Good morning, ladies and gentlemen. Today is Tuesday, September 19, and welcome to the Butler National Corporation First Quarter Fiscal 2018 Financial Results Conference Call. [Operator Instructions] Your call leaders for today's call are David Drewitz, Creative Options Communications; Clark Stewart, President and CEO; Craig Stewart, President of Aerospace Group. I will now turn the call over to Mr. Drewitz. You may begin.

Thank you, and good morning to everyone on the call. 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 provision as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks 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 of 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. Well, with that complete, I would like to turn the call over to Mr. Clark Stewart. Mr. Stewart? Clark D. Stewart: Thank you, Mr. Drewitz, and thank you, everyone, for taking your time this morning to listen to the Butler National status and participate in this call. We welcome all your questions after we have a chance to give you a brief description. So good morning, and thank you for attending. I have Craig here, and I -- Craig Stewart, the President of Aerospace. I have Tad, our Chief Financial Officer, with us this morning, and we'll go through the documents. You should have received a 10 -- Form 10-Q filing for the [ fourth ] period ended July 31, 2017. You should also have a press release covering that same document available to you at this point. I would remind you that our shareholder meeting, as defined in our proxy last year, is scheduled for the first week in November 2017, and we are on schedule for that meeting. As far as performance for this quarter, I -- as you know, the revenue is pretty much the same as it was last year, except for the fact that we are a little stronger and the casino's a little weaker -- Aerospace a little stronger and the casino was a little weaker than we had hoped for, but we're basically the same as last year. Our operating income, with the deduction for capital expenditures or development -- I shouldn't say capital, should see STC development was up $100,000. If we hadn't had done that and matched last year's, we'd have made $746,000 operating income instead of $711,000. So we'd have been a little better off. So for all practical purposes, the income's flat at $238,000 after taxes versus $224,000. Basically comfortable with the first quarter but not excited, so I think we'll do better as the year goes on. The backlog at the end of July is at $12.9 million. That's up 20% from where it was a year ago. It's up about, let's see, $0.5 million from July 14, so we were very lucky from the time we published the 10-K until we published the 10-Q and got some more orders. So I think our backlog is strong. It's strong in Tempe. It's strong at Aerospace. And of course, casino is what it is. It really doesn't have a backlog as such. So the climate, well, let's go through the 10-Q a little bit just to give you a feeling. As you will note on Page 3, the debt is down and as it's been going all along. Taxes are up, as you can see in there, showing at about $721,000. The total long-term debt and current maturities and all the accounts payable, that whole package is down about $1 million since April 30, which is a significant use of cash and, thus, good shareholder equity is up about $0.5 million since April 30. Net income, like it shows in there, attributed to the noncontrolling interest is down a little bit, so that means the casino's not as important as it might have been the previous year relative to total income. That's how you read that. You see the total income, the total net income is $426,000 versus $448,000, and the controlling interest -- or the noncontrolling interest deduction is $188,000 versus $224,000. So you -- we're -- a little more contribution from aerospace, thank you, Craig. And the casino just had a little problem with the hold, and I think it'll recover. So we did have plenty of visitors. We have plenty of play. We are hold percentage -- eventually, you have to pay the piper, so the hold percentage cycles. So that's what happened there. And that's about -- the line of credit as shows in the -- as shown in the 10-Q is sitting at about $2.5 million against a $5 million line, so we're in pretty good cash position. Craig, if you want to discuss any questions on -- our repurchase program, you should address it now, and then let's go to the... Craig D. Stewart: Okay. The stock repurchase program, now that we're through with the first quarter and the press release and earnings announcement and all of that, can begin again. We're now out of a quiet period, where we can get back in the market and repurchase Butler stock. We've been in a quiet period since April 30 for the most part, so we are looking forward to getting back into the market and repurchasing some of our stock. The -- I will touch on the -- on aerospace side of things. Avcon continues to be busy and strong with the modifications and the business. And Tempe with the -- regarding the Gun Control Units, is extremely strong and is really about -- is over half of that backlog is out in Tempe. So it's, yes, we're excited to see that. The ADS-B for the avionics piece of the business is going to be strong here for the next couple of years as we head towards the FAA mandate of -- in 2020. So it -- the outlook for the aerospace is pretty strong at this point. Clark D. Stewart: Thank you, Craig. The overall -- I'd call your attention to the overall management comments in the press release, which basically is telling you that we have a positive beginning, as indicated. It's not a great one, but it's a positive one. And it's increased revenue in -- up 2%. And the Aerospace Products are up 8%, and the decrease of 1% in Professional Services, as I told you, is related primarily to the hold -- the machine hold out there at Boot Hill. And let's see. I think that's about it. We've covered the fact that -- we've covered the difference in the income from last year to this year, at $746,000 versus $711,000 if we had not charged the $100,000 to the product development. It's important that we continue that product development to keep our aerospace segment in business, so I think that has to happen. I don't have anything else here. The backlog, we covered. I believe I'm pretty good on my checklist. So David, I think that while we haven't covered the Kansas climate, that's something we should cover. And as you know, we're waiting on a governor change. Gov. Brownback is supposed to be appointed to a position within the Trump White House. That has not occurred yet, but we expect that any time. And Topeka's kind of in an on-hold position. The other thing about the climate is that Kansas Lottery announced plans here at the last lottery meeting that they were going to double the lottery revenue in the next 5 years. We don't know whether that's good or bad for us, but it's good for the state. And I think that also is a part of our extension program that we're kind of holding on until we get the governor changed and know where the direction is. As far as the option, the exercise of the option to purchase the land and building, we have plans underway to exercise that option in some form or other to allow us to add some equity to the balance sheet as we go forward. As far as expanded gaming and the legislative session in 2018, we expect it to return again, as it did this year. That cost us -- cost the casino industry in Kansas considerable amount of money to deal with that, with the lobbyists and everything else. The desire of the legislature, as we understand it, is for the casino group to resolve the expanded gaming question and try to come up with something to move forward. So if we can do that, that will save a lot of money and also get a longer-term stability in the gaming business in Kansas. So with that, David, I think I'm done with my comments, and we're ready for questions, plus I ran out of my 10 minutes. Thank you very much. Appreciate everyone's patience.

Well, very good.

[Operator Instructions] Our first question comes from [ Roy Urako ].

Clark, I would like to know why the earning report for the fourth quarter and the year and this first quarter is not being released on the Dow Jones, Yahoo! Business Wire. I hit my Morgan Stanley account or I'd hit my TD Ameritrade account and it shows no recent information. David sends -- I get this e-mail from David that gives me the statistics. That's great. But I have a number of friends who own the stock that never know when a meeting is because they don't get the information. So I was just wondering if you know why Dow Jones is not picking up this like they used to do. Craig D. Stewart: This is Craig. [ Roy ], I appreciate your question. And with the -- when we went to OTCQB on the -- with -- in the OTC Markets Group, which is a step up, they have their own disclosure service that we're using. The easiest way to find out all the information on the company and see everything is to look at the OTC Markets website, which is otcmarkets.com and enter the BUKS symbol. And that'll put -- that will give you everything, including -- I think, it's got real-time market quotes in there, yes, the high bid, the high ask and all that. And all of our information will always be there. And so that's probably the easiest place to find that. I don't fully understand the -- how that gets to Dow Jones, Yahoo! and all that stuff, but the disclosure service through OTC Markets is what we're using at this point.

Okay. Maybe that'll change later on, but it used to be that we would get that information, immediately it would come on. I watch the SEC filings and I saw when that was released last Thursday. One other thing quickly. Do we still have the 600,000 shares in the Treasury that I talked to Clark about some years back about giving a stock dividend, and he said, "We're probably going to go ahead and cancel those shares." Do we still have those in the treasury? Clark D. Stewart: Yes, they're there. The -- let me deal with your first question. We used to send press releases out on the fax, and I still want to do that, but I don't know that anybody gets a fax. So I just thought I'd tell you that, [ Roy ]. The real -- the next question on the shares, is it really [ 700 ]? The shares we purchased back are sitting on the balance sheet as deductions in equity. And those are really treasury shares, which means they're -- in order for us to do anything with them, they'd have to be reregistered, and it's no different than issuing new shares. So we really can't do anything with them other than cancel them, which we couldn't do that. But we kind of wanted to keep the record to show how many we actually had repurchased over time. As far as doing anything with them. There's nothing going to happen to them. They don't vote. They don't do anything. So they're just sitting there. But it is a record of how many we've acquired in the past. So that's the definition of the treasury shares as we see them, and I think for all practical purposes, that's right. The attorney said if we got to issue them, we got to reregister them. And that's no different than a brand-new share that we don't want to issue. So that's the situation. Does that answer the question?

Yes. And I'm very pleased with the progress you're making. I think everything looks very encouraging. So thank you, and keep up the good work. And have a good day. Clark D. Stewart: You bet. Thank you for the question, [ Roy ].

Our next question comes from [ Timothy Macmillan ].

It does appear that you are turning things around on the operations of the company. I'm still concerned, Clark, and I'd like for you to address the registering on the 20% dilution. What are you thinking about on parameters as far as option prices? And who would be eligible for them? And what premium above the market, and this and that? It seemed like you want to get them registered, and I'd just like to know what your thoughts are going forward with the issuance of those options and at what prices and so forth. Clark D. Stewart: Well, the only thing I can tell you, Tim, is the register -- the registering didn't do anything other than make them eligible to be issued, I guess. The Compensation Committee of the Board of Directors is the one that decides when and how much and all that kind of thing relative to when we're going to issue and that. I don't -- I'm not really a part of that discussion, so I intentionally can't say much about it. And I don't know the answer to your question. So I -- that's the real key.

Well, I think the obvious observation, since the registering of the stock, is the stock has dropped 20%. It used to trade between $32 and $36. It's now trading between $27 and $30. And I think, Clark, as long as there is a question -- when you leave a question out in the marketplace like this, it's a pretty severe dilution. And you don't put details to it soon, you create a temporary cap on the stock, which appears right now to be $30. And all the good work I think you're doing is going to not affect the price of the stock. That's why I think you need to address this situation. I even think you need to talk to large shareholders in your company that has some ideas on this. Over the years, you've rightfully said your job's to run the company and not to be worried about the stock price because you really don't affect it that much. And I think you're doing a better job now, but when this situation's out there, it's causing your stock not to react appropriately. Clark D. Stewart: Well, I appreciate your observation, Tim, and you're probably right, we do have an unknown out there. I think the 20% dilution is considerably overstated. We're not about to do that in one little fell swoop that I'm aware of. So I don't think that's a valid observation, but we do have to do some things eventually here. The Compensation Committee has discussed with me the need for employee retention and long-term commitment to the company. Because as we get further up here with more skilled people than we've ever had before and hire tech people than we've had before, we're in a situation where we could easily be losing people for higher-paid jobs. I mean, that's all there is to it. We pay very well, but we're certainly not at the top of the pay curve by any stretch of the imagination, and we've got to be cognizant of that. We don't have everybody staffed 5-people deep and we can afford to lose anybody any time and be just fine. That isn't how it works. So operate pretty lean and mean, as you know, Tim, and that's really good for profit but it's not good for long-term planning sometimes. So we're trying to balance all that, and the Compensation Committee has studied that, as you know. We've had [ C biz ] in a couple, 3 times -- trying to outline the plan and what the best way to do, and I think they're still struggling with that. But eventually we're going to get there, and get a plan that everybody understands and that might keep people here. We have been fairly successful in hiring some good people, but you never know how long you can keep them. That's...

I think that's important, Clark. I've been in the stock since '81, 1981, and I think you also have to design this, not so much for keeping people, but also encouraging shareholders. The higher the price of the stock, the less you have to worry about a takeover coming that you don't want. So that's important, too. And I encourage the Compensation Committee and the Board of Directors to take that into effect. Good employees -- I don't think you've had a lot of turnover. So evidently, you're treating them pretty well. And -- but the shareholders is where I'm concerned about, and I think this thing needs to get addressed. And again, I strongly recommend with large shareholders or pockets of share that you listen to them because we have a little say in this thing also, and I would appreciate that. Clark D. Stewart: All right. Very good, Tim. Thank you for the question.

Our next question comes from [ Daniel Duff ].

Nice to see the ongoing improvements in operations. I have not heard you address the potential casino buyout situation. And if you can't address it now, is there a plan B for unlocking shareholder value here from these 2 very different divisions, discussions of which we've had for years and years? What's the situation? Is it ever going to come to a head? Are you considering spinning off the division if you cannot buy it? Are there other alternatives you're discussing? Please let me know. Clark D. Stewart: Yes, the answer is we are discussing all kinds of alternatives. So far, none of them really have panned out, but we have discussed spinning it off. We discussed buying out the interest in the minority partner. We have discussed buying the option on the land and the building. All those things have been public for some time. And what we haven't discussed was a change in the governor or the change in the Kansas Lottery. And some of those things that are brand new to the situation, we're trying to evaluate whether we spin it out as it stands right now or wait until we resolve some of these unknowns. So I think you have a good question, and we are on it, to some extent, as best we can move. You understand we have a new ingredient in the expanded gaming in Kansas, that we have not dealt with in the past, that surfaced this last spring. And we -- yes, the answer is yes, we're looking at that, and we're trying to decide at this point how we do approach it to protect the long-term value of Dodge City and Boot Hill Casino. And there are a lot of variables to that. So yes, we are considering it. We don't have an official plan that we can publish at this point, and you wouldn't expect us to. We do have meetings with the financial institution coming up here in the next couple of months, and we have the gaming show in Las Vegas, which we are -- have meetings scheduled out there. So we are active in it. We just can't disclose it all because it's not done there. It's not done yet.

I would encourage you to have some kind of a board-level time frame or specific plan that doesn't depend upon political situations, et cetera. And you need to make a decision at some point. It's been a long time coming. And I would reiterate the previous comments regarding dilution, which is egregious and ongoing. And you do have to pay attention to the stock, please. You can't just ignore it. But I do see a tremendous amount of value. You're trading at half the price of what you should be even without making any changes, but you do need to unlock that value within some reasonable time frame. Clark D. Stewart: Well, I appreciate it. I agree with you. We should unlock the value somehow, yes. I don't have a problem with that. Thank you very much for your question.

Our next question comes from [ Martin Kaplan ].

Yes, I have a question on the -- or a comment on the website. Under the management team, there are 3 officers listed and only 1 pictured. Under the Board of Directors, there are 6 positions with only 2 pictures. And on sales and service, there are 5 positions with only 2 pictures. So in the world of technology, where you can take a reasonably good picture with a cell phone, it seems that this would be a very simple thing to update to make the website look more professional. Craig D. Stewart: [ Martin ], this is Craig. I appreciate the comments. We're in the process of working on the website as we speak. So we will definitely try to get you more pictures up there, where you know what the team looks like and get the website looking a little bit better. So we're working on that. We definitely appreciate the comments on it. But yes, hopefully, we should have something out here in the next month or 2.

[Operator Instructions] At this time, we have no further questions. Clark D. Stewart: Thank you. David, sounds like we’re done. We've taken all the time...

Yes, we're good. Any closing statements, Clark? Clark D. Stewart: Well, I thank everyone for taking their time to discuss the Butler National Corporation first quarter results with us today, and we appreciate the questions. I think they were all good, valid questions, and we will work to address them. Thank you very much.

Thank you, everyone.

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