10-Q 1 edgardec00.txt TEXT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended December 31, 2000 Commission File No 0-2892 THE DEWEY ELECTRONICS CORPORATION A New York Corporation I.R.S. Employer Identification No. 13-1803974 27 Muller Road Oakland, New Jersey 07436 (201) 337-4700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 . The number of shares outstanding of the registrant's common stock, $.01 par value was 1,339,531 at December 31, 2000. THE DEWEY ELECTRONICS CORPORATION INDEX Part I Financial Information Page No. Item 1 Financial Statements 1 Condensed consolidated balance sheets - December 31, 2000 and June 30, 2000 2 Condensed consolidated statements of earnings - three and six months ended December 31, 2000 and December 31, 1999 3 Condensed consolidated statements of cash flows for the six months ended December 31, 2000 and 1999 4 Notes to condensed consolidated financial statements 5 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II Other Information Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 PART I: FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS The following unaudited condensed, consolidated balance sheets, statements of earnings, and statements of cash flows are of The Dewey Electronics Corporation. These condensed consolidated financial statements reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations and cash flows for the interim periods reflected herein. The results reflected in the unaudited statements of earnings for the period ended December 31, 2000 are not necessarily indicative of the results to be expected for the entire year. The following unaudited condensed consolidated financial statements should be read in conjunction with the notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 2 of Part I of this report, as well as the audited financial statements and related notes thereto contained in the Form 10-K filed for the fiscal year ended June 30, 2000. 1 THE DEWEY ELECTRONICS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, JUNE 30, 2000 2000 (UNAUDITED) (AUDITED)* ASSETS: CURRENT ASSETS: CASH $761,341 $1,176,479 ACCOUNTS RECEIVABLE 2,408,471 1,349,965 INVENTORIES 531,152 534,181 CONTRACT COSTS & RELATED EST PROFITS IN EXCESS OF APPLICABLE BILLINGS 1,216,709 1,087,863 DEFERRED TAX ASSET 170,475 170,475 PREPAID EXPENSES & OTHER CURRENT ASSETS 49,520 33,849 TOTAL CURRENT ASSETS 5,137,668 4,352,812 PLANT PROPERTY & EQUIPMENT - (NET) 811,898 841,956 OTHER ASSETS: OTHER NON CURENT ASSETS 128,412 130,512 TOTAL OTHER ASSETS 128,412 130,512 TOTAL ASSETS $6,077,978 $5,325,280 LIABILITIES & STOCKHOLDERS EQUITY: CURRENT LIABILITIES: TRADE ACCOUNTS PAYABLE $337,717 $334,701 ACCRUED LIABILITIES 173,746 158,203 ACCRUED CORP INCOME TAXES 692,047 379,807 ACCRUED PENSION COSTS 154,771 155,772 CURRENT PORTION OF LONG TERM DEBT 105,489 97,827 TOTAL CURRENT LIABILITIES 1,463,770 1,126,310 LONG-TERM PORTION OF LONG-TERM DEBT 1,514,737 1,567,859 OTHER LONG-TERM LIABILITY 61,172 61,172 DEFERRED TAX LIABILITY 95,320 95,320 DUE TO RELATED PARTY 200,000 200,000 STOCKHOLDERS' EQUITY: Preferred stock, par value $1.00; authorized 250,000 shares, issued and outstanding, none COMMON STOCK, par value $.01; authorized 3,000,000 shares; issued and outstanding 1,693,397 16,934 16,934 PAID IN CAPITAL 2,835,307 2,835,307 ACCUMMULATED EARNINGS/(DEFICIT) 410,835 (57,525) 3,263,076 2,794,716 LESS TREASURY STOCK 353,866 SHARES AT COST (520,097) (520,097) TOTAL STOCKHOLDERS' EQUITY 2,742,979 2,274,619 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $6,077,978 $5,325,280 *CONDENSED FROM AUDITED FINANCIAL STATEMENTS SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2 THE DEWEY ELECTRONICS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 2000 1999 2000 1999 REVENUES $2,365,480 $2,091,283 $4,632,884 $4,752,776 COST OF REVENUES 1,643,062 1,642,601 3,273,501 3,714,408 GROSS PROFIT 722,418 448,682 1,359,383 1,038,368 SELLING & ADMIN EXPENSES 294,776 268,870 496,752 469,654 OPERATING PROFIT 427,642 179,812 862,631 568,714 INTEREST EXPENSE 38,554 48,259 78,304 104,763 OTHER (INCOME)/ EXPENSE (646) 670 3,727 703 INCOME BEFORE INCOME TAXES 389,734 130,883 780,600 463,248 INCOME TAXES 155,894 52,355 312,240 185,300 NET INCOME $233,840 $78,528 $468,360 $277,948 NET INCOME PER SHARE: BASIC $0.17 $0.06 $0.35 $0.21 DILUTED $0.17 $0.06 $0.34 $0.21 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC 1,339,531 1,339,531 1,339,531 1,339,531 DILUTED 1,376,709 1,348,698 1,372,448 1,344,114 SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 THE DEWEY ELECTRONICS CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED DECEMBER 31 2000 1999 CASH FLOWS FROM OPERATIONS: NET INCOME 468,360 277,948 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION 76,950 70,263 AMORTIZATION 2,100 2,904 DEFERRED TAXES 0 185,300 (INCREASE)/DECREASE IN ACCOUNTS RECEIVABLE (1,058,506) 362,585 DECREASE/(INCREASE) IN INVENTORIES 3,029 105,208 (INCREASE)/DECREASE IN CONTRACT COSTS AND RELATED ESTIMATED PROFITS IN EXCESS OF APPLICABLE BILLINGS (128,846) 248,024 (INCREASE) IN PREPAID EXPENSES AND OTHER CURRENT ASSETS (15,671) (20,394) INCREASE/(DECREASE) IN ACCOUNTS PAYABLE 3,016 (395,381) INCREASE/(DECREASE) IN ACCRUED LIABILITIES 15,543 (110,403) INCREASE IN ACCRUED CORPORATE INCOME TAXES 312,240 0 (DECREASE)/INCREASE IN ACCRUED PENSION COSTS (1,001) (8,000) TOTAL ADJUSTMENTS ($791,146) $440,106 NET CASH (USED IN)/PROVIDED BY OPERATIONS ($322,786) $718,054 CASH FLOWS FROM INVESTING ACTIVITIES: EXPENDITURES FOR PLANT, PROPERTY AND EQUIPMENT (46,892) (44,721) NET CASH USED IN INVESTING ($46,892) ($44,721) CASH FLOWS FROM FINANCING ACTIVITIES: PRINCIPAL PAYMENTS OF LONG- TERM DEBT (45,460) (26,473) REPAYMENT OF LINE OF CREDIT 0 (200,000) NET CASH (USED IN) FINANCING ($45,460) ($226,473) NET INCREASE/(DECREASE) IN CASH ($415,138) $446,860 CASH AT BEGINNING OF PERIOD 1,176,479 288,859 CASH AT END OF PERIOD $ 761,341 $ 735,719 SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 THE DEWEY ELECTRONICS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 NOTE 1: REVENUE RECOGNITION Revenues and estimated earnings under defense contracts are recorded using the percentage-of-completion method of accounting, measured as the percentage of costs incurred to estimated total costs for each contract. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Since substantially all of the Company's electronics business comes from contracts with various agencies of the United States Government or subcontracts with prime Government contractors, the loss of Government business would have a material adverse effect on this segment of business. In the Leisure and Recreation segment, revenues and earnings are recorded when deliveries are made. NOTE 2: CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments with a maturity of three months or less at the date of purchase to be cash equivalents. NOTE 3: FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of the Company's long-term debt and line of credit borrowings are estimated based upon interest rates currently available for borrowings with similar terms and maturities and approximate the carrying values. Due to the short-term nature of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities, their carrying value is a reasonable estimate of fair value. NOTE 4: INVENTORIES Inventories are valued at lower of cost (first-in, first-out method) or market. Components of cost include materials, direct labor and plant overhead. As there is no segregation of inventories as to raw materials, work in progress and finished goods for interim reporting periods (this information is available at year end when physical inventories are taken and recorded), estimates have been made for the interim period. 5 THE DEWEY ELECTRONICS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) December 31, 2000 June 30, 2000 Finished Goods $ 46,800 $ 67,000 Work In Process 212,791 192,828 Raw Materials 271,561 274,353 ________ ________ Total $531,152 $534,181 ======= ======= NOTE 5: USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 6: PLANT, PROPERTY AND EQUIPMENT Plant, property and equipment are stated at cost. Allowance for depreciation is provided on a straight-line basis over estimated useful lives of three to ten years for machinery and equipment, ten years for furniture and fixtures, and twenty years for building and improvements. NOTE 7: LOAN FEES Loan fees are capitalized by the Company and amortized utilizing the straight-line basis over the term of the loan. NOTE 8: LONG-LIVED ASSETS Whenever events indicate that the carrying values of long-lived assets may not be recoverable, the Company evaluates the carrying values of such assets using future undiscounted cash flows. Management believes that, as of December 31, 2000, the carrying values of such assets are appropriate. 6 THE DEWEY ELECTRONICS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 9: RECENT PRONOUNCEMENTS Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires companies to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. We have adopted SFAS No. 133 in the first quarter of fiscal 2001, in accordance with the deferral provision in SFAS No. 137. The adoption of SFAS No. 133 did not have a material effect on our financial statements. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements." SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. We are required to adopt SAB 101 in the fourth quarter of fiscal 2001. We anticipate that the adoption of SAB 101 will not have a significant impact on our financial statements. NOTE 10: EARNINGS PER SHARE Net Income per share has been presented pursuant to the Financial Accounting Standards Board Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". Basic net income per share is computed by dividing reported net income available to common shareholders by weighted average shares outstanding for the period. Diluted net income per share is computed by dividing reported net income available to common shareholders by weighted average shares outstanding for the period, adjusted for the dilutive effect of common stock equivalents, which consist of stock options, using the treasury stock method. The table below sets forth the reconciliation of the numerators and denominators of the basic and diluted net income per common share computations. Three Months Ended December 31, 2000 1999 Income Shares Per Income Shares Per Share Share Amount Amount Basic Net Income per common share $233,840 1,339,531 $.17 $78,528 1,339,531 $.06 Effect of dilutive securities -- 37,178 -- -- 9,167 -- Diluted net income per common share $233,840 1,376,709 $.17 $78,528 1,348,698 $.06 7 Six Months Ended December 31, 2000 1999 Income Shares Per Income Share Per Share Share Amount Amount Basic Net Income per Common Share $468,360 1,339,531 $.35 $277,948 1,339,531 $.21 Effect of dilutive securities -- 32,917 -- -- 4,583 -- Diluted net income per common share $468,360 1,372,448 $.34 $277,948 1,344,114 $.21 8 THE DEWEY ELECTRONICS CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in this Form 10-Q may be deemed "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that the Company or management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by management of the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. The forward-looking statements included in this Form 10-Q are also subject to a number of material risks and uncertainties, including but not limited to economic, governmental, competitive and technological factors affecting the Company's operations, markets, products, services and prices and, specifically, the factors discussed below under "Government Defense Business". Such forward- looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. The Company's operating cycle is long-term and includes various types of products and varying delivery schedules. Accordingly, results of a particular period or period-to-period comparisons of recorded revenues and earnings, may not be indicative of future operating results. The following comparative analysis should be viewed in this context. Operating Segments The Company is organized into operating segments on the basis of the type of products offered. In the electronics segment, the Company produces sophisticated electronics and electromechanical systems for the Department of Defense and other projects performed as a subcontractor. In the leisure and recreation segment, the Company, through its HEDCO Division, designs, manufactures and markets advanced, sophisticated snowmaking equipment. There are no intersegment sales. Some operating expenses, including general corporate expenses, have been allocated by specific identification or based on labor for items which are not specifically identifiable. In computing operating profit, none of the following items have been added or deducted: interest expense, income taxes, and non-operating income and expenses. 9 Consolidated Results of Operations Consolidated revenues for the three month period ended December 31, 2000 were $2,365,480 which is an increase of $274,197 compared to the same period last year and an increase of $98,076 compared to the prior three month period ended September 30, 2000. The electronic segment of business accounted for the increase in revenues which was partially offset by a reduction in revenues by the leisure and recreation segment of business. These segments are discussed in more detail below. Consolidated revenues for the six month period this year were $4,632,884, which is $119,892 lower than the same period last year. Last year first quarter revenues were higher than previous years had been during the same period. Revenues for the six month period are discussed below according to business segment. Cost of revenues remained level with last year for the three month period when compared to last year. The cost of revenues for the six month period remained lower than last year. This is a result of costs during the first quarter this year being lower than the first quarter last year and the lower amounts being carried forward over the six month period. Costs of revenues are also discussed further below in sections of business segment. In June 2000, the Company made a voluntary principal reduction payment toward its mortgage in the amount of $500,000. This principal payment has reduced the amount of interest expenses. As a result of the above, net income continues to be higher than last year. Information about the Company's operations in the two segments for the fiscal periods ended December 31, 2000 and 1999 is as follows: Three months ended Six months ended December 31, December 31, 2000 1999 2000 1999 Electronic Segment Revenues $2,300,879 $1,806,678 $4,541,544 $4,455,596 Operating Income $ 431,692 $ 138,773 $ 874,041 $ 563,427 HEDCO Revenues $64,601 $284,605 $ 91,340 $297,180 Operating (Loss) ($ 4,050) $ 41,039 ($11,410) $ 5,287 Electronics Segment (In the electronics segment, revenues are recorded under defense contracts using the percentage of completion method of accounting, measured as the percentage of costs incurred to estimated total costs for each contract. Elements of these costs include material, labor and overhead expenses.) 10 In the electronic segment, revenues increased by $494,201 during the three month period ended December 31, 2000 compared to the same three month period of last year. Actual costs incurred during the three month period increased compared to last year as production efforts have remained level with the prior quarter. Last year material receipts were lower during the second quarter as more material had been received in prior quarters. This year, additional orders received during the year provided a more uniform delivery schedule. The Company experiences differences in the amount of material received from time to time in the normal course of business. Material receipts are dependent upon project requirements and vendor delivery schedules. For the six month period ended December 31, 2000 revenues increased by $85,948 compared to the six month period last year. Continued production efforts under the Company's contract with the U.S. Army for diesel operated tactical generator sets have provided 87% of electronic product revenues compared to 85% of such revenues for the six month period last year. The remaining 13% and 15% of electronic segment revenues for the six month periods ended December 31, 2000 and 1999, respectively, were derived from various orders, more limited in scope and duration, that were generally for replacement parts for previously supplied Department of Defense equipment and other projects performed as a subcontractor. A large part of such other revenues continues to be attributable to the Company's Pitometer Log Division, which manufactures speed and distance measuring instrumentation for the U.S. Navy. The Company has also been trying to develop a market for the use of its sophisticated CNC machining centers. As a result, a small customer base is beginning to develop. As of December 31, 2000, the aggregate value of the Company's backlog of electronic products not previously recorded as revenues was approximately $11 million. It is estimated that approximately $6 million of this backlog will be recognized as revenues during the fiscal year ending June 30, 2001. As of December 31, 1999, the aggregate value of the Company's backlog of electronic products not previously recorded as revenues was approximately $7 million. The contract with the U.S. Army for diesel operated tactical generator sets allows for production orders to be placed at any time through August 2001, though the Army is not obligated to place these orders. Since its initial award, which funded $1 million in 1996, the Army has placed an annual production order each year plus some additional orders. The most recent order which was placed in November 2000 brought the total orders on this contract to $33 million. Deliveries of this production order are projected out to early calendar year 2002. 11 HEDCO Division In the leisure and recreation segment, revenues were lower by $220,004 and $205,840 for the three and six month periods ended December 31, 2000, respectively, when compared to the same periods last year. Last year, one ski area purchased snowmaking machines amounting to $201,500, which did not occur this year. Traditionally, the major portion of revenues in this segment are recorded during the second quarter when snowmaking machines are normally delivered. Liquidity and Capital Resources The Company's working capital at December 31, 2000 was $3,673,898 compared to $3,226,502 at June 30, 2000. The ratio of current assets to current liabilities was 3.51 to 1 at December 31, 2000 and 3.86 to 1 at June 30, 2000. For the six month period ended December 31, 2000, $322,786 was used by operations, while investing and financing activities used $46,892 and $45,460, respectively. The net cash used by operations resulted primarily from net income before depreciation and amortization offset, in part, by an increase in accounts receivable. These billings had been subsequently collected during the first week of January. Investing activities of $46,892 include capital expenditures for building improvements and tooling and equipment. The Company does not anticipate any significant capital expenditures for the remainder of this fiscal year. Financing activities of $45,460 were used towards principal payments of the Company's mortgage note with Sovereign Bank. The Company also has a note payable to an officer in the amount of $200,000. This note bearing the interest rate of 9%, has been classified on its Balance sheet as a long term liability because it is subordinate to the mortgage note with Sovereign Bank. On November 28, 2000, Sovereign Bank agreed to extend the Company's line of credit of $500,000 for an additional year and reduce the interest rate from .75% plus the prime rate to .25% plus the prime rate. There were no outstanding borrowings against this line of credit facility. The Company's borrowing capacity at December 31, 2000 remained above its use of outside financing. Management believes that the Company's anticipated cash flow from operations, combined with its line of credit with Sovereign Bank, will be sufficient to support working capital requirements and capital expenditures at their current or expected levels. 12 Government Defense Business The electronics segment of business provides most of the Company's revenues. Virtually all of the electronic product revenues are attributable to business with the Department of Defense of the Federal Government or with other government contractors. Aside from replacement part and other short-term business, the Company's electronics segment revenues have in recent years been dependent upon single projects. Thus, until recently a single program, the ADCAP torpedo program with the U.S. Navy, was responsible for all of the Company's electronics segment revenues from long-term projects; and currently the tactical generator set program of the U.S. Army accounts for all such long-term revenues. Since the early production phases under the generator set project, management has been focusing on two main objectives. The maintenance and extension of its participation in the generator set project and the receipt of another large award. The Department of Defense Directive 4140.25 regarding Bulk Petroleum Management Policy (normally referred to as the "DOD single fuel forward policy"), requires that all mobile electric power sets use diesel type fuels only and that those using gasoline fuels be eliminated. It is the belief of management that the Department of Defense will continue to require diesel operated tactical generator sets. The lightweight generator has also gained momentum from the U.S. Army's transformation to the new mobile objective force. The digitized battlefield continued to develop new applications for small diesel driven generator sets. Currently, the U.S. government is in process of releasing a "re- procurement' solicitation. The competitive 're-procurement' is expected to include two production years and eight option years. The DoD Project Manager - Mobile Electric Power Master Plan identifies a June 2001 contract award schedule. As the incumbent contractor, the Company believes that it has a viable opportunity to receive such an award, although no assurances can be made that it will do so. The nature of the competitive bid process precludes any predictability with certainty. The second main objective of management is the receipt of another large award. The Company, which was incorporated in 1955, has many years of experience in contracting with the Department of Defense. These years had been dependent upon replacing government contracts. Management believes that by pursuing awards which utilize its technical expertise and its sophisticated machining capabilities, the Company has its best opportunity for success. Currently, the Company is actively pursuing Department of Defense procurement opportunities primarily in small sized generator sets and power generating systems. It should be recognized that Department of Defense business is subject to changes in military procurement policies and objectives and to government budgetary constraints and that the Company bids for Department of Defense business in competition with many defense contractors, including firms that are larger in size and have greater financial resources. 13 PART II - OTHER INFORMATION Item 4. Submission of Matters to a vote of Security Holders ------------------------------------------------------------------------- ------------------ On December 6, 2000, at the Company's annual meeting of shareholders, the following six directors were elected to serve for the ensuing year. Set forth below are the numbers of votes cast for, or withheld with respect to, each such person (who were the nominees for directors): Name For Withheld Alexander A. Cameron 1,084,514 3,692 Frances D. Dewey 1,084,492 3,714 Gordon C. Dewey 1,085,176 3,030 John H.D. Dewey 1,084,492 3,714 Pasquale A. Nolletti 1,084,514 3,692 Nathaniel Roberts 1,084.973 3,233 John G. McQuaid, who had been included in the proxy statement for re- election, died prior to the annual meeting. Accordingly, proxy's received for his re-election were not voted. Item 6. Exhibits and Reports on Form 8-K ------------------------------------------------------------------ No reports on Form 8-K have been filed during the quarter ended December 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DEWEY ELECTRONICS CORPORATION /s/ February 13, 2001 Thom A. Velto, Treasurer Principal Accounting Officer /s/ February 13, 2001 Edward L. Proskey Vice President, Operations 14