UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

(Mark One)

þ ☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~September 3130, 2016

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

For the transition period from__________to____________

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 þ ☑ NO o ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES þ ☑ No o ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o☐ Accelerated filer o☐ Non-accelerated filer o☐ Smaller reporting company þ☑ (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o ☐ NO þ ☑

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 1,~~362~~366,~~031~~731 at ~~May~~October 1226, 2016.

THE DEWEY ELECTRONICS CORPORATION

INDEX

Part I Financial Information
		Page No.
	Item 1.	Condensed Financial Statements	3
Part I Financial Information		3
		Condensed Balance Sheets - March 31,2016(unaudited) and June 30, 2015	3
Item 1. Condensed Financial Statements		3
		Condensed Statements of Operations - Three and Nine-months Ended March 31, 2016 and 2015 (unaudited)	4
Condensed Balance Sheets - September 30, 2015(unaudited) and June 30, 2015		3
		Condensed Statements of Comprehensive Loss Three and Nine-months Ended March 31, 2016 and 2015 (unaudited)	4
Condensed Statements of Operations - Three-months Ended September 30, 2015 and 2014 (unaudited)		4
		Condensed Statements of Cash Flows for the Nine-months Ended March 31, 2016 and 2015 (unaudited)	5
Condensed Statements of Comprehensive Loss - Three-months Ended September 30, 2015 and 2014 (unaudited)		4
		Notes to Condensed Financial Statements (unaudited)	6
Condensed Statements of Cash Flows - Three-months Ended September 30, 2015 and 2014 (unaudited)		5
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Notes to Condensed Financial Statements (unaudited)		6
	Item 4.	Controls and Procedures	22
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		11
Part II Other Information
Item 4. Controls and Procedures		18
	Item 6.	Exhibits	23
Part II Other Information		19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 5. Other Information		19
Item 6. Exhibits		19

PART I: FINANCIAL INFORMATION

ITEM 1.CONDENSED FINANCIAL STATEMENTS

THE DEWEY ELECTRONICS CORPORATION

CONDENSED BALANCE SHEETS

		March 31,			JUNE 30,
	SEPTEMBER 30,	JUNE 30,
	2016	2016			~~2015~~
ASSETS:	(unaudited)	~~(unaudited)~~
CURRENT ASSETS:
Cash and cash equivalents	$496,376	$539,742	~~346,784~~		$	~~347,598~~
Accounts receivable	198,953	497,862	~~230,301~~			~~1,329,327~~
Inventories	2,073,614	1,889,908	~~2,532,936~~			~~2,031,232~~
Prepaid expenses and other current assets	95,958	106,047	~~107,733~~			~~73,204~~
TOTAL CURRENT ASSETS	2,864,901	3,033,559	~~3,217,754~~			~~3,781,361~~
PLANT, PROPERTY AND EQUIPMENT:
Land and improvements	651,015	651,015	~~651,015~~			~~651,015~~
Building and improvements	1,957,815	1,957,815	~~1,957,815~~			~~1,948,165~~
Machinery and equipment	3,342,690	3,342,690	~~3,345,387~~			~~3,332,356~~
Furniture and fixtures	268,700	268,700	~~268,700~~			~~268,700~~
			6,222,917			6,200,236
	6,220,220	6,220,220
Less: accumulated depreciation			5,375,994			5,348,560
Less accumulated depreciation	(5,396,110)	(5,386,655)
			846,923			851,676
	824,110	833,565
DEFERRED COSTS	65,095	65,095	~~65,095~~			~~65,095~~
TOTAL ASSETS	$3,754,106	$3,932,219	~~4,129,772~~		$	~~4,698,132~~
LIABILITIES AND STOCKHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Note payable		$	500,000		$	500,000
Note payable – current portion	$250,000	$-
Trade accounts payable	80,477	123,495	~~174,487~~			~~348,253~~
Accrued expenses and other liabilities	208,993	236,665	~~337,674~~			~~443,798~~
Accrued compensation and benefits payable	152,621	152,573	~~171,620~~			~~200,186~~
Accrued pension costs	310,860	301,229	~~269,103~~			~~203,757~~
TOTAL CURRENT LIABILITIES	1,002,951	813,962	~~1,452,884~~			~~1,695,994~~
LONG-TERM PENSION LIABILITY	981,640	1,012,005	~~950,308~~			~~1,051,005~~
TOTAL LIABILITIES	1,984,591	1,825,967	~~2,403,192~~			~~2,746,999~~
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; 1,693,397 shares issued and 1,362,031 shares outstanding at March 31, 2016 and June 30, 2015			16,934			16,934
Common stock, par value $.01; authorized 3,000,000 shares; 1,693,397 shares issued; and 1,366,731 shares and 1,362,031 shares outstanding at September 30, 2016 and June 30, 2016, respectively	16,934	16,934
Additional paid-in capital	2,883,970	2,882,842	~~2,882,842~~			~~2,882,842~~
Retained earnings	171,608	546,747	~~105,378~~			~~430,628~~
Accumulated other comprehensive loss	(822,878)	(853,243)	~~(791,546~~	)		~~(892,243~~	)
			2,213,608			2,438,161
	2,249,634	2,593,280
Less: Treasury stock 331,366 shares at cost			(487,028	)		(487,028	)
Less: Treasury stock of 326,666 shares and 331,366 shares at September 30, 2016 and June 30, 2016, respectively, at cost	(480,119)	(487,028)
TOTAL STOCKHOLDERS’ EQUITY	1,769,515	2,106,252	~~1,726,580~~			~~1,951,133~~
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$3,754,106	$3,932,219	~~4,129,772~~		$	~~4,698,132~~

See accompanying notes to condensed financial statements

THE DEWEY ELECTRONICS CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

		THREE-MONTHS ENDED MARCH 31,						NINE-MONTHS ENDED MARCH 31,
	THREE-MONTHS ENDED SEPTEMBER 30,
	2016	~~2016~~2015			~~2015~~			~~2016~~			~~2015~~
Revenues	$473,225	$1,205,032	~~819,549~~		$	~~1,716,106~~		$	~~3,703,224~~		$	~~4,268,667~~
Cost of revenues	535,252	802,549	~~623,323~~			~~1,284,526~~			~~2,684,925~~			~~3,088,240~~
Gross profit			196,226			431,580			1,018,299			1,180,427
Gross (loss)/profit	(62,027)	402,483
Selling, general and administrative			442,303			443,063			1,378,866			1,395,154
Selling, general & administrative	317,578	448,363
Operating loss	(379,605)	(45,880)	~~(246,077~~	)		~~(11,483~~	)		~~(360,567~~	)		~~(214,727~~	)
Interest expense	--	(3,601)	~~(5,646~~	)		~~(2,951~~	)		~~(14,618~~	)		~~(6,847~~	)
Other income – net			51,940			4,280			49,935			3,575
Other income/(expense) – net	4,466	(870)
Loss before income taxes	(375,139)	(50,351)	~~(199,783~~	)		~~(10,154~~	)		~~(325,250~~	)		~~(217,999~~	)
Provision for income tax	--	--	--			--			--			--
Net loss		$	(199,783	)	$	(10,154	)	$	(325,250	)	$	(217,999	)
NET LOSS	$(375,139)	$(50,351)
Net loss per common share-Basic		$	(0.15	)	$	(0.01	)	$	(0.24	)	$	(0.16	)
NET LOSS PER COMMON SHARE-BASIC	$(0.27)	$(0.04)
Net loss per common share-Diluted		$	(0.15	)	$	(0.01	)	$	(0.24	)	$	(0.16	)
NET LOSS PER COMMON SHARE-DILUTED	$(0.27)	$(0.04)
Weighted average number of shares outstanding:
Basic	1,366,731	1,362,031	~~1,362,031~~			~~1,362,031~~			~~1,362,031~~			~~1,362,031~~
Diluted	1,366,731	1,362,031	~~1,362,031~~			~~1,362,031~~			~~1,362,031~~			~~1,362,031~~

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

		THREE-MONTHS ENDED						NINE-MONTHS ENDED
	THREE MONTHS ENDED SEPTEMBER 30,
		MARCH 31,						MARCH 31,
	2016	2015
		2016			2015			2016			2015
Other comprehensive loss
Other comprehensive loss – net of tax
Net loss	$(375,139)	$(50,351)
Net loss		$	(199,783	)	$	(10,154	)	$	(325,250	)	$	(217,999	)
Amortization of actuarial gains and losses	30,365	33,566
Amortization of actuarial losses			33,566			31,208			100,698			93,624
Comprehensive loss	$(344,774)	$(16,785)
Comprehensive loss		$	(166,217	)	$	(21,054	)	$	(224,552	)	$	(124,375	)

See accompanying notes to condensed financial statements

THE DEWEY ELECTRONICS CORPORATION

CONDENSED STATEMENTS OF CASH ~~FLOW~~FLOWS

(UNAUDITED)

(UNAUDITED)	THREE-MONTHS ENDED
	SEPTEMBER 30,
	2016	2015

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$(375,139)	$(50,351)
Adjustments to reconcile net loss to
Net cash used in operating activities:
Depreciation	9,455	9,145
Provision for inventory reserve	87,448	6,577
Decrease in accounts receivable	298,909	739,560
Increase in inventories	(271,154)	(402,115)
Decrease in prepaid expenses and
other current assets	10,089	5,371
Decrease in trade accounts payable	(43,018)	(62,308)
Decrease in accrued expenses and other liabilities	(27,672)	(237,096)
Increase/(decrease) in accrued compensation and
benefits payable	48	(50,307)
Increase/(decrease) in accrued pension costs	9,631	(2,743)
Total adjustments	73,736	6,084

NET CASH USED IN OPERATING ACTIVITIES	(301,403)	(44,267)

CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant, property and equipment	--	(9,553)

NET CASH USED IN INVESTING ACTIVITIES	--	(9,553)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short term borrowings	250,000	--
Proceeds from exercise of stock options	8,037	--


NET CASH USED IN FINANCING ACTIVITIES	258,037	--

NET DECREASE IN CASH AND CASH EQUIVALENTS	(43,366)	(53,820)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	539,742	347,598

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$496,376	$293,778

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Interest paid	$--	$3,601

	NINE-MONTHS ENDED
	MARCH 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(325,250	)	$	(217,999	)
Adjustments to reconcile net loss to
Net cash provided by operating activities:
Depreciation		27,434			24,975
Decrease in accounts receivable		1,099,026			1,074,041
Increase in inventories		(508,894	)		(654,259	)
Provision for inventory reserve		7,190			27,978
Decrease in prepaid expenses and
other current assets		(34,529	)		(20,993	)
Decrease in trade accounts payable		(173,766	)		(112,299	)
(Decrease)/Increase in accrued expenses and other liabilities		(134,690	)		51,473
Increase in accrued pension costs		65,346			1,463
Total adjustments		347,117			392,379
NET CASH PROVIDED BY OPERATING ACTIVITIES		21,867			174,380
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for plant, property and equipment		(22,681	)		(34,437	)
NET CASH USED IN INVESTING ACTIVITIES		(22,681	)		(34,437	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		--			500,000
Repayment of long-term debt		--			(500,000	)
NET CASH USED IN FINANCING ACTIVITIES		--			--
NET(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(814	)		139,943
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		347,598			480,107
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	346,784		$	620,050
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	14,618		$	8,618

See accompanying notes to condensed financial statements

THE DEWEY ELECTRONICS CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

1. ~~Significant Accounting Policies~~

Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared by The Dewey Electronics Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Certain information and disclosures normally included in notes to financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States of America as they apply to interim reporting. The condensed financial statements should be read in conjunction with the financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2015~~2016 (the “~~2015~~2016 Form 10-K”).

In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, the Company’s financial position as of ~~March~~September 3130, 2016, and the results of operations ~~for the three months~~ and ~~nine months then ended and~~ cash flows for the ~~nine~~ three-months then ended. The results of operations and cash flows for the period ended ~~March~~September 3130, 2016 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year ending June 30, ~~2016~~2017.

As of September ~~March 31~~30, 2016, there have been no material changes to any of the significant accounting policies described in our ~~2015~~2016 Form 10-K.

Liquidity

During the ~~nine~~three months ended ~~March~~September 3130, 2016, the Company had a net loss of approximately $~~325~~375,~~250~~000 and net cash ~~inflows~~outflows from operations of approximately $22301,000. Net cash ~~inflows~~outflows were principally due to ~~a decrease in accounts receivable and an increase in accrued pension costs, and were partly offset by~~ the net loss, increases in ~~inventory,~~net ~~pre-paid expenses and other current assets~~inventories, and decreases in trade accounts payable, and accrued expenses and other liabilities, and were partly offset by a decrease in accounts receivable.

The Company believes that the Company’s current cash and its line of credit, which currently expires November 30, ~~2016~~2017, combined with progress payments as well as billings at the time of delivery of products, will be sufficient to support short-term liquidity requirements, working capital needs and capital expenditures at their current or expected levels. However, if our performance expectations fall short (including our failure to generate expected levels of sales) or our expenses exceed expectations, or if the commitment under the line of credit becomes unavailable, we may need to secure additional financing and/or reduce our expenses to continue our operations. Our failure to do so would have a material adverse impact on our prospects and financial condition. There can be no assurance that any contemplated additional financing will be available on terms acceptable to us, if at all. If required, we believe we would be able to reduce our expenses to a sufficient level to continue to operate as a going concern.

Revenue Recognition

Revenues and earnings for orders for replacement parts and other short term business are recorded when deliveries of product are made and title and risk of loss have been transferred to the customer and collection is probable.

Revenues and estimated earnings under long-term defense contracts (including research and development contracts) are recorded using the percentage-of-completion method of accounting, measured as the percentage of costs incurred to estimated total costs of each contract. These calculations require management to estimate the cost to complete open orders. Changes between those estimates and the actual cost of completion of delivery orders impact the revenue recognition in each reporting period. Estimates are adjusted as necessary on a quarterly basis. For research and development contracts total costs incurred are compared to total expected costs for each contract. As of ~~March~~September 3130, 2016 and 2015 the Company had no uncompleted contracts on which revenue has been recognized on a percentage of completion basis.

For those contracts where revenue has been recognized using the percentage-of-completion method of accounting, 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.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires 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. These estimates include, among others, lower of cost or market estimates for inventories, realization of deferred tax assets, revenue recognition and certain accrued expenses. Actual results could differ from those estimates.

Income Taxes

Under the asset and liability method of accounting for taxes under ASC Topic 740, “Income Taxes”, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of operations in the period the new laws are enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not, that such assets will be realized.

The Company accounts for uncertain tax positions in accordance with Generally Accepted Accounting Principles in the U.S. Income tax positions must meet a more-likely-than-not recognition in order to be recognized in the financial statements. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within operations as income tax expense. As new information becomes available, the assessment of the recognition threshold and the measurement of the associated tax benefit of uncertain tax positions may result in financial statement recognition or ~~derecognition~~de-recognition.

2. ~~New~~ Accounting Standards Updates Not Yet Effective

In ~~July 2015~~May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) ~~2015~~2014-~~11,~~09 ~~"Inventory~~Revenue ~~(Topic~~from Contracts ~~330):~~with ~~Simplifying~~Customers, ~~the~~which ~~Measurement~~outlines ofa ~~Inventory",~~single ~~which~~comprehensive model ~~requires~~for anentities ~~entity~~ to ~~measure~~use in ~~scope~~accounting ~~inventory~~for atrevenue ~~the~~arising ~~lower~~from contracts ofwith ~~cost~~customers and ~~net~~supersedes ~~realizable~~most ~~value.~~current ~~Subsequent~~revenue recognition ~~measurement~~guidance, isincluding ~~unchanged~~industry-specific ~~for~~guidance. ~~inventory~~This ASU ~~measured~~requires ~~using~~an ~~LIFO~~entity orto ~~the~~recognize ~~retail~~revenue ~~inventory~~depicting ~~method.~~the ~~This~~transfer of ~~ASU~~goods ~~does~~or ~~not~~services ~~apply~~ to ~~inventory~~customers ~~that~~in isan ~~measured~~amount ~~using~~that ~~last-in,~~reflects ~~first-out~~the consideration ~~(LIFO)~~to orwhich the ~~retail~~entity ~~inventory~~expects ~~method.~~to ~~This~~be ~~ASU~~entitled ~~applies~~in exchange tofor ~~all~~those ~~other~~goods ~~inventory,~~or ~~which~~services. ~~includes~~It ~~inventory~~will ~~that~~also isresult ~~measured~~in enhanced ~~using~~revenue ~~first-in,~~related ~~first-out~~disclosures. ~~(FIFO)~~ASU or2014-09 ~~average~~originally provided ~~cost.~~that Itit iswould be effective for fiscal years ~~beginning after December 15~~, ~~2016,~~and ~~including~~ interim reporting periods within those ~~fiscal~~ years, ~~and~~beginning ~~should~~after beDecember ~~applied~~15, 2016. ~~prospectively~~However, ~~with~~in ~~earlier~~August ~~application~~2015, ~~permitted~~the asFASB ofissued ~~the~~Accounting ~~beginning~~Standards Update of(ASU) an2015-14 ~~interim~~Revenue orfrom ~~annual~~Contracts ~~reporting~~with ~~period.~~Customers ~~The~~- Deferral ~~Company~~of ~~expects~~Effective toDate, ~~adopt~~which ~~this~~deferred the effective adoption date of “ASU ~~when~~2014-09” ~~effective~~to ~~and~~apply isto ~~currently~~fiscal ~~evaluating~~years ~~the~~and interim ~~effect~~reporting ofperiods ~~ASU~~within ~~2015-11~~those onyears ~~its~~beginning ~~consolidated~~after December ~~financial~~15, ~~statements~~2017.

In The Company ~~November~~expects ~~2015,~~to adopt the ~~FASB~~ASUs ~~issued~~described ~~Accounting~~above ~~Standards~~when ~~Update (ASU) 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”, which requires an entity to classify deferred tax liabilities~~ effective and ~~assets~~is ascurrently ~~noncurrent~~evaluating inthe aeffect ~~classified~~on ~~statement~~its of financial ~~position~~statements. Other ~~The~~Accounting ~~amendments~~Standards inUpdates ~~this~~not ~~update~~described ~~will~~above ~~align~~(or in the Company’s ~~presentation~~2016 ofForm ~~deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS~~10-K). ~~This ASU applies to all entities~~ and isfirst effective ~~for annual periods ending~~ after ~~December 15~~September 30, 2016, ~~for~~are ~~public~~not ~~business~~expected ~~entities,~~to ~~and~~have ~~interim~~a ~~periods~~material ~~thereafter,~~effect ~~with~~on ~~early~~the Company’s ~~adoption~~financial ~~permitted~~position or results of operations.

Other Accounting Standards Updates not effective until after March 31, 2016 are not expected to have a material effect on the Company’s financial position or results of operations.

3. Inventories

Inventories consist of:

		March 31, 2016		June 30, 2015
	September 30, 2016	June 30, 2016
Finished Goods	$11,420	$66,652	~~21,036~~	$	~~115,563~~
Work In Progress	1,085,344	944,267	~~1,372,296~~		~~752,711~~
Raw Materials	976,850	878,989	~~1,139,604~~		~~1,162,958~~
Total	$2,073,614	$1,889,908	~~2,532,936~~	$	~~2,031,232~~

The increase in inventory is primarily due to increased work in progress production orders needed to complete new generator sets and rodmeters, to be shipped in subsequent months against existing customer delivery orders.

4. Taxes on Income

The Company has provided a ~~full~~ valuation allowance against its net deferred tax assets as it believes that it is more likely than not that it will not realize these tax attributes. AsThe ~~of March 31, 2016 the~~ Company ~~had~~ has approximately $1,~~165~~125,000 and $~~147~~141,000 of federal and state net deferred tax assets respectively, primarily arising from net operating loss ~~carry-forwards~~carryforwards, expiring beginning in 2017. In the three ~~nine~~ month period ended ~~March~~September 3130, 2016 these federal and state net deferred tax assets increased by approximately $~~111~~128,000 and $2023,000, respectively, as a result of a net loss for the period.

5. Loss Per Share

Net loss per share has been presented pursuant to ASC Topic 260, “Earnings per Share”. Basic net loss per share is computed by dividing reported net loss available to common shareholders by weighted average shares outstanding for the period. Diluted net loss per share is computed by dividing reported net loss 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 tables below set forth the reconciliation of the numerators and denominators of the basic and diluted net loss per common share computations. For the three months ended March 31, 2016, outstanding stock options for 23,600 shares were excluded from the calculation of diluted net loss per share as a result of their anti-dilutive effect on the net loss for the period. For the three months ended March 31, 2015, options for 37,200 shares were excluded as a result of their anti-dilutive effect on the net loss per share for the period.

For the nine months ended March 31, 2016, outstanding stock options for 29,700 shares were excluded from the calculation of diluted net loss per share as a result of their anti-dilutive effect on the net loss for the period. For the nine months ended March 31, 2015, options for 37,200 shares were excluded due to the exercise price of the options exceeding the average share price for the period.

	Three-months Ended March 31,
	2016								2015
	Net Loss			Shares		Per Share Amount			Net Loss			Shares		Per Share Amount
Basic net loss
per common share	$	(199,783	)		1,362,031	$	(.15	)	$	(10,154	)		1,362,031	$	(.01	)
Effect of dilutiveSecurities		--			--		--			--			--		--
Diluted net loss per common share	$	(199,783	)		1,362,031	$	(.15	)	$	(10,155	)		1,362,031	$	(.01	)

The table below sets forth the reconciliation of the numerators and denominators of the basic and diluted net loss per common share computations. For the three months ended September 30, 2016 and September 30, 2015, respectively, all outstanding stock options (16,000 shares on September 30, 2016 and 33,200 shares on September 30, 2015) were excluded from the computation of earnings per share due to their anti-dilutive effect.

		Nine-months Ended March 31,
	Three-months Ended September 30,
	2016	~~2016~~		2015							~~2015~~
	Net Loss	~~Net Loss~~Shares	Per Share Amount	Net Loss	Shares	~~Shares~~Per Share Amount		~~Per Share Amount~~			~~Net Loss~~			~~Shares~~		~~Per Share Amount~~
Basic net loss
per common share	$(375,139)	$1,366,731	$(~~325,250~~.27)	$(50,351)	1,362,031	$(.04)	~~1,362,031~~	$	~~(.24~~	)	$	~~(217,999~~	)		~~1,362,031~~	$	~~(.16~~	)
Effect of dilutive Securities	--	--	--	--	--	--	--		--			--			--		--
Diluted net loss per common share	$(375,139)	$1,366,731	$(~~325,250~~.27)	$(50,351)	1,362,031	$(.04)	~~1,362,031~~	$	~~(.24~~	)	$	~~(217,999~~	)		~~1,362,031~~	$	~~(.16~~	)

6. Stock Option Plan

On September 22, 2011, the Board of Directors of the Company adopted the Company’s 2011 Stock Option Plan, which was approved by the shareholders of the Company on December 8, 2011. Under this plan options to purchase a maximum of 133,000 shares of common stock may be granted to any employee of the Company, including officers. Such options may be either incentive stock options or non-qualified options and must be granted with an exercise price no less than the fair market value of the stock on the date of the grant. No stock options have been granted under this plan.

On December 2, 1998, the Company adopted its Stock Option Plan of 1998 which was amended and restated effective December 5, 2001, pursuant to which options to purchase a maximum of 85,000 shares of common stock may be granted to executives and key employees. ~~Incentive~~ Incentive stock options have been granted under this plan with an exercise price no less than fair market value of the stock on the date of grant. Outstanding options generally are exercisable for ten years from the date of grant~~, except for one grant totaling 4,700 options which are exercisable for a 5-year term~~. Outstanding options have expiration dates ranging from December 2, 2018 to September 21, 2021. No additional options may be granted under this plan.

There were no stock options granted in the first quarter of fiscal 2017 (quarter ended September 30, 2016) or in the first quarter of fiscal 2016 (quarter ended September 30, 2015). The Company recorded no stock option compensation expense for either of the three month periods ended September 30, 2016 or September 30, 2015.

For the full fiscal year ending June 30, 2017, the Company does not expect any stock option compensation expense based on stock options already granted and assuming no further option grants during the remainder of the fiscal year. However, our assessment of the compensation expense will be affected by the number of stock options actually granted (if any) during the remainder of the year as well as the number of outstanding options that are forfeited.

~~There~~ Stock option ~~were~~transactions nofor ~~stock options granted in~~ the ~~first nine months of fiscal 2016 (period ended March 31, 2016) or in the first nine months of fiscal 2015 (period ended March 31, 2015). The~~ Company’s ~~recorded~~employee no stock option plans ~~compensation expense~~ for ~~either of~~ the ~~nine~~quarter ~~month periods~~ ended ~~March~~September 3130, 2016 orare ~~March 31, 2015.~~as follows:

For the full fiscal year ending June 30, 2016, the Company does not expect any stock option compensation expense based on stock options already granted and assuming no further option grants during the remainder of the fiscal year. However, our assessment of the compensation expense will be affected by the number of stock options actually granted (if any) during the remainder of the year as well as the number of outstanding options that are forfeited.

		Weighted
		Average
	Shares	Exercise Price
Beginning balance	20,700	$1.92
Granted	--	--
Exercised	(4,700)	1.71
Cancelled or expired	--	--
Ending balance	16,000	1.98
Options exercisable at end of period	16,000	1.98

Stock option transactions for the Company’s employee stock option plans for the three months and nine months ended March 31, 2016 are as follows:

	March 31, 2016
	Three Months				Nine Months
			Weighted				Weighted
			Average				Average
	Shares		Exercise Price		Shares		Exercise Price
Beginning balance		29,200	$	1.93		33,200	$	1.96
Granted		--		--		--		--
Exercised		--		--		--		--
Cancelled or expired		8,500	$	1.96		12,500	$	2.03
Ending balance		20,700	$	1.92		20,700	$	1.92
Options exercisable at end of period		20,700	$	1.92		20,700	$	1.92

7. Notes Payable

The Company maintains a line of credit (the “Line of Credit”) with TD Bank, NA (the “Bank”) for $500,000. ~~The~~On November 4, 2016, the Bank notified the Company that it has extended the Line of Credit, iswhich ~~currently~~was ~~set~~due to expire on November 30, 2016, for an additional year ending November 30, 2017. No other terms of the Company’s revolving term note to the Bank were changed.

The Line of Credit provides among other things for an annual interest rate on borrowings equal to the Bank’s prime rate plus ~~one (~~1.00~~) percent~~ % and is subject to customary representations, covenants, and default provisions in favor of the Bank. Any loans drawn under the Line of Credit are secured by a first lien on all of the Company’s accounts receivable, machinery, equipment, other personal property and Commercial Mortgages on the Company’s real property. The rate applicable to the Line of Credit at ~~March~~September 3130, 2016 was approximately 4.50%. The Company has previously utilized the Line of Credit during periods of increased production requirements and anticipates that it will continue to utilize this credit facility during future periods of peak production activity. As of September 30, 2016, the Company had $250,000 of outstanding borrowings against the Line of Credit.

As of June 30, 2015 and March 31, 2016 the Company had outstanding debt of $500,000 against the Line of Credit.

8. Pension Plan

The Company has a non-contributory defined benefit retirement plan covering substantially all of its employees. The impact of the plan on operations is as follows:

	THREE-MONTHS ENDED	~~THREE-MONTHS ENDED~~
		MARCH 31,
	SEPTEMBER 30,
	2016	~~2016~~2015			~~2015~~
Service cost-benefits earned during the period	$13,894	$12,024	~~12,024~~		$	~~15,519~~
Interest cost on projected benefit obligation	29,745	32,297	~~32,297~~			~~29,411~~
Expected return on plan assets	(26,623)	(26,855)	~~(26,855~~	)		~~(24,319~~	)
Amortization of actuarial loss	30,365	33,566	~~33,566~~			~~31,208~~
Net periodic pension cost	$47,381	$51,032	~~51,032~~		$	~~51,819~~

	NINE-MONTHS ENDED
	MARCH 31,
	2016			2015
Service cost-benefits earned during the period	$	36,072		$	46,557
Interest cost on projected benefit obligation		96,891			88,233
Expected return on plan assets		(80,565	)		(72,957	)
Amortization of actuarial loss		100,698			93,624
Net periodic pension cost	$	153,096		$	155,457

THE DEWEY ELECTRONICS CORPORATION

ITEM 2. ~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~The~~MANAGEMENT'S DISCUSSION ~~following~~AND ~~discussion~~ANALYSIS ~~should~~OF beFINANCIAL ~~read~~CONDITION inAND ~~conjunction~~RESULTS with the unaudited condensed financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q, and with the audited financial statements, including the notes thereto, appearing in the Company’s 2015 Form 10-K. Certain statements in this report 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 report 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 “Financing Activities”, and “Company Strategy – General” and “Long-Term Strategy”, and in Item 1 (Description of Business) of the Company’s 2015 Form 10-K under the subheading “Operational Risks”. 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.OF OPERATIONS

The following discussion should be read in conjunction with the unaudited condensed financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q, and with the audited financial statements, including the notes thereto, appearing in the Company’s 2016 Form 10-K. Certain statements in this report 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 report 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 “Financing Activities” and “Long-Term Growth Strategy”, and in Item 1 (Business) of the Company’s 2016 Form 10-K under the subheading “Operational Risks”. 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.

Critical Accounting Policies and Estimates

The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions affect the application of our accounting policies. Actual results could differ from these estimates. Critical accounting policies are those that require application of management’s most difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. The Company’s critical accounting policies and estimates include revenue recognition on contracts and contract estimates, pensions, impairment of long-lived assets, inventory valuation, and valuation of deferred tax assets and liabilities. For additional discussion of the application of these and other accounting policies, see Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Note 1 of the Notes to the Financial Statements included in the Company’s ~~2015~~2016 Form 10-K.

12 Business Environment:

~~Business~~ Automatic budget ~~Environment~~cuts, known as “sequestration”, began in March of 2013 and have resulted in significant contraction of spending across the Department of Defense. They have also created uncertainty in our customers about the continuation of funding for our products and the availability of funding to initiate new programs. This uncertainly has led to a far larger reduction in actual spending than just the legislated or mandated sequestration reduction, primarily due to delays in contract awards and the reduction or elimination of some programs. In addition to sequestration cuts, over the last few years U.S. forces returned from Iraq and Afghanistan with excess generators that lessened the need for replacements. This excess equipment, combined with a strategic regrouping within the Department of Defense around global combat, has continued the uncertainty and contraction of the market for global power products.

A significant reduction in Department of Defense spending at the federal level known as “sequestration” went into effect in March of 2013. Sequestration has resulted in a contraction of spending across the Department of Defense and has also created uncertainty in our customers about the continuation of funding and about initiating new programs. This uncertainty has led to a far larger reduction in actual spending than the legislated reduction, primarily due to delays in contract awards and the reduction or elimination of some programs. Since the Company derives virtually all its revenues from Government defense business, any delays in contract awards would significantly and adversely affect our future revenues and liquidity. These factors are contributing to a more difficult and more challenging business environment, and have already adversely affected revenues in the quarter reported in this Quarterly Report. This uncertainty as well as the reduction in overall Government spending may continue through this Government fiscal year, ending September 2016, and we can give no assurances that this uncertainty or reduction in spending would end after such fiscal year. 11

~~Results~~ The foregoing offactors ~~Operations~~are –contributing ~~Revenues~~to a more difficult and more challenging business environment. This uncertainty as well as the reduction in overall Government spending may continue through this Government fiscal year, beginning October 1, 2016, and we can give no assurances that this uncertainty or reduction in spending would end after such fiscal year.

For additional information, please refer to Item 1 (Business) of the Company’s 2016 Form 10-K.

Results of Operations:

Revenues

Revenues and estimated earnings under long-term defense contracts (including research and development contracts) are recorded using the percentage-of-completion method of accounting, measured as the percentage of costs incurred to estimated total costs of each contract. These calculations require management to estimate the cost to complete open orders. Changes between those estimates and the actual cost of completion of delivery orders impact the revenue recognition in each reporting period. Estimates are adjusted as necessary on a quarterly basis. For research and development contracts total costs incurred are compared to total expected costs for each contract. As of ~~March~~September 3130, 2016 the Company had no uncompleted contracts on which revenue has been recognized on a percentage of completion basis.

13 For the three months ended September 30, 2016, production efforts to provide power products to the U.S. Department of Defense, Government contractors, and foreign militaries, which includes diesel operated tactical generator sets and associated equipment, was approximately $354,000 or 75% of revenues compared to approximately $501,000 or 42% of revenues for the three months ended September 30, 2015. Non-power products including replacement parts and other short-term business accounted for $120,000 or 25% of revenues in the three months ended September 30, 2016 and approximately $704,000 or 58% of revenues for the same period in fiscal year 2016. Customer funded research and development efforts provided no revenues in either of the first quarters of fiscal years 2017 and 2016.

~~Revenues~~ Overall, revenues for the ~~third~~first quarter of fiscal year ~~2016~~2017 (the three month period ended ~~March~~September 3130, 2016) were approximately $~~896~~732,~~557~~000 lower when compared to the ~~third~~first quarter of fiscal year ~~2015~~2016. (Almost two-thirds of the ~~three~~reduction ~~month~~was ~~period~~attributable ~~ended~~to ~~March~~non-power 31products, where ~~2015).~~orders ~~The~~that ~~decrease~~were booked to ship in ~~revenues~~the ~~was~~first ~~principally~~quarter ~~due~~of fiscal toyear ~~decreased~~2017, ~~levels~~instead shipped at the end of ~~shipments~~fiscal year 2016. The rest of this reduction resulted from decreases in customer orders for power products. ~~(generator~~Management ~~sets),~~believes ~~rodmeters~~that ~~and~~shipments ~~replacement~~for non-power ~~parts,~~products ~~partly~~will ~~offset~~increase byin ~~increased~~the ~~shipment~~remaining three quarters of fiscal year 2017 resulting in annual sales below fiscal year 2016 levels but exceeding those of ~~additional~~fiscal ~~new~~year ~~products~~2015. In addition, management ~~consisting~~believes that shipments for power products will continue to lag behind fiscal 2016 levels through the third quarter of fiscal ~~pumps~~year 2017 but that a substantial increase in shipments of these products in the fourth quarter will produce annual sales that are consistent with fiscal 2016 levels.

Revenues for the nine months ended March 31, 2016 were $565,443 lower when compared to the nine month period ended March 31, 2015. The decrease in revenues was principally due to decreased levels of shipments of rodmeters, replacement parts and power products (generator sets) partly offset by increased levels of shipments of additional new products, consisting of pumps, bead breakers and conveyors.12

~~For~~ The above ~~the~~estimates ~~three~~for ~~months~~future ~~ended~~periods ~~March~~are ~~31,~~based ~~2016~~on ~~production~~orders ~~efforts~~that management toexpects ~~provide the Armed Forces with power products provided approximately 19% of revenues compared~~ to ~~approximately~~receive ~~69%~~but ~~for~~have ~~the~~not ~~third~~yet ~~quarter~~been ~~of fiscal year 2015~~received. ~~Pumps,~~No assurances ~~bead~~can ~~breakers~~be ~~and~~made ~~conveyors~~that ~~provided~~such ~~approximately~~orders ~~69%~~will ofbe ~~revenues~~received ~~for the third quarter of fiscal year 2016~~ and, ~~provided approximately 15% of revenues in~~ to the ~~third~~extent ~~quarter~~received, ~~of fiscal year 2015. Replacement parts and rodmeters provided approximately 12% of revenues for~~ the ~~third~~timing ~~quarter of fiscal year 2016 and approximately 16% of revenues for the same period in fiscal year 2015~~thereof. ~~The Company had no revenues from customer sponsored research and development in either of the three months ended March 31, 2016 or March 31, 2015.~~

For further ~~the~~discussion ~~nine~~regarding ~~months~~business ~~ended~~environment March 31, 2016, production efforts to provide the Armed Forces with power products provided approximately 35% of revenues compared to approximately 55% for the nine months ended March 31, 2015. Pumps, bead breakers and ~~conveyors~~management initiatives ~~provided~~see ~~approximately~~“Long-Term ~~43%~~Growth ~~of revenues for the nine months ended March 31, 2016 and approximately 16% of revenues in the same period in 2015~~Strategy” below. Replacement parts and rodmeters provided approximately 22% of revenues for the nine months ended March 31, 2016 and approximately 28% of revenues for the same period in fiscal year 2015. The Company had no revenues from customer sponsored research and development for the nine months ended March 31, 2016 and approximately 1% of revenues in the nine months ended March 31, 2015.

~~For~~ The aggregate ~~further~~value ~~discussion~~of the Company’s backlog of ~~management~~sales ~~initiatives~~orders ~~regarding~~was $2.2 ~~revenues~~million ~~see~~on “September 30, 2016. The Company’s ~~Strategy”~~backlog ~~below~~of sales orders was $3.2 million on September 30, 2015. Most of the reduction in backlog is due to the decrease in orders for power products discussed above. It is estimated that a significant portion of the present backlog will be billed during the next 9 months and be recognized as fiscal year 2017 revenues with the balance being recognized in fiscal years 2018 through 2020.

The aggregate value of the Company’s backlog of sales orders was $3.0 million on March 31, 2016. The Company’s backlog of sales orders was $4.3 million on March 31, 2015. It is estimated that a significant portion of the present backlog will be billed during the next 3 months and be recognized as fiscal year 2016 revenues with the balance being recognized in fiscal years 2017 through 2019.

Gross Profit

Gross profit is affected by a variety of factors including, among other items, sales volume, product mix, product pricing, and product costs.

The Company ~~earned~~had a gross ~~profit~~loss of $~~196~~62,~~226~~027 or 24(13.1%) of revenues for the three ~~month~~months ~~period~~ ended ~~March~~September 3130, 2016 compared to a gross profit of $~~431~~402,~~580~~483 or 2533% of revenues for the same ~~three month~~ period in ~~2015~~fiscal year 2016. The ~~lower~~ gross ~~profit~~loss for the ~~three~~first ~~months~~quarter ~~ended~~of ~~March~~fiscal ~~31,~~year ~~2016~~2017 was primarily ~~the~~due ~~result~~to ofa ~~lower~~decrease in overall sales of both power and non-power products resulting in production ~~volume,~~levels ~~primarily~~which ofwere ~~power~~below those ~~products~~necessary ~~(generator~~to ~~sets),~~absorb ~~replacement~~overhead. ~~parts~~This ~~and~~resulted ~~rodmeters,~~in ~~partly~~unallocated overhead ~~offset~~being byexpensed ~~increased~~in ~~sales~~the first quarter of ~~pumps~~fiscal year 2017. Management expects factory production to increase in the remainder of this fiscal year to levels similar to the prior fiscal year, and therefore ~~conveyors~~the gross profit percentage to largely recover.

For the nine month period ended March 31, 2016 the Company’s gross profit was $1,018,299 or 27% of revenues compared to a gross profit of $1,180,427 or 28% of revenues for the nine month period ended March 31, 2015. The lower gross profit for the nine months ended March 31, 2016 was the result of lower sales and production volume, primarily of power products, replacement parts and rodmeters, partly offset by increased sales of bead breakers, pumps and conveyors.

Selling, General and Administrative Expenses

Selling, General and Administrative ~~expenses~~Expenses for the first three months ~~ended~~of fiscal ~~March~~year ~~31,~~2017 ~~2016~~ were $~~442~~317,~~303~~578 or 5467% of revenues compared to $~~443~~448,~~063~~363 or 2637% of revenues ~~for~~in the first three ~~month~~months ~~period~~of ~~ended~~fiscal year ~~March 31, 2015~~2016. The most significant changes in expense and the approximate ~~amount~~amounts of the changes were adecreases ~~decrease~~ in ~~corporate~~consulting fees ~~expense (~~$4371,000), ~~partly~~compensation ~~offset~~$30,000, byrecruiting anfees ~~increase~~$23,000 ~~in legal expense~~ and other ~~professional fees (~~$427,000).

~~Selling,~~ Loss ~~General~~Before ~~and~~Income Administrative expenses for the nine months ended March 31, 2016 were $1,378,866 or 37% of revenues compared to $1,395,154 or 33% of revenues for the nine month period ended March 31, 2015. The most significant changes in expense and the approximate amount of the changes were a decrease in general corporate expense ($115,000), partly offset by increases in consulting expense ($96,000).Taxes

~~Interest~~ Loss before ~~Expense~~income taxes was $375,139 for the three months ended September 30, 2016. Loss before income taxes was $50,351 for the three months ended September 30, 2015.

For the three month period ended March 31, 2016 the Company had interest expense of $5,646 compared to $2,951 of interest expense in the three month period ended March 31, 2015.

For the nine month period ended March 31, 2016 the Company had interest expense of $14,618 compared to $6,847 of interest expense in the nine month period ended March 31, 2015.

Other Income/Expense – Net

Amounts reported as other income or expense represent the net effect of interest income and miscellaneous items such as the sale of scrap, bank transaction fees and other like items.

Other income of $76,408 for the three months ended March 31, 2016 was primarily comprised of a refund of previously paid property taxes as a result of a recently approved tax appeal, partly offset by bank fees.

Other expense of $74,403 for the nine months ended March 31, 2016 was primarily comprised of a refund of previously paid property taxes as discussed above, partly offset by bank fees.

Net Loss Before Income Taxes

For the three months ended March 31, 2016 net loss before income taxes was $199,783. For the three months ended March 31, 2015 net loss before income taxes was $10,154.

Net loss for the three months ended March 31, 2016 was higher when compared to the same period last year due primarily to the result of a decrease in revenues as discussed above and an increase in selling, general and administrative expenses as discussed above.

For the nine months ended March 31, 2016 net loss before income taxes was $325,250. For the nine months ended March 31, 2015 net loss before income taxes was $217,999.

Net loss for the nine months ended March 31, 2016 was higher when compared to the same period last year primarily as the result of an decrease in revenues as discussed above.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts and for tax loss and credit carry-forwards.

A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that these amounts will not be realized.

The Company has provided a ~~full~~ valuation allowance against its net deferred tax assets as it believes that it is more likely than not that it will not realize these tax attributes. AsThe ~~of March 31, 2016 the~~ Company ~~had~~ has approximately $1,~~165~~125,000 and $~~147~~141,000 of federal and state net deferred tax assets, respectively, primarily arising from net operating loss ~~carry-forwards~~carryforwards, expiring beginning in 2017. In the three ~~nine~~ month period ended ~~March~~September 3130, 2016 these federal and state net deferred tax assets increased by approximately $~~111~~128,000 and $2023,000, respectively, as a result of a net loss for the period.

Liquidity and Capital Resources

Historically, the Company’s capital expenditures, debt servicing requirements and working capital needs have been financed by cash flow from operations, progress payments on various Government contracts (based on cost incurred) and a line of credit, described under “Financing Activities” below. As of ~~March~~September 3130, 2016, the Company had no material capital expenditure commitments. Management believes that the Company’s current cash and its line of credit, which (as described under “Financing Activities” below) currently expires on November 30, 2017, combined with progress payments as well as billings at the time of delivery of products will be sufficient to support short-term liquidity requirements, working capital needs and capital expenditures at their current or expected levels. However, if our performance expectations fall short (including our failure to generate expected levels of sales) or our expenses exceed expectations, or if the commitment under the Line of Credit becomes unavailable, we may need to secure additional financing and/or reduce our expenses to continue our operations. Our failure to do so would have a material adverse impact on our prospects and financial condition. There can be no assurance that any contemplated additional financing will be available on terms acceptable to us, if at all. If required, we believe we would be able to reduce our expenses to a sufficient level to continue to operate as a going concern.

At September ~~March 31~~30, 2016, the Company’s working capital was $1,~~764~~861,~~870~~950 compared to $2,~~085~~219,~~367~~597 at June 30, ~~2015~~2016.

The ratio of current assets to current liabilities was 2.2186 to 1 at September ~~March 31~~30, 2016 and 23.2373 to 1 at June 30, ~~2015~~2016.

The following table is a summary of the Statements of Cash Flows in the Company’s Financial Statements:

		Nine Months ended March 31,
	Three Months ended September 30,
	2016	~~2016~~2015			~~2015~~
Net cash provided by/(used in)
Net cash provided by(used in)
Operating activities	$(301,403)	$(44,267)	~~21,867~~		$	~~174,380~~
Investing activities	--	(9,553)	~~(22,681~~	)		~~(34,437~~	)
Financing activities	258,037	--	-			-

Operating Activities:

Adjustments to reconcile net ~~loss~~income to net cash provided by~~/used~~ in operations are presented in the Condensed Statements of Cash Flows in the Company’s Financial Statements.

17 Net cash used in operating activities for the three month period ended September 30, 2016 was principally due to the net loss, an increase in net inventories, (due to work in progress on generator sets and non-power products expected to ship this year), and decreases in trade accounts payable and accrued expenses and other liabilities, and was partially offset by a decrease in accounts receivable.

Net cash ~~provided~~used byin operating activities in the ~~nine~~three month period ended September ~~March 31~~30, ~~2016~~2015 was principally due to ~~a decrease in accounts receivable and an increase in accrued pension costs and was partly offset by~~ the net loss, increases in ~~inventory~~inventories, ~~and~~decreases ~~prepaid~~in accrued expenses and other liabilities, ~~current~~accrued ~~assets,~~compensation and ~~decreases~~benefits inpayable, ~~trade~~and ~~accounts~~was partly ~~payable,~~offset ~~accrued~~by ~~expenses~~a ~~and~~decrease ~~other~~in ~~liabilities~~accounts receivable.

~~Net~~ The Company ~~cash~~expenses ~~provided~~its byresearch ~~operating~~and ~~activities~~development incosts ~~the~~as ~~nine~~incurred. These ~~month~~costs ~~period~~consist ~~ended~~primarily ~~March~~of ~~31,~~salaries ~~2015~~and ~~was~~material ~~principally~~costs. ~~due~~For the tothree amonth ~~decrease~~periods inended ~~accounts~~September ~~receivable~~30, 2016 and anSeptember ~~increase~~30, 2015 inthe ~~accrued~~Company ~~expenses~~did ~~and~~not ~~other~~incur ~~liabilities~~any research and ~~accrued~~development ~~pension~~ costs,. Research ~~partly~~and ~~offset~~development byprojects ~~the~~performed ~~net~~under ~~loss,~~contract ~~increases~~for customers inare ~~inventory~~billed ~~and~~to ~~prepaid~~the ~~expenses~~customer and ~~other~~are ~~current~~recorded ~~assets,~~as ~~and~~contract costs ~~decreases~~as inthey ~~trade~~are ~~accounts payable~~incurred.

The Company expenses its research and development costs as incurred. These costs consist primarily of salaries and material costs. For the nine months ended March 31, 2016 and March 31, 2015, the Company expensed $0 and $3,079 respectively, of research and development costs. Research and development projects performed under contract for customers are billed to the customer and are recorded as contract costs as they are incurred.

Investing Activities:

During the first ~~nine~~three months of fiscal ~~2016~~2017, ~~the~~no ~~Company used net~~ cash ofwas ~~$22,681~~used in investing activities. ~~The entire amount was used for capital expenditures, principally for the acquisition of production equipment tooling, computers and building improvements.~~

During the first ~~nine~~three months of fiscal ~~2015~~2016, ~~the Company used~~ net cash of $349,~~437~~553 was used in investing activities. The entire amount was used for capital expenditures, principally for the acquisition of ~~production and test equipment,~~ computers and ~~software~~ tooling.

Financing Activities:

~~On April 27, 2009 the~~ The Company ~~entered~~maintains ~~into~~ a $500,000 line of credit ~~with TD Bank, NA. On November 2, 2011,~~ (the ~~Company and the Bank entered into a modification of the~~ “Line of Credit,”) ~~effective~~with asTD ~~of October 31~~Bank, ~~2011,~~NA ~~which reduced~~ (the ~~maximum borrowing amount to $375,000, removed the minimum interest rate of 4~~“Bank”).~~25%~~ ~~on outstanding borrowings and extended the Line of Credit to~~ On November 304, ~~2012. No other terms of the Company’s April 27~~2016, ~~2009 revolving term note to~~ the Bank ~~were~~notified ~~changed. On November 16, 2012,~~ the Company ~~and~~that ~~the~~it ~~Bank~~has extended ~~entered into a further modification of~~ the Line of Credit, ~~effective as of November 30, 2012,~~ which ~~returned~~was ~~the~~due ~~maximum~~to ~~borrowing~~expire ~~amount~~on toNovember 30, ~~$500~~2016,~~000~~ ~~and~~for ~~extended~~an ~~the~~additional ~~Line~~year ofending ~~Credit to~~ November 30, ~~2013~~2017. No other terms of the Company’s revolving term note to the Bank ~~(previously amended and restated as of October 31, 2011)~~ were changed.

On The Line ~~November~~of 8,Credit ~~2013,~~provides ~~the~~among ~~Company~~other ~~and~~things ~~the~~for ~~Bank~~an ~~entered~~annual ~~into~~interest rate aon ~~modification~~borrowings ofequal to the ~~Line~~Bank’s ofprime ~~Credit,~~rate ~~effective~~plus ~~November~~1.00% and ~~15,~~is ~~2013,~~subject to ~~temporarily~~customary ~~increase~~representations, ~~the~~covenants, ~~maximum~~and ~~borrowing~~default provisions ~~amount~~in ~~under~~favor ~~the Line~~ of ~~Credit~~the ~~from~~Bank. ~~$500,000~~Any toloans ~~$1,000,000~~drawn ~~for~~under the ~~six~~Line ~~month~~of Credit ~~period~~are ~~November~~secured ~~15,~~by ~~2013~~a tofirst ~~May~~lien ~~15,~~on ~~2014~~all ~~(after~~of ~~which~~the itCompany’s accounts ~~returned~~receivable, tomachinery, ~~$500~~equipment,~~000).~~ Atother ~~the~~personal ~~same~~property and ~~time~~Commercial ~~the~~Mortgages ~~Company~~on ~~and~~ the ~~Bank~~Company’s ~~entered~~real ~~into~~property. aThe rate ~~further~~applicable ~~modification~~to of the Line of Credit at September 30, ~~effective~~2016 aswas approximately of4.5%. ~~November~~The ~~30,~~Company ~~2013,~~has topreviously ~~extend~~utilized the Line of Credit toduring ~~November~~periods ~~30,~~of ~~2014.~~increased Inproduction ~~each~~requirements ~~case,~~and anticipates nothat ~~other~~it ~~terms~~will ofcontinue ~~the Company’s revolving term note~~ to ~~the~~utilize ~~Bank~~this ~~(previously~~credit ~~amended~~facility during ~~and~~future ~~restated~~periods as of ~~November~~peak ~~30,~~production ~~2012) were changed~~activity.

18 As of September 30, 2016 the Company has $250,000 of outstanding borrowings against the Line of Credit. During fiscal year 2015 the Company repaid $500,000 which it subsequently re-borrowed and the Bank gave the Company a waiver for a temporary technical financial ratio covenant default. During fiscal year 2016 the Company repaid $500,000. The Company did not use any other cash in financing activities during fiscal years 2016 and 2015.

~~On November 30, 2014, the Bank notified the~~ The Company ~~that~~is itexploring ~~had~~avenues ~~extended the term of the Line of Credit from November 30, 2014~~ to ~~November~~monetize ~~30,~~its ~~2015;~~real ~~and~~estate ~~on December 1, 2015, the Bank notified the Company that it had extended the Line of Credit for another year, to November 30, 2016~~holdings. For Infurther ~~each case~~information, nosee ~~other~~“Long-Term ~~terms~~Growth Strategy” ~~of the Company’s revolving term note to the Bank (previously amended and restated as of November 8, 2013) were changed~~below.

The Company did not use any cash in financing activities during the nine-month period ended March 31, 2016. During the fiscal year ended June 30, 2015, following the repayment described in the following paragraph, the Company borrowed $500,000 under the Line of Credit, all of which was outstanding as of March 31, 2016.15

~~During~~ Accounting ~~the~~Standards ~~nine-month~~Updates ~~period~~Not ~~ended~~Yet ~~March 31, 2015 the Company repaid $500,000 and subsequently borrowed $500,000 under the Line of Credit, all of which was outstanding as of March 31, 2015.~~Effective

~~The Line of Credit provides among other things for an annual interest rate on borrowings equal~~ Refer to ~~the~~Note ~~Bank’s prime rate plus one (1~~2.~~00)~~ ~~percent~~Accounting ~~and~~Standards Updates isNot ~~subject~~Yet toEffective ~~customary representations, covenants, and default provisions~~ in ~~favor of~~ the ~~Bank.~~Notes Any loans drawn under the Line of Credit are secured by a first lien on all of the Company’s accounts receivable, machinery, equipment, other personal property and Commercial Mortgages on the Company’s real property. The rate applicable to the ~~Line~~Condensed Financial ofStatements ~~Credit~~section ~~at March 31, 2016 was approximately 4.50%. The Company has previously utilized the Line~~ of ~~Credit during periods of increased production requirements and anticipates that it will continue to utilize~~ this ~~credit~~Quarterly ~~facility during future periods of peak production activity~~Report.

~~The~~ Long-Term ~~Company~~Growth owns approximately 90 acres of land and the building, which it occupies in Bergen County, New Jersey, adjacent to an interchange of Interstate Route 287. The Company is continuing to actively pursue possible methods of monetizing 68 undeveloped and unused acres of this property, by its sale and/or development. This endeavor has become more complex with the implications of New Jersey’s “Highlands Water Protection and Planning Act”.Strategy:

The Company’s ~~Act~~business ~~identifies~~environment ~~approximately~~over ~~400,000~~the ~~acres~~last offew ~~New~~years ~~Jersey~~has changed assignificantly ~~The~~due ~~Highlands~~to ~~Preservation~~governmental ~~Area~~and industry developments. ~~Pursuant~~ toThere ~~the~~has ~~statute,~~been ~~this~~a ~~area~~significant ~~has~~reduction ~~the~~in ~~most~~Department of ~~onerous~~Defense ~~restrictions~~spending onfor ~~future~~new ~~development~~programs. ~~The~~ ~~Company’s~~This ~~property~~reduction isbegan in ~~this~~2013 with ~~area,~~the ~~and~~automatic ~~further~~federal ~~development~~budget ~~would~~cuts ~~not~~called “sequestration”. beIn ~~permitted~~2014, ~~without~~the aDepartment ~~waiver~~of orDefense notified ~~other~~us ~~relief~~that ~~from~~it ~~the~~no ~~State. The~~longer ~~Company~~would ~~continues~~award toa ~~believe~~prime ~~that~~contract ~~there~~for ~~are~~2kW generators, ~~strong~~leading ~~reasons~~to ~~why~~a ~~its~~reduction ~~property~~in ~~should~~demand ~~not~~for bethe Company’s ~~subject~~power toproducts. Also, over the ~~severe~~last ~~restrictions~~few ofyears ~~the~~U.S. forces ~~preservation~~returned ~~area,~~from Iraq and isAfghanistan ~~attempting~~with toexcess ~~affect~~generators thus alessening ~~solution~~demand for replacements.

~~Since~~ In response ~~the~~to ~~Act~~this ~~was~~new ~~passed~~business ~~in June of 2004~~environment, the ~~State~~Company ~~repeatedly~~has ~~delayed promulgation of final regulations~~ designed and ais ~~master~~rolling ~~plan. Originally~~out ~~expected~~an ~~in 2005~~ambitious, ~~final~~multi-faceted ~~regulations~~long-term ~~and~~strategy to aachieve ~~master~~new ~~plan~~opportunities ~~were~~for ~~approved~~growth byin ~~the~~both ~~Governor~~existing onoperations and ~~September~~new ~~5, 2008~~directions. At ~~the~~In ~~same~~doing ~~time the Governor issued executive order 114 further defining the framework by which the Highlands Council~~so, ~~other~~we ~~State~~will ~~agencies,~~build ~~and~~upon ~~both~~our ~~county~~experience in ~~and~~adapting ~~municipal governments are~~ to ~~work~~this ~~together. The~~challenging ~~Company~~business ~~believes that a regulatory~~ environment, ~~has developed within~~ which ~~monetization~~has offor several ~~the~~years ~~land~~led ~~may~~us beto ~~possible. In~~aggressively ~~light~~pursue ~~of these events,~~ the ~~Company~~diversification isof our ~~actively~~product ~~assessing~~lines ~~its~~and ~~options. However,~~our nocustomer ~~assurances can be given that the Company’s efforts will be successful~~base, ~~that~~including aan ~~satisfactory~~increased focus ~~valuation~~on ~~will~~sales beof ~~achieved,~~non-power orproducts ~~that~~and ~~resolution~~foreign ~~will be timely~~military sales.

19 Our new long-term strategy is intended to exploit the Company’s existing strengths and build new capabilities in order to increase revenue, market presence and ultimately profitability in both power and non-power products and services. Key elements of our new growth strategy include:

In May 2008, the Company entered into a contract to sell a small parcel of land, approximately 7 acres, for $205,000. The land is physically separated from the main parcel of the Company’s property by an interstate highway and is contained within the Highlands Preservation Area. Among other things, the sale of the land is subject to approval for development by the Highlands Commission and various state and local government agencies. Accordingly, the Company can make no assurance that the sale will be successfully consummated or, if consummated, the timing thereof. ●

InIncrease ~~November~~Innovation ~~2011, the Company~~ and ~~the~~Extend ~~buyer~~our ~~extended~~Technology Capabilities. ~~the~~We ~~sales~~plan ~~contract described above until December 31, 2012~~ to ~~allow~~increase ~~the~~our ~~buyer~~investment ~~additional~~in ~~time~~research and ~~to gain the required approvals for~~ development. ~~In recognition of the additional expense on the part of the buyer~~ to ~~obtain~~prudently ~~the~~and ~~required~~selectively ~~development~~expand ~~approvals~~and ~~the~~enhance ~~Company~~our capabilities ~~agreed to lower the contract price~~ of ~~the~~product ~~parcel~~design byand ~~$50,000~~performance toin ~~$155,000.~~both ~~In January 2013,~~ the ~~Company~~ power and ~~the~~non-power ~~buyer~~contexts. ~~further~~We ~~extended~~intend ~~the sales contract until December 31, 2013~~ to ~~allow~~leverage ~~the~~our ~~buyer~~core ~~additional~~competencies in ~~time~~power asand ~~described~~related ~~above.~~products Inwith ~~January~~developments ~~2015 the Company~~ and ~~the~~applications that ~~buyer~~will ~~further~~economically ~~extended~~allow ~~the~~for ~~sales~~new ~~contract~~offerings ~~until~~to ~~December~~meet ~~31,~~new ~~2015. In January 2016 the Company~~ and different ~~the~~demands ~~buyer~~in ~~further~~our ~~extended~~existing ~~the sales contract until December 31, 2016~~markets. ~~However, the Company can make no assurances that the required approvals will be granted, or if granted, the timing thereof.~~

~~Accounting Standards Updates~~ ●

~~Refer~~Expand toour ~~Note~~Sales 2and Marketing Capabilities. ~~Accounting~~We ~~Standards~~intend ~~Updates~~to increase our investment over time in ~~the~~our ~~Notes~~sales organization to ~~the~~aggressively ~~Condensed~~pursue ~~Financial~~existing ~~Statements~~and ~~section~~new relationships with both domestic and foreign military customers of power and non-power products and services. We believe that with a modest investment in sales and marketing we can exploit our niche presence, reputation and relationships to identify, target and develop new customers and opportunities. We intend to engage one or more experienced sales and/or marketing personnel to guide and implement this ~~Quarterly~~initiative. ~~Report~~In addition, we intend to pursue strategic acquisitions to enhance and expand relationships with customers and business partners as discussed below.

~~Company Strategy - General~~ ●

~~Beginning~~Increase inPenetration ~~March~~with ofExisting Customers. ~~2013~~To ~~the~~complement ~~environment~~our ~~for~~sales ~~Department~~and ofmarketing ~~Defense~~initiative above, ~~contracting~~we ~~business~~intend ~~has~~to ~~changed~~focus ~~significantly~~in ~~with~~particular ~~greatly~~on ~~reduced~~recent ~~spending~~ and ~~delays~~existing customers inand ~~awarding contracts. This reduced level of~~ business ~~opportunities~~partners, ~~directly~~including ~~with~~ the ~~U.S. government, as well as with other~~ Department of Defense ~~contractors~~, ~~has~~who ~~continued~~know ~~into~~us ~~the~~as ~~government’s~~reliable ~~fiscal~~and ~~year ending September 30~~competitive, ~~2016,~~to ~~and~~explore wenew opportunities. ~~can~~Our ~~give~~goal nois ~~assurances~~to ~~that~~demonstrate ~~this~~new ~~uncertainty~~and orexpanded capabilities ~~reduction~~based in ~~spending~~part ~~will~~on ~~end after such fiscal year. Effects of this changed environment have resulted in a continued decrease in~~ the ~~Company’s~~favorable ~~revenues~~qualities ~~from sales~~ of ~~generator~~our existing ~~sets~~products ~~to the U.S. Government~~ and ~~other~~services ~~government~~as ~~contractors.~~well Inas ~~this~~our ~~changing~~strong ~~business~~reputation, ~~environment~~to sell ~~the~~additional ~~Company~~products ~~has been pursuing new opportunities through foreign military sales~~ and anservices ~~expansion~~to ofour ~~its~~existing ~~product~~customers. ~~offerings,~~We believe ~~most~~that ~~notably with the acquisition of certain product lines from Goodman Ball Incorporated (“Goodman Ball”)~~ as ~~discussed~~a ~~below~~relatively ~~under~~small ~~“Long-Term~~company, ~~Strategy”.~~we ~~The~~can ~~results~~economically mine ofexisting ~~these~~relationships ~~efforts~~for ~~are~~new ~~reflected in the composition of the Company’s backlog at March 31, 2016~~opportunities.

The Company’s March 31, 2016 backlog of approximately $3.0 million consisted of approximately $1.8 million of the Company’s traditional products, consisting of power products and replacement parts, and approximately $1.2 million of additional new products noted above under “Revenues,” with deliveries scheduled between January 2016 and July 2018.16

The Company also continues to work toward selling its 2kW generators through the General Services Administration’s GSA.gov website (as described below) as well as through other websites and sales channels. In order to support these efforts the Company has begun to build generators for inventory in order to have them available for immediate delivery. ●

20Pursue Strategic Acquisitions. We intend to continue to opportunistically pursue selective acquisitions and joint ventures to extend our presence into new markets with new products and realize operational value from our cost-effective facility, among other benefits. In 2013, the Company acquired certain assets, rights of manufacture and intellectual property from Goodman Ball, a maker of military equipment based in Menlo Park, California. As part of this transaction, among other things, the Company obtained certain product lines, contracts with the Department of Defense and its prime contractors, and business destined for foreign militaries. The Company believes that, by adding the product lines to the Company’s list of offerings, the acquisition provided a number of opportunities similar to those described above. In fiscal 2016, the Company had sales of $2.8 million relating to those product lines acquired from Goodman Ball. The Company’s long-term strategy includes growth through acquisitions such as the one from Goodman Ball. Beginning last year, the Company increased these acquisition efforts with a focus on other small defense-related companies and/or product lines that fit within the Company’s profile and complement our growth goals. In this regard, management believes that the Company’s best targets have revenue below $10 million, manufacturing that can be brought into the Company’s factory, products in military power and energy or that relate to our existing non-power products; and customers and/or products that are on established long-term programs. To the extent that such acquisitions are not financed solely out of cash flow from the acquired business, the Company will consider raising acquisition capital, which may include monetizing certain real-estate holdings, either by debt financing or sale.

~~Long-Term Strategy~~ ●

~~The~~Monetize ~~Company~~Real ~~has~~Estate ~~many~~Assets ~~years~~for ofGrowth. As ~~experience~~described in ~~contracting~~Item ~~with~~2 (Properties) of the ~~Department~~Company’s 2016 Form 10-K, the Company’s real estate holdings consist of approximately ~~Defense~~90 ~~and~~acres ~~has~~of ~~been~~which ~~successful~~approximately 68 acres (including approximately 20 acres of flat ground) are not used in ~~obtaining~~our operations. ~~many~~The ~~contracts~~Company is exploring avenues to ~~provide~~monetize aand ~~wide~~deploy value ~~array~~that ofis ~~products~~locked ~~and~~up ~~services~~in these assets. ~~Management~~As ~~believes~~with the strategic acquisitions described above, the Company would consider prudent utilization of such assets to facilitate operational growth that will ~~this~~be ~~experience~~more isaccretive ato ~~significant~~stockholders ~~positive~~in ~~competitive~~the ~~factor~~long term. ~~Management~~Such assets isalso ~~continuing~~may be monetized to ~~explore~~acquire ~~other~~assets ~~areas~~such ofas ~~business~~product lines ~~with~~as ~~the~~opposed ~~Department~~to offull ~~Defense,~~businesses. ~~which~~The ~~are~~Company ~~capable~~will ofseek ~~providing~~guidance from ~~stability~~qualified finance professionals to assist in evaluating and facilitating ~~growth~~the Company’s efforts in this regard.

~~The~~ We ~~Company~~are encouraged ~~has~~by ~~been focused within~~ the ~~market~~fact ~~for~~that ~~military~~in ~~compact~~a ~~diesel~~recent ~~power~~successful ~~generation~~real ~~and~~property tax isappeal, ~~expanding~~our ~~its~~building ~~capabilities~~(including tothe ~~also~~land ~~include~~used ~~power~~in ~~management~~the Company’s ~~solutions~~operations) ~~aimed~~was atappraised ~~delivering~~for ~~power~~approximately ~~systems~~$4.5 million, ~~with~~based ~~high~~on ~~fuel~~comparable ~~efficiency~~values ~~that are engineered~~ for ~~operation~~49,000 insquare ~~austere~~feet ~~environments~~of commercial orspace. ~~for~~With ~~unattended~~respect ~~operation~~to ~~over~~our ~~extended~~unused ~~periods.~~land, ~~Although~~although noNew Jersey’s ~~assurances~~“Highlands ~~can~~Water beProtection ~~made~~Act ~~that~~and ~~this~~Planning Act” ~~new~~currently ~~initiative~~imposes ~~will~~severe berestrictions ~~successful~~on development, ~~management~~we believe ~~believes~~that itthere isare a strong ~~addition~~reasons towhy ~~the~~this ~~Company’s~~property ~~long-term~~should ~~strategy~~not be ~~for~~subject ~~growth~~to ~~and targeted diversification. This strategy has three parts: 1) growing~~ the ~~Company’s~~restrictions ~~profitability~~on indevelopment. ~~areas~~Further, ~~where~~while ~~the~~not as ~~Company~~valuable ~~already~~a ~~has~~potential ause ~~strong~~as ~~presence~~development, 2)we ~~focused~~would ~~diversification~~consider ~~into~~a transaction ~~related markets~~ with ~~existing~~a ~~products~~conservation ~~and~~organization ~~capabilities,~~as ~~and~~a 3)means ~~further taking advantage~~ of avoiding the ~~Company’s~~expense ~~strengths~~and byregulatory ~~additional~~uncertainties ~~expansion~~inherent ~~into~~in ~~related~~a ~~product categories~~development transaction.

The Company faces competition in many areas and from companies of various sizes, capabilities and resources. Competitive factors include product quality, technology, product availability, price, and customer service. Management believes that the reputation of the Company in these areas provides a significant positive competitive factor. As part of its overall business strategy management is continuing to expand and reinforce customer awareness of the Company’s current and past performance as a Department of Defense supplier, its product quality and reliability, and its historically strong customer relationships. ●

~~The~~Recruit, ~~Company’s 10 year indefinite delivery~~Retain, ~~indefinite quantity contract with the U.S. Army to supply 2kW generator sets expired at the end of November 2013~~ and ~~deliveries~~Develop ~~of orders received under this contract have been completed~~Talent. The Company ~~engaged~~recognizes ~~in negotiations with~~ the ~~U.S.~~need ~~Army~~ for aexcellent ~~new~~personnel ~~three~~in facilitating ~~year,~~its ~~sole~~multi-pronged ~~source,~~growth ~~indefinite~~strategy. ~~quantity/indefinite~~Accordingly, ~~delivery~~in pursuing ~~contract~~acquisitions to(and ~~produce~~depending ~~2kW generators; however,~~ on ~~May~~our 1,financing ~~2014,~~situation) ~~the~~we intend ~~Company was notified that the U.S. Army no longer intended~~ to ~~award~~deliberately ~~this~~and ~~contract.~~selectively ~~The~~focus ~~Company~~on ~~anticipates that~~ the ~~Government~~recruitment, development ~~will~~and ~~continue~~retention toof ~~require~~one ~~the~~or ~~Company’s~~more ~~2kW~~technically ~~generators~~sophisticated personnel, ~~however~~experienced wesales ~~are~~and ~~unable~~marketing ~~to predict whether~~personnel, ~~when,~~finance orand acquisition ~~to what extent the Government will place orders for these generators. On May 6~~personnel, 2014 the United States General Services Administration awarded the Company a five year contract to make the Company’s 2kW generator sets available for purchase for national defense purposes by the Department of Defense and other ~~branches~~personnel, all of ~~the~~whom ~~U.S.~~ideally will ~~Government~~be onexperienced ~~the~~in ~~GSA.gov~~our ~~website~~industry orwith bycompanies ~~individual~~of ~~“Purchase~~similar profile ~~Orders”~~circumstances. ~~The Company also continues to work to make these generators available through other websites and sales channels.~~

In approaching the second and third strategic objectives of targeted diversification, the Company is attempting to capitalize on its previous investments in technology to obtain business in related military power markets and to expand into related military product categories.17

On The foregoing ~~February~~components ~~20,~~of ~~2013~~ the Company’s ~~announced~~long-term ~~the~~growth strategy ~~purchase~~have ofbeen ~~certain~~designed ~~assets,~~to ~~rights~~work ofcollectively ~~manufacture~~on ~~and~~an ~~intellectual~~integrated basis, ~~property~~while ~~from~~individually ~~Goodman~~advancing ~~Ball,~~ a ~~maker~~separate portion of ~~military~~our comprehensive ~~equipment~~growth ~~based in Menlo Park, California~~plan. As ~~part~~While ofwe ~~this~~can ~~transaction,~~give ~~among~~no ~~other~~assurances ~~things~~of success, ~~the~~management ~~Company~~believes ~~agreed~~that toit ~~assume~~is ~~responsibility~~the toright ~~maintain~~time ~~certain~~and ~~Goodman~~in ~~Ball contracts with~~ the stockholders’ ~~U.S.~~best ~~Department~~interests ~~of Defense that pertain~~ to ~~the~~accelerate ~~acquired~~and ~~product~~innovate ~~lines,~~these growth and itdevelopment ~~took~~efforts. ~~possession~~This oftiming ~~some~~coincides ~~of Goodman Ball~~with management’s ~~existing~~heightened ~~inventory~~belief ~~for~~that ~~these~~the ~~product~~Company’s business ~~lines~~prospects onare aunderappreciated ~~consignment basis~~ and ~~agreed~~its tocommon ~~pay~~stock ~~Goodman~~is undervalued. ~~Ball~~Management ~~as the inventory~~ is ~~sold~~committed to ~~customers.~~correcting ~~The~~these misperceptions ~~product~~by ~~lines~~aggressively ~~acquired~~pursuing doits ~~not~~long-term ~~compete~~growth strategy ~~with~~and ~~existing~~continuously ~~product~~evaluating ~~lines~~and ofenhancing ~~the Company~~its effectiveness.

The Company believes that, by adding Goodman Ball products to the Company’s list of offerings, this transaction provides a number of opportunities relating to the first and second strategic objectives described above (growing profitability in areas where the Company already has a strong presence and expanding into related markets). At the time of the acquisition, Goodman Ball had no backlog of production orders for these products. The Company made sales for $2,127,000 of these products in the nine month period ended March 31, 2016, and as of March 31, 2016 has orders for an additional $1,175,000 of these products in backlog. It is estimated that approximately $300,000 of this Goodman Ball products backlog will be billed during the next 3 months and be recognized as fiscal year 2016 revenues with the balance being recognized in fiscal years 2017 through 2019.

The Company continues to act on the second strategic objective, working to expand into related power markets. Using our expertise in Direct Current power generation we have expanded our capabilities to include entire power

systems integrating our traditional diesel power generation with renewable power sources, energy storage, power distribution and power management. The solutions remain man-portable or of similar scale, and management believes that our best opportunities involve isolated locations or unattended operation. For example, we are providing power for another company’s trailer mounted military remote monitoring systems. This type of integration delivers fuel savings as compared to traditional diesel generators while also enabling the optional integration of opportunistic power sources such as solar and wind. These accomplishments build on the Company’s previous accomplishments with vehicle mounted auxiliary power units, while also working with a growing group of partner companies. Management believes these activities can lead to expanded business with new types of military power requirements while also increasing our technical capabilities.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Controller, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the fiscal quarter covered by this Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Controller concluded that, as of ~~March~~September 3130, 2016, the design and operation of the Company’s disclosure controls and procedures were effective.

Nonetheless, a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended ~~March~~September 3130, 2016 that materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

2218

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Set forth below is information regarding securities sold or issued by us during the three months ended September 30, 2016, that were not registered under the Securities Act of 1933 (the “Securities Act”). Also included is the consideration, if any, received by us for the securities and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration was claimed.

On September 16, 2016, we issued an aggregate of 4,700 shares of common stock upon the exercise of options for aggregate consideration of $8,037. The shares of common stock issued upon the exercise of stock options described above were issued under the exemption set forth in Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

Item 5. Other Information

See the discussion of the extension of the Line of Credit to November 30, 2017 in Note 7. Notes Payable in the Notes to the Condensed Financial Statements section of this Quarterly Report.

Item 6. Exhibits

See the accompanying Index to Exhibits to this Quarterly Report on Form 10-Q.

2319

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
Date: May 16, 2016	By:	/s/ John H.D. Dewey
Date: November 10, 2016	By:	/s/ John H.D. Dewey
		John H.D. Dewey
		President and Chief Executive Officer
Date: May 16, 2016		/s/ Donna Medica
Date: November 10, 2016		/s/ Donna Medica
		Donna Medica
		Controller

2420

THE DEWEY ELECTRONICS CORPORATION

INDEX TO EXHIBITS

The following exhibits are included with this report. For convenience of reference, exhibits are listed according to the numbers assigned in the Exhibit table to Regulation S-K.

Exhibit No.		Description
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Controller Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Controller pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Number

10.1

Letter from TD Bank, N.A. extending Line of Credit, dated November 4, 2016

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Controller Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Controller pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filing Compare · DEWEY ELECTRONICS CORP