786765--10/11/2007--BUTLER_INTERNATIONAL_INC

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{cost, contract, operation}

{stock, price, share}

{debt, indebtedness, cash}

{product, market, service}

{loss, insurance, financial}

{interest, director, officer}

{operation, international, foreign}

{regulation, change, law}

{system, service, information}

{personnel, key, retain}

{control, financial, internal}

{stock, price, operating}

{condition, economic, financial}

Butler has been delinquent filing its quarterly and annual reports with the Securities and Exchange Commission. Due to Butler s delinquent filing of its quarterly and annual reports with the Securities and Exchange Commission, Butler has a limited ability to raise capital in the public markets. We were in violation of covenants contained on our debt agreements with our primary lender. We may not be able to obtain new financing upon the termination of our Credit Agreement with GECC or Monroe Capital Management. Adverse economic trends and conditions may cause Butler to lose customers. Due to the competitiveness of the industry, Butler s market share may be at risk. Inability to retain or attract personnel (key employees) may disrupt the future ability of Butler to provide value to its customers. Workers compensations premiums and claims liability exposes Butler to cost risks. Butler is unable to predict the pace of technology or the obsolescence of current technological and service practices, elements that are key to Butler s profitability. Existence of restrictive covenants in debt instruments may expose Butler to greater costs or limit its ability to pursue certain business strategies. Extending credit to clients exposes Butler to accounts receivable risks. Pink sheet trading will continue to decrease liquidity for investors. Fixed payments and salaried employees expose Butler to extra costs or project losses. Regulations in the United States may affect Butler s ability to contract with employees, willingness of customers to contract for Butler s services, and willingness of government customers to request additional services. Acquisitions may expose Butler to unanticipated costs or diversions. Security breaches of proprietary client information or client system failure may leave Butler liable to monetary or reputational damages. Profits from offshore delivery service are uncertain. Exposure to regulatory and economic conditions in India exposes Butler to risks or loss of business. Exercise of outstanding options and warrants will result in further dilution. Our corporate compliance program cannot guarantee that we are in compliance with all potentially applicable regulations. As disclosed in the 2004 10-K, we have and continue to have a material weaknesses in our internal control in the past resulting in the restatement of our financial statements. The failure or circumvention of our controls and procedures could seriously harm our business and result in a material weakness in the future. The passage of legislation limiting outsourcing opportunities will adversely affect Butler s opportunities in India. Market fluctuations in our stock price may expose investors to decreased value of Butler s stock. Concentration of ownership may impact ability of stockholders to vote and approve specific corporate resolutions.

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786765--10/11/2007--BUTLER_INTERNATIONAL_INC_/MD/