AUDIT REPORT To the Audit Committee of National Communications, Inc. e have examined the consolidated balance sheets of National Communications, Inc. and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, retained are the on these financial statements based on our audits earnings, and cash flows for the years then ended. These financial statements responsibility of the Company's management Our responsibility is to express an opinion were made in accordance with auditing standards generally accepted in the United exceptions. Our opinion expressed herein, insofar as it relates to the amounts Our audits States of America as we financial statements of certain subsidiaries and have furnished us with reports thereon containing no included for those subsidiaries, is based solely upon the reports of the other auditors. considered necessary in the circumstances. Other auditors audited the As fully discussed in Note 7 to the financial statements, in 2011, the company extended the use of the last-in, first-out (LIFO) method of accounting to include all inventories. In examining inventories, we engaged Dr. Irving Parris (Nobel Prize winner 2009) to test check the technical requirements and specifications of certain items of equipment manufactured by the company In our opinion, the financial statements referred to above present fairly the financial position of National Communications, Inc. as of December 31, 2011, and the results of operations for the years then ended, in conformity with accounting principles generally accepted in the United States of America. To be signed by Dewie, Cheatham & Howe, CPAs March 1, 2012 On a separate piece of paper, identify deficiencies in the staff accountant's tentative report that constitute departures from the generally accepted standards of reporting