Elecsys Corp - Annual Report (Small Business Issuers) (10KSB)

 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

  Form 10-KSB

 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT OF 1934

 For the Fiscal year ended April 30, 2008

 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934

 For the transition period from to ____ to ____



 Commission file number 0-22760

 Elecsys Corporation
 (Name of small business issuer in its charter)

 Kansas 48-1099142
 (State or other jurisdiction of (I.R.S. Employer
 incorporation or organization) Identification No.)

 846 N. Mart-Way Court Olathe, KS 66061
 (Address of principal executive offices) (Zip Code)


 Issuer's telephone number [phone]

Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:



 Common Stock, $.01 par value American Stock Exchange
 (Title of class) (Name of Exchange)

 Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act [ ].
 Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes (X)
No ( )
 Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be

contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
 Indicate by check mark whether registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ( ) No (X)

 State issuer's revenues for its most recent fiscal year. $23,418,369

 State the aggregate market value of the voting stock held by non-affiliates
of the issuer on July 1, 2008, based upon the average bid and ask prices for
such stock on that date was $20,238,292. The number of shares of Common Stock of
the issuer outstanding as of July 1, 2008 was 3,285,437.

 DOCUMENTS INCORPORATED BY REFERENCE
The information contained in Items 9, 10, 11, 12, and 14 of Part III of this
Form 10-KSB have been incorporated by reference to our Proxy Statement for our
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended April 30,
2008.

Transitional Small Business Disclosure Form (Check One): Yes ( ) No (X)

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  ELECSYS CORPORATION AND SUBSIDIARIES
 FORM 10-KSB
 Year Ended April 30, 2008

 INDEX
 Page
PART I

ITEM 1. DESCRIPTION OF BUSINESS 3

ITEM 2. DESCRIPTION OF PROPERTY 10

ITEM 3. LEGAL PROCEEDINGS 10

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES 11

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 12

ITEM 7. FINANCIAL STATEMENTS 22

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
 ACCOUNTING AND FINANCIAL DISCLOSURE 22

ITEM 8A(T). CONTROLS AND PROCEDURES 22

ITEM 8B. OTHER INFORMATION 23


PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
 AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a)
 OF THE EXCHANGE ACT 24

ITEM 10. EXECUTIVE COMPENSATION 24

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
 MANAGEMENT AND RELATED STOCKHOLDER MATTERS 24

ITEM 12. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND
 DIRECTOR INDEPENDENCE 24

ITEM 13. EXHIBITS 24

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 25


SIGNATURES 26

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 Part I



Item 1. DESCRIPTION OF BUSINESS

General

 Elecsys Corporation ("Elecsys," the "Company," or "we"), through our wholly
owned subsidiaries, provides electronic manufacturing services, custom LCDs,
ultra-rugged mobile computing devices, and wireless remote monitoring solutions
to numerous industries worldwide. Our customer base spans many markets including
the aerospace, industrial, communications, transportation, military, medical,
and energy infrastructure industries.

 DCI, Inc. ("DCI") provides electronic design and manufacturing services for
original equipment manufacturers ("OEMs") in the aerospace, transportation,
communications, safety, security and other industrial product markets. DCI has
specialized expertise and capabilities to design and efficiently manufacture
custom electronic assemblies that integrate a variety of specialized interface
technologies, such as custom LCDs, keypads, and touchscreens with circuit boards
and other electronic components. DCI seeks to become an extension of the OEM's
organization by providing key expertise that enables rapid development and
manufacture of electronic products from product conception through volume
production.

 Radix Corporation ("Radix") designs, develops, and implements ultra-rugged
handheld computing solutions for tough environments where data integrity is
paramount. Its products, which include handheld computers, printers,
peripherals, and application software, are deployed in over 70 countries in
applications that include utilities, transportation logistics, traffic and
parking enforcement, route accounting/deliveries, and inspection and
maintenance. Our flexibility to custom configure solutions tailored to specific
requirements has provided opportunities to expand our product offerings into new
industries.

 Network Technologies Group, Inc. ("NTG") designs, markets, and provides
remote monitoring solutions for the oil and gas pipeline industry as well as
other industries that require remote monitoring. NTG's wireless remote
monitoring devices utilize the existing cellular and satellite infrastructure
and its Watchdog CP Web Monitor to provide full time, wireless status monitoring
and alarm notification regarding the performance of multiple types of systems
over the internet. This highly reliable network, combined with its
internet-based front-end, provides NTG's customers with active monitoring and
control of a large population of field-deployed remote monitoring devices.

 Elecsys was incorporated in Kansas in 1991, and in February 2000, the
Company entered the electronics manufacturing services ("EMS") business with our
acquisition of DCI.

 In November 2004, the Company acquired certain assets, including all of the
proprietary technology, and assumed certain liabilities of Network Technologies
Group, LLC ("NTG, LLC"). The acquired assets were transferred to the Company's
new wholly owned subsidiary, NTG. NTG, LLC supplied remote monitoring solutions
utilizing the digital control channels of the nation's cellular telephone
network and established its initial market in the oil and gas pipeline industry.

 In September 2007, the Company, through its newly formed and wholly owned
subsidiary,

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Radix Corporation, acquired substantially all of the tangible assets, as well as
all of the intellectual property and intangible assets and assumed certain
liabilities of Radix International Corporation and its subsidiary of Salt Lake
City, Utah. Radix had built a reputation for reliability and support over its
history of manufacturing ultra-rugged mobile computing devices.

Business

 DCI. DCI provides a range of design, manufacturing, integration and testing
services to OEMs that desire a cost-effective single source for the development
and production of custom electronic assemblies that integrate specialized
interface technologies with flexible electronic production. Our strategy is to
leverage our expertise as an EMS provider that can integrate specialized
technologies, such as custom LCD fabrication, user interfaces, and
microelectronic assembly, to provide solutions to our customers' electronic
interface needs. We design, manufacture, integrate, and test a wide variety of
electronic assemblies, including circuit boards, high-frequency electronic
modules, microelectronic assemblies, and full turn-key products, along with
custom LCD devices and modules. The electronic interfaces, assemblies, and LCDs
we produce, or import, are used in aerospace, industrial, communications,
medical, transportation, and military products and other applications. The
Company's operating business segments are located in the Company's 60,000 square
foot production and headquarters facility located in Olathe, Kansas. Although
DCI operations utilize the majority of the facility, we believe that there is
sufficient surplus capacity to accommodate anticipated near-term growth for all
of our subsidiaries.

 DCI is registered to the ISO 9001:2000 international quality standard,
having received initial ISO 9001 certification in November 2000. DCI is also
registered to the ISO 13485:2003 standard, which governs the design and
manufacture of medical devices. We are also registered with the U.S. Department
of State, Directorate of Defense Trade Controls for the production of restricted
military and defense items in compliance with the Arms Export Control Act (AECA)
and the International Traffic in Arms Regulations (ITAR).

 Sales at DCI are made primarily to customers in the United States, Canada
and a few other international markets, which are serviced primarily by in-house
sales and program management personnel. We view our OEM customers as strategic
partners and work to provide them with broad technical services and excellent
customer care. A strategic operating objective is to form long-term business
relationships with our customers by developing technological interdependence
between the Company and the customer.

 The DCI engineering staff provides hardware design, software design and
component engineering services to OEMs. Our manufacturing processes produce
assemblies incorporating both conventional electronic packaging and high-density
configurations, including ball grid array (BGA) and microelectronic
technologies. We maintain manufacturing capabilities that include automated
surface mount technology component placement, automated solder paste application
and soldering, automated through-hole component insertion, wire bonded chip on
board microelectronic assembly, and complete in-circuit and functional testing
services. We integrate our customers' electronic assemblies with numerous
specialized interface technologies such as custom LCDs, keypads, Touchscreens,
and other user input devices as well as application specific backlights and
illumination sources.

 Our LCD fabrication process produces custom LCDs that are used to display
information in a

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variety of applications from commercial and consumer to aerospace and medical
products. We fabricate highly specialized and low-to-medium volume custom LCD
devices in our Class 10000 cleanroom located in our Olathe facility. We also
maintain relationships with several offshore LCD manufacturers to source our
higher volume customer requirements. We are capable of designing and
manufacturing a complete display module involving both the custom LCD device and
the supporting electronics. We believe a limited number of our competitors
currently have the capability to produce such complete modules.

 We believe our design, manufacturing, and integration capabilities,
combined with materials management expertise, make us an effective single
resource for product development and production that allows customers to
integrate their supply chains and reduce their vendor bases. We focus our
marketing efforts on OEMs whose products require the integration of custom
electronic interface devices, such as LCDs, or custom input devices, with
specialized electronic manufacturing. Our ideal customer requires both design
and manufacturing services and places a high value on quality, reliable delivery
and customer service. This strategy of focusing on specialized display and
interface technologies differentiates DCI from conventional domestic EMS
providers.

 We view the integration of electronic manufacturing services with
specialized niche technologies to be a large and growing market. It is our
primary focus to grow internally through both our existing customer base and the
addition of new customers, for which our expertise in EMS, displays, display
integration, and customer service is a single-source solution. To further
develop our business and complement our internal growth strategy, we will
continue to selectively evaluate opportunities that will permit us to leverage
our capabilities. We will continue to explore complementary niche technologies
in order to expand our technological capabilities and drive our growth into
additional sectors of the EMS market. We will look at businesses where we see an
opportunity to add complementary customers and capabilities, or purchase assets
at reasonable prices.

 Radix. Radix designs, develops, and implements ultra-rugged handheld
computing solutions for use in demanding environments where data integrity is
paramount. Radix has built a reputation for reliability and support and markets
what are considered to be some of the most rugged, reliable, and easy-to-use
handheld computers and portable printers in the world. Our field proven
products, which include handheld computers, printers, peripherals, and
application software, are deployed in over 70 countries in a variety of critical
applications. Engineering and production operations for Radix are located in the
Company's 60,000 square foot production and headquarters facility in Olathe,
Kansas, where a majority of Radix's electronic subassemblies are manufactured by
DCI. Radix also maintains a 5,000 square foot sales and support facility in Salt
Lake City, Utah. Several worldwide satellite locations provide sales and
technical support to our customers and business partners.

 Radix sells its products and services to both private firms and government
affiliated end users worldwide. We utilize both a direct sales force and a
network of specialized business partners located throughout the world. In many
cases, we combine our hardware and software products with those of our business
partners to create an integrated solution for our mutual customers. Radix
products can be found in utilities, law enforcement, transportation, logistics
tracking, maintenance, and other critical applications in rugged environments.
The Radix reputation for supplying innovative, reliable, and easy-to-use
products and our commitment to provide superior support has earned Radix many
customers and business partners around the world.

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 Radix handheld computers are designed to withstand the extreme
environmental conditions found in our customers' demanding applications. Our
equipment is designed to exceed the industry's highest specifications for shock,
vibration, and environmental ruggedness. Radix products operate throughout a
wide temperature range, are completely waterproof and submersible, and are
resistant to dust, oil and solvents. To enhance customer productivity and
facilitate training, our proprietary design keyboards can be customized for
different languages and applications. Based on Windows(R) CE.NET operating
systems and high performance Intel XScale(R) architecture, our handheld devices
make use of industry standard components that simplify application development.

 Radix offers a comprehensive range of cutting edge peripheral equipment
including printers, scanners, and communications devices. Radix manufactures a
full line of bar code readers, radio frequency identification (RFID) scanners,
and image capture devices, as well as magnetic stripe and smart card readers. A
wide range of communication options are supported including Ethernet, USB,
Bluetooth(R), WiFi, GSM/GPRS, and CDMA. Since these are custom integrated
devices designed by Radix, all of these options can be added without
compromising the environmental durability of our equipment. In addition to
integrated peripherals, Radix can provide multiple accessories, including
chargers, loaders, carrying cases, and vehicle mounts.

 In addition to handheld computing hardware, Radix also provides the Utility
Management System (UMS), a complete meter reading solution designed to meet the
unique requirements of the utility meter reading market. Available in multiple
languages, UMS is a highly configurable data capture application that provides
advanced route management to hundreds of utilities worldwide. UMS offers
configurable file formats, custom handheld configuration, and professional
reports and seamlessly interfaces to most automatic meter reading (AMR)
technologies, as well as existing billing systems.

 Our commitment to customers extends beyond the delivery and installation of
our hardware. Radix provides factory direct support to our customers and
business partners through a customer service department staffed with highly
experienced technical professionals. Radix products are offered with
comprehensive support and maintenance agreements to ensure that systems remain
fully operational and deliver the expected benefits to our customers.

 We believe Radix Corporation is an established leader in the specialized
ultra-rugged handheld computing market. We believe that the market for rugged
mobile computing equipment is very large and expanding at a rapid rate. We are
committed to developing and supplying the best products and services for the
markets that demand secure mobile computing solutions for use in the harshest
environments. Radix remains committed to providing our customers with the most
durable and reliable products backed up with the best service and support in the
industry.

 NTG. NTG provides wireless, internet-based remote monitoring equipment and
network data services for industrial monitoring applications. Our strategy is to
focus product and market development on industrial monitoring applications that
require wide-area wireless networking technologies and proprietary field
application hardware. NTG provides various application specific remote
monitoring units that are integrated with centralized data services that operate
using the Company's WatchdogCP Web Monitor software and data center. The newly
unveiled WatchdogCP Web Monitor system is based on our proprietary ScadaNET
Network(TM) technology. In addition to initial equipment revenue, each remote
monitor generates monthly network services revenue. NTG currently operates out
of a portion of the Company's 60,000 square foot production and headquarters
facility located in Olathe,

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Kansas, where a majority of NTG's electronic subassemblies are manufactured by
DCI. Sales at NTG are primarily conducted through, in-house direct marketing and
sales efforts combined with independent sales representatives with expertise in
the pipeline corrosion protection market and national and regional trade
expositions. We currently sell our remote monitoring products and services
throughout North America.

 The WatchdogCP Web Monitor is comprised of a variety of remote monitoring
devices that use either the digital data channels of the analog or digital
cellular network infrastructure or the Inmarsat-D satellite data transmission
system to link into an internet-based back-end network and customer/user
interface. The remote devices, proprietary designs and technology pioneered by
the Company monitor functions such as voltages, currents, temperatures, levels,
and pressures, and allow control activity to take place at remote sites. By
utilizing the capacity, coverage, and capability of the existing cellular and
satellite based wireless infrastructure, the WatchdogCP Web Monitor can receive
data from and deliver information out to remote devices. When combined with our
internet-based user interface, our customers can directly access and control a
large population of field-deployed remote monitoring devices at an attractive
cost.

 NTG has initially targeted the cathodic protection ("CP") market for North
American pipelines where numerous applications currently exist for our products
and services. The millions of miles of buried pipelines that carry gas, oil,
water, and other products throughout North America corrode due to the
interaction of the metals with underground moisture. Pipeline operators
constantly fight this natural corrosion process to protect their pipeline assets
and comply with strictly enforced federal regulations that require corrosion
protection, assessment, and monitoring. Pipelines are generally protected with
CP rectifiers deployed along the pipeline that establish a voltage between the
pipeline and the surrounding soil to arrest corrosion activity. Historically,
pipeline organizations employ corrosion technicians who travel from site to site
to verify the operation of CP systems. There currently are vast numbers of
CP-related sites in North America with thousands of additional sites being
installed each year. A small number of these sites are remotely monitored at the
present time. We feel that the availability of cellular and satellite digital
data channels, and the low cost of sending periodic, by-exception data over the
wireless infrastructure, is an ideal means to automate the monitoring and data
collection tasks required by the pipeline CP industry. To date, over 6,000 NTG
remote monitors have been deployed in various applications and locations that
provide recurring network services revenues to the Company.

 During the past year, NTG has integrated globally compatible wireless
communications techniques into our products, while using the same centralized,
internet-centric network to provide network services from our data centers in
Olathe, Kansas and Kansas City, Missouri. This move into global digital data
services allows us to expand our markets from North America to a global scale.
NTG will continue to explore opportunities to both expand into additional
markets with our proprietary product lines and to design new products. We will
continue to focus product and market development on niche applications that
leverage complete client solutions, wireless networking technologies, and
proprietary field application hardware.

Competition

 There are numerous domestic and foreign EMS providers with which DCI
competes. Many of these competitors are substantially larger than DCI, with
greater financial, operating, manufacturing and

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marketing resources, including Flextronics International Ltd., Sanmina-SCI
Corporation, and Celestica, Inc. Many have broader geographic breadth, a broader
range of services, and established overseas operations. There are a limited
number of LCD manufacturers located in the United States. There are also
numerous foreign manufacturers who export LCD products into our primary customer
markets. Our ability to integrate custom LCDs and other specialized electronic
interface technologies with electronic assemblies helps differentiate us from
our competitors. Our management team believes that the principal competitive
factors in target markets for DCI are product quality, reliability in meeting
product delivery schedules, flexibility and timeliness in responding to design
and schedule changes, pricing, and technological sophistication. To remain
competitive, DCI must provide technologically advanced manufacturing services,
maintain quality levels, deliver finished products on a reliable basis, offer
flexible delivery schedules, and compete effectively on total value.

 There are many domestic and foreign manufacturers that compete with Radix
in the rugged handheld computing markets. Many of these competitors are
substantially larger than Radix, with greater financial, operating, and
marketing resources, including companies such as Motorola, Inc., Honeywell
International, and Intermec, Inc. Many have broader geographic breadth and offer
a broader range of services. Radix competes in the ultra-rugged segment of the
overall mobile computing market, where we believe we enjoy certain competitive
advantages that differentiate us from the larger competitors. Radix management
believes that significant competitive factors in our segment of the market
include reliability, performance, support, and the ability to rapidly customize
solutions. There are also several smaller firms that participate in the
ultra-rugged segment of the market. We believe that Radix competes favorably
with respect to these competitors.

 While there are numerous competitors in the general remote monitoring
market, some that are much larger than NTG, we participate in specialized
industrial sectors of the market where we believe NTG has a significant portion
of the market and possesses certain product technology advantages. In the CP
remote monitoring market, American Innovations, Ltd. is a direct competitor that
is comparable to NTG in size. There are also several smaller firms that
participate in the CP remote monitoring market. Management believes the
significant competitive factors in our markets include reliability, features,
performance, and price. We believe that NTG's current proprietary products and
the WatchdogCP Web Monitor compete favorably with respect to these factors.

Sources and Availability of Raw Materials and Principal Suppliers

 The raw materials used in the manufacture of our products are primarily
electronic components and parts. These components and parts are readily
available from a number of sources in the United States and abroad. From time to
time, some components we use have been subject to shortages, and suppliers have
been forced to allocate available quantities among their customers. We attempt
to actively manage our business in a way that minimizes our exposure to these
potential shortages, but we may experience component shortages that could cause
us to delay shipments to customers, which could result in lower net sales and
operating results.

 In addition to manufacturing our own products, we have close working
relationships with companies both in the United States and in some foreign
countries to provide component assemblies and finished goods that are
manufactured to the Company's specifications. Although multiple suppliers are
available for such items, if the Company were to lose one or more of the current
suppliers, some delay and additional costs may be incurred while we obtain and
qualify alternative sources.

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Patents, Trademarks and Licenses

 Through NTG, the Company owns or licenses multiple patents dealing with
control channel communication techniques over the cellular network and other
communication concepts. Some of these patents deal specifically with the CP
market currently being pursued by NTG and have influence on the Company's
competitive status. The Company intends to use these intellectual property
assets to both protect its competitive position and to license certain
technology. The average remaining life of these patents is approximately 12
years.

 NTG holds federal trademark registrations for marks used in the Company's
business as follows: ScadaNET, ScadaNET Network, CellularRTU, ConfigRTU, CPi,
CellularRMU, RMUvi, and P2S.

Research and Development

 At DCI, we design and manufacture custom products and assemblies for OEM
customers on a contract basis and thus are not engaged in any independent,
self-funded research and development programs. We develop proprietary mobile
computing and remote monitoring products at Radix and NTG, respectively. These
products are targeted at specific industry applications and involve electronic
hardware and system software design. Total research and development expenses at
Radix and NTG were approximately $616,000 and $258,000 for the fiscal years 2008
and 2007, respectively. The Company believes that our internal engineering
resources combined with qualified third-party engineering consultants will be
able to satisfy the current needs of our customer bases.

Effect of Governmental Regulations

 Our operations are subject to certain federal, state and local regulations
concerning waste management and health and safety matters. We believe that we
operate in material compliance with all applicable requirements and do not
anticipate any material expenditure in maintaining compliance. New, modified, or
more stringent requirements or enforcement policies could be adopted in the
future that could result in material costs and liabilities that could adversely
affect our business.

Effect of Environmental Regulations

 The Company is not aware of any federal, state, or local provisions
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment with which compliance by the Company has
had, or is expected to have, a material effect upon the capital expenditures,
earnings, or competitive position of the Company.

Dependence on One or a Few Major Customers

 Sales to one customer (Radix International Corporation) accounted for 4%
and 26% of our total sales in fiscal 2008 and 2007, respectively. Sales to our
five largest customers decreased to 27% of total sales for fiscal 2008 as
compared to 51% of total sales for fiscal 2007. The decrease in sales to our
five largest customers in fiscal 2008 is primarily the result of the acquisition
of Radix International Corporation's assets and assumption of certain
liabilities during the year. Since September 18, 2007,

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the date of acquisition, these sales are being accounted for as intercompany
sales and are eliminated upon consolidation of the subsidiaries. Radix
International Corporation was a new customer in 2007 and this contributed to the
increase in sales to our five largest customers when compared to fiscal 2006, in
which sales to our five largest customers were 39% of total sales. The loss of
one or more of these major customers would have a substantial impact on our
business. In order to minimize the impact the loss of any one customer might
have on our business, we seek to expand and diversify our customer base. We are
focusing our increased sales efforts on new market segments and are attempting
to increase our market penetration across all geographic areas in the United
States, Canada and selected international markets. The new market segments
include additional industrial controls and products, aerospace applications and
medical devices. We continue to add, develop and transition our internal sales
force in an effort to effectively develop opportunities for new products in new
markets. We have, in the last few years, seen improved results from these
efforts, as demonstrated by an expanding customer base and a smaller percentage
of total sales to our top five customers. In fiscal 2007 the addition of one
major new customer impacted those efforts but in the current fiscal year our
sales to our top five customers declined to 27% from 51% in fiscal 2007.
Additional analysis of the fiscal years preceding fiscal 2007 also shows a
decline in sales to our top five customers which were 39% in fiscal 2006, 45% in
fiscal 2005 and 47% in fiscal 2004.

Total Number of Employees

 At April 30, 2008, we had a total of 157 full time employees and 1
part-time employee. None of our employees are represented by a labor
organization or subject to a collective bargaining agreement. Our management
team believes that our relationship with our employees is good.





Item 2. DESCRIPTION OF PROPERTY

 In September 2006, we moved into our current facility located at 846 N.
Mart-Way Court in Olathe, Kansas. Each of our subsidiaries utilizes the
facility's 60,100 sq ft for their operations and administration. We currently
use approximately 50,000 sq ft for manufacturing operations, including our
stockroom, LCD cleanroom and production, and production support. The remaining
approximately 10,000 sq ft is used for administration, engineering and
marketing.

 Our Radix subsidiary also leases approximately 5,600 sq ft of office space
near Salt Lake City, Utah for its sales offices and customer support center.





Item 3. LEGAL PROCEEDINGS

 From time to time, we are a party to routine litigation that is incidental
to the business. Currently there is no pending or outstanding litigation against
the Company. The Company is not aware of any proceedings pending or contemplated
by a governmental authority.





Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 We did not submit any matter to a vote of security holders, through a
solicitation of proxies or otherwise, during the fourth quarter of our fiscal
year ended April 30, 2008.

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 Part II



Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
 BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Stock Trading

The Company's common stock trades on the American Stock Exchange under the
symbol "ASY".



Common Stock Price Range and Dividend Information

The prices in the table below represent the high and low sales prices for
Elecsys common stock as reported by the American Stock Exchange for the two
preceding fiscal years. No cash dividends were declared during such time. As of
April 30, 2008, the Company had approximately 200 stockholders of record.

 Fiscal Year 2008 High Low
 ------------------- ------------------------
 First Quarter $8.99 $5.63
 Second Quarter 7.35 5.06
 Third Quarter 8.22 4.90
 Fourth Quarter 6.50 5.00
 For the Year $8.99 $4.90

 Fiscal Year 2007 High Low
 ------------------- ------------------------
 First Quarter $4.78 $3.61
 Second Quarter 5.80 4.11
 Third Quarter 5.61 4.46
 Fourth Quarter 6.36 4.70
 For the Year $6.36 $3.61


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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

 Elecsys is a publicly traded company that provides electronic manufacturing
services, custom LCDs, ultra-rugged mobile computing devices, and wireless
remote monitoring solutions to numerous industries worldwide. We operate our
business through three wholly-owned subsidiaries, DCI, Inc. ("DCI"), Radix
Corporation ("Radix") and NTG, Inc. ("NTG").

 DCI provides electronic design and manufacturing services for original
equipment manufacturers ("OEMs") in the aerospace, transportation,
communications, safety, security and other industrial product markets. DCI has
specialized expertise and capabilities to design and efficiently manufacture
custom electronic assemblies which integrate a variety of specialized interface
technologies, such as custom LCDs, keypads, and touchscreens with circuit boards
and other electronic components. DCI seeks to become an extension of the OEM's
organization by providing key expertise that enables rapid development and
manufacture of electronic products from product conception through volume
production.

 Radix designs, develops, and implements ultra-rugged handheld computing
solutions for tough environments where data integrity is paramount. Its
field-proven products, which include handheld computers, printers, peripherals,
and application software, are deployed in over 70 countries in applications that
include utilities, transportation logistics, traffic and parking enforcement,
route accounting/deliveries, and inspection and maintenance. Radix has built a
reputation for reliability and support over its lengthy history. Our flexibility
to custom configure solutions tailored to specific requirements has provided
opportunities to expand our product offerings into new industries.

 NTG designs, markets, and provides remote monitoring solutions for the oil
and gas pipeline industry as well as other industries that require remote
monitoring. NTG's wireless remote monitoring devices utilize the existing
cellular and satellite infrastructure and its Watchdog CP Web Monitor to provide
full time, wireless status monitoring and alarm notification regarding the
performance of multiple types of systems over the internet. This highly reliable
network, combined with its internet-based front-end, provides NTG's customers
with active monitoring and control of a large population of field-deployed
remote monitoring devices.

 On December 19, 2006, the Company announced that its NTG subsidiary had
acquired the product lines, technology, customer base and intellectual property,
including a pending patent application, of Advanced Monitoring & Control, Inc.
("AMCI") for approximately $90,000 plus additional royalty payments. The entire
purchase price was allocated to the customer list. AMCI was a competitor of NTG
in the business of remote monitoring of oil and gas pipelines as well as other
various remote monitoring applications.

 The Company renewed and increased its operating line of credit to
$5,000,000 on August 15, 2007. This line of credit provides the Company and its
subsidiaries with short-term financing for their working capital requirements.
On April 11, 2008, the Company and its financial institution amended the
agreement, increasing the total amount available under the operating line of
credit to $6,000,000 and modifying its variable interest rate. The line of
credit now accrues interest at the prime rate with a minimum interest rate of
5.50% (5.50% at April 30, 2008). The line of credit is secured by accounts

 12

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receivable and inventory and expires on August 14, 2008. Its borrowing capacity
is calculated as a specified percentage of accounts receivable and inventory.
The line of credit contains various covenants, including certain financial
performance covenants pertaining to the maintenance of debt to net worth and
minimum net worth ratios. As of April 30, 2008 the Company was in violation of
its minimum tangible net worth covenant as a result of acquiring a significant
amount of intangible assets in the Radix transaction. The Company received a
waiver of the covenant from its financial institution for the period ended April
30, 2008. There were $3,836,000 and $1,525,000 in borrowings outstanding on the
credit facility as of April 30, 2008 and 2007, respectively.

 On September 18, 2007, the Company, through its newly formed and wholly
owned subsidiary, Radix Corporation, acquired the assets and assumed certain
liabilities of Radix International Corporation and its subsidiary of Salt Lake
City, Utah. The Company acquired approximately $4.56 million in tangible assets,
including accounts receivable and inventory, as well as all of the intellectual
property and intangible assets owned by Radix International Corporation and its
subsidiary. In the transaction, the Company's new subsidiary assumed accounts
payable of $2.2 million due to the Company's DCI subsidiary, assumed an
additional amount of approximately $2.3 million in liabilities, and incurred
acquisition costs of over $50,000. The transaction also includes contingent
consideration based on the annual revenues of the acquired business over the
next five years. The revenue-based contingency is limited to approximately $2.2
million and is subject to certain considerations that may impact the total
amount to be paid.



Results of Operations

 The following table sets forth for the periods presented, certain statement
of operations data (in thousands) of the Company:



 Years Ended
 ---------------------------------------------------

 April 30, 2008 April 30, 2007

 Sales $23,418 100.0% $19,809 100.0%
 Cost of products sold 15,182 64.8% 13,958 70.5%
 ---------------------------------------------------
 Gross margin 8,236 35.2% 5,851 29.5%
 Selling, general and Administrative expenses 6,526 27.9% 4,323 21.8%
 ---------------------------------------------------
 Operating income 1,710 7.3% 1,528 7.7%
 Interest expense (491) (2.1%) (310) (1.6%)
 Gain on sale of property -- 0.0% 324 1.6%
 Other income, net 20 0.1% 11 0.1%
 ---------------------------------------------------
 Net income before taxes 1,239 5.3% 1,553 7.8%
 Income tax expense 551 2.4% 507 2.5%
 ---------------------------------------------------
 Net income $688 2.9% $1,046 5.3%
 ===================================================
 Net income per share - Basic $0.21 $0.32
 ============== =============
 Net income per share - Diluted $0.20 $0.31
 ============== =============


 13

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 Sales for the fiscal year ended April 30, 2008 were approximately
$23,418,000, an increase of $3,609,000, or 18.2%, from $19,809,000 for fiscal
2007.
 DCI. Sales at DCI were approximately $16,477,000, a decrease of $2,422,000,
or 12.8%, from $18,899,000 from the prior year. The sales from the prior year
included $4,454,000 in sales to the former Radix Corporation. Sales to the
former Radix Corporation totaled approximately $872,000 for the period from May
1, 2007 to September 17, 2007. External sales reported at DCI no longer include
sales made to our Radix subsidiary after September 18, 2007. Overall, sales to
outside customers at DCI, excluding sales to both NTG and Radix in both
comparable periods, were $15,605,000 for the year ended April 30, 2008, an
increase of $1,160,000, or 8.0%, from the $14,445,000 for the year ended April
30, 2007. The increase in sales at DCI to outside customers resulted from
increased shipments to existing and new customers. We expect sales volumes to
outside customers at DCI to decrease slightly over the next two fiscal quarters,
and we expect growth to occur in the second half of the 2009 fiscal year. This
expectation is based upon scheduled shipments to customers currently recorded in
our backlog, combined with anticipated future bookings.
 Radix. Sales at the Company's newest subsidiary, Radix, totaled
approximately $3,249,000 since the acquisition date of September 18, 2007. The
revenues were mainly the result of sales of rugged hand held computer hardware
and peripherals as well as maintenance contract revenues. We anticipate
increasing revenues at Radix over the next few quarters as integration efforts
are completed and the investments made in sales, marketing, and support
initiatives begin to mature.
 NTG. Sales volumes at NTG were $3,692,000 for the year ended April 30, 2008
an increase of $2,783,000, or 306%, from the year ended April 30, 2007. The
increase in sales at NTG resulted from shipments of new products and equipment
upgrades of $3,276,000 during the period and additional network messaging
service revenues which totaled $262,000 for the period. Sales at NTG are
expected to continue increasing next quarter as compared to the previous year
period as a result of anticipated demand for both our digital cellular and
satellite-based WatchdogCP products.

 Total consolidated backlog at April 30, 2008 was approximately $5,166,000,
a decrease of approximately $5,237,000, or 50.3%, from a total backlog of
$10,403,000 on April 30, 2007 and a decrease of $1,934,000 from a total backlog
of $7,100,000 on January 31, 2008. As of April 30, 2007, the backlog of orders
at DCI included approximately $3,668,000 in orders from the former Radix
International Corporation that are no longer reported in consolidated backlog.
The amount of total consolidated backlog at April 30, 2008, includes purchase
orders in place from our customers at each of the three subsidiaries that are
scheduled for shipment in future periods but excludes any intercompany purchase
orders. The following table presents total backlog by subsidiary for the periods
ended April 30, 2008 and 2007 (in thousands):



 April 30, 2008 April 30, 2007
 ------------------- -------------------
 DCI, Inc. $7,888 $9,688
 NTG, Inc. 108 820
 Radix Corporation 589 --
 Less intercompany backlog (3,419) (105)
 ------------------- -------------------

 Total $5,166 $10,403
 =================== ===================


 Gross margin for the year ended April 30, 2008, was 35.2% of sales, or
$8,236,000, compared to 29.5% of sales, or $5,851,000, for the year ended April
30, 2007. The increase in gross margin of

 14

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approximately $2,385,000 is primarily the result of increased sales volumes at
NTG and the additional sales from Radix. Due to the proprietary nature of their
products, these subsidiaries generate higher gross margins than DCI.
 DCI. DCI's gross margin was approximately $5,360,000, or 32.5%, for the
period as compared to approximately $5,514,000, or 29.2%, for the comparable
period of the prior year primarily as a result of product mix to its outside
customers.
 Radix. The gross margin at Radix for the year ended April 30, 2008 was
approximately $1,380,000 or 42.5%.
 NTG. The gross margin at NTG was approximately $1,496,000, or 40.5%, for
the year ended April 30, 2008 as compared to approximately $337,000, or 37.1%,
for the year ended April 30, 2007. The increase in gross margin at NTG was due
to the increased sales volumes with NTG's products and an increase in messaging
services, which includes the AMCI customer accounts added as part of the AMCI
asset acquisition.
 We expect that consolidated gross margins over the next few quarters will
remain in the range of 30% to 35%.

 Selling, general and administrative ("SG&A") expenses increased $2,203,000,
or 50.9%, to $6,526,000 in the year ended April 30, 2008 from $4,323,000 in the
fiscal year ended April 30, 2007. SG&A expenses were 27.9% of sales for the
fiscal year ended April 30, 2008 as compared to 21.8% of sales for the fiscal
year ended April 30, 2007.

 DCI. SG&A expenses at DCI increased $36,000 from the prior year period.
During the prior year period, DCI's SG&A expenses included moving and relocation
expenses of approximately $100,000. Excluding those moving and relocation
expenses, the increase in SG&A expenses in the current period was mainly due to
increases in personnel and personnel-related expenses in the administration and
engineering departments resulting from our growth.
 Radix. The addition of Radix also added approximately $1,712,000 in SG&A
expenses during the period, contributing to the overall increase in operating
expenses. Included in Radix's SG&A expenses were approximately $160,000
specifically related to the costs of the transaction and the move of product
integration, engineering, and service operations to Olathe, Kansas facility.
 NTG. SG&A expenses at NTG increased $339,000 from the prior year period as
a result of royalty payments to AMCI combined with increased personnel costs and
increased marketing and travel expenses.
 Elecsys Corporation. Corporate expenses were approximately $116,000 higher
than fiscal 2007 as a result of higher accounting and consulting expenses.
 Excluding the effects of only having a partial year of expenses at Radix as
a result of the timing of the Radix acquisition, we anticipate that our SG&A
expenses will decrease slightly over the near term as the current period
contained moving, relocation and legal expenses related to the Radix transaction
that are not expected to be recurring. We will continue to invest in the
continuing growth at DCI as well as intensify our investment in product
development, marketing, and sales at both NTG and Radix.

 Interest expense was $491,000 and $310,000 for the fiscal years ended April
30, 2008 and 2007, respectively. This increase of $181,000 was the direct result
of interest expense on our operating line of credit during the period that
resulted from an increase in the average amount outstanding on the line of
credit as a result of using the line of credit to finance our growth and
operations, an increase in total overall outstanding borrowings and increases in
the variable interest rates on the Company's borrowings

 15

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during the period. As of April 30, 2008, there was $3,836,000 outstanding on the
line of credit and an additional $4,179,000 in outstanding long-term borrowings.

 Income from operations before income taxes totaled $1,239,000 for the year
ended April 30, 2008. During the fiscal year ended April 30, 2007, the Company
reported income from operations before income taxes of $1,553,000 which included
a gain on the sale of its Lenexa facility of approximately $324,000, net of
selling expenses.

 Income tax expense totaled approximately $551,000 and $507,000 for the
years ended April 30, 2008 and 2007, respectively. The increase of $44,000 was
the result of $97,000 of adjustments to income tax expenses due to the impact of
FIN 48 which was partially offset by lower taxable income as compared to fiscal
2007. The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty
in Income Taxes ("FIN 48") at the beginning of the fiscal year. FIN 48 requires
that the Company recognize the financial statement benefit, or liability, of a
tax position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the more likely than not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the relevant tax
authority. The Company recognized an additional $97,000 of income tax liability
for accrued income taxes, penalties and interest related to its tax positions.

 As a result of the above, net income was $688,000, or $0.20 per diluted
share, for the fiscal year ended April 30, 2008 as compared to net income of
$1,046,000, or $0.31 per diluted share, as reported for the year ended April 30,
2007.





Liquidity and Capital Resources
 Cash and cash equivalents decreased $146,000 to $357,000 as of April 30,
2008 compared to $503,000 at April 30, 2007. This decrease was the result of
cash used for new production equipment, increases in inventory and accounts
receivable, a decrease in accounts payable which were partially offset by cash
borrowed for the assets and liabilities purchased for the Radix acquisition as
well as borrowings on our operating line of credit. In the Radix acquisition,
the Company assumed accounts payable of $2.2 million due to the Company's DCI
subsidiary, assumed an additional amount of approximately $2.3 million in
liabilities, and incurred acquisition costs of over $50,000.

 Operating activities. Our consolidated working capital decreased
approximately $2,171,000 from $4,546,000 in consolidated working capital at the
end of the 2007 fiscal year to $2,375,000 at the end of the 2008 fiscal year due
to increases in current liabilities primarily associated with the Radix asset
acquisition and in our efforts to build up product inventory at both Radix and
NTG to meet anticipated demand. Total accounts receivable also increased from
the prior year with an increase in sales in the last fiscal quarter from both
NTG and Radix. Operating cash receipts during the fiscal year ended April 30,
2008 totaled over $21,150,000 while cash disbursements for operations, which
includes purchases of inventory and operating expenses, were approximately
$24,743,000. The Company utilizes its line of credit when necessary in order to
pay suppliers and meet operating cash requirements.

 Investing activities. The $603,000 of cash used in investing activities
during the year ended April 30, 2008 was primarily the result of the purchases
of new production equipment to increase production capacity and improve
productivity at our DCI subsidiary.

 16

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 Financing activities. For the year ended April 30, 2008, cash provided by
financing activities totaled $2,573,000 and included the addition of a new
$550,000 loan to meet financing obligations under the acquisition agreement with
Radix International Corporation. Also during the period, total borrowings on our
operating line of credit were $5,028,000 which was primarily utilized to finance
the operations of our subsidiaries. Payments on the operating line of credit
during the year ending April 30, 2008 were approximately $2,717,000 which
resulted in an outstanding balance on the line of credit of $3,836,000 as of
April 30, 2008.

 The Company increased its operating line of credit to $5,000,000 on August
15, 2007 and amended the agreement on April 11, 2008. The amendment increased
the operating line of credit to $6,000,000 and modified its variable interest
rate. The line of credit now accrues interest at the prime rate with a minimum
interest rate of 5.50% (5.50% at April 30, 2008) and has an interest rate floor
of 5.50%. The line of credit is secured by accounts receivable and inventory and
is available for working capital. It expires on August 14, 2008 and its
borrowing capacity is calculated as a specified percentage of accounts
receivable and inventory. The line of credit contains various covenants,
including certain financial performance covenants pertaining to the maintenance
of debt to net worth and minimum net worth ratios. As of April 30, 2008 the
Company was in violation of its minimum tangible net worth covenant as a result
of the Radix transaction in which the amount of intangible assets was
significant. The Company received a waiver of the covenant from its financial
institution for the period ended April 30, 2008. There were $3,836,000 in
borrowings outstanding on the credit facility as of April 30, 2008.

 Although there can be no assurances, we believe that existing cash, the
cash expected to be generated from the operations of our subsidiaries, amounts
available under our line of credit, and amounts available from trade credit,
will be sufficient to finance our currently anticipated working capital needs,
our capital expenditures for the foreseeable future, and our scheduled debt
repayments.

 The following table summarizes our contractual obligations as of April 30,
2008 (in thousands):



 For Fiscal Years Ending April 30,
 Total 2009 2010 2011 2012 2013 Thereafter
 --------- --------- --------- -------- -------- ------- ------------
Contractual obligations:
 Series A IRB Bonds
 (Building Debt) $3,508 $115 $121 $128 $134 $142 $2,868
 Interest payments 2,322 212 202 195 186 178 1,349
 Operating leases 292 121 119 51 1 -- --
 Radix Note 454 176 193 85 -- -- --
 Land Note 217 18 20 22 23 25 109
 --------- --------- --------- -------- -------- ------- ------------
Total $6,793 $642 $655 $481 $344 $345 $4,326
 ========= ========= ========= ======== ======== ======= ============


 Amount available at Amount owed at
 Other obligations: April 30, 2008 April 30, 2008 Expiration
 ----------------------- ------------------- -----------------------
 Line of credit $6,000,000 $3,836,000 August 14, 2008


 17

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Critical Accounting Policies

 The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and related disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. We cannot assure you that actual results
will not differ from those estimates. We believe the following critical
accounting policies affect our more significant judgments and estimates used in
the preparation of our consolidated financial statements.

 Revenue Recognition. We derive revenue from the manufacture of production
units of electronic assemblies, liquid crystal displays, remote monitoring
equipment and ultra-rugged handheld computers and peripherals. We also derive
revenue from repairs and non-warranty services, engineering design services,
remote monitoring services and maintenance contracts. Production and repaired
units are billed to the customer after they are shipped. Remote monitoring
services and maintenance contracts are billed and the revenue recognized at the
end of the month after the services or maintenance periods are completed. For
customers that utilize our engineering design services, we bill the customer and
recognize revenue after the design services or tooling have been completed. We
require our customers to provide a binding purchase order to verify the
manufacturing services to be provided. Typically, we do not have any
post-shipment obligations that would include customer acceptance requirements,
training, installation or other services.

 Inventory Valuation. Our inventories are stated at the lower of cost, using
the first-in, first-out (FIFO) method, or market value. Our industry is
characterized by rapid technological change, short-term customer commitments and
rapid changes in demand, as well as other market considerations. We make
provisions for estimated excess and obsolete inventory based on our quarterly
reviews of inventory quantities on hand and the latest forecasts of product
demand and production requirements from our customers. We review our inventory
in detail on a quarterly basis utilizing a 24-month time horizon. Individual
part numbers that have not had any usage in a 24-month time period are examined
by manufacturing personnel for obsolescence, excess and fair value. Parts that
are not identified for common use or are unique to a former customer or
application are categorized as obsolete and are discarded as part of our
quarterly inventory write-down. If actual market conditions or our customers'
product demands are less favorable than those projected, additional inventory
write-downs may be required. The reserve balance is analyzed for adequacy along
with the inventory review each quarter.

 Allowance for Doubtful Accounts. Accounts receivable are carried at
original invoice amount less an estimate made for doubtful receivables based on
a review of all outstanding amounts on a monthly basis. We determine the
allowance for doubtful accounts by regularly evaluating individual customer
receivables and considering a customer's financial condition and credit history,
and current economic conditions. Receivables are written off when deemed
uncollectible. Recoveries of receivables previously written off are recorded
when received. The majority of the customer accounts are considered past due
after 30 days. Interest is not charged on past due accounts for the majority of
our customers.

 Warranty Reserve. We have established a warranty reserve for rework,
product warranties and customer refunds. We provide a limited warranty for a
period of one year from the date of receipt of our products by our customers and
our standard warranties require us to repair or replace defective products at no
cost to the customer or refund the customer's purchase price. The warranty
reserve is

 18

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based on historical experience and analysis of specific known and potential
warranty issues. The product warranty liability reflects management's best
estimate of probable liability under our product warranties.

 Goodwill. Goodwill is initially measured as the excess of the cost of an
acquired business over the fair value of the identifiable net assets acquired.
We do not amortize goodwill, but rather review its carrying value for impairment
annually (April 30), and whenever an impairment indicator is identified. Our
annual impairment test is performed at year-end. The goodwill impairment test
involves a two-step approach. The first step is to identify if potential
impairment of goodwill exists. If impairment of goodwill is determined to exist,
the second step of the goodwill impairment test measures the amount of the
impairment using a fair value-based approach.

 Intangible assets. Intangible assets consist of patents, trademarks,
copyrights, customer relationships and capitalized software. Intangible assets
are amortized over their estimated useful lives using the straight-line method.

 Impairment of Long-Lived Intangible Assets. Long-lived assets, including
amortizable intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset or group
of assets may not be fully recoverable. These events or changes in circumstances
may include a significant deterioration of operating results, changes in
business plans, or changes in anticipated future cash flows. If an impairment
indicator is present, we evaluate recoverability by a comparison of the carrying
amount of the assets to future undiscounted cash flows expected to be generated
by the assets. If the sum of the expected future cash flows is less than the
carrying amount, we would recognize an impairment loss. An impairment loss would
be measured by comparing the amount by which the carrying value exceeds the fair
value of the long-lived assets and intangibles.

 19

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Selected Quarterly Financial Data (Unaudited)

 The following table sets forth selected unaudited financial information for
the Company for the four fiscal quarters of the years ended April 30, 2008 and
2007. This unaudited information has been prepared on the same basis as the
annual financial statements contained elsewhere herein, and in the opinion of
the Company, reflects all adjustments for a fair presentation thereof. The
following table is qualified by reference to and should be read in conjunction
with the consolidated financial statements, related notes thereto and other
financial data included elsewhere herein.



 Three Months Ended
 July 31, 2007 October 31, 2007 January 31, 2008 April 30, 2008
 ------------- ---------------- ---------------- --------------
 (In thousands, except per share data)
Sales $4,787 $5,602 $6,135 $6,894
Gross margin 1,515 1,796 2,402 2,523
Operating income 354 140 526 690
Income before taxes 266 16 390 567
Net income $174 $10 $241 $263
Net income per share - Basic $0.05 $0.00 $0.07 $0.08
Net income per share - Diluted $0.05 $0.00 $0.07 $0.08
Net cash (used in) provided by
 operating activities $(856) $(1,253) $(215) $208


 Three Months Ended
 July 31, 2006 October 31, 2006 January 31, 2007 April 30, 2007
 ------------- ---------------- ---------------- --------------
 (In thousands, except per share data)
Sales $3,862 $5,596 $5,173 $5,178
Gross margin 1,314 1,660 1,448 1,429
Operating income 333 490 297 408
Income before taxes 306 403 520 324
Net income $169 $241 $310 $326
Net income per share - Basic $0.05 $0.07 $0.10 $0.10
Net income per share - Diluted $0.05 $0.07 $0.09 $0.09
Net cash (used in) provided by
 operating activities $31 $10 $(696) $542


New Accounting Pronouncements

 In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value
Measurements ("SFAS 157"). SFAS 157 establishes a common definition for fair
value to be applied to U.S. GAAP guidance requiring use

 20

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of fair value, establishes a framework for measuring fair value, and expands
disclosure about such fair value measurements. FASB Staff Position No. SFAS
157-2 was issued in February 2008. SFAS 157-2 delayed the application of SFAS
157 for non-financial assets and non-financial liabilities, except items that
are recognized or disclosed at fair value in the financial statements on a
recurring basis, until fiscal years beginning after November 15, 2008. The
Company is required to adopt SFAS 157 in the first quarter of fiscal year 2010.
The Company believes that the financial impact, if any, of adopting SFAS 157
will not result in a material impact to its financial statements.

 In February 2007, the FASB, issued SFAS No. 159 ("SFAS 159"), The Fair
Value Option for Financial Assets and Financial Liabilities. Under SFAS 159, the
Company may elect to report financial instruments and certain other items at
fair value on a contract-by-contract basis with changes in value reported in
earnings. This election is irrevocable. SFAS 159 provides an opportunity to
mitigate volatility in reported earnings that is caused by measuring hedged
assets and liabilities that were previously required to use a different
accounting method than the related hedging contracts when the complex hedge
accounting provisions of SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, are not met. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company is required to adopt SFAS 159 in
the first quarter of fiscal year 2009. The Company believes that the financial
impact, if any, of adopting SFAS 159 will not result in a material impact to its
financial statements.

 In December 2007, the FASB issued SFAS No. 160 ("SFAS 160"), Noncontrolling
Interests in Consolidated Financial Statements-an amendment of ARB No. 51. SFAS
160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for the Company in its
fiscal year beginning May 1, 2009. The Company does not believe the adoption of
this statement will have a material impact on its financial position and results
of operations.

 In December 2007, the FASB issued SFAS No. 141R ("SFAS 141R"), Business
Combinations. SFAS 141R establishes principles and requirements for how the
acquirer of a busness recognizes and measures in its financials statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree. SFAS 141R also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R is
effective for the Company's fiscal year beginning May 1, 2009. The Company does
not believe the adoption of this statement will have a material impact on its
financial position and results of operations.

Forward Looking Statements

 This annual report on Form 10-KSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including, but
not limited to, our statements on strategy, operating forecasts, and our working
capital requirements and availability. In addition, from time to time, the
Company or its representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included in, but
are not limited to, various filings made by the

 21

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Company with the Securities and Exchange Commission, press releases or oral
statements made by or with the approval of an authorized executive officer of
the Company. Forward-looking statements consist of any statement other than a
recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate,"
or "continue" or the negative thereof or other variations thereon or comparable
terminology. Actual results could differ materially from those projected or
suggested in any forward-looking statements as a result of a wide variety of
factors and conditions, including, but not limited to, an inability on the part
of the Company to successfully market and grow NTG, Radix and DCI, the Company's
dependence on its top customers, reliance on certain key management personnel,
an inability to grow the Company's customer base, potential growth in costs and
expenses, an inability to refinance the Company's existing debt on terms
comparable to those now in existence, potential deterioration of business or
economic conditions for the Company's customers' products, price competition
from larger and better financed competitors, and the factors and conditions
described in the discussion of "Results of Operations" and "Liquidity and
Capital Resources" as contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations of this annual report, as well as
those included in other documents the Company files from time to time with the
Securities and Exchange Commission, including the Company's quarterly reports on
Form 10-QSB and current reports on Form 8-K. Holders of the Company's securities
are specifically referred to these documents with regard to the factors and
conditions that may affect future results. The reader is cautioned that the
Company does not have a policy of updating or revising forward-looking
statements and thus he or she should not assume that silence by management of
the Company over time means that actual events are bearing out as estimated in
such forward-looking statements.






Item 7. FINANCIAL STATEMENTS

 The information required by Item 310(a) of Regulation S-B is provided on
pages F-1 through F-26 of this filing on Form 10-KSB and is hereby incorporated
by reference herein.





Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE

 We have no disagreements with our independent registered public accounting
firm through the date of this filing.





Item 8A(T). CONTROLS AND PROCEDURES

 (a) Evaluation of disclosure controls and procedures. The Company's
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Company's disclosure
controls and procedures, as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of the end of the period covered by this report. Based on such
evaluation, these officers have concluded that the Company's disclosure controls
and procedures are effective to provide reasonable assurance that information
required to be disclosed in our periodic filings under the Exchange Act is
accumulated and communicated to our management, including those officers, to
allow timely decisions regarding required disclosure.

 22

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 (b) Management's Report on Internal Control over Financial Reporting. The
Company's management is responsible for establishing and maintaining effective
internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act. Management has assessed the Company's internal control over
financial reporting in relation to criteria described in Internal Control -
Integrated Framework, issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment using those criteria, management
concluded that, as of April 30, 2008, the Company's internal control over
financial reporting was effective.

 This annual report does not include an attestation report of the Company's
independent registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's independent registered public accounting firm pursuant to the rules of
the Securities and Exchange Commission that permit the Company to provide only
management's report in this annual report.

 (c) Changes in internal controls. There were no significant changes in the
Company's internal controls over financial reporting or in other factors that in
management's estimates are reasonably likely to materially affect the Company's
internal controls over financial reporting subsequent to the date of the
evaluation.




Item 8B. OTHER INFORMATION

 None.

 23

---

 Part III



Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
 GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

 The Company has adopted a Code of Ethics for the Company's officers and
directors. A copy of the Code of Ethics may be obtained without charge on the
Company website (www.elecsyscorp.com) or by contacting the Company's Secretary
at the Company's headquarters, 846 N. Mart-Way Court, Olathe, Kansas 66061. The
Company will satisfy any disclosure requirements under Item 5.05 of Form 8-K
regarding an amendment to, or waiver from, any provision of the Code of Ethics
by disclosing the nature of such amendment or waiver on our website or in a
report on Form 8-K.

 The remaining information required to be disclosed pursuant to this Item 9
is incorporated by reference to our Proxy Statement for our Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120
days after the close of the year ended April 30, 2008.





Item 10. EXECUTIVE COMPENSATION

 Incorporated by reference to our Proxy Statement for our Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120
days after the close of the year ended April 30, 2008.





Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
 RELATED STOCKHOLDER MATTERS

 Incorporated by reference to our Proxy Statement for our Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120
days after the close of the year ended April 30, 2008.





Item 12. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 Incorporated by reference to our Proxy Statement for our Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120
days after the close of the year ended April 30, 2008.


Item 13. EXHIBITS

 The list of exhibits following the signature page of this Annual Report on
Form 10-KSB is incorporated by reference herein.

 24

---

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 Incorporated by reference to our Proxy Statement for our Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120
days after the close of the year ended April 30, 2008.

 25

---

 Signatures

 Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

 ELECSYS CORPORATION



Date: July 23, 2008 By: /s/ Karl B. Gemperli
 ---------------------------------------
 Karl B. Gemperli
 President and Chief Executive Officer
 Principal Executive Officer

 In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated:


 /s/ Karl B. Gemperli Date: July 23, 2008
--------------------------------------------
Karl B. Gemperli
President, Chief Executive Officer and Director
Principal Executive Officer


 /s/ Todd A. Daniels Date: July 23, 2008
--------------------------------------------
Todd A. Daniels
Vice President and Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer


 /s/ Robert D. Taylor Date: July 23, 2008
--------------------------------------------
Robert D. Taylor
Chairman of the Board of Directors


 /s/ Stan Gegen Date: July 23, 2008
--------------------------------------------
Stan Gegen
Director

 26

---

 EXHIBIT INDEX

NUMBER DESCRIPTION
3.1 Articles of Incorporation

 (a) The amended Articles of Incorporation of the Company dated
 September 14, 1994, attached as Exhibit 3.1 pages 19-55 of the
 Company's Form 10-KSB, filed July 31, 1995 with the Securities
 and Exchange Commission is incorporated herein by reference.

 (b) An amendment to the Articles of Incorporation of the Company
 dated November 1, 2000, attached as Exhibit 4.2 of the Company's
 Form S-8, filed June 19, 2000 with the Securities and Exchange
 Commission, is incorporated herein by reference.

3.2 By-Laws

 The Restated By-Laws of the Company dated October 1, 1993, attached as
 Exhibit 3.2, of the Company's Registration Statement, Form SB-2, filed
 November 29, 1993 with the Securities and Exchange Commission, are
 incorporated herein by reference.

4 Instruments Defining the Rights of Security Holders

 A specimen stock certificate representing shares of the common stock,
 par value $.01 per share, attached as Exhibit 4.1 of the Company's
 Registration Statement, Form SB-2, filed November 29, 1993 with the
 Securities and Exchange Commission, is incorporated herein by
 reference.

10 Material Contracts

 (a) Restated 1991 Stock Option Plan attached as Exhibit 10.5 of the
 Company's Registration Statement, Form SB-2, filed November 29,
 1993 with the Securities and Exchange Commission, is incorporated
 herein by reference.

 (b) Amendment of the Company's Restated 1991 Stock Option Plan,
 increasing the number of shares of Common Stock subject to option
 thereunder from 375,000 shares to 475,000 approved by the
 shareholders at the annual stockholders meeting held September
 15, 1998, attached as Exhibit 10(cc) of the Company's Form 10-KSB
 filed July 29, 1999 with the Securities and Exchange Commission,
 is incorporated herein by reference.

 (c) Form of Stock Option Agreement for Restated 1991 Stock Option
 Plan, attached as Exhibit 10(c) of the Company's Form 10-KSB
 filed July 29, 2002 with the Securities and Exchange Commission,
 is incorporated herein by reference.

 (d) Form of Non-Employee Director Stock Option Agreement for Restated
 1991 Stock Option Plan attached as Exhibit 10(d) of the Company's
 Form 10-KSB filed July 29, 2002 with the Securities and Exchange
 Commission, is incorporated herein by reference.

 (e) Employment Agreement dated December 6, 1999, by and between the
 Company and Karl Gemperli attached as Exhibit 10(cc) of the
 Company's Form 10-KSB, filed July 28, 2000, with the Securities
 and Exchange Commission is incorporated herein by reference.

---

 (f) Supplemental Agreement dated February 28, 2001, between the
 Company and Karl Gemperli, attached as Exhibit 10(mm) of the
 Company's Form 10-QSB, filed March 19, 2001, with the Securities
 and Exchange Commission, is incorporated herein by reference.

 (g) Trust Indenture dated September 1, 2006 between the City of
 Olathe, Kansas, and UMB Bank, N.A. as Trustee attached as Exhibit
 10.1 of the Company's Form 10-QSB filed December 11, 2006 with
 the Securities and Exchange Commission, is incorporated herein by
 reference.

 (h) Lease Agreement dated September 1, 2006 between the City of
 Olathe, Kansas, and DCI Holdings FAE, LLC attached as Exhibit
 10.2 of the Company's Form 10-QSB filed December 11, 2006 with
 the Securities and Exchange Commission, is incorporated herein by
 reference.

 (i) Guaranty Agreement dated September 1, 2006 among DCI, Inc.,
 Elecsys Corporation, and NTG, Inc., and UMB Bank, N.A. as Trustee
 attached as Exhibit 10.3 of the Company's Form 10-QSB filed
 December 11, 2006 with the Securities and Exchange Commission, is
 incorporated herein by reference.

 (j) Bond Pledge Agreement dated September 1, 2006 between DCI, Inc.
 and Bank Midwest, N.A. attached as Exhibit 10.4 of the Company's
 Form 10-QSB filed December 11, 2006 with the Securities and
 Exchange Commission, is incorporated herein by reference.

 (k) Promissory Note dated November 15, 2006 between DCI, Inc. and
 Bank Midwest, N.A. attached as Exhibit 10.7 of the Company's Form
 10-QSB filed December 11, 2006 with the Securities and Exchange
 Commission, is incorporated herein by reference.

 (l) Commercial Guaranty dated November 15, 2006 between DCI, Inc. and
 Bank Midwest, N.A. and Elecsys Corporation attached as Exhibit
 10.8 of the Company's Form 10-QSB filed December 11, 2006 with
 the Securities and Exchange Commission, is incorporated herein by
 reference.

 (m) Commercial Guaranty dated November 15, 2006 between DCI, Inc. and
 Bank Midwest, N.A. and NTG, Inc. attached as Exhibit 10.9 of the
 Company's Form 10-QSB filed December 11, 2006 with the Securities
 and Exchange Commission, is incorporated herein by reference.

 (n) Mortgage dated November 15, 2006 between DCI, Inc. and Bank
 Midwest, N.A. attached as Exhibit 10.10 of the Company's Form
 10-QSB filed December 11, 2006 with the Securities and Exchange
 Commission, is incorporated herein by reference.

 (o) Business Loan Agreement (Asset Based) dated August 15, 2007
 between Elecsys Corporation and Bank Midwest, N.A. attached as
 Exhibit 10.1 of the Company's Form 10-QSB filed September 10,
 2007 with the Securities and Exchange Commission, is incorporated
 herein by reference.

 (p) Change in Terms Agreement dated August 15, 2007 between Elecsys
 Corporation and Bank Midwest, N.A. attached as Exhibit 10.2 of
 the Company's Form 10-QSB filed September 10, 2007 with the
 Securities and Exchange Commission, is incorporated herein by
 reference.

---

 (q) Promissory Note dated September 25, 2007 between Elecsys
 Corporation and Bank Midwest, N.A. attached as Exhibit 10.1 of
 the Company's Form 10-QSB filed December 21, 2007 with the
 Securities and Exchange Commission, is incorporated herein by
 reference.

 (r) Asset Purchase Agreement dated August 31, 2007 between ER
 Acquisition Corporation and Radix International Corporation
 attached as Exhibit 99.1 of the Company's Form 8-K/A filed
 December 17, 2007 with the Securities and Exchange Commission, is
 incorporated herein by reference.

 (s) Waiver relating to Business Loan Agreement between Elecsys
 Corporation and Bank Midwest, N.A. attached as Exhibit 10.1 of
 the Company's Form 10-QSB filed March 10, 2008 with the
 Securities and Exchange Commission, is incorporated herein by
 reference.

21 Subsidiaries of the Company

23.1 Consent of McGladrey & Pullen LLP

31.1 Rule 13a-14(a)/15d-14(a) Certification of President and Chief
 Executive Officer (Principal Executive Officer)

31.2 Rule 13a-14(a)/15d-14(a) Certification of Vice President and Chief
 Financial Officer (Principal Financial and Accounting Officer)

32.1 Section 1350 Certification of President and Chief Executive Officer
 (Principal Executive Officer)

32.2 Section 1350 Certification of Vice President and Chief Financial
 Officer (Principal Financial and Accounting Officer)

---

 FINANCIAL STATEMENTS INDEX


Report of Independent Registered Public Accounting Firm . . . . . . . . . . .F-2

Consolidated Balance Sheets as of April 30, 2008 and 2007 . . . . . . . . . .F-3

Consolidated Statements of Operations
 Years Ended April 30, 2008 and 2007 . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statements of Stockholders' Equity
 Years Ended April 30, 2008 and 2007 . . . . . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows
 Years Ended April 30, 2008 and 2007 . . . . . . . . . . . . . . . . . . .F-6

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . .F-8


 F-1

---

 Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Elecsys Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Elecsys
Corporation and Subsidiaries (the Company) as of April 30, 2008 and 2007, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Elecsys
Corporation and Subsidiaries as of April 30, 2008 and 2007, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

As discussed in Note 1 and Note 9 to the financial statements, effective May 1,
2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty
in Income Taxes - an Interpretation of Statements of Financial Accounting
Standards No. 109 ("FIN 48").

We were not engaged to examine management's assertion about the effectiveness of
Elecsys Corporation and Subsidiaries' internal control over financial reporting
as of April 30, 2008 included in this Annual Report under the caption
"Management's Report on Internal Control over Financial Reporting" and,
accordingly, we do not express an opinion thereon.


/s/ McGladrey & Pullen, LLP
Kansas City, Missouri
July 23, 2008

 F-2

---

 Elecsys Corporation and Subsidiaries
 Consolidated Balance Sheets
 (In thousands, except share data)

 April 30, 2008 April 30, 2007
 ----------------- -----------------
ASSETS
 Current assets:
 Cash $ 357 $ 503
 Accounts receivable, less allowances of $303
 and $126, respectively 3,757 2,966
 Inventories 6,207 4,686
 Prepaid expenses 75 99
 Deferred taxes 781 767
 ----------------- -----------------
 Total current assets 11,177 9,021

 Property and equipment:
 Land 1,737 1,737
 Building and improvements 3,395 3,392
 Equipment 3,490 3,005
 ----------------- -----------------
 8,622 8,134
 Accumulated depreciation (2,249) (1,806)
 ----------------- -----------------
 6,373 6,328

 Goodwill 1,544 82
 Intangible assets, net 1,927 351
 Other assets, net 77 71
 ----------------- -----------------
Total assets $21,098 $15,853
 ================= =================

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Accounts payable $2,051 $2,050
 Accrued expenses 2,042 708
 Income taxes payable 564 --
 Notes payable to bank 3,836 1,525
 Current maturities of long-term debt 309 192
 ----------------- -----------------
 Total current liabilities 8,802 4,475

 Deferred taxes 311 312
 Long-term debt, less current maturities 3,870 3,725

 Stockholders' equity:
 Preferred stock, $.01 par value, 5,000,000 shares
authorized; -- --
 none issued and outstanding
 Common stock, $.01 par value, 10,000,000 shares authorized;
 issued and outstanding - 3,284,937 33 33
 Additional paid-in capital 9,117 9,031
 Accumulated deficit (1,035) (1,723)
 ----------------- -----------------
 Total stockholders' equity 8,115 7,341
 ----------------- -----------------
Total liabilities and stockholders' equity $21,098 $15,853
 ================= =================


See Notes to Consolidated Financial Statements.

 F-3

---

 Elecsys Corporation and Subsidiaries
 Consolidated Statements of Operations
 (In thousands, except per share data)

 Years Ended April 30,
 ------------------------------------
 2008 2007
 ---------------- ----------------
Sales $23,418 $19,809
Cost of products sold 15,182 13,958
 ---------------- ----------------
Gross margin 8,236 5,851

Selling, general and administrative expenses 6,526 4,323
 ---------------- ----------------

Operating income 1,710 1,528

Financial income (expense):
 Interest expense (491) (310)
 Gain on the sale of property -- 324
 Other income, net 20 11
 ---------------- ----------------
 (471) 25
 ---------------- ----------------

Net income before income tax expense 1,239 1,553

Income tax expense 551 507
 ---------------- ----------------

Net income $688 $1,046
 ================ ================

Net income per share information:
 Basic $0.21 $0.32
 Diluted $0.20 $0.31

Weighted average common shares outstanding:
 Basic 3,285 3,259
 Diluted 3,452 3,402


See Notes to Consolidated Financial Statements.

 F-4

---

  Elecsys Corporation and Subsidiaries
 Consolidated Statements of Stockholders' Equity
 (In thousands)

 Common Additional Total
 Stock Common Paid-In Accumulated Stockholders'
 (# of shares) Stock Capital Deficit Equity
 --------------- ----------- ------------- --------------- ---------------
Balance at April 30, 2006 3,240 $32 $8,926 $(2,769) $6,189
 Net income -- -- -- 1,046 1,046
 Exercise of stock options 45 1 50 -- 51
 Share-based compensation expense -- -- 55 -- 55
 --------------- ----------- ------------- --------------- ---------------
Balance at April 30, 2007 3,285 33 9,031 (1,723) 7,341
 Net income -- -- -- 688 688
 Share-based compensation expense -- -- 86 -- 86
 --------------- ----------- ------------- --------------- ---------------
Balance at April 30, 2008 3,285 $33 $9,117 $(1,035) $8,115
 =============== =========== ============= =============== ===============



See Notes to Consolidated Financial Statements.

 F-5

---

 Elecsys Corporation and Subsidiaries
 Consolidated Statements of Cash Flows
 (In thousands)

 Years ended April 30,
 --------------------------------------
 2008 2007
 ----------------- -----------------
Cash Flows from Operating Activities:
Net income $688 $1,046
Adjustments to reconcile net income to net cash (used in)
 operating activities:
 Share-based compensation expense 86 55
 Depreciation 537 428
 Amortization 133 42
 Provision for doubtful accounts 77 56
 Loss (gain) on disposal of assets 3 (315)
 Deferred taxes (15) 475
 Changes in operating assets and liabilities, net of acquisition
 of assets and assumed liabilities:
 Accounts receivable (2,345) (1,116)
 Inventories (907) (1,303)
 Accounts payable (665) 725
 Accrued expenses (286) (118)
 Income taxes payable 564 --
 Other, net 14 (88)
 ----------------- -----------------
Net cash (used in) operating activities (2,116) (113)
 ----------------- -----------------

Cash Flows from Investing Activities:
Purchases of property and equipment (585) (5,737)
Proceeds from disposal of property and equipment -- 1,766
Goodwill increase related to acquisition costs (6) (33)
Costs incurred for intangible assets -- (90)
Acquisition of assets and assumed liabilities, net of cash acquired (12) --
 ----------------- -----------------
Net cash (used in) investing activities (603) (4,094)
 ----------------- -----------------

Cash Flows from Financing Activities:
Proceeds from exercise of stock options -- 51
Borrowings on long-term debt 550 4,420
Principal payments on long-term debt (288) (503)
Borrowings on notes payable to bank 5,028 7,050
Principal payments on notes payable to bank (2,717) (6,996)
 ----------------- -----------------
Net cash provided by financing activities 2,573 4,022

 ----------------- -----------------
Net (decrease) in cash (146) (185)
Cash at beginning of year 503 688
 ----------------- -----------------
Cash at end of year $357 $503
 ================= =================


 F-6

---

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $492 $270
Cash paid during the period for income taxes 2 37

Supplemental Disclosures of Non-Cash Investing
 and Financing Activities:
Acquisition of assets and assumed liabilities:
 Receivables $785 $ --
 Inventories 614 --
 Intangibles 1,705 --
 Goodwill 1,456 --
 Accounts payable (666) --
 Accounts payable due to Elecsys Corporation (2,262) --
 Accrued expenses (1,620) --
 ----------------- -----------------
Total cash paid in acquisition, net of cash acquired $12 $ --
 ================= =================



See Notes to Consolidated Financial Statements.

 F-7

---

 Elecsys Corporation and Subsidiaries


 Notes to Consolidated Financial Statements
 April 30, 2008

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
 Elecsys Corporation (the "Company") is a publicly traded holding company
with three wholly owned subsidiaries, DCI, Inc. ("DCI"), NTG, Inc. ("NTG"), and
Radix Corporation ("Radix"). DCI provides electronic design and manufacturing
services for original equipment manufacturers ("OEMs") in the aerospace,
transportation, communications, safety, security and other industrial product
markets. DCI has specialized expertise and capabilities to design and
efficiently manufacture custom electronic assemblies which integrate a variety
of innovative display and interface technologies. NTG designs, markets, and
provides remote monitoring solutions for the gas and oil pipeline industry as
well as other industries that require remote monitoring. Radix was created as a
wholly owned subsidiary to acquire the assets and assume certain liabilities of
Radix International Corporation and its subsidiary. The transaction closed on
September 18, 2007 and the results from operations since September 18, 2007 and
its resulting financial condition are included in the Company's consolidated
financial statements. Radix develops, designs and markets ultra-rugged handheld
computers, peripherals and portable printers. The markets served by its products
include utilities, transportation logistics, traffic and parking enforcement,
route accounting/deliveries, and inspection and maintenance.

 The Company's sales are made to customers within the United States, but
also include Canada and several other international markets.

Principles of Consolidation
 The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, DCI, NTG and Radix. All
significant intercompany balances and transactions have been eliminated in
consolidation.

Use of Estimates
 The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates.

Cash
 The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. Accounts are guaranteed by the Federal
Deposit

 F-8

---

Insurance Corporation ("FDIC") up to $100,000. The Company had bank deposits of
approximately $209,000 and $372,000 in excess of FDIC insured limits as of April
30, 2008 and 2007, respectively. The Company has not experienced any losses due
to this.

Accounts Receivable
 Accounts receivable are carried at original invoice amount less an estimate
made for doubtful receivables based on a review of all outstanding amounts on a
monthly basis. Management determines the allowance for doubtful accounts by
regularly evaluating individual customer receivables and considering a
customer's financial condition and credit history, and current economic
conditions. Receivables are written off when deemed uncollectible. Recoveries of
receivables previously written off are recorded when received. The majority of
the customer accounts are considered past due after the invoice becomes older
than the customer's credit terms (30 days for the majority of customers).
Interest is not charged on past due accounts for the majority of our customers.

Concentration of Credit Risk and Financial Instruments
 The Company grants credit to customers who meet the Company's
pre-established credit requirements. Credit risk is managed through credit
approvals, credit limits, and monitoring procedures. Credit losses are provided
for in the Company's consolidated financial statements and historically have
been within management's expectations.

 Sales to one customer (Radix International Corporation) accounted for 4%
and 26% of total sales in fiscal 2008 and 2007, respectively. Sales to the
Company's five largest customers were 27% of total sales for fiscal 2008
compared to fiscal 2007 in which sales to the Company's five largest customers
were 51% of total sales. The overall decrease in sales to the Company's five
largest customers was primarily driven by the acquisition of the assets and
liabilities of Radix International Corporation and its subsidiary on September
18, 2007. The loss of one or more of these major customers would have a
substantial impact on the Company's business.

 The carrying value of the Company's financial instruments, including cash,
accounts receivable, accounts payable, notes payable and long-term debt, as
reported in the accompanying consolidated balance sheets, approximates fair
value due to their liquid nature (cash, accounts receivable, and accounts
payable) and variable interest rates (for notes payable and long-term debt).

Shipping and Handling Costs
 Shipping and handling costs that are billed to the Company's customers are
recognized as revenues in the period that the product is shipped. Shipping and
handling costs that are incurred by the Company are recognized as cost of sales
in the period that the product is shipped.

Revenue Recognition
 The Company derives revenue from the manufacture of production units of
electronic assemblies, liquid crystal displays, remote monitoring equipment and
ultra-

 F-9

---

rugged handheld computers and peripherals. The Company also derives revenue from
repairs and non-warranty services, engineering design services, remote
monitoring services and maintenance contracts. Production and repaired units are
billed to the customer after they are shipped. Remote monitoring services and
maintenance contracts are billed and the revenue recognized at the end of the
month after the services or maintenance periods are completed. For customers
that utilize the Company's engineering design services, the customer is billed
and revenue is recognized after the design services or tooling have been
completed. The Company requires our customers to provide a binding purchase
order to verify the manufacturing services to be provided. Typically, the
Company does not have any post-shipment obligations that would include customer
acceptance requirements. Radix does provide training and installation services
to its customers and those services are billed and the revenue recognized at the
end of the month after the services are completed. Revenue recognized is net of
sales taxes remitted to the government.

Inventory Valuation
 Inventories are stated at the lower of cost, using the first-in, first-out
(FIFO) method, or market value. The Company's industry is characterized by rapid
technological change, short-term customer commitments and rapid changes in
demand, as well as other market considerations. Provisions for estimated excess
and obsolete inventory are based on quarterly reviews of inventory quantities on
hand and the latest forecasts of product demand and production requirements from
the customers. Inventories are reviewed in detail on a quarterly basis utilizing
a 24-month time horizon. Individual part numbers that have not had any usage in
a 24-month time period are examined by manufacturing personnel for obsolescence,
excess and fair value. Parts that are not identified for common use or are
unique to a former customer or application are categorized as obsolete and are
discarded as part of the quarterly inventory write-down. If actual market
conditions or customers' product demands are less favorable than those
projected, additional inventory write-downs may be required. The reserve balance
is analyzed for adequacy along with the inventory review each quarter.
Inventories, net of reserves of approximately $377,000 and $251,000, are
summarized by major classification as follows (in thousands):



 April 30,
 2008 2007
 ------------- ------------
 Raw materials $4,725 $2,871
 Work-in-process 959 1,053
 Finished goods 523 762
 ------------- ------------
 $6,207 $4,686
 ============= ============


 The Company has entered into supplier arrangements with some of its larger
customers that allows for the Company to produce finished goods for those
customers based on their forecasted requirements. As of April 30, 2008 and 2007,
finished goods inventory of approximately $118,000 and $244,000, respectively
was directly related to those customer agreements.

 F-10

---

Property and Equipment
 Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives:

 Description Years
 Building and improvements 39
 Equipment 3-8
 Computers and software 3


Goodwill
 Goodwill is initially measured as the excess of the cost of an acquired
business over the fair value of the identifiable net assets acquired. The
Company does not amortize goodwill, but rather reviews its carrying value for
impairment annually (April 30), and whenever an impairment indicator is
identified. The Company performs its annual impairment test at year-end. The
goodwill impairment test involves a two-step approach. The first step is to
identify if potential impairment of goodwill exists. If impairment of goodwill
is determined to exist, the second step of the goodwill impairment test measures
the amount of the impairment using a fair value-based approach. The Company has
concluded that no impairment existed as of April 30, 2008 or 2007.

Intangible assets
 Intangible assets consist of patents, trademarks, copyrights, customer
relationships and capitalized software. Intangible assets are amortized over
their estimated useful lives using the straight-line method.

Impairment of Long-Lived Intangible Assets
 Long-lived assets, including amortizable intangible assets, are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset or group of assets may not be fully recoverable.
These events or changes in circumstances may include a significant deterioration
of operating results, changes in business plans, or changes in anticipated
future cash flows. If an impairment indicator is present, the Company evaluates
recoverability by a comparison of the carrying amount of the assets to future
undiscounted cash flows expected to be generated by the assets. If the sum of
the expected future cash flows is less than the carrying amount, the Company
would recognize an impairment loss. An impairment loss would be measured by
comparing the amount by which the carrying value exceeds the fair value of the
long-lived assets and intangibles. Management reviewed the intangible assets for
impairment as of April 30, 2008 and 2007 and determined that no impairment
existed.

Income Taxes
 The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes
("SFAS 109") as clarified by FASB Interpretation No. 48, Accounting for
Uncertainty in

 F-11

---

Income Taxes ("FIN 48"). Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to the differences between the tax
bases of assets and liabilities and their carrying amount for financial
reporting purposes, as measured by the enacted tax rates which will be in effect
when these differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. In assessing the realizability of
deferred income tax assets, the Company considers whether it is "more likely
than not," according to the criteria of SFAS 109, that some portion or all of
the deferred income tax assets will be realized. The ultimate realization of
deferred income tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. FIN 48 requires that the Company recognize the financial statement
benefit of a tax position only after determining that the relevant tax authority
would more likely than not sustain the position following an audit. For tax
positions meeting the more likely than not threshold, the amount recognized in
the financial statements is the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the relevant tax
authority.

Advertising Costs
 The Company expenses advertising costs as incurred. Advertising expense
charged to operations amounted to approximately $35,000 and $44,000 for the
years ended April 30, 2008 and 2007, respectively.

Research and Development Costs
 The Company expenses research and development costs as incurred. Research
and development expenses were approximately $616,000 and $258,000 for the years
ended April 30, 2008 and 2007, respectively.

Recent Accounting Pronouncements
 In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value
Measurements ("SFAS 157"). SFAS 157 establishes a common definition for fair
value to be applied to U.S. GAAP guidance requiring use of fair value,
establishes a framework for measuring fair value, and expands disclosure about
such fair value measurements. FASB Staff Position No. SFAS 157-2 was issued in
February 2008. SFAS 157-2 delayed the application of SFAS 157 for non-financial
assets and non-financial liabilities, except items that are recognized or
disclosed at fair value in the financial statements on a recurring basis, until
fiscal years beginning after November 15, 2008. The Company is required to adopt
SFAS 157 in the first quarter of fiscal year 2010. The Company believes that the
financial impact, if any, of adopting SFAS 157 will not result in a material
impact to its financial statements.

 In February 2007, the FASB, issued SFAS No. 159 ("SFAS 159"), The Fair
Value Option for Financial Assets and Financial Liabilities. Under SFAS 159, the
Company may elect to report financial instruments and certain other items at
fair value on a contract-by-contract basis with changes in value reported in
earnings. This election is

 F-12

---

irrevocable. SFAS 159 provides an opportunity to mitigate volatility in reported
earnings that is caused by measuring hedged assets and liabilities that were
previously required to use a different accounting method than the related
hedging contracts when the complex hedge accounting provisions of SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, are not met. SFAS
159 is effective for fiscal years beginning after November 15, 2007. The Company
is required to adopt SFAS 159 in the first quarter of fiscal year 2009. The
Company believes that the financial impact, if any, of adopting SFAS 159 will
not result in a material impact to its financial statements.

 In December 2007, the FASB issued SFAS No. 160 ("SFAS 160"), Noncontrolling
Interests in Consolidated Financial Statements-an amendment of ARB No. 51. SFAS
160 establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for the Company in its
fiscal year beginning May 1, 2009. The Company does not believe the adoption of
this statement will have a material impact on its financial position and results
of operations.

 In December 2007, the FASB issued SFAS No. 141R ("SFAS 141R"), Business
Combinations. SFAS 141R establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree. SFAS 141R also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R is
effective for the Company's fiscal year beginning May 1, 2009. The Company does
not believe the adoption of this statement will have a material impact on its
financial position and results of operations.


2. ACQUISITIONS OF ASSETS

 Radix. On September 18, 2007, the Company, through its newly formed and
wholly owned subsidiary, Radix Corporation, acquired the assets and assumed
certain liabilities of Radix International Corporation and its subsidiary. The
Company made the strategic decision to grow through expansion into the
specialized niche of rugged mobile computing. The Company, through Radix,
acquired approximately $4.56 million in assets, including accounts receivable
and inventory, as well as all of the intellectual property and intangible assets
owned by Radix International Corporation and its subsidiary. In the transaction,
Radix assumed accounts payable due to DCI, assumed an additional amount of
approximately $2.3 million in liabilities, and incurred acquisition costs of
approximately $50,000. The transaction also includes performance related
contingent consideration based on the annual revenues of the acquired business
over the next five years. The total performance related contingency is limited
to approximately

 F-13

---

$2.2 million and is subject to certain conditions that may impact the total
amount to be paid.

 The acquisition has been accounted for as a purchase and, accordingly, the
accompanying financial statements include the results of operations of Radix,
from the date of the acquisition.

 The purchase price was initially allocated based on the fair value of the
assets acquired and, subsequent to the acquisition date, there have been
additional purchase price adjustments leading to the following allocation for
the assets purchased and liabilities assumed (in thousands):

Assets acquired:
 Receivables $785
 Inventories 614
 Goodwill 1,456
 Intangibles (customer list, trade names/trade secrets, and technology) 1,705
 ----------
 4,560

Liabilities assumed:
 Accounts payable to outside vendors (666)
 Accounts payable to DCI, Inc. (a subsidiary of Elecsys Corporation) (2,262)
 Accrued expenses (1,620)
 ----------
 (4,548)
 ----------
Cost of acquisition, net of cash acquired $12
 ==========

 The purchase price in excess of the fair value of the tangible assets
acquired has been allocated to intangibles and goodwill. The Company engaged an
independent third party valuation expert to assist in the allocation of the
excess purchase price to the various specific separately identifiable
intangibles. The final valuation report allocated the $1,705,000 in intangible
valuation to customer relationships ($950,000), trade names ($530,000) and
technology ($225,000). These assets were determined by the valuation expert to
have a useful life of 15 years. Amortization expense for the acquired intangible
assets is estimated to be approximately $114,000 in each of the next fifteen
fiscal years.

 The following table sets forth the unaudited pro forma results of
operations of the Company for the periods ended April 30, 2008 and 2007 as if
the Company had acquired the assets and assumed certain liabilities of Radix
International Corporation and subsidiary at the beginning of the respective
periods. The pro forma information contains the actual operating results of the
Company and Radix with the results prior to September 18, 2007, for Radix,
adjusted to include pro forma impact of (i) the elimination of intercompany
sales and gross margin in inventory as of the periods presented; (ii) additional
interest expense associated with the financing arrangement entered into by the
Company on September 25, 2007 in connection with the transaction; (iii)
additional expense as a result of estimated amortization of identifiable
intangible assets; (iv) and an adjustment to income tax expense for the tax
effect of the above adjustments. These pro forma amounts do not purport to be
indicative of the results that would have actually been obtained if the
acquisitions occurred at the beginning of the respective periods or that may


 F-14

---

be obtained in the future (in thousands, except per share data).



 Year Ended April 30,
 ---------------------------------------------------------------------------------
 2008 2007
 --------------------------------------- --------------------------------------
 Pro forma Pro forma Pro forma Pro forma
 Reported adjustments Reported adjustments
 --------------------------------------- --------------------------------------
Sales $23,418 $1,399 $24,817 $19,809 $6,001 $25,810
Net income (loss) 688 (418) 270 1,046 (2,950) (1,904)

Basic Earnings per share $0.21 $0.08 $0.32 $(0.59)
Diluted Earnings per share $0.20 $0.08 $0.31 $(0.59)


 AMCI. On December 19, 2006, the Company announced that its NTG subsidiary
had acquired the product lines, technology, customer base and intellectual
property of Advanced Monitoring & Control, Inc. ("AMCI") for approximately
$90,000. The purchase price also included a pending patent application. The
entire purchase price was allocated to the customer list. AMCI was a competitor
of NTG in the business of remote monitoring of oil and gas pipelines as well as
other various remote monitoring applications. The employees of AMCI became
employees of NTG upon completion of the transaction.

 Total acquired intangible assets consist of the following (in thousands):



 April 30, 2008 April 30, 2007
 Gross Gross
 Carrying Accumulated Carrying Accumulated
Intangible Asset Description Company Amount Amortization Amount Amortization
---------------------------------- --------- --------- ------------- --------- --------------
Patents, trademarks and NTG $352 $(120) $352 $(85)
copyrights
Customer relationships NTG 90 (24) 90 (6)
Customer relationships Radix 950 (42) -- --
Trade name Radix 530 (24) -- --
Technology Radix 225 (10) -- --
 --------- ------------- --------- --------------
 $2,147 $(220) $442 $(91)
 ========= ============= ========= ==============


 Amortization expense for the years ended April 30, 2008 and 2007, was
approximately $129,000 and $42,000, respectively.

 F-15

---

 Estimated amortization expense for the next five fiscal years is as follows
(in thousands):



 Year Amount
 ------------ ------------
 2009 $176
 2010 176
 2011 176
 2012 170
 2013 158



3. PLEDGED ASSETS, NOTES PAYABLE AND LONG-TERM DEBT

 As of April 30, 2008, the Company had multiple credit agreements with a
regional lender based in Kansas City, Missouri. These credit agreements include
an operating line of credit, an additional asset-backed long-term note related
to the Company's acquisition of assets and assumption of certain liabilities of
Radix International Corporation, a long-term mortgage secured by approximately
74,000 square feet of land adjacent to the Company's production and headquarters
in Olathe, Kansas, and long-term financing for the facility.

 The Company has an operating line of credit that provides the Company and
its subsidiaries with short-term financing for their working capital
requirements. On April 11, 2008, the Company and its financial institution
amended the agreement, entered into on August 15, 2007, which increased the
total amount available under the operating line of credit from $5,000,000 to
$6,000,000 and modified its variable interest rate. The line of credit now
accrues interest at the prime rate with a minimum interest rate of 5.50% (5.50%
at April 30, 2008) and now has an interest rate floor of 5.50%. The line of
credit is secured by accounts receivable and inventory and expires on August 14,
2008. Its borrowing capacity is calculated as a specified percentage of accounts
receivable and inventory. The line of credit contains various covenants,
including certain financial performance covenants pertaining to the maintenance
of debt to net worth and minimum net worth ratios. As of April 30, 2008 the
Company was in violation of its minimum tangible net worth covenant as a result
of acquiring a significant amount of intangible assets in the Radix transaction.
The Company received a waiver of the covenant from its financial institution for
the period ended April 30, 2008. There were $3,836,000 and $1,525,000 in
borrowings outstanding on the credit facility as of April 30, 2008 and 2007,
respectively.

 The following table is a summary of the Company's long-term debt and
related current maturities (in thousands):

 F-16

---

 April 30,
 2008 2007
 --------- ----------
Industrial revenue bonds, Series 2006A, 5-year adjustable interest rate based on
the yield on 5-year United States Treasury Notes, plus .45% (5.50% as of April
30, 2007), due in monthly principal and interest payments beginning October 1,
2006 through maturity on September 1, 2026, secured by real estate. $3,508 $3,617

Industrial revenue bonds, Series 2006B, fixed interest rate of 6.06%, due in
monthly principal and interest payments beginning October 1, 2006 through
maturity on September 1, 2009, secured by equipment. This note was paid off
during fiscal 2008. -- 67

Note payable with an adjustable interest rate of 7.94%, due in monthly
principal and interest payments beginning December 15, 2006 through maturity on
November 15, 2016, secured by real estate. 217 233

Note payable with a fixed interest rate of 9.00%, due in monthly principal and
interest payments beginning October 25, 2007 through maturity on September 25,
2010, secured by accounts receivable and inventory. 454 --
 --------- ----------
 4,179 3,917

Less current matuities 309 192

 --------- ----------
Total long-term debt $3,870 $3,725
 ========= ==========

 The approximate aggregate amount of principal to be paid on the long-term
debt during each of the next five years ending April 30 is as follows (in
thousands):

 Year Amount
 ---------------- ----------------
 2009 $309
 2010 334
 2011 235
 2012 157
 2013 167
 Thereafter 2,977
 ----------------
 $4,179
 ================


 F-17

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4. SEGMENT REPORTING

 The Company operates three reportable business segments: DCI, Inc., NTG,
Inc. and Radix Corporation. DCI produces custom electronic assemblies which
integrate a variety of interface technologies, such as custom liquid crystal
displays, light emitting diode displays, and keypads, and also provides repair
services and engineering design services. NTG designs, markets, and provides
remote monitoring services. The Company's Radix subsidiary develops, designs and
markets ultra-rugged handheld computers, peripherals and portable printers. The
following table presents business segment revenues, income (loss), and total
assets for the years ended April 30, 2008 and 2007 (in thousands).



 Year Ended April 30, 2008
 ----------------------------------------------------------------------------------
 DCI NTG Radix Unallocated Eliminations Total
 ---------- --------- --------- ----------- ------------- --------
Sales:
 External customers $16,477 $3,692 $3,249 $ -- $ -- $23,418
 Intersegment 4,294 -- -- -- (4,294) --
 ---------- --------- --------- ----------- ------------- --------
Total sales $20,771 $3,692 $3,249 $ -- $(4,294) $23,418

Depreciation and
amortization expenses $492 $90 $88 $ -- $ -- $670
 ========== ========= ========= =========== ============= ========

Segment income (loss)
 before income tax expense $2,375 $244 $(358) $(572) $(450) $1,239
 ========== ========= ========= =========== ============= ========

Capital expenditures $405 $10 $170 $ -- $ -- $585
 ========== ========= ========= =========== ============= ========

Goodwill and intangible
 assets $ -- $387 $3,084 $ -- $ -- $3,471
 ========== ========= ========= =========== ============= ========

Total assets $20,476 $1,718 $5,717 $4,989 $(11,802) $21,098
 ========== ========= ========= =========== ============= ========

 Year Ended April 30, 2007
 --------------------------------------------------------------------
 DCI NTG Unallocated Eliminations Total
 --------- ------- -------------- ------------- ---------
Sales:
 External $18,899 $910 $-- $ -- $19,809
 Intersegment 429 -- -- (429) --
 --------- ------- -------------- ------------- ---------
Total sales $19,328 $910 $-- $(429) $19,809
 ========= ======= ============== ============= =========

Depreciation and amortization expenses $410 $60 $ -- $ -- $470
 ========= ======= ============== ============= =========

Segment income (loss) Before
 income tax expense $ 2,587 $(576) $(469) $ 11 $1,553
 ========= ======= ============== ============= =========

Capital expenditures $5,664 $73 $ -- $ -- $5,737
 ========= ======= ============== ============= =========

Goodwill and intangible assets $ -- $433 $ -- $ -- $433
 ========= ======= ============== ============= =========

Total assets $16,292 $ 780 $4,554 $(5,773) $15,853
 ========= ======= ============== ============= =========


 F-18

---

 The following table reconciles total revenues to the products and services
offered by the Company (in thousands).



 Years Ended
 April 30,
 ----------------------------
 2008 2007
 ------------ ------------
Products and services:
 Electronic manufacturing services $16,102 $18,457
 Remote monitoring solutions 3,692 910
 Rugged mobile computing 3,249 --
 Engineering services 168 169
 Other 207 273
 ------------ ------------
Total sales $23,418 $19,809
 ============ ============


 The Company had total export sales of approximately $2,765,000 and
$1,230,000 for the years ended April 30, 2008 and 2007, respectively.


5. WARRANTY

 The Company provides a limited warranty for a period of one year from the
date a customer receives its products. The Company's standard warranties require
the Company to repair or replace defective products at no cost to the customer
or refund the customer's purchase price. The Company's product warranty
liability reflects management's best estimate of probable liability under
product warranties. Management determines the liability based on known product
failures (if any), historical experience, and other currently available
evidence.

 The following table presents changes in the Company's warranty liability,
which is included in accrued expenses on the balance sheets (in thousands):



 Years Ended
 April 30,
 2008 2007
 -------------- --------------
 Warranty reserve balance at beginning of period $85 $82
 Expense accrued 95 63
 Warranty costs incurred (58) (60)
 -------------- --------------
 Warranty reserve balance at end of period $122 $85
 ============== ==============


6. OPERATING LEASES


 The Company has a number of office equipment leases which will begin to
expire in July 2008 through July 2012. As a result of the Radix transaction, the
Company

 F-19

---

entered into a three year lease for office space in Sandy, UT for approximately
5,400 square feet beginning October 1, 2007 through September 30, 2010. The
Company also had an office lease for its NTG subsidiary in Florida during fiscal
year 2008 that expired in September 2007.

 Rent expense under all operating leases was approximately $143,000 and
$18,000 for the years ended April 30, 2008 and 2007, respectively. The following
table presents the Company's future obligations for minimum lease payments (in
thousands):



 Years Ended April 30, Amount
 ------------------------- ----------------
 2009 $121
 2010 119
 2011 51
 2012 1


7. NET INCOME PER SHARE


 The following table presents the components of the calculation of basic and
diluted income per share (in thousands):



 Years Ended April 30,
 2008 2007
 ------------- -------------
Numerator:
Net income $688 $1,046

Denominator:
Weighted average common shares outstanding - basic 3,285 3,259
Effect of dilutive options outstanding 167 143
 ------------- -------------
Weighted average common shares outstanding - diluted 3,452 3,402
 ============= =============


 Options to purchase 15,000 shares of common stock as of April 30, 2007 were
antidilutive and therefore were not included in the computation of diluted
earnings per share.


8. STOCK OPTIONS

 At April 30, 2008, the Company had an equity-based compensation plan from
which stock-based compensation awards are granted to eligible employees and
consultants of the Company. According to the terms of the Company's 1991 stock
option plan (the "Plan") for which the Company originally reserved 675,000
shares of common stock, both incentive stock options and non-qualified stock
options to purchase common stock of the Company may be granted to key employees,
directors and consultants to the Company, at the discretion of the Board of
Directors. Incentive stock options may not be

 F-20

---

granted at prices that are less than the fair market value on the date of grant.
Non-qualified options may be granted at prices determined appropriate by the
Board of Directors of the Company, but have not been granted at less than market
value on the date of grant. Generally, these options become exercisable and vest
over one to five years and expire within 10 years of the date of grant. The Plan
also provides for accelerated vesting if there is a change in control of the
Company. As of April 30, 2008, options to purchase approximately 324,750 shares
were outstanding, of which 235,250 were vested and exercisable.

 Prior to May 1, 2006, the Company accounted for its equity-based
compensation plan under the recognition and measurement provision of APB Opinion
No. 25, Accounting for Stock Issued to Employees (APB 25), and related
Interpretations, as permitted by Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS 123). The Company did not
recognize the value of stock-based compensation issued to employees and
directors in its Consolidated Statements of Operations prior to May 1, 2006, as
all options granted under its equity-based compensation plan had an exercise
price equal to the market value of the underlying common stock on the date of
the grant. Effective May 1, 2006, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standard No. 123 (revised 2004),
Share-Based Payment (SFAS 123R), using the modified-prospective-transition
method. Under this transition method, compensation cost recognized in fiscal
year 2007 includes compensation costs for all share-based payments granted prior
to May 1, 2006, but not yet vested as of May 1, 2006, based on the grant-date
fair value estimated in accordance with the original provisions of SFAS 123, and
compensation cost for all share-based payments granted subsequent to April 30,
2006 based on the grant date fair value estimated in accordance with the
provisions of SFAS 123R. Results from prior periods have not been restated to
reflect the impact of adopting the new standard.

 The fair value of each option award is estimated on the date of grant using
the Black-Scholes option pricing model, which uses the following
weighted-average assumptions for the indicted periods.



 Year Ended April 30,
 2008 2007
 ---------------------- --------------------
 Risk-free interest rate 2.93% - 4.85% 5.00%
 Expected life, in years 6 6
 Expected volatility 48.78% - 51.32% 56.23%
 Dividend yield 0.0% 0.0%
 Forfeiture rate 5.00% 5.00%


 The Company uses historical data to estimate option exercises and employee
terminations used in the model. Expected volatility is based on monthly
historical fluctuations of the Company's common stock using the closing market
value for the number of months of the expected term immediately preceding the
grant. The risk-free

 F-21

---

interest rate is based on the U.S. Treasury yield curve in effect at the time of
the grant for a bond with a similar term.

 The Company receives a tax deduction for certain stock option exercises and
disqualifying stock dispositions during the period the options are exercised if
the stock is sold, generally for the excess of the price at which the options
are sold over the exercise prices of the options. In accordance with SFAS 123R,
the Company will revise the Consolidated Statement of Cash Flows presentation to
report any tax benefit from the exercise of stock options as financing cash
flows. For the year ended April 30, 2008 and 2007, there were no exercises of
stock options which triggered tax benefits.

 At April 30, 2008, there was approximately $151,000 of unrecognized
compensation cost related to share-based payments which is expected to be
recognized over a weighted-average period of 2.01 years.

 The following table represents stock option activity for the year ended
April 30, 2008:



 Weighted-
 Weighted- Average
 Number Average Remaining
 of Exercise Contract Life
 Shares Price
Outstanding options at April 30, 2006 255,750 $1.40 5.69 Years
 Granted 85,000 3.88 9.22 Years
 Exercised (45,000) 1.13 --
 Forfeited -- -- --
 ------------ -------------- -----------------
Outstanding options at April 30, 2007 295,750 $2.16 5.93 Years
 Granted 29,500 6.24 9.44 Years
 Exercised (500) 0.81 --
 Forfeited -- -- --
 ------------ -------------- -----------------
Outstanding options at April 30, 2008 324,750 $2.53 5.34 Years
 ============ ============== =================

Outstanding exercisable at April 30, 2008 235,250 $1.72 4.16 Years
 ============ ============== =================


 Shares available for future stock option grants to employees, officers,
directors and consultants of the Company under the existing Plan were 33,500 at
April 30, 2008. The aggregate intrinsic value of options outstanding was
approximately $1,275,000 and $1,044,000 as of April 30, 2008 and 2007,
respectively. The aggregate intrinsic value of options exercisable was
approximately $1,112,000, and $879,000 at April 30, 2008 and 2007, respectively.
Total aggregate intrinsic value of options exercised during for the years ended
April 20, 2008 and 2007 were approximately $3,000 and $205,000, respectively.

 During the year ended April 30, 2008, the Company granted 29,500 options.
These options had a weighted average grant date fair value of $4.18 per share.

 F-22

---

 The following table summarizes information about stock options outstanding
at April 30, 2008:



 Options outstanding Options exercisable
 ------------------------------------------------------ -----------------------------------
 Weighted-
 Number average Weighted- Number Weighted-
 Range of outstanding at remaining average exercisable at average
 exercise prices April 30, 2008 contractual life exercise price April 30, 2008 exercise price
------------------- ------------------ ------------------ ---------------- ------------------ ----------------
$0.81 96,750 4.00 years $0.81 96,750 $0.81
$1.25 - $1.50 47,500 4.30 years $1.25 47,500 $1.25
$2.13 - $2.25 51,000 1.77 years $2.25 51,000 $2.25
$3.25 - $3.99 85,000 7.56 years $3.67 35,000 $3.66
$4.94 15,000 8.81 years $4.94 5,000 $4.94
$5.85 - $5.90 15,000 9.57 years $5.88 -- --
$6.30 10,000 9.34 years $6.30 -- --
$7.30 4,500 9.16 years $7.30 -- --
 ------------------ ------------------
$0.81 - $7.30 324,750 5.34 years $2.53 235,250 $1.72
 ================== ==================


 F-23

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9. INCOME TAXES

 Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities at April 30, 2008 and 2007 are
as follows (in thousands):

 Years Ended April 30,
 2008 2007
 ------------- --------------
Deferred tax assets:
 Current:
 Net operating loss carry forward $ -- $46
 Alternative minimum tax and research and development
 credit carry forward 25 279
 Accrued expenses 160 96
 Inventories 480 275
 Other 116 71
 ------------- --------------
Total deferred tax assets 781 767

Deferred tax liabilities:
 Property and equipment (311) (312)
 ------------- --------------
Total deferred tax liabilities (311) (312)
 ------------- --------------
 -- --
 ------------- --------------
Net deferred tax asset $470 $455
 ============= ==============

 Years Ended April 30,
 2008 2007
 ------------- --------------
Current tax expense $566 $32
Deferred tax expense (benefit) (15) 475
 ------------- --------------
 $551 $507
 ============= ==============



 The income tax benefit differs from amounts computed at the statutory
federal income tax rate as follows (in thousands):

 Years Ended April 30,




 2008 2007
 ----------- -------------
 Expense at federal statutory rate $434 $544
 Permanent tax differences 5 (67)
 State tax , net of federal tax benefit 62 58
 Other 50 (28)
 ----------- -------------
 $551 $507
 =========== =============


 At April 30, 2008, the Company has no remaining net operating loss
carryforwards.

 F-24

---

 Effective May 1, 2007, the Company adopted the Financial Accounting
Standards Board ("FASB") Interpretation No. 48 ("FIN 48"), Accounting for
Uncertainty in Income Taxes - an Interpretation of SFAS No. 109. As required by
FIN 48, the Company recognizes the financial statement benefit of a tax position
only after determining that the relevant tax authority would more likely than
not sustain the position following an audit. For tax positions meeting the
more-likely-than-not threshold, the amount recognized in the financial
statements is the largest benefit that has a greater than 50 percent likelihood
of being realized upon the ultimate settlement with the relevant tax authority.

 Included in the balance at April 30, 2008, the Company recognized an
additional $97,000 of income tax expense, including $14,000 relating to
penalties and interest, for potential income tax liability in various states for
tax years 2003 through the current fiscal year. The potential income tax
liability is approximately $34,000 with an additional $14,000 accrued for
penalties and interest. An additional $49,000 is reserved for the application of
past net operating losses that were applied to a state income tax liability. At
the adoption date of May 1, 2007 and as of April 30, 2008, the Company had no
unrecognized tax benefits that, if recognized, would affect the effective tax
rate.

 The Company recognizes interest and penalties accrued on unrecognized tax
benefits as well as interest received from favorable tax settlements within tax
expense. At the adoption date of May 1, 2007, the Company recognized no interest
or penalties related to uncertain tax positions due to the insignificance to its
financial position and results of operations.

 It is reasonably possible that significant change in the gross balance of
unrecognized tax benefits may occur within the next 12 months. An estimate of
the range of such gross changes cannot be made at this time. However, the
Company does not expect the changes to have a significant impact on its
effective tax rate or expected cash payments for income taxes within the next 12
months.

 The Company files income tax returns in the U.S. federal and various state
jurisdictions. Tax regulations within each jurisdiction are subject to the
interpretation of the related tax laws and regulations and require significant
judgment to apply. With a few exceptions, we are no longer subject to Internal
Revenue Service (IRS), state or local income tax examinations by tax authorities
for the years before 2003. The Company is not currently under examination by any
taxing jurisdiction.

 F-25

---

10. EMPLOYEE BENEFIT PLAN

 The Company has a defined contribution employee benefit plan that covers
substantially all full-time employees who have attained age 21 and completed
three months of service. Qualified employees are entitled to make voluntary
contributions to the plan of up to 50% of their annual compensation subject to
Internal Revenue Code maximum limitations. On January 1, 2008 the Company
amended the Plan to account for a change in the Company's contribution on the
employee's behalf. The Company now matches the employee's first 1% contribution
plus an additional 50% of each employee's contribution up to the next 5% to a
maximum of 6% of the employee's annual compensation. Participants in the plan
may direct the Company's contribution into mutual funds and money market funds.
Additionally, the Company may make discretionary contributions to the plan. For
the years ended April 30, 2008 and 2007, Company contributions to the plans
amounted to approximately $119,000 and $84,000, respectively.

 F-26