THROUGHOUT THIS POINT 2 ALL NON-TABULAR FINANCIAL RESULTS ARE PRESENTED IN THOUSANDS OF
Forward-Looking Statements Statements made in this report, other reports and proxy statements filed with theSecurities 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, hopes, 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," "hope," "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 endedApril 30, 2021 , and elsewhere herein or in other reports filed with theSEC . 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. The forward-looking statements in this report are only predictions and actual events or results may differ materially. In evaluating such statements, a number of risks, uncertainties and other factors could cause actual results, performance, financial condition, cash flows, prospects and opportunities to differ materially from those expressed in, or implied by, the forward-looking statements. These risks, uncertainties and other factors include those set forth in Item 1A (Risk Factors) of the Annual Report on Form 10-K for the fiscal year endedApril 30, 2021 , including the following factors: ? the geographic location of our casino; ? customer concentration risk; ? executive officers are family members; ? industrial business cycles; ? fixed-price contracts; ? development, production, testing and marketing of new products; ? loss of key personnel; ? risks associated with international sales; ? future acquisitions and investments; ? change of control restrictions; ? cyber-security threats; ? extensive regulation across our industries; ? evolving government regulations and law; ? changes in regulations of financial reporting; ? the stability of credit markets; ? potential impairment losses; ? marketability restrictions of our common stock; ? the possibility of a reverse-stock split; ? stock dilution caused by the annual employer match to our 401(k) plan; ? market competition; ? acts of terrorism and war; ? inclement weather and natural disasters; ? pandemics or other national health crisis (including COVID-19); ? fluctuating fuel and energy costs; ? extensive taxation; Except as expressly required by the federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. Results of operations in any past period should not be considered indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of the Company's common stock. Investors should also be aware that while the Company, from time to time, communicates with securities analysts; it is against its policy to disclose any material non-public information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility ofButler National Corporation . 16
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Table of Contents Management Overview Management is focused on increasing long-term shareholder value from increased cash generation, earnings growth, and prudently managing capital expenditures. We plan to do this by continuing to drive increased revenue from product and service innovations, strategic acquisitions, and targeted marketing programs. We have two separate reporting segments: Aerospace Products and Professional Services. Aerospace Products and Professional Services do not share the same customers and 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 provide architectural and engineering services. These reporting segments operate through various subsidiaries and affiliates listed in the Company's fiscal year 2021 Annual Report on Form 10-K. Aerospace Products. The Aerospace Products segment includes the manufacture, sale and service of electronic equipment and systems and technologies to enhance and support products related to aircraft. Additionally, we also operate severalFederal Aviation Administration (the "FAA") Repair Stations. Companies in Aerospace Products concentrate onLearjet ,Beechcraft King Air , Cessna turbine engine, Cessna multi-engine piston and Dassault Falcon 20 aircraft. Specifically, the design, distribution and support for products for older aircraft, or "Classic" aircraft are areas of focus for companies in Aerospace Products.
Some products. The products that the companies in this group design, design, manufacture, integrate, install, repair and maintain:
? Aerial surveillance products ? GARMIN GTN Global Position
System
Navigator with Communication Transceiver
? Aerodynamic improvement products? JET autopilot products
? Airspeed and altimeter systems ? Electrical systems and switching equipment ? Avcon Fins ? Noise suppression systems ? ADS-B (transponder) systems ? Rate gyroscopes ? Conversion of passenger ? Replacement vertical accelerometers configurations to cargo ? Cargo/sensor carrying pods ? Provisions for external stores
? Electronic navigation instruments,? Attitude heading reference systems
radios and transponders Modifications. The companies in Aerospace Products have authority pursuant to Federal Aviation Administration Supplemental Type Certificates ("STCs") and Parts Manufacturer Approval ("PMA"), to build required parts and subassemblies and to make applicable installations. Companies in Aerospace Products perform modifications in the aviation industry including:
? Aerial photography skills? Extended tip fuel tanks
? Aerodynamic improvements ? Radar systems ? Avionics systems ? ISR - Intelligence Surveillance Reconnaissance ? Cargo doors ? Special mission modifications ? Conversion from passenger to ? Stability enhancements freighter configuration ? Extended doors ? Traffic collision avoidance systemsSpecial Mission Electronics . We supply defense-related, commercial off-the-shelf products to various commercial entities and government agencies and subcontractors in order to update or extend the useful life of aircraft with older components and technology. These products include: ? Cabling ? HangFire Override Modules ? Electronic control systems ? Test equipment
? Gun control units for Apache and? Land and Sea Gun Control Units
Blackhawk helicopters based military vehicles Professional Services. The Professional Services segment includes the management of a gaming facility and related dining and entertainment facilities inDodge City, Kansas .Boot Hill Casino and Resort features approximately 645 slot machines and 20 table games. Due to COVID-19,Boot Hill Casino and Resort currently operates 520 slot machines and 16 table games. Companies in Professional Services also provide licensed architectural services, including commercial and industrial building design, and engineering services. Boot Hill.Butler National Service Corporation ("BNSC"), viaBHCMC, LLC ("BHCMC"), a company in Professional Services, has managedThe Boot Hill Casino and Resort inDodge City, Kansas ("Boot Hill") since 2009 pursuant to the Lottery Gaming Facility Management Contract, by and among BNSC, BHCMC and theKansas Lottery , originally datedDecember 8, 2009 , as subsequently amended ("Boot Hill Agreement"). As required byKansas law, all games, gaming equipment and gaming operations at Boot Hill are owned and operated by theKansas Lottery .
Architectural and engineering services. Professional service firms provide licensed architectural and engineering services, including the design of commercial and industrial buildings.
17
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Table of Contents COVID-19 Overview The pandemic caused by the disease COVID-19 was first reported inWuhan, China inDecember 2019 and has since spread throughout the world. Financial markets have been volatile in 2020 and 2021, primarily due to uncertainty with respect to the severity and duration of the pandemic. The pandemic resulted in federal, state and local governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, "shelter in place" and "stay at home" orders, travel restrictions or bans, business curtailments, school closures, and other protective measures. Our aerospace segment qualified as "essential" under applicable federal guidance and state orders. The facilities have continued operations. We are enforcing social distancing and enhanced health, safety and sanitization measures in accordance with guidelines from theCenter for Disease Control (the "CDC"). Our professional services operations at theBoot Hill Casino & Resort was forced to close fromMarch 18, 2020 thruMay 21, 2020 . The casino reopened to the public onMay 22, 2020 with reduced hours to allow for extra time for cleaning and sanitizing in accordance withCDC guidelines and limited number of games and food offerings. We are also continuing to enforce social distancing measures throughout the casino and are subject to state mandated restrictions. Since reopening theBoot Hill Casino & Resort we have experienced lower customer headcount, which has been off-set by a larger net revenue per customer. The COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020 and continues to impact us. We face numerous uncertainties in estimating the direct and indirect effects on our present and future business operations, financial condition, results of operations, and liquidity. Due to several rapidly changing variables related to the COVID-19 pandemic, we cannot reasonably estimate future economic trends and the timing of when stability will return. As schools, businesses and the economy in general have slowly reopened, and vaccinations rates in our operating territory improve and new infections decline, we have continued to see improvements in customer headcount. However, the unpredictable nature of the pandemic could again lead to closures, decreased traffic and demand, and increased COVID-19- related operating expenses, for the foreseeable future. While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to emerge from the pandemic. Results Overview The six months endedOctober 31, 2021 revenue increased 29% to$37.2 million compared to$29.0 million in the six months endedOctober 31, 2020 . In the six months endedOctober 31, 2021 the professional services revenue was$19.4 million compared to$13.0 million in the six months endedOctober 31, 2020 , an increase of 49%. In the six months endedOctober 31, 2021 the Aerospace Products revenue was$17.8 million compared to$16.0 million in the six months endedOctober 31, 2020 , an increase of 12%. The six months endedOctober 31, 2021 net income increased to$6.1 million compared to a net income of$306 in the six months endedOctober 31, 2020 . The six months endedOctober 31, 2021 , operating income increased to$8.8 million from an operating income of$1.8 million in the six months endedOctober 31, 2020 . RESULTS OF OPERATIONS SIX MONTHS ENDEDOCTOBER 31, 2021 COMPARED TO SIX MONTHS ENDEDOCTOBER 31, 2020 Six Months Six Months Ended October Percent of
End of October Percentage change in percentage (in thousands of dollars)
31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Revenue: Professional Services$ 19,401 52 %$ 13,001 45 % 49 % Aerospace Products 17,836 48 % 15,960 55 % 12 % Total revenue 37,237 100 % 28,961 100 % 29 % Costs and expenses: Costs of Professional Services 7,578 20 % 6,828 24 % 11 % Cost of Aerospace Products 11,939 32 % 11,788 41 % 1 % Marketing and advertising 2,471 6 % 1,845 6 % 34 % Employee benefits 1,121 3 % 1,151 4 % -3 % Depreciation and amortization 1,407 4 % 2,118 7 % -34 % General, administrative and other 3,956 11 % 3,416 12 % 16 % Total costs and expenses 28,472 76 % 27,146 94 % 5 % Operating income$ 8,765 24 %$ 1,815 6 % 383 % 18
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Table of Contents Revenue: Revenue increased 29% to$37.2 million in the six months endedOctober 31, 2021 , compared to$29.0 million in the six months endedOctober 31, 2020 . See "Operations by Segment" below for a discussion of the primary reasons for the increase in revenue.
? Professional services derive their income (a) from professional management
services in the gaming industry through
(“BNSC”) and
engineering and management support services. Professional turnover
Services increased 49% for the six months for
compared to$13.0 million atOctober 31, 2020 . ? Aerospace Products derives its revenue by designing, engineering,
manufacture, install, maintain and repair conventional products and
current production aircraft. Aerospace Products revenue increased 12% for the
six months to
October 31, 2020 . Costs and expenses: 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 increased 5% in the six months endedOctober 31, 2021 to$28.5 million compared to$27.1 million in the six months endedOctober 31, 2020 . Costs and expenses were 76% of total revenue in the six months endedOctober 31, 2021 , as compared to 94% of total revenue in the six months endedOctober 31, 2020 . Costs of Professional Services increased 11% in the six months endedOctober 31, 2021 to$7.6 million compared to$6.8 million in the six months endedOctober 31, 2020 . Costs were 20% of total revenue in the six months endedOctober 31, 2021 , as compared to 24% of total revenue in the six months endedOctober 31, 2020 . Costs of Aerospace Products increased 1% in the six months endedOctober 31, 2021 to$11.9 million compared to$11.8 million for the six months endedOctober 31, 2020 . Costs were 32% of total revenue in the six months endedOctober 31, 2021 , as compared to 41% of total revenue in the six months endedOctober 31, 2020 . Marketing and advertising expenses increased 34% in the six months endedOctober 31, 2021 , to$2.5 million compared to$1.8 million in the six months endedOctober 31, 2020 . Expenses were 6% of total revenue in the six months endedOctober 31, 2021 , as compared to 6% of total revenue in the six months endedOctober 31, 2020 . Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions. Employee benefits expenses as a percent of total revenue was 3% in the six months endedOctober 31, 2021 , compared to 4% in the six months endedOctober 31, 2020 . These expenses decreased 3% to$1.1 million in the six months endedOctober 31, 2021 , from$1.2 million in the six months endedOctober 31, 2020 . These expenses include the employers' share of all federal, state and local taxes, paid time off for vacation, holidays and illness, employee health and life insurance programs and employer matching contributions to retirement plans. Depreciation and amortization expenses as a percent of total revenue was 4% in the six months endedOctober 31, 2021 , compared to 7% in the six months endedOctober 31, 2020 . These expenses decreased 34% to$1.4 million in the six months endedOctober 31, 2021 from$2.1 million in the six months endedOctober 31, 2020 . These expenses include depreciation related to owned assets being depreciated over various useful lives and amortization of intangible items including theKansas privilege fee related to theBoot Hill Casino being expensed over the initial term of the gaming contract with theState of Kansas .BHCMC, LLC depreciation and amortization expense for the six months endedOctober 31, 2021 was$1.2 million compared to$1.8 million in the six months endedOctober 31, 2020 . General, administrative and other expenses as a percent of total revenue was 11% in the six months endedOctober 31, 2021 , compared to 12% in the six months endedOctober 31, 2020 . These expenses increased 16% to$4.0 million in the six months endedOctober 31, 2021 , from$3.4 million in the six months endedOctober 31, 2020 . Other expense: Interest expense was$1.3 million in the six months endedOctober 31, 2021 , compared with interest expense of$1.7 million in the six months endedOctober 31, 2020 . Interest related to obligations ofBHCMC, LLC was$1.1 million in the six months endedOctober 31, 2021 compared to$1.5 million in the six months endedOctober 31, 2020 . 19
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Table of Contents Operations by Segment We have two operating segments, Professional Services and Aerospace Products. The Professional Services segment includes revenue contributions and expenditures associated with casino management services and professional architectural, engineering and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft.
The following table presents a summary of our segment information for the half-year ended.
Six Months Six Months Ended October Percent of Ended October Percent of Percent Change (dollars in thousands) 31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Professional Services Revenue Boot Hill Casino$ 19,237 99 %$ 12,863 99 % 50 %
Management / Professional
Services 164 1 % 138 1 % 19 % Revenue 19,401 100 % 13,001 100 % 49 % Costs of Professional Services 7,578 39 % 6,828 52 % 11 % Expenses 6,464 33 % 5,446 42 % 19 % Total costs and expenses 14,042 72 % 12,274 94 % 14 % Professional Services operating income before former noncontrolling interest in BHCMC, LLC$ 5,359 28 % $ 727 6 % 637 % Six Months Six Months Ended October Percent of Ended October Percent of Percent Change (dollars in thousands) 31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Aerospace Products Revenue$ 17,836 100 %$ 15,960 100 % 12 % Costs of Aerospace Products 11,939 67 % 11,788 74 % 1 % Expenses 2,491 14 % 3,084 19 % -19 % Total costs and expenses 14,430 81 % 14,872 93 % -3 % Aerospace Products operating income$ 3,406 19 %$ 1,088 7 % 213 % Professional Services
? Professional Services revenue increased 49% for the half-year ended
ended
In the past six months
received for the
for the six months ended
distributions reduced gross receipts by
income from
to a reduction in gross receipts of
of
income to
31, 2020. The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed
architectural services. Revenue from Professional Services excluding Boot Hill
Casino increased 19% to$164 for the six months endedOctober 31, 2021 , compared to$138 for the six months endedOctober 31, 2020 .
? Professional services costs increased 11% during the six-month period ended October
31 2021 to
ended
six months endedOctober 31, 2020 . ? Expenses increased 19% in the six months endedOctober 31, 2021 to
2020. Spending represented 33% of total segment revenue for the six months ended
October 31, 2021 , as compared to 42% of segment total revenue in the six months endedOctober 31, 2020 . Aerospace Products
? Turnover increased by 12% for
2021, compared to
the increase in income is mainly due to an increase in special missions
electronics company
of$957 .
? Aerospace product costs increased 1% in the end of the six-month period
2021 to
ended
six months endedOctober 31, 2020 . ? Expenses decreased 19% in the six months endedOctober 31, 2021 to
2020. Spending represented 14% of total segment revenue for the six months ended
October 31, 2021 , as compared to 19% of segment total revenue in the six months endedOctober 31, 2020 . 20
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SECOND QUARTER OF FISCAL 2022 COMPARED TO SECOND QUARTER OF FISCAL 2021
Three Months Three Months Ended October Percent of Ended October Percent of Percent Change (dollars in thousands) 31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Revenue: Professional Services $ 9,676 51 % $ 7,648 48 % 27 % Aerospace Products 9,417 49 % 8,324 52 % 13 % Total revenue 19,093 100 % 15,972 100 % 20 % Costs and expenses: Costs of Professional Services 3,877 20 % 3,418 21 % 13 % Cost of Aerospace Products 5,927 31 % 6,687 42 % -11 % Marketing and advertising 1,267 7 % 893 6 % 42 % Employee benefits 546 3 % 566 3 % -4 % Depreciation and amortization 705 4 % 1,075 7 % -34 % General, administrative and other 2,028 10 % 1,646 10 % 23 % Total costs and expenses 14,350 75 % 14,285 89 % 0 % Operating income $ 4,743 25 % $ 1,687 11 % 181 % Revenue: Revenue increased 20% to$19.1 million in the three months endedOctober 31, 2021 , compared to$16.0 million in the three months endedOctober 31, 2020 . See "Operations by Segment" below for a discussion of the primary reasons for the increase in revenue.
? Professional services derive their income (a) from professional management
services in the gaming industry through
(“BNSC”) and
engineering and management support services. Professional turnover
Services increased by 27% for the three months for
2021 compared to$7.6 million atOctober 31, 2020 . ? Aerospace Products derives its revenue by designing, engineering,
manufacture, install, maintain and repair conventional products and
current production aircraft. Aerospace Products revenue increased 13% for the
three months at
October 31, 2020 . Costs and expenses: 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 increased 0% in the three months endedOctober 31, 2021 to$14.4 million compared to$14.3 million in the three months endedOctober 31, 2020 . Costs and expenses were 75% of total revenue in the three months endedOctober 31, 2021 , as compared to 89% of total revenue in the three months endedOctober 31, 2020 . Costs of Professional Services increased 13% in the three months endedOctober 31, 2021 to$3.9 million compared to$3.4 million in the three months endedOctober 31, 2020 . Costs were 20% of total revenue in the three months endedOctober 31, 2021 , as compared to 21% of total revenue in the three months endedOctober 31, 2020 . Costs of Aerospace Products decreased 11% in the three months endedOctober 31, 2021 to$5.9 million compared to$6.7 million for the three months endedOctober 31, 2020 . Costs were 31% of total revenue in the three months endedOctober 31, 2021 , as compared to 42% of total revenue in the three months endedOctober 31, 2020 . Marketing and advertising expenses increased 42% in the three months endedOctober 31, 2021 , to$1.3 million compared to$0.9 million in the three months endedOctober 31, 2020 . Expenses were 7% of total revenue in the three months endedOctober 31, 2021 , as compared to 6% of total revenue in the three months endedOctober 31, 2020 . Marketing and advertising expenses include advertising, sales and marketing labor, gaming development costs, and casino and product promotions. Employee benefits expenses as a percent of total revenue was 3% in the three months endedOctober 31, 2021 , compared to 3% in the three months endedOctober 31, 2020 . These expenses decreased 4% to$546 in the three months endedOctober 31, 2021 , from$566 in the three months endedOctober 31, 2020 . These expenses include the employers' share of all federal, state and local taxes, paid time off for vacation, holidays and illness, employee health and life insurance programs and employer matching contributions to retirement plans. 21
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Depreciation and amortization expenses as a percent of total revenue was 4% in the three months endedOctober 31, 2021 , compared to 7% in the three months endedOctober 31, 2020 . These expenses decreased 34% to$705 in the three months endedOctober 31, 2021 from$1.1 million in the three months endedOctober 31, 2020 . These expenses include depreciation related to owned assets being depreciated over various useful lives and amortization of intangible items including theKansas privilege fee related to theBoot Hill Casino being expensed over the initial term of the gaming contract with theState of Kansas .BHCMC, LLC depreciation and amortization expense for the three months endedOctober 31, 2021 was$575 compared to$954 in the three months endedOctober 31, 2020 . General, administrative and other expenses as a percent of total revenue was 10% in the three months endedOctober 31, 2021 , compared to 10% in the three months endedOctober 31, 2020 . These expenses increased 23% to$2.0 million in the three months endedOctober 31, 2021 , from$1.6 million in the three months endedOctober 31, 2020 . Other expense: Interest expense was$640 in the three months endedOctober 31, 2021 , compared with interest expense of$1.1 million in the three months endedOctober 31, 2020 . Interest related to obligations ofBHCMC, LLC was$576 in the three months endedOctober 31, 2021 compared to$1.0 million in the three months endedOctober 31, 2020 . Operations by Segment 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, engineering and management support services. Aerospace Products derives its revenue by designing, engineering, manufacturing, installing, servicing and repairing products for classic and current production aircraft.
The following table presents a summary of our segment information for the three months ended.
Three Months Three Months Ended October Percent of
End of October Percentage change in percentage (in thousands of dollars)
31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Professional Services Revenue Boot Hill Casino $ 9,573 99 % $ 7,555 99 % 27 % Management/Professional Services 103 1 % 93 1 % 11 % Revenue 9,676 100 % 7,648 100 % 27 % Costs of Professional Services 3,877 40 % 3,418 45 % 13 % Expenses 3,433 36 % 2,714 35 % 26 % Total costs and expenses 7,310 76 % 6,132 80 % 19 % Professional Services operating income before former noncontrolling interest in BHCMC, LLC $ 2,366 24 % $ 1,516 20 % 56 % Three Months Three Months Ended October Percent of
End of October Percentage change in percentage (in thousands of dollars)
31, 2021 Total Revenue 31, 2020 Total Revenue 2020-2021 Aerospace Products Revenue $ 9,417 100 % $ 8,324 100 % 13 % Costs of Aerospace Products 5,927 63 % 6,687 80 % -11 % Expenses 1,113 12 % 1,466 18 % -24 % Total costs and expenses 7,040 75 % 8,153 98 % -14 % Aerospace Products operating income $ 2,377 25 % $ 171 2 % 1290 % 22
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Table of Contents Professional Services
? Professional Services revenue increased 27% for the quarter ended
ended
During the three months ended
received for the
the three months have ended
distributions reduced gross receipts by
income from
to a reduction in gross receipts of
of
income to
ended
31, 2020. The remaining management and Professional Services revenue includes professional management services in the gaming industry, and licensed
architectural services. Revenue from Professional Services excluding Boot Hill
Casino grew 11% for
compared to$93 for the three months endedOctober 31, 2020 .
? Professional services costs increased 13% in the quarter ended in October
31 2021 to
ended
three months endedOctober 31, 2020 . ? Expenses increased 26% in the three months endedOctober 31, 2021 to
2020. Spending represented 36% of total segment revenue for the three months ended
months endedOctober 31, 2020 . Aerospace Products
? Turnover increased by 13% for
2021, compared to
increase in revenue is primarily due to an increase in special mission electronics business of$1.1 million .
? Aerospace product costs fell 11% in the quarter ended October
31 2021 to
ended
three months endedOctober 31, 2020 . ? Expenses decreased 24% in the three months endedOctober 31, 2021 to
2020. Spending represented 12% of total segment revenue for the three months ended
months endedOctober 31, 2020 . Employees Other than persons employed by our gaming subsidiaries there were 115 full time and 4 part time employees onOctober 31, 2021 , compared to 111 full time and 5 part time employees onOctober 31, 2020 . As ofDecember 10, 2021 , staffing is 112 full time and 5 part time employees. Our staffing atBoot Hill Casino & Resort onOctober 31, 2021 was 172 full time and 48 part time employees compared to 166 full time and 66 part time employees onOctober 31, 2020 . AtDecember 10, 2021 there are 174 full time and 50 part time employees. None of the employees are subject to any collective bargaining agreements. 23
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Liquidity and capital resources
We believe that our current banks will provide the necessary capital for our business operations. However, we continue to maintain contact with other banks that have an interest in funding our working capital needs to continue our growth in operations in fiscal 2022 and beyond.
Analysis and discussion of cash flow
During the six months endedOctober 31, 2021 our cash position decreased by$9.1 million . Net income was$7.9 million for the six months endedOctober 31, 2021 . Cash flows provided by operating activities was$3.7 million for the six months endedOctober 31, 2021 . Non-cash activities consisting of depreciation and amortization provided$2.6 million , while deferred compensation provided$297 , gain on the sale of an airplane provided$75 , and forgiveness of debt used$2.0 million . Contract assets decreased our cash position by$680 . Contract liability decreased our cash position by$4.6 million . Inventories increased our cash position by$109 . Accounts receivable decreased our cash position by$1.6 million . Gaming facility mandated payments increased our cash position by$100 . Prepaid expenses and other assets decreased our cash by$296 . An increase in accounts payable, a decrease in accrued expenses, and an increase in other current liabilities increased our cash by$993 . Income tax payable increased our cash position by$710 . A decrease in lease liability decreased our cash position by$57 .
Cash used in investing activities has been
proceeds from the sale of an aircraft.
The cash used by financing activities was
Critical accounting conventions and estimates
We believe that there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amount of revenue and other significant areas involving management judgments and estimates. These significant accounting policies relate to revenue recognition, the use of estimates, long-lived assets, and Supplemental Type Certificates. These policies and our procedures related to these policies are described in detail below and under specific areas within this "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Revenue recognition: See footnote 3 of the condensed consolidated financial statements.
Lease-use rights: See note 13 of the condensed consolidated financial statements.
Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements. Significant estimates include assumptions about percentage-of-completion, collection of accounts receivable, inventory obsolescence, the valuation of long-lived assets, including the STC's, valuation for deferred tax assets and useful life of fixed and other long-term assets. Long-lived Assets: The Company accounts for its long-lived assets in accordance with ASC Topic 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value.
Supplemental Type Certificates: Supplemental Type Certificates (CTS) are authorizations granted by the
Changing Prices and Inflation We have experienced upward pressure from inflation in fiscal year 2022. From fiscal year 2021 to fiscal year 2022 most of the increases we experienced were in material costs. This additional cost may not be transferable to our customers resulting in lower income in the future. We anticipate fuel costs and possibly interest rates to rise in fiscal 2022 and 2023. 24
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Off-balance sheet provisions
We do not have off-balance sheet arrangements.
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