Good morning, ladies and gentlemen. Today is Friday, September 16, 2016, and welcome to the Butler National Corporation First Quarter Fiscal 2017 Financial Results Conference Call. [Operator Instructions] Your call leaders for today's call are David Drewitz, Creative Options Communications; Clark Stewart, President and CEO; and Craig Stewart, President of Aerospace Group. I would now like to turn the call over to your host, Mr. David Drewitz. David, you may begin.

Thank you, and good morning to everyone out there. Before Mr. Stewart begins, I would like to draw your attention to, except for historical information contained herein, the statements in this conference call are forward-looking and made pursuant to the safe harbors provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risk and uncertainties which may cause Butler National's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; new governmental safety, health and environmental regulations which could require Butler to make significant capital expenditures. The forward-looking statements included in this conference call are only made at the date of this call, and Butler National undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, factors described under the caption Risk Factors in the company's annual report on Form 10-K filed with the Securities and Exchange Commission. So with that statement completed, I would like to turn the call over to Mr. Clark Stewart. Mr. Stewart? Clark D. Stewart: Good morning, ladies and gentlemen. Thank you very much, David. Welcome to the first quarter 2017 phone call. We appreciate you all joining us, and we have some good news, bad news, exciting news and so on. So let's go through it quickly. You should you all have available to you a press release and a Form 10-Q that we filed earlier this week, and it shows you that our revenue was basically down 4.5% from the quarter ended in April and 2.5% about from a year ago same quarter. Our operating income, however, was up substantially this quarter over the quarter ended in April and considerably better than it was a year ago. Our net income was down 40% from the spring quarter and up considerably from a year ago 2015. Assets are relatively the same. Long-term debt is down. Total debt is down. We continue to reduce debt. Equity is up about 0.3% for the quarter and 3.5% from last year. We did make a distribution to our casino partner as 40% of the income relative to tax, and so that would be the reason the equity did not go up equal to the net income. Shares outstanding are the same as they were the last quarter, about 1.9% over a year ago. We cut the R&D sum. Not intentionally, it's just a matter of the sequence of the FAA's approval. And the projects we're working on, we are completing a number of them, and so that cost is down just slightly. Our cash position is pretty strong at this point. It goes from strong to real weak, seems like, overnight, but it is in pretty good shape right now. Our backlog is up 40% from what it was in April and about 17% from what it was a year ago. We continue to have good activity in the order -- in the aerospace side of it. Liabilities are down about 10% in total. And our staffing is down about 10 people from a year ago at the aerospace side, and it's level at the casino operations. As far as concerns about the economy and the -- and our market situation, the aerospace market is, of course, lumpy. And as we've discussed before, it's not improving any and probably won't until we get through the election because of the funding of the international market by the U.S. In the casino world, I guess, we're doing fairly well. If you look at the state's numbers, you'll see we're doing better percentage-wise than our competition, and we are able to exist, I guess, in what's really a depressed market. I was talking to somebody yesterday. He said the cost of a bushel of wheat at the races is about $4.5 and the market is about $2.75. So we do have a significant problem in the wheat belt and the feed grains and all that, that we deal with. Out in the casino world, we're still holding up and doing as well as or about the same as we did a year ago. They also have a problem in that the banking system is -- has told a lot of the bankers they got to reappraise all the oil and gas interest and the agricultural interest, which is most of the banks in Kansas, Oklahoma Panhandle and West Texas are all involved in that. So we're a little concerned about that part of the market, but we're -- like I say, we're still doing okay. Let's see. Arizona shipments were good. We're proud of them, and Avcon is coming along. I'll let Craig expand a little bit on the market and the backlog and what's happening in the last quarter. Craig? Craig D. Stewart: Thank you. The Aerospace group, all segments at this point are doing pretty well. We're delivering on the large order we've got there at -- or with -- out in Tempe and continuing to get additional business in addition to that contract, so they're strong out there. Avcon is busy. We continue to quote projects every day, and the activity level seems high with the quoting. So we anticipate the backlog stand pretty strong for the near-term future, and the workload there is good. And the Avionics division is also pretty strong. We're hoping to get more and more into the ADS-B as we get a little bit closer to the 2020 deadline. I think that won't necessarily be a situation where the customers are waiting right up until the end. I know that currently, there's a rebate program from the federal government even to try to encourage people to get going earlier rather than later on the ADS-B solutions. So we're encouraged by the aviation and Aerospace segments and think it should continue strong here for the near-term future. Clark D. Stewart: Thank you, Craig. We have had good interest on our ADS-B product. I think that's -- I think we'll be surprised how well it does. We've done some other product improvement, STCs in the -- with Garmin and with Learjet, and those seem to be coming along. You can now watch the other traffic in the airplane on your iPad and all of this kind of exciting stuff. But that's coming along. It's not big pieces of sales. The sales size of those are $5,000 to $25,000 for these to the STC, but if we get a few hundred of them, that'll make -- that'll add up. Relative to our efforts to exercise the option, the bank information that I was giving you is coming from the banking community that we're trying to deal with in Western Kansas. And also, that source -- we have 2 other sources that we are talking to and providing information to, and we'll see how those work out, if the agricultural market really gets bad. So that's status of acquisition of the land and building in Dodge City. It's still moving along but it's not moving as fast as we thought it was going to. I think we're in good shape. I'm feeling good about where we're going. I'm concerned a little bit about the economy and that kind of thing, but there isn't anything we can do about that except keep taking orders and shipping products. And we have seemed to be doing that. You have any other comments, Craig? Craig D. Stewart: No. Clark D. Stewart: David, I think we're ready for questions.

All right. So Ross, why don't we open up the floor to questions.

[Operator Instructions] And our first question comes from Martin Kaplan [ph].

Yes. I'm a stockholder, and I have 2 questions regarding the Board of Directors. It's been brought up at numerous conference calls in previous quarters about the lack of commitment from directors owning stock in the company. I would like to know, since the last conference call, when this issue was raised, have the directors made substantial investments in Butler? Clark D. Stewart: Well, you would know that if we had, and we haven't. And I was -- I've been looking at the stock chart, and I notice it says on there that insiders haven't had any activity in 5 years. And so I decided -- I started talking to the attorneys yesterday. I said, "I don't like this. I want to be able to do something." And so, so far, I haven't got approval to buy 10 shares or 10,000 or anything else. But I'm working on that. As I was...

Well, as a stockholder, if the directors -- Board of Directors do not have a substantial interest in the company, I feel that the board should immediately replace those directors who do not have a substantial investment. And I'm not talking about $10,000. I'm talking about upwards of $100,000 to $250,000 investment. And my second issue with the Board of Directors is, I believe that -- I'm not sure exactly how the compensation committee is structured. But if the Board of Directors approves management compensation and the Board of Directors does not have a financial interest in the company, it really doesn't seem that the board without an investment in stock is acting in the best interest of those of us who do have an investment. Clark D. Stewart: Well, thank you for your comments. We appreciate your thoughts on the matter.

Our next question comes from Tim McMillan [ph].

With the earnings for first quarter and backlog holding strong, would you anticipate to further earnings over the next quarter or 2? I mean, is that a reasonable assumption based on what you're saying or saying right now? Clark D. Stewart: Tim, I'd like to tell you that's true, but I've done that in the past and got burned every time. So I'm not going to tell you that it's good or bad, but I'm happy.

But you are -- I'm detecting your tone is stronger on backlog and orders. Is that a reasonable... Craig D. Stewart: We're -- Tim, we're pretty comfortable with, especially, the aerospace business in terms of, it's been as strong as it's been in a while. So you can make your assumptions based on that, but I think we're feeling pretty encouraged by where it's at and where it's headed here over the next 3 to 6 months.

Our next question comes from Tony Piscade [ph].

I'd like to direct this, I guess, more toward Craig since you're the CFO. I'm wondering, have you ever done a cost-benefit analysis of the structure of the company as far as it being a publicly held company? I know that from years past, the main purpose of being a publicly held company is to have direct access to the capital markets and so forth and so on. I don't see at $0.18 a share that you all are going to be tapping the equity markets any time soon. The cost of being a public company has got to be well into the hundreds of thousands of dollars by the time, you're paying a Board of Directors who, as the previous caller has said, seems to refuse to or be unable, for whatever reason, to make a commitment to the company. That alone is about $125,000 to $150,000 on expenses just paying the board, plus all the filing and so forth and so on that you have to go through, not to mention the profound joy that I'm sure you all have in having these conference calls every 3 months. Have you done a cost-benefit analysis to see why a tiny, little company like Butler really benefits from being a publicly held company? Craig D. Stewart: We understand what the costs are with being a public company, and we're constantly evaluating what's in the best interest of the company. But it is expensive to be a public company, and there's a lot of time and effort that goes into it as well. There are some benefits, but there are some drawbacks as well. So I mean, we're -- we look at it and we understand what the cost is and also what the benefits are.

Do you know, off the top of your head, approximately what you've come up with as far as the total costs of being a publicly held company over a period of a year? It's got to be, I mean I'm guessing, $300,000, $400,000 minimum. Craig D. Stewart: I don't think it's quite that much. I'd say $200,000 to $250,000, somewhere in that range. That probably didn't include employee time to deal with some of this stuff. But just in terms of pure cash out the door, that's about what it is.

Right. And you feel -- now you say that you have seen certain benefits of being a public company. Can you enumerate any of those benefits? Clark D. Stewart: Yes. I would suggest that we have these meetings every year to talk to everybody. That's kind of interesting. And we have these goals, Tony, so it's not all that bad. Banking situation is easier that way, and it's probably worth a couple hundred thousand. I don't think we spend $250,000. I think it's less than that but...

And that includes the $100-and-some thousand that you're paying to the Board? Craig D. Stewart: It's $100,000 to the board. It's 3 directors at $20,000 and a Chairman at $40,000. Clark D. Stewart: Yes. So that's all there is there. We -- there's no real expenses of the board or anything like that.

Right. It just seems that we're dealing with such a low base situation as far as total revenues and so forth, a concern that, that does add up. And I was just kind of wondering, last night, when I was sitting at my desk trying to figure out, "Okay, what do I ask them this?" Just to put a burr under your saddle blanket. But -- and I came up with that. And it's really more of a macro situation to -- if it were me, I think I would be tempted to look at alternative structuring of the company, but that's just me. Craig D. Stewart: Well, yes, that's -- it is something that is constantly evaluated as to what's the best structure to be in. And you're right, there's no market, in typical public company terms, for being able to go out and raise capital by using the company stock at $0.18 a share. That isn't going to happen any time soon.

At $0.18, it's not a currency. Craig D. Stewart: Right. So that benefit that you normally have as a public company isn't there and hasn't been there for us for a long time.

Right. Just one ancillary question. I know we've discussed this before. Has anything at all been done or do you still feel as though it's premature to try to develop some sort of relationship with Wall Street as far as either developing a relationship with individual market makers or putting the name Butler out there as far as it being a potential attractive value investment, hidden value investment, whatever to Wall Street? I speak to a number of people in the course of a day about small companies like this, and just nobody has ever heard the name before. They've never heard the name. And here you guys have been around since, what is it, 1959 or something like that. I know that one of the clarion calls in each one of these quarterly statements is that what we're attempting to do -- what we, current management, is attempting to do is enhance shareholder value. Well, you know and I know the only way you can enhance shareholder value is to have the stock go up. There's no dividend involved. There's no stock repurchase or anything like that. So what's the game plan? I think that's what a lot of us would just sort of like to know. What is the game plan to "enhance shareholder value?" Craig D. Stewart: Well, and Tony, I think from that standpoint in terms of getting awareness out there, we went through the exercise here a few years ago of doing that. And I think, at this point, we'd be premature to go do something similar or really try to raise the awareness level too significantly until we've got a strong story to tell. I think part of that hinges is around getting the casino and the aerospace to where they're 2 separate stories. That was one of the big things we ran into the last time, was these fund managers had -- either they were aerospace people or they were casino people, but not very many of them wanted to deal with a company that was both. You've been around us a long time and know that it's a complicated story to tell. And if -- even some of them that really enjoyed hearing about the company and thought it was a neat deal, they'd look at you then and tell you, "Well, that's too hard for me to explain to my investors." And so until we've got a simpler story and something that's got a little more bite to it, I don't think we want to go down that path of spending the money on the public relations, investor awareness side right now until we've got something that's more enduring than just 3 or 6 months' worth of good earnings and that type of thing. Because we saw how quickly that erodes and then you're dealing with a whole separate issue. So I think you want it to be sustainable and more excitement going with the story when you go out and tell it if you're going to spend that money on it.

I agree with that. I think that one of the big conundrums that we as shareholders face is the fact that we're talking about a company here -- the total company has a market capitalization of -- just ballparking it at $12 million, okay? So we feel as though 2 $6 million companies is going to be more liquid or more easy to attract institutional interest? Craig D. Stewart: Well, I would hope it wouldn't be 2 $6 million. I would hope that in the -- and what we were told when we were dealing with it is that your market cap shows a significant discount for not being in one business or the other. So the hope in being able to unlock some of the shareholder value would be in the fact that you've got clear stories on each one and you won't suffer that discount anymore.

Now I don't know whether this is the proper venue to discuss this. If it's not, just tell me to shut up. But if you do -- if you are successful in refinancing the casino element of the business, is the long-term plan to increase the size of that sector of the business by maybe doing a capital raise at that point and perhaps expanding it from 1 casino in Dodge City to other opportunities that are out there for like-sized small casinos? In other words, where are you going to get the growth story from? Clark D. Stewart: Yes. That's -- Tony, that's clearly the point of splitting the thing out and trying to get the casino financed outside. I was -- I've been spending probably half my time working on this stuff, and I thought we would be in a position where we could tell you we've made some progress. And quite the contrary. A week ago, we figured out that the Federal Reserve and the state banking authorities are going out there harassing all these banks. And the end result of that is I'm not sure how quick we can move. We originally planned on trying to have that done by the end of this -- the current quarter, but it's not going to happen.

Well, if the commercial banking side is not a viable alternative at this time, what about private equity? Clark D. Stewart: Well, we've had some people say they would do a portion of it, but we don't have anybody willing to do $40 million worth. Now if you have somebody willing to do that, I'd certainly be willing to talk to him. Craig D. Stewart: And that's probably a subject for a different time.

[Operator Instructions] And at this time, there appears to be no further questions. Clark D. Stewart: All right. David, I think we're done. I want to thank everyone for your comments and your observations. It's important to us that we hear where you're coming from and what you'd like to have us do. Because we think we do have a great opportunity. It's just that we've got to get all the ducks lined up at the same time. So we appreciate your help and spending your time on this conference call. Thank you very much. David, I think we're done.

Thank you, everyone.

This concludes today's conference call. Thank you for attending.