fiscal 2024.2025. The increase was primarily driven by higher labor costs and increased costs of aerospace products,products reflectingas a result of higher sales in the Aerospace Products segment. This was partially offset by a $1.3 million decrease in marketing and advertising expenses. Costs and expenses represented 80%71% of total revenue in fiscal 2025,2026, compared to 83%80% in fiscal 2024.2025. This represents an operating margin of 20.0%29% in fiscal 2025,2026, compared to 16.9%20% in fiscal 20242025 (operating income as a percentage of revenue), an increase of approximately9 18%.percentage points.

Costs of Professional Services increaseddecreased 2% in the year ended April 30, 2025,2026, to $16.0$15.7 million compared to $15.8$16.0 million in the year ended April 30, 2024.2025. Costs were 42% of Professional Services revenue in the year ended April 30, 2025,2026, as compared to 41%42% of Professional Services revenue in the year ended April 30, 2024. The increase is directly related to an increase in labor costs.2025.

Costs of Aerospace Products increased 4%7% in the year ended April 30, 2025,2026, to $29.9$32.1 million compared to $28.7$29.9 million for the year ended April 30, 2024.2025. The increase is directly related to an increase in material and labor costs,costs impacteddriven by our increased sales. Costs were 53% of Aerospace Products revenue in the year ended April 30, 2026, as compared to 65% of Aerospace Products revenue in the year ended April 30, 2025, as compared to 72% of total revenue in the year ended April 30, 2024, reflecting increased efficiencies of our engineering and fabrication leading to improved operating profit margins. The Aircraft Modification division has also invested in engineering and production to modify a new platform for Special Mission Electronics. With the new work and schedules, additional resources have been enabled to support the efforts.

While we continue to workfocus toon controlcontrolling costs, with the sales growth and expansion of aircraft modification installations at the New Century facility, the need for parts fabrication exceeded our existing shop capacity in Newton, Kansas. In response, in April,April 2025, we purchased a building adjacent to our Newton airport campus for the primary purpose to expand our internal fabrication capabilities.

Marketing and advertising expenses decreased 26%3% to $3.6 million in fiscal 2026, from $3.7 million in fiscal 2025, from $5.0 million in fiscal 2024.2025. Costs were 4% of total revenue in the year ended April 30, 20252026 as compared to 6%4% of total revenue in the year ended April 30, 2024. The decrease in fiscal 2025 is due to a change in marketing strategy and methods to attract customers, with less focus on various media advertising and more focus on loyalty based promotions.2025. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

Other income (expense) was ($0.8 million income in fiscal 2026 compared to $0.1) million expense in fiscal 2025, a change of $0.9 million from fiscal 2025 to fiscal 2026. Interest expense was $1.9 million in fiscal 20252026 comparedand to $3.5$2.2 million in fiscal 2024, a change of $3.6 million from fiscal 2024 to fiscal 2025. Interest expense was ($2.2) million in fiscal 2025 and ($2.4) million in fiscal 2024. Gain on sale of assets was $1.9 million in fiscal 2026 compared to $1.6 million in fiscal 20252025. comparedInterest toincome $5.7was $0.9 million in fiscal 2024.2026 Interest income wasand $0.5 million in fiscal 2025 and $0.3 million in fiscal 2024.2025.

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 and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, modifying, servicing and repairing products for aircraft.

Revenue from Professional Services decreased less than 1%2% to $37.4 million in fiscal 2026 from $38.3 million in fiscal 2025 from $38.6 million in fiscal 2024.2025. Sports wagering through the DraftKings sports wagering platform brought in $5.8$6.5 million of revenue during fiscal 20252026 compared to $4.6$5.8 million during fiscal 2024.2025. Furthermore, traditional casino gaming revenue decreased $1.5$1.3 million due to a decrease in patron visits. We believe the decline of traditional casino gaming revenue was due primarily to economic factors impacting the region surrounding our casino in southwestwestern Kansas. Factors influencing the local economy in the region surrounding our casino operations include reduced shifts and/or wages for Dodge City-based cattle processors and meat packing employees, increasedgeneral inflationeconomic uncertainty and drought conditions. Additionally, beginning in December 2024, the revenue share paid to the State of Kansas under our Management Agreement increased by two percent. Our revenue is determined after the revenue share is distributed to the state and mandated regulatory expenses are paid. Non-gaming revenue at Boot Hill Casino decreased to $4.2 million in fiscal 2026, compared to $4.6 million in fiscal 2025.

Costs increaseddecreased 2% in fiscal 20252026 to $15.7 million compared to $16.0 million compared to $15.8 million in fiscal 2024.2025. Costs were 42% of segment total revenue in fiscal 2025,2026, compared to 41%42% of segment total revenue in fiscal 2024.2025. The increasedecrease is directly related to ana increasedecrease in labor costs.

Expenses decreasedincreased 8%2% in fiscal 20252026 to $13.4 million compared to $13.1 million comparedin tofiscal $14.22025. millionExpenses were 36% of segment total revenue in fiscal 2024.2026, Expensescompared wereto 34% of segment total revenue in fiscal 2025, compared to 37% of segment total revenue in fiscal 2024.2025. The decreaseincrease is due primarily to aan decreaseincrease in marketing and advertising expenses, with less focus on various media advertising and more focus on loyalty based promotions.expenses.

Revenue increased 15%33% to $60.6 million in fiscal 2026 compared to $45.7 million in fiscal 2025 compared to $39.7 million in fiscal 2024.2025. This increase was primarily due to an increase in our aircraft modification business of $4.5$7.6 million and an increase in special mission electronics of $0.8$6.5 million. The development of new STC’sSTC’s, as well as repeat modifications utilizing previously acquired STCs and our marketing efforts in both domestic and international markets supported the increase. Additionally, increased fabrication of modification kits for installation by third party facilities has increased revenue while also improving margins.

Costs increased 4%7% to $32.1 million in fiscal 2026 compared to $29.9 million in fiscal 2025 compared to $28.7 million in fiscal 2024.2025. This increase is directly related to the increase in material and labor costs associated with higher revenues. Costs were 53% of segment total revenue in fiscal 2026, compared to 65% of segment total revenue in fiscal 2025, comparedreflecting to 72%sales of segmentpreviously totalFAA-approved revenuemodifications, inboth fiscalfrom 2024,an reflectinginstallation perspective as well as a kit sale perspective and increased efficiencies of our engineering and fabrication labor leading to improved operating profit margins. Both Special Mission Electronics and Aircraft Modifications gained further efficiencies by strategically planning sub-component fabrication and decreasing outsourcing. With respect to Avionics, the divestment of the autopilot product line has reduced the costs.

TheU.S. trade policy has recently been significantly changed. Since February 2025, the U.S. government has madeissued significantseveral changesexecutive inorders U.S.under tradevarious policy,statutes, includingimposing the impositiontariffs on April 2, 2025, of a baseline tariff of 10% on product imports from almost allmost countries andwith individualizedwhom higherthe tariffsU.S. onengages certainin other countries.trade. These changes in U.S. trade policy and tariffstariffs, and potential future changes, have impacted demand for our services and could have a material adverse effect on our operating results, including as a result of the possibility of higher inflation, an economic slowdown or general economic uncertainty. Many of our operating expenses are sensitive to increases in inflation including equipment prices, fuel costs, and employee-related costs. Insurance costs have also significantly increased with most major carriers. Furthermore, the market is currently experiencing inflationary pressures that may increase costs for materials, supplies, and services. Rising inflation may also drive employee demand for increases in compensation which may result in increased labor costs. With costs increasing, we may have to increase our prices to maintain the same level of profitability.

With respect to Aerospace Products, we continue to enjoy a strong backlog, especially with respect to specialaircraft mission electronics.modifications. However, we have experienced and anticipate continuing to experience vigorous competition for skilled technicians and fabrication labor. We believe labor costs in Aerospace Products will continue to rise.

At April 30, 2025,2026, therethe wasCompany has a note payable with PatriotsSimmons Bank with an interest rate of 4.35%7.19% with a balance of $720.$1.7 million. This loan is secured by a single aircraft security agreements with a net book value of $460.$2.0 million. This note matures in MarchNovember 2029.

At April 30, 2025,2026, there iswas a note payable with an interest rateBank of 8.13%America, N.A. with a balance of $24$467. The interest rate on this note is SOFR plus 1.75%. The loan is secured by equipmentbuildings withand improvements having a net book value of $20.$575. This note matures in OctoberMarch 2025.2029.

CashflowCash Flow Summary

Cash flows from operating activities provided $18.4$25.8 million. Non-cash activities consisting of depreciation and amortization contributed $6.7$6.9 million, deferred compensation contributed $320,$196, stock awarded to directordirectors contributed $61,$213 and supplemental type certificates work in progress adjustment contributed $529$607. and gainGain on sale of assets $1.6decreased million.our Deferredcash position by $1.9 million and deferred income taxes decreased our cash position by $157.$305. Accounts receivable and inventories decreased our cash position by $91$7.5 million and $1.4$2.2 million, respectively. Accounts payable and accrued liabilities increased our cash position by $3.3$4.5 million and $731,$868, respectively. Contract asset and lease liability increased our cash position by $819$1.4 million and $220,$224, respectively. Contract liability and prepaid expenses decreased our cash position by $392$336 and $77,$1.7 million, respectively. OtherIncome liabilitiestaxes payable increased our cash position by $309.$3.4 Incomemillion. taxesOther payableliabilities and gaming facility mandated payment decreased our cash position by $3.4 million$323 and $158,$113, respectively.

Cash used in investing activities was $5.4$4.4 million. This was ana increasedecrease of $4.3$1.0 million from last year. The increasedecrease was primarily attributable to the higher proceeds from the sale of airplanesassets in fiscal year 2024.2025. We invested $1.6$2.7 million towards STCs, $1.6$1.5 million on a building and improvements, $2.8 million on the purchase of an airplane and airplane upgradesimprovements and $2.3 million on equipment and furnishings. We received $294$403 in proceeds from the sale of airplanes, $1.1and $1.8 million in proceeds from the sales of land, and $1.5 million in proceeds fromfor the sale of Boot Hill Casino’s administrative building. The casino’s administrative building was sold for $2.4 million, of which approximately $1.8 million was received in cash and the remaining $600 is recorded in accounts receivable at April 30, 2026. The Company plans to construct a productmore line.efficient facility for storage and training adjacent to the casino.

Cash used in financing activities was $5.6$11.5 million. This was aan decreaseincrease of $5.1$6.0 million from last year. This use of cash was primarily attributable to $2 million in borrowing of long-term debt offset by the Company repurchasing $2.3$5.5 million of Company stock. Further, our uses consisted of repayments on our debt of $5.0$5.8 million and a reduction of our lease liability by $268.$271. The stock acquired was placed in treasury. During the fiscal year ended April 30, 2026, the Company has initiated contacts with potential financing sources for the refinancing of the gaming facility debt that becomes due in calendar year 2027.

The Company anticipates capital expenditures in fiscal year 20262027 to be approximately $12.5$11.5 million, consisting of $5$5.0 million on STCs, $4.5$3.6 million on equipment, and $3.0$2.8 million on buildings and improvements. The Company’s estimate is subject to adjustment based on market conditions and management’s discretion. We are in the process of moving our aircraft modification fabrication facilities to our newly acquired Newton, Kansas building, and we plan to acquire additional tooling/equipment to enhance our internal fabrication capabilities. We anticipate our cash balance will be sufficient to cover cash requirements through the current fiscal year.

Management reviews the inventory balance on an annual basis to determine whether any additional write-downs are necessary. Following the write-downadjustment of the inventory as discussed above, we believe this inventory is stated at net realizable value at April 30 2025,2026, although an unanticipated lack of demand for aircraft or spare parts in the future could result in additional write-downs of the inventory value. Overall, management believes that our inventory is appropriately valued at April 30, 2025.2026.

Statements made in this report, other reports and proxy statements filed with the Securities and Exchange Commission, communications to stockholders, press releases, and oral statements made by representatives of the Company that are not historical in nature, or that state the Company or management intentions, plans, beliefs, expectations or predictions of the future, may constitute “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can often be identified by the use of forward-looking terminology, such as “could,” “should,” “will,” “intended,” “continue,” “believe,” “may,” “expect,” “anticipate,” “goal,” “forecast,” “plan,” “guidance” or “estimate” or the negative of these words, variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties, and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year ended April 30, 2025,2026, and elsewhere herein or in other reports filed with the SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time, except as expressly required by federal securities laws.

•loss of key personnelpersonnel, including executive officers;

•the stabilityavailability of economic marketsfinancing;

•climate change, inclement weather and natural disasters; and

•rising inflation;

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

Aerospace Products. The Aerospace Products segment includes the design, manufacture, sale and service of structural modifications, design, integration and installation of electronic equipment, systems and technologies that enhance aircraft operations, and the design, manufacture and sale of commercial controls, cabling and defense related articles. Additionally, we operate Federal Aviation Administration (the “FAA”) Repair Stations. Companies in Aerospace Products concentrate on products and services for Learjet, Challenger, Textron Beechcraft King Air, and Textron Cessna turboprop aircraft.

InThe the ninethree months ended JanuaryJuly 31, 2026 net incomerevenue increased 53% to $16.4$30.8 million compared to a net income of $9.2$20.1 million in the ninethree months ended JanuaryJuly 31, 2025. In the three months ended July 31, 2026 the Professional Services revenue was $9.0 million compared to $8.8 million in the three months ended July 31, 2025, an increase of 78%.3%. In the ninethree months ended JanuaryJuly 31, 2026,2026 operatingthe incomeAerospace increasedProducts revenue was $21.7 million compared to $21.0 million from an operating income of $12.4$11.3 million in the ninethree months ended JanuaryJuly 31, 2025, an increase of 69%.92%.

NINETHREE MONTHS ENDED JANUARYJULY 31, 2026 COMPARED TO THE NINETHREE MONTHS ENDED JANUARYJULY 31, 2025

Revenue:

Revenue increased 13%53% to $70.3$30.8 million in the ninethree months ended JanuaryJuly 31, 2026, compared to $62.4$20.1 million in the ninethree months ended JanuaryJuly 31, 2025. See “Operations by Segment” below for a discussion of the primary reasons for the increase in revenue.

•Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for aircraft and military vehicles. Aerospace Products revenue increased by 26%92% to $42.4$21.7 million for the ninethree months ended JanuaryJuly 31, 2026 compared to $33.7$11.3 million for the ninethree months ended JanuaryJuly 31, 2025. The increase in revenue is largely due to an increase in Aircraft Modifications revenue of $10.7 million and an increase in Special Mission Electronics revenue of $4.5$0.7 million. The Aircraft Modification revenue grew to a quarterly record of $16.3 million, anand increasewas primarily driven by higher activity across aircraft modification programs, including increased work on larger and more complex special-mission aircraft projects, as well as repeat modifications utilizing previously developed STCs. Revenue also benefited from increased sales of modification kits for field installation, including Cessna Caravan camera-port modification kits and Avcon rail and Special Mission Pod kits for the King Air, among others. Additionally, Avcon completed and delivered two Special Mission Challenger 605/650 modification projects that included our recently approved STC for the under-fuselage radome/pod and rails for mounting of sensors. The timing, size and scope of individual aircraft modification programs can result in Aircraftvariability Modificationsin revenue ofbetween $2.9reporting million and additional aircraft avionics revenue of $1.4 million.periods.

•Professional Services derives its revenue from professional management services in the gaming industry through Butler National Service Corporation (“BNSC”) and BHCMC, LLC (“BHCMC”).industry. Revenue from Professional Services decreasedincreased 3% to $27.9$9.0 million for the ninethree months ended JanuaryJuly 31, 2026 compared to $28.7$8.8 million for the ninethree months ended JanuaryJuly 31, 2025. Sports wagering revenue through the DraftKings sports wagering platform broughtwas in $5.1$1.1 million for the ninethree months ended JanuaryJuly 31, 2026 compared to $4.3$1.3 million in the ninethree months ended JanuaryJuly 31, 2025. Traditional casino gaming revenue decreasedincreased $1.1$0.4 millionmillion, primarily due to increased patron spending during the current quarter. This increase occurred despite continued economic pressures in the nineregion monthssurrounding ended January 31, 2026 to $19.8 million compared to $20.9 million for the nine months ended January 31, 2025. Effective December 15, 2024, the revenue share for traditionalour casino gamingoperations toin thesouthwest stateKansas, ofincluding Kansasfactors increasedaffecting byDodge 2%City-based withcattle theprocessors startand ofmeat ourpacking fifteen-yearemployees, contractgeneral renewaleconomic termuncertainty forand thedrought management of Boot Hill Casino.conditions.

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 decreasedincreased 1%51% to $49.3$23.4 million in the ninethree months ended JanuaryJuly 31, 2026 compared to $49.9$15.5 million in the ninethree months ended JanuaryJuly 31, 2025. Costs and expenses were 70%76% of total revenue in the ninethree months ended JanuaryJuly 31, 2026, as compared to 80%77% of total revenue in the ninethree months ended JanuaryJuly 31, 2025. This represents an operating margin of 29.9%24% in the ninethree months ended JanuaryJuly 31, 2026, compared to 19.9%23% in the ninethree months ended JanuaryJuly 31, 2025 (operating income as a percentage of revenue), an increase of 101.0 percentage points.point.

CostCosts of Professional Services decreased 2% in the ninethree months ended JanuaryJuly 31, 2026 atto $11.6$3.7 million compared to $11.8$3.9 million in the ninethree months ended JanuaryJuly 31, 2025. CostsProfessional Services costs were 17%12% of total revenue in the ninethree months ended JanuaryJuly 31, 2026, as compared to 19% of total revenue in the ninethree months ended JanuaryJuly 31, 2025.

CostCosts of Aerospace Products decreasedincreased 3%106% in the ninethree months ended JanuaryJuly 31, 2026 to $22.6$13.6 million compared to $23.3$6.6 million for the ninethree months ended JanuaryJuly 31, 2025. CostsAerospace Products costs were 32%44% of total revenue in the ninethree months ended JanuaryJuly 31, 2026, as compared to 37%33% of total revenue in the ninethree months ended JanuaryJuly 31, 2025. The improvedincrease operatingin marginsAerospace wereProducts drivencosts byis salesdirectly related to the increase in material and labor costs associated with higher Aerospace revenues. The Aircraft Modification business has also invested in engineering and production resources to support work on a new special-mission platform and the increased level of previouslyprogram FAAactivity. STC-approvedWe modifications, increased sales of kits comparedcontinue to priorwork periodto andcontrol increasedcosts efficiencieswith ofexpanding our internal parts fabrication leading to improved operating profit margins.capabilities.

Marketing and advertising expenses decreasedincreased in the ninethree months ended JanuaryJuly 31, 2026 to $2.7$1.1 million compared to $2.8$0.9 million in the ninethree months ended JanuaryJuly 31, 2025. ExpensesMarketing and advertising expenses were 4%5% of total revenue in the ninethree months ended JanuaryJuly 31, 2026, as compared to 4%5% of total revenue in the ninethree months ended JanuaryJuly 31, 2025. Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions.

General, administrative and other expenses asincreased ain percentthe three months ended July 31, 2026 to $5.0 million compared to $4.0 million in the three months ended July 31, 2025. General, administrative and other expenses were 16% of total revenue werein 18%the three months ended July 31, 2026, as compared to 20% of total revenue in the ninethree months ended January 31, 2026, compared to 19% in the nine months ended January 31, 2025. These expenses increased 3% to $12.4 million in the nine months ended January 31, 2026, from $12.0 million in the nine months ended JanuaryJuly 31, 2025. The increase is primarily attributable to higher insuranceinsurance, professional fees and overhead labor for the ninethree months ended JanuaryJuly 31, 2026 compared to the ninethree months ended JanuaryJuly 31, 2025.

Other income (expense) was $1.1$235 millionthousand expense in the ninethree months ended JanuaryJuly 31, 2026 compared to $220$352 thousand expense in the ninethree months ended JanuaryJuly 31, 2025. Interest expense was $1.5$418 millionthousand in the ninethree months ended JanuaryJuly 31, 2026, compared with interest expense of $1.7$523 millionthousand in the ninethree months ended JanuaryJuly 31, 2025. The decrease in interest expense is due to the paydown of long-term debt. Interest income was $735$183 thousand in the ninethree months ended JanuaryJuly 31, 2026 compared to $331$171 thousand in the ninethree months ended JanuaryJuly 31, 2025. Gain on sale of assets was $1.9 million in the nine months ended January 31, 2026, compared to a $1.5 million gain on sale of assets in the nine months ended January 31, 2025. The gain on sale of assets for the nine months ended January 31, 2026 was a result of selling two older model Learjets and the Professional Services administration building, which will be replaced by a newly constructed facility adjacent to the Boot Hill Casino.

The following table presents a summary of our operating segment information for the three months ended JanuaryJuly 31, 2026 and JanuaryJuly 31, 2025:

•ExpensesCosts of Aerospace Products increased 2%106% in the three months ended JanuaryJuly 31, 2026 to $3.4$13.6 million compared to $3.3$6.6 million infor the three months ended JanuaryJuly 31, 2025,2025. primarilyThis dueincrease is directly related to the increase in material and labor costs associated with higher allocationrevenues. of corporate overhead costs. ExpensesCosts were 34%62% of segment total revenue in the three months ended JanuaryJuly 31, 2026, as compared to 34%58% of segment total revenue in the three months ended JanuaryJuly 31, 2025.