Financial Analysis

COMMITMENTS AND CONTINGENCIES: Litigation: From time to time, we may be a defendant and/or plaintiff in various other legal proceedings arising in the normal course of our business. We are not currently a party to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Furthermore, as of July 8, 2026, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.

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DEBT: Principal amounts of debt at April 30, 2026 and 2025, consist of the following (in thousands): Promissory Notes 2026 2025 Bank line of credit, available LOC $2.0 million interest at 8.4% due on demand, secured by a first and second position on all assets of the Company. - - $ - $ - Long-Term Debt Note payable, interest at 5.75%, this note matures October 2026, secured by all of BHCMC's assets and compensation due under the State Management Contract. 1,577 4,611 Note payable, interest at 8.13%, due April 2027, secured by equipment with a net book val ue of $10 . 12 24 Note payable, interest at 4.50%, this note matures in December 2027, with a balloon payment of $20,563, secured by all of BHCMC's assets and compensation due under the State Management Contract. 25,666 27,417 Note payable, interest at Secured Overnight Financing Rate (SOFR) plus 1.75% due March 2029, secured by buildings and improvements with a net book value of $575 . $ 467 $ 627 Note payable, interest at 4.35%, due March 2029, secured by Aircraft Security Agreements with a net book v alue of $314 . 149 720 Note payable, interest at 7.19%, due November 2029, secured by a single aircraft with a net book value of $2.0 million. 1,686 1,922 29,557 35,321 Less: Origination fees 86 164 29,471 35,157 Less: Current maturities, net of origination fees 4,868 5,287 $ 24,603 $ 29,870 Maturities of long-term debt are as follows: Year Ending April 30 Amount 2027 $ 4,868 2028 23,384 2029 440 2030 865 2031 - Thereafter - …

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In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition. Year Ended April 30, 2026 Professional Services Aerospace Products Total Geographical Markets North America $ 37,380 $ 48,386 $ 85,766 Europe - 8,021 8,021 Asia - 3,908 3,908 Australia and Other - 272 272 $ 37,380 $ 60,587 $ 97,967 Major Product Lines Casino Gaming Revenue $ 26,655 $ - $ 26,655 Sportsbook Revenue 6,537 - 6,537 Casino Non-Gaming Revenue 4,188 - 4,188 Aircraft Modification - 37,195 37,195 Aircraft Avionics - 4,173 4,173 Special Mission Electronics - 19,219 19,219 $ 37,380 $ 60,587 $ 97,967 Contract Types / Revenue Recognition Timing Percentage of completion contracts $ - $ 31,869 $ 31,869 Goods or services transferred at a point of sale 37,380 28,718 66,098 $ 37,380 $ 60,587 $ 97,967 Year Ended April 30, 2025 Professional Services Aerospace Products Total Geographical Markets North America $ 38,267 $ 27,217 $ 65,484 Europe - 14,257 14,257 Asia - 3,726 3,726 Australia and Other - 501 501 $ 38,267 $ 45,701 $ 83,968 Major Product Lines Casino Gaming Revenue $ 27,919 $ - $ 27,919 Sportsbook Revenue 5,789 - 5,789 Casino Non-Gaming Revenue 4,559 - 4,559 Aircraft Modification - 29,587 29,587 Aircraft Avionics - 3,377 3,377 Special Mission Electronics - 12,737 12,737 $ 38,267 $ 45,701 $ 83,968 Contract Types / Revenue Recognition Timing Percentage of completion contracts $ - $ 26,551 $ 26,551 Goods or services transferred at a point of …

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INCOME TAXES: Deferred taxes are determined based on the estimated future tax effects of differences between the financial statements and tax basis of assets and liabilities given the provision of the enacted tax laws. Significant components of the Companys deferred tax liabilities and assets as of April 30, 2026 and 2025 are as follows (in thousands): April 30, 2026 April 30, 2025 Deferred tax liabilities: Depreciation and amortization $ (610) $ (106) Deferred compensation, restricted stock - (22) Total deferred tax liabilities (610) (128) Deferred tax assets: Research and development 1,766 1,401 Deferred Compensation, restricted stock 44 - Accounts receivable allowance 59 22 Inventory and other allowances 107 151 Lease right-to-use 215 184 Compensation accruals 369 200 Inventory Capitalization 233 51 Jackpot reserves 198 195 Total deferred tax assets 2,991 2,204 Less valuation allowance - - Net deferred tax asset $ 2,381 $ 2,076 The reconciliation of the federal statutory income tax rate to the effective tax rate is as follows: April 30, 2026 April 30, 2025 Statutory federal income tax rate expense $ 6,153 21.00 % $ 3,479 21.00 % State income tax, net of federal benefits 1,414 4.83 % 931 5.62 % Permanent differences 160 0.55 % 109 0.66 % Research and development credit (317) (1.08) % - - % Kansas aviation credit (152) (0.53) % - - % Deferred tax adjustment (102) (0.35) % - - % Tax Payable adjustment 47 0.16 % - - % Deferred state rate change 91 0.31 % - - % Other 73 0.25 % …

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y) Recent Accounting Pronouncements: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This ASU is effective for fiscal years beginning after December 15, 2024, and allows for adoption on a prospective basis, with a retrospective option. The Company adopted this standard during the fiscal year ended April 30, 2026, and updated its income tax disclosures accordingly. The adoption did not have a material impact on the Companys financial position, results of operations, or cash flows. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires public business entities to provide additional disclosures regarding specified categories of expenses included within relevant income statement captions. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact the adoption of this standard will have on its financial statement disclosures. Other standards issued by the FASB or SEC had no material impact on our future financ …

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401(k) PROFIT SHARING PLAN: We have a defined contribution plan authorized under Section 401(k) of the Internal Revenue Code. All benefits-eligible employees with at least thirty days of service are eligible to participate in the plan; however, there are only two entry dates per calendar year. The Plan matches 100 percent of every pre-tax dollar an employee contributes up to 6 percent of the employee s salary, and a portion of the Companys profits. Employees are 100 percent vested in the employer s contributions immediately. The contribution expense was $927 and $876 in fiscal year ended April 30, 2026 and 2025, respectively. …

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RELATED-PARTY TRANSACTIONS: The Company paid consulting fees of $0 and $135 to David Hayden, a former director of Butler National Corporation, in the fiscal year ended April 30, 2026 and 2025, respectively. Effective January 2025, Butler National Corporations Board of Directors created the position of Executive Chairman to lead the Board and named director, Jeffrey D. Yowell, to the position. Mr. Yowells director role as Executive Chairman is to work with and support the corporations Chief Executive Officer in day-to-day and strategic responsibilities. In conjunction with Mr. Yowells additional responsibilities, for the fiscal year ended April 30, 2026, the Company compensated Mr. Yowell an additional $160 per year in addition to compensation paid to all directors (currently an annual amount equal to $90). Effective June 1, 2026, this amount paid to Mr. Yowell as Executive Chairman was increased by an additional $90 annually and is now $340 in the aggregate (inclusive of compensation paid to all directors). Effective June 15, 2026, Mr. Christopher J. Reedy resigned from his position as Chief Executive Officer and entered into a Transition and Release Agreement with the Company to provide continuing services as a special advisor to the Board as a non-executive officer employee. Mr. Reedys is compensated at an annual rate of $150 pursuant to the Transition and Release Agreement, which provides for his full retirement on July 1, 2027. While an employee of the Company, Mr. Reedy …

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ACCOUNTS RECEIVABLE, NET, CONTRACT ASSET AND CONTRACT LIABILITY: Accounts Receivables, net, contract asset and contract liability were as follows (in thousands): 2026 2025 Accounts Receivable, net $ 13,996 $ 5,867 Contract Asset 1,596 2,993 Contract Liability 5,194 5,530 Accounts Receivables, net consist of $13,996 a nd $5,867 from customers as of April 30, 2026 and 2025 respectively. At April 30, 2026, and 2025, the allowance for doubtful accounts was $228 and $83, respectively. Contract assets are net of progress payments and performance-based payments from our customers as well as advance payments from customers totaling $1,596 and $2,993 as of April 30, 2026 and 2025. Contract assets decreased $1,397 during 2026, primarily due to recognizing revenue upon completing the contract performance obligations. There were no significant impairment losses related to our contract assets during 2026 and 2025. We expect to bill our customers for the majority of the April 30, 2026 contract assets during fiscal year end 2026. Contract liabilities decreased $336 during 2026, primarily due to payments received in excess of revenue recognized on these performance obligations. During 2026, we recognized $5,398 of our contract liabilities from the April 30, 2025 balance as revenue. During 2025, we recognized $4,523 of our contract liabilities from the April 30, 2024 balance as revenue.

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SEGMENT REPORTING AND SALES BY MAJOR CUSTOMER: Industry Segmentation Current Activities: The Company focuses on two primary activities, Professional Services and Aerospace Products. Aerospace Products Aircraft Modifications principally includes the modification of customer owned business-size aircraft with capabilities to perform special missions including provisions for radar systems, aerial photography, search and rescue, environmental research, mapping, intelligence surveillance reconnaissance (ISR), and stability enhancing modifications. Our modifications are primarily to Learjets, Textron Beechcraft, and Textron Cessna aircraft. We also perform other specialized modifications to other unique aircraft. We provide these services through our subsidiary, Avcon Industries, Inc. (Aircraft Modifications or Avcon). Avcon activities include the high-quality precision manufacturing of machine parts at Butler Machine, LLC (doing business as KC Machine). Special mission electronics principally includes the manufacture, sale, and service of electronics and accessories for control systems used on commercial and government aircraft and vehicles. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona. Butler Avionics sells, installs and troubleshoots aircraft avionics equipment (airplane radio equipment and flight control systems). This includes flight display systems, collision avoidance, terrain awareness instruments, and sensor systems. Butler Av …

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SUBSEQUENT EVENTS: The Company evaluated its April 30, 2026, consolidated financial statements for subsequent events throug h July 8, 2026, the filing date of this report. The Company is not aware of any other subsequent events that would require recognition or disclosure in the consolidated financial statements.

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Debt: At January 31, 2026, the Company has a line of credit with Kansas State Bank in the form of a promissory note with an interest ra te of 8.4% t otaling $2.0 million. The unused line at January 31, 2026 is $2.0 million. There were no advances or payments made on the line of credit during the nine months ended January 31, 2026. The line of credit is due on demand and is secured by a first and second position on all assets of the Company. On November 25, 2024, the Company entered into a note agreement with Simmons Bank for $2.0 million with an interest rate of 7.19% payable over five years. At January 31, 2026, the loan balance of $1.7 million is secured by a single aircraft with a net book value of $2.1 million. The first note with Academy Bank, N.A. fo r $2.4 million is secured by all of BHCMCs assets and compensation under the State management contract with an interest rate of 5.75% payable in full over five years. This note matures in October 2026. The second note with Academy Bank, N.A. fo r $26.5 million is secured by all of BHCMCs assets and compensation under the State management contract with an interest rate of 4.75% payable over seven years, and a balloon payment of $20.6 million in December 2027. These notes contain a covenant to maintain a debt service coverage ratio of 1.3 to 1.0. These notes also contain a liquidity covenant requiring the Company to maintain an aggregate sum of $1.5 million of unrestricted cash. At January 31, 2026, there is a note payable wi …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition. Three Months Ended January 31, 2026 Three Months Ended January 31, 2025 Professional Services Aerospace Products Total Professional Services Aerospace Products Total Geographical Markets North America $ 9,859 $ 12,994 $ 22,853 $ 9,813 $ 4,049 $ 13,862 Europe - 3,267 3,267 - 6,687 6,687 Asia - 790 790 - 593 593 Australia and Other - 3 3 - 32 32 $ 9,859 $ 17,054 $ 26,913 $ 9,813 $ 11,361 $ 21,174 Major Product Lines Casino Gaming Revenue $ 6,485 $ - $ 6,485 $ 6,845 $ - $ 6,845 Sports Wagering Revenue 2,218 - 2,218 1,838 - 1,838 Casino Non-Gaming Revenue 1,156 - 1,156 1,130 - 1,130 Aircraft Modification - 11,144 11,144 - 8,061 8,061 Aircraft Avionics - 1,271 1,271 - 915 915 Special Mission Electronics - 4,639 4,639 - 2,385 2,385 $ 9,859 $ 17,054 $ 26,913 $ 9,813 $ 11,361 $ 21,174 Contract Types / Revenue Recognition Timing Percentage of completion contracts $ - $ 10,020 $ 10,020 $ - $ 7,419 $ 7,419 Goods or services transferred at a point of sale 9,859 7,034 16,893 9,813 3,942 13,755 $ 9,859 $ 17,054 $ 26,913 $ 9,813 $ 11,361 $ 21,174 Nine Months Ended January 31, 2026 Nine Months Ended January 31, 2025 Professional Services Aerospace Products Total Professional Services Aerospace Products Total Geographical Markets North America $ 27,882 $ 33,261 $ 61,143 $ 28,700 $ 18,475 $ 47,175 Europe - 5,507 5,507 - 13,330 13,330 Asia - 3,516 3,516 - 1,521 …

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Stock Options and Incentive Plans: In November 2016, the shareholders approved and adopted the Butler National Corporation 2016 Equity Incentive Plan. The maximum number of shares of common stock that may be issued under the Plan is 12.5 million. On April 12, 2019, the Company granted 2.5 million restricted shares to employees. In April 2024, 1.65 million of those shares became fully vested and non-forfeitable. The remaining 850 thousand shares were forfeited. On March 17, 2020, the Company granted 5.0 million restricted shares to employees. These shares have voting rights at date of grant and fully vested on March 16, 2025. The restricted shares were valued at $0.41 per share, for a total of $2.0 million. The deferred compensation related to these grants was expensed on the financial statements over the five-year vesting period. In January 2025, the Company granted 86,704 shares under the plan as employee compensation. The first installment of these shares vested immediately, the second installment vests on the one-year anniversary and the final installment vests on the two-year anniversary. These shares were valued at $1.73 per share for a total of $150. The deferred compensation related to these grants will be expensed on the financial statements over the remaining two-year vesting period. In March 2025, the Company granted five board members a total of 39,430 shares under the plan as a component of regular board compensation. These shares were fully vested and non-forfeit …

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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 principle, 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 partys 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 customers intent and ability to pay the promised consideration. 2) Identification of the performance obligations in the contract At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in …

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Segment Reporting and Sales by Major Customer: Industry Segmentation Current Activities - The Company focuses on two primary activities, Professional Services and Aerospace Products. Aerospace Products: Aircraft Modifications principally includes the modification of customer owned business-size aircraft with capabilities to perform special missions including provisions for radar systems, aerial photography, search and rescue, environmental research, mapping, intelligence surveillance reconnaissance (ISR), and stability enhancing modifications. Our modifications are primarily to Learjets, Textron Beechcraft, and Textron Cessna aircraft. We also perform other specialized modifications to other unique aircraft. We provide these services through our subsidiary, Avcon Industries, Inc. (Aircraft Modifications or Avcon). Avcon activities include the high-quality precision manufacturing of machine parts at Butler Machine, LLC (doing business as KC Machine). Special Mission Electronics principally includes the manufacture, sale, and service of electronics and accessories for control systems used on commercial and government aircraft and vehicles. We provide the products through our subsidiary, Butler National Corporation - Tempe, Arizona. Butler Avionics sells, installs and troubleshoots aircraft avionics equipment (airplane radio equipment and flight control systems). This includes flight display systems, collision avoidance, terrain awareness instruments, and sensor systems. Butler …

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Subsequent Events: The Company evaluated its January 31, 2026 financial statements for subsequent events through the filing date of this report. The Company is not aware of any subsequent events that would require recognition or disclosure in the consolidated financial statements.

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