Cover
Cover - USD ($) | 12 Months Ended | ||
Nov. 30, 2021 | Feb. 09, 2022 | May 29, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Nov. 30, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --11-30 | ||
Entity File Number | 000-5109 | ||
Entity Registrant Name | Micropac Industries, Inc. | ||
Entity Central Index Key | 0000065759 | ||
Entity Tax Identification Number | 75-1225149 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 905 E. Walnut Street | ||
Entity Address, City or Town | Garland | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75040 | ||
City Area Code | 972 | ||
Local Phone Number | 272-3571 | ||
Title of 12(b) Security | Common Stock, $0.10 par value per share | ||
Trading Symbol | MPAD | ||
Security Exchange Name | NONE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,562,000 | ||
Entity Common Stock, Shares Outstanding | 2,578,315 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Nov. 30, 2021 | Nov. 30, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 15,252,000 | $ 14,619,000 |
Receivables, net of allowance for doubtful accounts of $0 at November 30, 2021 and 2020 | 4,974,000 | 2,639,000 |
Income tax receivable | 0 | 200,000 |
Contract assets | 603,000 | 512,000 |
Inventories: | ||
Raw materials and supplies | 5,738,000 | 5,792,000 |
Work in process | 2,946,000 | 3,345,000 |
Total inventories | 8,684,000 | 9,137,000 |
Prepaid expenses and other assets | 341,000 | 515,000 |
Total current assets | 29,854,000 | 27,622,000 |
PROPERTY, PLANT AND EQUIPMENT, at cost: | ||
Land | 1,518,000 | 1,518,000 |
Buildings | 498,000 | 498,000 |
Facility improvements | 1,126,000 | 1,109,000 |
Furniture and fixtures | 1,025,000 | 1,015,000 |
Construction in process equipment | 8,019,000 | 1,044,000 |
Machinery and equipment | 9,390,000 | 9,169,000 |
Total property, plant, and equipment | 21,576,000 | 14,353,000 |
Less accumulated depreciation | (10,739,000) | (10,418,000) |
Net property, plant, and equipment | 10,837,000 | 3,935,000 |
Operating lease right to use asset | 67,000 | 117,000 |
Deferred income taxes, net | 27,000 | |
Total assets | 40,758,000 | 31,701,000 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,963,000 | 843,000 |
Accrued compensation | 1,295,000 | 981,000 |
Deferred revenue | 1,258,000 | 111,000 |
Property taxes | 318,000 | 129,000 |
Income tax | 180,000 | 0 |
Operating lease liabilities, current portion | 53,000 | 50,000 |
Other accrued liabilities | 25,000 | 53,000 |
Total current liabilities | 5,092,000 | 2,167,000 |
Operating lease liabilities less current portion | 14,000 | 67,000 |
Long Term Debt, net of debt issuance costs | 3,369,000 | 0 |
Deferred income taxes, net | 16,000 | |
Total liabilities | 8,491,000 | 2,234,000 |
SHAREHOLDERS’ EQUITY | ||
Common stock, $.10 par value, authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding at November 30 2021 and 2020 | 308,000 | 308,000 |
Additional paid-in-capital | 885,000 | 885,000 |
Treasury stock, 500,000 shares, at cost | (1,250,000) | (1,250,000) |
Retained earnings | 32,324,000 | 29,524,000 |
Total shareholders’ equity | 32,267,000 | 29,467,000 |
Total liabilities and shareholders’ equity | $ 40,758,000 | $ 31,701,000 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Nov. 30, 2021 | Nov. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 3,078,315 | 3,078,315 |
Common Stock, Shares, Outstanding | 2,578,315 | 2,578,315 |
Treasury Stock, Shares | 500,000 | 500,000 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Income Statement [Abstract] | ||
NET SALES | $ 27,292 | $ 22,274 |
COST AND EXPENSES: | ||
Cost of goods sold | 15,211 | 13,675 |
Research and development | 1,739 | 1,431 |
Selling, general & administrative expenses | 6,456 | 5,543 |
Total cost and expenses | 23,406 | 20,649 |
OPERATING INCOME | 3,886 | 1,625 |
Other (expense) income | (171) | 22 |
Interest income, net | 19 | 43 |
INCOME BEFORE INCOME TAXES | 3,734 | 1,690 |
PROVISION (BENEFIT) FOR INCOME TAXES | ||
Current | 633 | 260 |
Deferred | 43 | (42) |
Total tax expense provision | 676 | 218 |
NET INCOME | $ 3,058 | $ 1,472 |
NET INCOME PER SHARE, BASIC AND DILUTED | $ 1.19 | $ 0.57 |
WEIGHTED AVERAGE OF SHARES, basic and diluted | 2,578,315 | 2,578,315 |
DIVIDENDS PER SHARE | $ 0.10 | $ 0.10 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Nov. 30, 2019 | $ 308 | $ 885 | $ (1,250) | $ 28,310 | $ 28,253 |
Dividend | 0 | 0 | 0 | (258) | (258) |
Net Income | 0 | 0 | 0 | 1,472 | 1,472 |
Ending balance, value at Nov. 30, 2020 | 308 | 885 | (1,250) | 29,524 | 29,467 |
Dividend | 0 | 0 | 0 | (258) | (258) |
Net Income | 0 | 0 | 0 | 3,058 | 3,058 |
Ending balance, value at Nov. 30, 2021 | $ 308 | $ 885 | $ (1,250) | $ 32,324 | $ 32,267 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 3,058 | $ 1,472 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 384 | 377 |
Deferred tax expense | 43 | (42) |
Loss on disposal of equipment | 245 | 23 |
Change in right of use of asset | 50 | 36 |
Changes in certain current assets and liabilities: | ||
(Increase) decrease in accounts receivable | (2,334) | 743 |
Increase in tax receivable | (200) | |
(Increase) decrease in contract assets | (91) | 7 |
Decrease (increase) in inventories | 452 | (2,094) |
Decrease in prepaid expenses and other assets | 174 | 57 |
Decrease in prepaid income taxes | 223 | |
Increase (decrease) in deferred revenue | 1,146 | (279) |
Increase (decrease) in accounts payable | (101) | (8) |
Increase (decrease) in accrued compensation | 314 | (306) |
Increase (decrease) in income taxes payable | 156 | (213) |
Decrease in lease liabilities | (50) | (36) |
Increase in all other accrued liabilities | 162 | 47 |
Net cash provided by (used in) operating activities | 3,831 | (416) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from maturity of short-term investments | 0 | 2,089 |
Additions to property, plant and equipment | (6,309) | (686) |
Net cash provided by (used) in investing activities | (6,309) | 1,403 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Cash dividend | (258) | (258) |
Proceeds from long term debt | 3,548 | 0 |
Proceeds from short term debt | 0 | 1,942 |
Repayment of short term debt | 0 | (1,942) |
Payment of debt issuance costs | (179) | (1,942) |
Net cash provided by (used in) financing activities | 3,111 | (258) |
Net increase in cash and cash equivalents | 663 | 729 |
Cash and cash equivalents at beginning of period | 14,619 | 13,890 |
Cash and cash equivalents at end of period | 15,252 | 14,619 |
Supplemental Cash Flow Disclosure: | ||
Cash paid for income taxes | 472 | 630 |
Supplemental Non-Cash Flow Disclosure: | ||
Accrued additions to property, plant and equipment | $ 1,221 | $ 0 |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
BUSINESS DESCRIPTION | 1. BUSINESS DESCRIPTION : Micropac Industries, Inc. (the “Company”), a Delaware corporation, designs, manufactures and distributes various types of microelectronic circuits including solid state relays and power controllers, optoelectronic components, and sensor and display components and assemblies. The Company’s products are used as components and assemblies in a broad range of military, space, medical and commercial systems, including aircraft instrumentation and navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200 o |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition The core principle of revenue recognition under accounting principles generally accepted in the Unites States of America (GAAP) is that the Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company's revenue on the majority of its customer contracts are recognized at a point in time, generally upon shipment of products. To achieve that core principle, the Company applies the following steps: 1. Identify the contract(s) with a customer. The Company designs, manufactures and distributes various types of microelectronic circuits, optoelectronics, and sensors and displays. The Company’s products are used as components and assemblies in a broad range of military, space, medical and industrial systems, including aircraft instrumentation and navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200 o The Company’s revenues are from purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 2. Identify the performance obligations in the contract. The majority of the Company’s purchase orders or contracts with customers contain a single performance obligation, the shipment of products. 3. Determine the transaction price. The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that was negotiated, we will generate more or less profit or could incur a loss. 4. Allocate the transaction price to the performance obligations in the contract. The Company’s transaction price is the fixed price per unit per each delivery upon shipment. 5. Recognize revenue when (or as) the Company satisfies a performance obligation. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders for products to be delivered over multiple dates that may extend across reporting periods. The Company accounting policy treats shipping and handling activities as a fulfillment cost. The Company invoices for each delivery upon shipment and recognizes revenues at the fixed price for each distinct product delivered when transfer of control has occurred, which is generally upon shipment. For certain contracts under which the Company produces products with no alternative use and for which the Company has an enforceable right to payment during the production cycle, the Company recognizes revenue for the cost incurred of work in process plus a margin at the end of each period and records a contract asset (unbilled receivable). The majority of these products are shipped weekly and monthly to the customers and the contracts require us to manage and limit the level of work in process to meet the scheduled delivery dates. In addition, the Company may have a contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed, and performance obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied. Disaggregation of Revenue The following table summarizes the Company’s Net Sales by Product Line Nov. 30, 2021 Nov. 30, 2020 Microelectronics $ 7,803 $ 7,278 Optoelectronics 7,124 4,984 Sensors and Displays 12,365 10,012 $ 27,292 $ 22,274 Timing of revenue recognition Recognized at a point in time $ 23,555 $ 18,654 Recognized over time 3,737 3,620 Total Revenue $ 27,292 $ 22,274 The following table summarizes the Company’s Net Sales by Major Market 2021 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 10,157 $ 2,364 $ 3,621 $ 498 $ 16,640 Domestic Distribution 7,945 861 — 644 9,450 International 222 751 — 229 1,202 $ 18,324 $ 3,976 $ 3,621 $ 1,371 $ 27,292 2020 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 7,656 $ 1,809 $ 2,749 $ 1,044 $ 13,258 Domestic Distribution 7,155 143 28 641 7,967 International 427 553 — 69 1,049 $ 15,238 $ 2,505 $ 2,777 $ 1,754 $ 22,274 Receivables, net, Contract Assets and Contract Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Receivables, net, contract assets and contract liabilities November 30, 2021 November 30, 2020 December 1, 2019 Receivables, net $ 4,974 $ 2,639 $ 3,382 Contract assets $ 603 $ 512 $ 519 Deferred Revenue $ 1,258 $ 111 $ 390 Revenue recognized in 2021 that was included in the deferred revenue liability balance at the beginning of the year was $ 88,000 Contract costs The Company does not have material incremental costs to obtain a contract in the form of sales commissions or bonuses. The Company incurs other immaterial costs to obtain and fulfill a contract; however, the Company has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. Inventories Inventories are stated at lower of cost or net realizable value and include material, labor and manufacturing overhead. All inventories are valued using the FIFO (first-in, first-out) method of inventory valuation. The Company determines the need to write inventory down to the lower of cost or net realizable value via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method the Company records deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The resulting deferred tax liabilities and assets are adjusted to reflect changes in tax law or rates in the period that includes the enactment date. The Company records a liability for an unrecognized tax benefit for a tax position that is not “more-likely-than-not” to be sustained. The Company did not record any liability for uncertain tax positions as of November 30, 2021 and November 30, 2020. Property, Plant, and Equipment Property, plant, and equipment are carried at cost, and depreciation Buildings ......................................................................................................................................................... 15 40 Facility improvements ......................................................................................................................................................... 8 15 Machinery and equipment ......................................................................................................................................................... 5 10 Furniture and fixtures ......................................................................................................................................................... 5 8 The Company assesses long-lived assets for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement Construction in progress relates to multiple capital projects ongoing during the years ended November 30, 2021 and 2020, including the construction of the new manufacturing facility. Construction in progress also includes interest and fees on debt that are directly related to the financing of the Company’s capital projects. Repairs and maintenance are expensed as incurred. Improvements which extend the useful lives of property, plant, and equipment are capitalized. Research and Development Costs Costs for the design and development of new products are expensed as incurred. Basic and Diluted Earnings Per Share Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential common shares. During 2021 and 2020, the Company had no Use of Estimates The preparation of financial statements in conformity with GAAP 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Nov. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 3. NEW ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses Measurement of Credit Losses on Financial Instruments |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Nov. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | 4. FAIR VALUE MEASUREMENT The Company had no The Company measures its long-term debt at fair value which approximates book value as the long-term debt bears market rates of interest. There were no |
NOTES PAYABLE TO BANKS
NOTES PAYABLE TO BANKS | 12 Months Ended |
Nov. 30, 2021 | |
Payables and Accruals [Abstract] | |
NOTES PAYABLE TO BANKS | 5. NOTES PAYABLE TO BANKS The Company obtained a commercial real estate construction loan for the construction of a new 76,000 square foot manufacturing center on the 9.2 acres of land in Garland, Texas that the Company has purchased. On March 26, 2021, the Company (acting as borrower) entered into a Construction Loan Agreement (the “loan agreement”) with Frost Bank (“Frost”) (acting as lender). The Construction Loan Agreement provides for a construction loan, in amounts not to exceed a total principal balance of $ 16,160,000 3.40 On March 26, 2021, the Company renewed the Revolving Loan Agreement with Frost through the “Sixth Amendment to Loan Agreement.” (See Exhibit 10.13). The Revolving Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $ 6,000,000 3.25 Construction Loans Principal and interest shall be due and payable monthly in an amounts determined by Lender required to fully amortize the outstanding principal balance of this Note over a period of twenty-five (25) years, payable on the twenty-sixth (26th) day of each and every calendar month, beginning April 26, 2023, and continuing regularly thereafter until March 26, 2031, when the entire amount hereof, principal and accrued interest then remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited to any collection costs and late charges, to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall determine. The interest rate of ( 3.40 The loan shall be secured by a “Deed of Trust, Security Agreement – Financing Statement” covering the 9.2 acre tract in Garland, Texas and the improvements made on it. Revolving Credit Loans The interest on the outstanding and unpaid principal balance shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate per annum; provided, however, in no event shall the resulting rate be less than three and one-quarter percent (3.25%). The Company has borrowed $ 3,548,000 Debt November 30, 2021 Notes payable $ 3,548,000 Less unamortized debt issuance costs 179,000 Net Debt 3,369,000 Less—Current portion — Total long-term debt $ 3,369,000 |
PRODUCT WARRANTIES
PRODUCT WARRANTIES | 12 Months Ended |
Nov. 30, 2021 | |
Guarantees and Product Warranties [Abstract] | |
PRODUCT WARRANTIES | 6. PRODUCT WARRANTIES In general, the Company warrants that its products, when delivered, will be free from defects in material workmanship under normal use and service. The obligations are limited to replacing, repairing or giving credit for, at the option of the Company, any products that are returned within one year after the date of shipment. The Company does not provide extended warranties. The Company reserves for potential warranty costs based on historical warranty claims experience. While management considers the process to be adequate to effectively quantify its exposure to warranty claims based on historical performance, changes in warranty claims on a specific or cumulative basis may require management to adjust its reserve for potential warranty costs. Warranty expense was approximately $ 56,000 $185,000 The following table summarizes Product Warranty Activity 2021 2020 Beginning balance $ 60 $ 25 Additions for current year provision 56 185 Payments for current year (91 ) (150 ) Ending balance $ 25 $ 60 |
LEASE COMMITMENTS
LEASE COMMITMENTS | 12 Months Ended |
Nov. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEASE COMMITMENTS | 7. LEASE COMMITMENTS Rent expense for each of the years ended November 30, 2021 and 2020 was $51,000 and $51,000 respectively. Leases In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) In the first quarter of 2020, the Company entered into a three (3) year lease extension on the property that has been leased on a year to year basis. As a result, we recognized $ 165,000 50,000 3.25 The Undiscounted Future Minimum Lease Payments 2022 $ 55,000 2023 14,000 Total lease payments 69,000 Interest (2,000 ) Present value of lease liabilities $ 67,000 |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Nov. 30, 2021 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFITS | 8. EMPLOYEE BENEFITS The Company sponsors an Employees’ Profit Sharing Plan and Trust (the “Plan”). Pursuant to section 401(k) of the Internal Revenue Code, the Plan is available to substantially all employees of the Company. Employee contributions to the Plan are matched by the Company at amounts up to 6 421,000 360,000 20 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Nov. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 9. INCOME TAXES The Income Tax Provision (Benefit) 2021 2020 Current Provision: Federal $ 574,000 $ 219,000 State 59,000 41,000 633,000 260,000 Deferred federal tax expense 43,000 (42,000 ) Total $ 676,000 $ 218,000 The Provision for Income Taxes 2021 2020 Tax at statutory rate $ 784,000 $ 355,000 State income taxes, net of federal benefit 46,000 32,000 Research and Development Tax Credit (197,000 ) (186,000 ) Permanent differences and other 43,000 17,000 Income tax provision $ 676,000 $ 218,000 The Components of Deferred Tax Assets and Liabilities 2021 2020 Deferred tax assets (liabilities) Inventory $ 169,000 $ 231,000 Deferred revenue, sales returns and warranty 5,000 12,000 Other accrued liabilities 52,000 50,000 Depreciation (242,000 ) (266,000 ) Net deferred assets (liabilities) $ (16,000 ) $ 27,000 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. |
SIGNIFICANT CUSTOMER INFORMATIO
SIGNIFICANT CUSTOMER INFORMATION | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT CUSTOMER INFORMATION | 10. SIGNIFICANT CUSTOMER INFORMATION : The Company’s major customers include contractors to the United States government. Sales to these customers for DOD and NASA contracts accounted for approximately 67 66 20 |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 12 Months Ended |
Nov. 30, 2021 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | 11. SHAREHOLDERS’ EQUITY On December 10, 2019 0.10 January 8, 2020 February 14, 2020 On December 8, 2020 0.10 January 6, 2021 February 12, 2021 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS On December 7, 2021 0.10 January 11, 2022 February 10, 2022 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company’s Chief Executive Officer and Chief Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this report was prepared. The Certifying Officers have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) (the Rules) under the Securities Exchange Act of 1934 (or Exchange Act)) and determined that as of November 30, 2021, the Company's disclosure controls and procedures were effective. Management’s Annual Report on Internal Control Over Financial Reporting Management of Micropac is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act Rule 13a-15(f). Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), the Company’s management conducted an evaluation of the effectiveness of its internal control over financial reporting as of November 30, 2021 as required by the Securities Exchange Act of 1934 Rule13a-15(c). In making this assessment, the Company’s management used the criteria set forth in the framework in “Internal Control – Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation conducted under the framework in “Internal Control – Integrated Framework” (2013), management concluded that the Company’s internal control over financial reporting was effective as of November 30, 2021. During our most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. This annual report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report. Item 9B. Other Information None. PART III In accordance with General Instruction G(3) of Form 10-K, the information required by this Part III is incorporated by reference to Micropac Industries, Inc.’s definitive proxy statement relating to its 2022 Annual Meeting of Stockholders, as set forth below. The 2022 Proxy Statement will be filed with the Securities and Exchange Commission on or about February 9, 2022. Directors, Executive Officers and Corporate Governance Name Age Position with the Company Director Since Mark King 67 CEO, President and Member of Audit Committee and Chairman of the Board October 2005 Heinz-Werner Hempel 93 Director and Member of Audit Committee February 1997 Christine B. Dittrich 69 Director and Member of Audit Committee October 2015 Gerald Tobey 68 Director and Member of Audit Committee June 2017 Donald Robinson 56 Director and Member of Audit Committee December 2019 Shaunna Black 67 Director and Member of Audit Committee December 2019 Patrick S. Cefalu 64 CFO, Executive Vice President N/A Mr. King is the current President and Chief Executive of the Company. Prior to November 2002, Mr. King was the President and Chief Operating Officer of Lucas Benning Power Electronics. Mr. King joined the Company in November of 2002, and was elected Chief Executive Officer, President and Director in October 2005. Mr. Hempel has served as the Chief Operating Officer of Hanseatische Waren-Gesellschaft MBH & Co, KG, Bremen, Germany for over 25 years. Ms. Dittrich was an Executive Vice President of Raytheon Systems Company and the General Manager of the Sensor and Electronic Systems segment. Before working for Raytheon, Ms. Dittrich was a Senior Vice President of Texas Instruments (TI) Systems Group, a Malcolm Baldrige Quality Award winner, and the General Manager of the Electronic Systems Division. Her prior assignments include TI Systems Group Vice President and Engineering Manager, Software Engineering Director for the defense business, and Senior Member of Technical Staff. She has had senior executive responsibility for product engineering efforts that involve large scale software and hardware development and integration. Ms. Dittrich provided consulting services with a focus on business strategy and operational performance to various technology companies after leaving Raytheon. She became a Visiting Scientist at the Carnegie Mellon University Software Engineering Institute (SEI), a Federally Funded Research and Development Center and chaired the SEI Board of Advisors for over 10 years. She was a Fellow of the Cutter Business Technical Council and a senior consultant for Cutter Consortium. In addition, she has held membership positions on the Army Science Board, the Department of Defense Software Best Practices - Airlie Software Council and other advisory boards. Mr. Tobey was a Vice President of Business Development at Raytheon Missile Systems Company retiring in 2016 following a 38 year career in the defense, aerospace, and civil security sectors. He also served as Vice President of International Business Development for both Raytheon's Missile Systems and Network Centric Systems businesses. Until 1997, when Texas Instruments' Defense Systems and Electronics Group was acquired by Raytheon, Mr. Tobey served as that company's Vice President of International Business Development and Managing Director of Texas Instruments UK, Ltd. (a wholly owned TI subsidiary). During Mr. Tobey's career, he has served in various business creation and capture, strategy, program and manufacturing management positions both in the U.S. and abroad. Mr. Tobey holds a Bachelor of Science and a Masters of Business Administration degree from Utah State University. He is a graduate of the U.S. Defense Department's Defense Acquisition University, and has completed Executive Study at the Anderson School of Management at UCLA. Mr. Robinson is a practical, executive-level leader interested in making a difference within organizations and maximizing the potential collective impact of people. He has deep experience in corporate strategy, structuring and executing successful complex corporate initiatives, manufacturing, and mergers and acquisitions. As a partner-level consultant, Mr. Robinson has led engagements in strategy development, M&A integration and executing complex corporate initiatives. His industry experience includes time as an Industrial Engineer with Texas Instruments’ Defense Systems Group and as an executive over industrial engineering, safety and quality systems with Decibel Products, a $35M in annual revenue manufacturer which grew into Allen Telecom. He served on the Chicago and North Texas chapter boards of the National Association of Corporate Directors (NACD), a national organization focused on providing information and education to corporate directors. Mr. Robinson served as a Business Leadership Center Instructor at the SMU Cox School of Business in Dallas, TX and is a two-time recipient of the Teaching Excellence Award. He holds an MBA from the University of Dallas and a B.S. in Industrial Engineering from Texas A&M University. Ms. Shaunna Black is President of Shaunna Black and Associates. Ms. Black advises companies on global operations, provides experienced executive talent, and coaches leadership teams. The focus of her company is start-ups, business turnarounds and growth, strategy, organization and systems design, and leadership development. Ms. Black is an innovative and highly accomplished operations/manufacturing executive, who enables leaders to rapidly solve complicated problems. She has managed operations internationally in 25 countries. Ms. Black’s methodology delivers extraordinary performance utilizing the power of diverse, multi-generational teams, creating high performance cultures and metrics-driven systems. She has expertise in leadership and team development, technical and systems design, and production methodology in the technology, industrial, manufacturing and hospitality sectors. Her executive career has provided significant experience in strategy, global operations, technology, risk management and sustainability. Ms. Black has served on Audit, Governance, Safety/Risk and M&A Committees. Her industry experience includes Texas Instruments Vice President, (24 years) Dallas/Fort Worth Area including Vice President, Worldwide Facilities - responsible for the design, construction and operation of TI facilities, environmental, safety and health programs, global real estate, worldwide security, and TI's sustainability strategy; Vice President, Dallas Fabrication - Manager for semiconductor manufacturing in one of TI's premier analog wafer fabrication facilities; and Vice President, Worldwide Facilities and Worldwide Environmental, Safety and Health. Mr. Cefalu has over 35 years of experience in management, manufacturing and financial operations in a variety of industries. Mr. Cefalu has been the Chief Financial Officer and Executive Vice President of the Company since September 2001. Board Meetings and Committees The Board of Directors held five (5) board meetings during the year ended November 2021. Directors received a fee of $1,500 (other than Mr. King) for each meeting attended during the year ended November 2021. In addition, the Board agreed to pay an annual retainer of $10,000 to Mr. Donald Robinson, Ms. Dittrich, Ms. Shaunna Black and Mr. Gerald Tobey. The Audit Committee held four (4) meetings during the year ended November 30, 2021. Members of the Audit Committee received a fee of $750 for each meeting attended during the year ended November 2021. Mr. King did not receive any payments for attending meetings of the Audit Committee. Director Compensation 2021 Director Audit Committee Other fees Total Fees Shaunna Black $ 17,500 $ 3,000 — $ 20,500 Donald Robinson $ 17,500 $ 3,000 — $ 20,500 Christine Dittrich $ 17,500 $ 3,000 — $ 20,500 Gerald Tobey $ 17,500 $ 3,000 — $ 20,500 Mr. King does not receive any additional compensation for serving as a Director and as a member of the Audit Committee. Audit Committee The Board of Directors formed an Audit Committee on May 13, 2002. The members of the Audit Committee operate pursuant to a charter developed by the Board of Directors. The Board has determined that all Audit Committee members qualify as an “audit committee financial expert” for purposes of the rules and regulations of the SEC and that each of these members is sufficiently proficient in reading and understanding our financial statements to serve on the Audit Committee. With the exception of Mr. King and Mr. Hempel, members of the Audit Committee are considered independent members under the Securities and Exchange Act rules and regulations. The Audit Committee has reviewed with management and the independent auditors the quality and adequacy of the Company's significant accounting policies. The Audit Committee has considered and reviewed with the independent auditors their audit plans, the scope of the audit, and the identification of audit risks. The Audit Committee has reviewed and discussed the audited financial statements with management and has discussed such financial statements with the independent auditors. The Audit Committee has received the written disclosures and the report from the independent accountant required by the applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountants the independent accountant’s independence. Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s annual report on Form 10-K for the fiscal year ended November 30, 2021, for filing with the Securities and Exchange Commission. Management has the responsibility for the preparation and integrity of the Company's financial statements and the independent registered public accounting firm have the responsibility for the audit of those statements. It is not the duty of the Audit Committee to conduct audits to determine that the Company’s financial statements are complete and accurate and are in accordance with accounting principles generally accepted in the United States. In giving its recommendations, the Audit Committee considered (a) management's representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America, and (b) the report of the Company’s independent auditors with respect to such financial statements. Nominating, Compensation and Corporate Governance The Board of Directors does not have a nominating, compensation committee or corporate governance committee or committees performing similar functions. The Directors of the Company are responsible for developing and recommending corporate governance guidelines, identifying qualified individuals to become directors, recommending selected nominees to serve on the Board, and overseeing the evaluation of the Board. In addition, the Directors are responsible for considering and recommending the compensation arrangements for senior management. As part of its other responsibilities, they provide general oversight of our compensation structure, and, if deemed, necessary, retains and approves compensation consultants and other compensation experts. Other specific duties and responsibilities of reviewing the performance of executive officers; reviewing and approving objectives relevant to executive officer compensation; recommending incentive compensation plans; and recommending compensation policies and practices for service on our Board of Directors. Board Leadership Structure Our Board of Directors does not have a policy on whether the roles of Chief Executive Officer and Chairman of the Board of Directors should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee. Our Board of Directors believes that it should be free to make a choice from time to time in any manner that is in the best interest of us and our stockholders. The Board of Directors believes that Mr. King’s service as both Chief Executive Officer and Chairman of the Board is in the best interest of us and our stockholders. Mr. King possesses detailed and in-depth knowledge of the issues, opportunities and challenges we face and is thus best positioned to develop agendas, to ensure that the Board’s time and attention are focused on the most critical matters. His combined role enables decisive leadership, ensures clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to our stockholders, employees, and customers and suppliers. Our Board of Directors believes that the independent directors provide effective oversight of management. Board of Directors’ Role in the Oversight of Risk Management The Board of Directors has designated the Audit Committee to take the lead in overseeing risk management at the Board of Directors level. Accordingly, the Audit Committee schedules time for periodic review of risk management, in addition to its other duties. In this role, the Audit Committee receives reports from management, independent registered public accounting firm, outside legal counsel, and other advisors, and strives to generate serious and thoughtful attention to our risk management process and system, the nature of the material risks we face, and the adequacy of our policies and procedures designed to respond to and mitigate these risks. In addition to the formal compliance program, our Board of Directors encourage management to promote a corporate culture that understands risk management and incorporates it into our overall corporate strategy and day-to-day business operations. Employee, Officer and Director Hedging None Section 16(a) Beneficial Owner Reporting Compliance Section 16(a) of the Exchange Act requires the Company's directors, executive officers, and 10% stockholders to file reports of ownership and reports of change in ownership of the Company's equity securities with the Securities and Exchange Commission. Directors, executive officers, and 10% stockholders are required to furnish the Company with copies of all Section16(a) forms they file. Based on information provided by such persons and a review of the copies of such reports furnished, the Company believes that during the fiscal year ended November 30, 2021, the Company's directors, executive officers, and 10% stockholders filed on a timely basis all reports required by Section 16(a) of the Exchange Act. Code of Ethics The Company has adopted a code of ethics that applies to the Company’s principal executive officer and principal financial officer. In addition, the Company has a code of conduct for all employees, officers and directors of the Company. Item 11. Executive Compensation The information set forth in the 2022 Proxy Statement under the heading “Management Remuneration and Transactions” is incorporated herein. The following table shows as of November 30, 2021, all cash compensation paid to, or accrued and vested for the account of Mr. Mark King, President and Chief Executive Officer and Mr. Patrick Cefalu, Vice President and Chief Financial Officer. Mr. King and Mr. Cefalu received no non-cash compensation during 2021. Annual Compensation Name and Principal Position Year Annual Salary Bonus All Other Compensation (a) Total Mark King, 2021 $ 301,924 $ 13,400 $ 42,672 $ 357,997 President and 2020 $ 300,391 $ 36,000 $ 41,280 $ 378,211 Chief Executive Officer (1) 2019 $ 286,536 $ 15,000 $ 36,115 $ 337,651 Patrick Cefalu, 2021 $ 187,873 $ 13,400 $ 32,918 $ 234,191 Vice President and 2020 $ 186,889 $ 36,000 $ 33,065 $ 256,854 Chief Financial Officer (2) 2019 $ 178,264 $ 15,000 $ 30,748 $ 224,012 (a) Reflects amounts contributed by Micropac Industries, Inc., under Micropac’s 401(k) profit sharing plan; unused vacation pay; life insurance premiums paid; and reimbursement for medical expenses under Micropac’s Family Medical Reimbursement Plan. (1) Effective November 2005, Mr. King’s existing employment agreement was revised to provide that Mr. King would serve as the Company’s President and Chief Executive Officer, and a member on the Board of Directors and Audit Committee at a base salary of $186,400 for a term of three (3) years. In December 2005, the Company and Mr. King amended his employment agreement to increase his annual base salary to $225,000. In June 2009, the Company and Mr. King amended his employment agreement to increase his annual base salary to $247,104 for renewable terms of three (3) years with annual increases based on consumer price index with additional increases to be determined by the Board of Directors. The June 2009 amendment also provides under certain events, either the Company or Mr. King can terminate the agreement upon a payment to Mr. King of 18 or 36 months’ salary as severance payments. (2) Effective February 2004, Mr. Cefalu entered into an employment agreement that Mr. Cefalu would serve as Executive Vice President and Chief Financial Officer for a term of two (2) years. On April 6, 2020, the employment agreement was amended to extend the term for three (3) years and the remaining terms and conditions of the Employment Agreement shall remain if full force and effect. The Board of Directors reviews and approves the Company’s annual bonus payment’s structure. Mr. King and Mr. Cefalu received a bonus payment of $13,400 in December 2020. Amount included in all other compensation relating to employee benefit plans The Company maintains a Family Medical Reimbursement Plan for the benefit of its executive officers and their dependents. The Plan is funded through a group insurance policy issued by an independent carrier and provides for reimbursement of 100% of all bona fide medical and dental expenses that are not covered by other medical insurance plans capped at an annual family maximum. During the fiscal year ended November 30, 2021, the Company paid $14,604 in premiums each for Mr. King and Mr. Cefalu which amounts are included in the "All Other Compensation" column shown in the preceding remuneration table. In July 1984, the Company adopted a Salary Reduction Plan pursuant to Section 401(k) of the Internal Revenue Code. The Plan's benefits are available to all Company employees who are at least 18 years of age and have completed at least six months of service to the Company as of the beginning of a Plan year. Plan participants may elect to defer up to 15% of their total compensation as their contributions, subject to the maximum allowed by the Internal Revenue code 401(k), and the Company matches their contributions up to a maximum of 6% of their total compensation. A participant's benefits vest to the extent of 20% after two years of eligible service and become fully vested at the end of six years. During the fiscal year ended November 30, 2021, the Company made contributions to the Plan for Mr. King in the amount of $17,100 and for Mr. Cefalu in the amount of $11,773 which amount is included in the "All Other Compensation" column shown in the preceding remuneration table. Employment agreements of the Company’s officers provide that they may elect to carry over any unused vacation time to subsequent periods or elect to be paid for such unused vacation time. Mr. King and Mr. Cefalu did not receive any unused vacation pay in 2021. During the fiscal year ended November 30, 2021, the Company paid life insurance premiums for the benefit of Mr. King and Mr. Cefalu valued at $10,968 and $6,540, respectively. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table shows the number and percentage of shares of the Company's common stock beneficially owned (a) by each person known by the Company to own 5% or more of the outstanding common stock, (b) by each director and nominee, and (c) by all present officers and directors as a group. Name and Address of Beneficial Owner (1) Number of Shares Beneficially Owned Percent of Class (1) Jeff Capital, LP 151,545 5.9% Heinz-Werner Hempel (2) (3) (4) 1,952,577 75.7% Shaunna Black (3) 0 0% Patrick Cefalu 0 0% Christine Dittrich (3) 0 0% Mark King (3) 14,100 Less than 0.6% Donald Robinson (3) 0 0% Gerald Tobey (3) 0 0% All officers and directors as a group (7 Persons) 1,966,677 76.3% _______________________ (1) Calculated on the basis of the 2,578,315 outstanding shares. There are no options, warrants, or convertible securities outstanding. The address of each person listed is 905 East Walnut Street, Garland, Texas 75040. (2) The Company and Mr. Heinz-Werner Hempel are parties to an Ancillary Agreement entered into in March 1987. The Ancillary Agreement primarily obligates the Company to register Mr. Hempel’s stock and allows Mr. Hempel to participate in any sale of stock by the Company. (3) A director of the Company. Each incumbent director has been nominated for re-election at the Annual Meeting. (4) Effective October 10, 2007, Mr. Hempel transferred all of the shares of the Company’s common stock owned by him and consisting of 1,952,577 shares, to a partnership organized under the laws of Germany. This partnership is composed of Mr. Hempel, his son, and his daughter. As the consideration for this transfer, Mr. Hempel received a 99.98% share in this partnership and received the sole voting and management control. His son and daughter each own a 0.01% ownership interest in this partnership. Item 13. Certain Relationships and Related Transactions, and Director Independence None. Principal Accountant Fees and Services Whitley Penn LLP was selected as the Company’s independent registered public accounting firm in 2016 and has been responsible for the Company's financial audit for the fiscal years ended November 30, 2016 through November 30, 2021. Management anticipates that a representative from Whitley Penn LLP will be present at the Annual Meeting and will be given the opportunity to make a statement if he or she desires to do so. It is also anticipated that such representative will be available to respond to appropriate questions from stockholders. AUDIT FEES The fees for professional services rendered for the audit of our annual financial statements for each of the fiscal years ended November 30, 2021 and November 30, 2020, and the reviews of the financial statements included in our Quarterly Reports on Form 10-Q during those periods were $137,500 and $136,000, respectively. TAX FEES Whitley Penn LLP fees for tax return preparation services were $26,500 in 2021 and 2020. ALL OTHER FEES Whitley Penn LLP fees for audit of the Company’s 401K plan was $10,000 in 2021 and 2020. The Audit Committee requests that the Principal Accounting Firm provide the committee with the anticipated charges of all accounting and tax related services to be performed in advance of performing such services. The Audit Committee approves all services in advance of the performance of such services. Item 15. Exhibits, Financial Statement Schedules (a) Exhibits 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Accounting Officer 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 , 32.2 Certification of Chief Accounting Officer pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002. 3.1 Bylaws – In the form of Exhibit 3.1 to the Form 8-K filed March 3, 2011 which is incorporated herein. 4.1 Certificate of Incorporation – In the form of Exhibit 4.1 to the Form S-8 filed August 15, 2001 which is incorporated herein. 10.1 Loan Agreement dated as of January 23, 2013 by and among Frost Bank and Micropac Industries, Inc. which is filed as Exhibit 10.1 to the Form 8K filed January 29, 2013 which is incorporated by reference herein. 10.4 Employment Agreement with Patrick Cefalu dated April 6, 2020 – In the form attached as Exhibit 10.4 to the Form 10KSB filed August 23, 2004 which is incorporated herein. 10.7 Code of Ethics – In the form attached as Exhibit 10.7 to the Form 10KSB filed August 23, 2005 which is incorporated herein. 10.11 Restated and Amended Employment Agreement with Mark W. King dated June 1, 2009 – In the form attached as Exhibit 10.11 to the Form 10K filed February 10, 2021 which is incorporated herein. 10.12 Amended Employment Agreement with Patrick Cefalu dated April 6, 2020 – In the form attached as Exhibit 10.12 to the Form 10K filed February 10, 2021 which is incorporated herein. 10.13 “Sixth Amendment to Loan Agreement” dated March 26, 2021 between Micropac Industries, Inc. as borrower and Frost Bank attached as Exhibit 10.13 to Form 8K filed March 30, 2021 which is incorporated herein. 10.14 “Construction Loan Agreement dated March 26, 2021 between Micropac Industries, Inc. as borrower and Frost Bank attached as Exhibit 10.14 to Form 8K filed March 30, 2021 which is incorporated herein. Item 16. Form 10K Summary None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MICROPAC INDUSTRIES, INC. By: /s/ Mark King Mark King President and Chief Executive Officer (Principal Executive Officer) By: /s/ Patrick Cefalu Patrick Cefalu Executive Vice President and Chief Financial Officer (Principal Accounting Officer) Dated: February 9, 2022 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 9, 2022. /s/ Mark King Mark King, Director Heinz-Werner Hempel, Director /s/ Richard Hoesterey /s/ Gerald Tobey Richard Hoesterey, Director Gerald Tobey, Director /s/ Christine Dittrich /s/ Shaunna Black Christine Dittrich, Director Shaunna Black, Director DIRECTORS AND OFFICERS NOVEMBER 30, 2021 MARK KING President and Chief Executive Officer Chairman of the Board Micropac Industries, Inc. HEINZ-WERNER HEMPEL Chief Operating Officer Hanseatishe Waren Handelsgesellschaft MBH & Co. KG, Bremen, Germany DONALD ROBINSON Managing Partner Metre22, Inc CHRISTINE DITTRICH Retired GERALD TOBEY Retired SHAUNNA BLACK Retired PATRICK CEFALU Executive Vice President Chief Financial Officer Micropac Industries, Inc. LEGAL COUNSEL TRANSFER AGENT & REGISTRAR Whitaker Chalk Swindle & Schwartz PLLC Securities Transfer Fort Worth, Texas Plano, Texas |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition The core principle of revenue recognition under accounting principles generally accepted in the Unites States of America (GAAP) is that the Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company's revenue on the majority of its customer contracts are recognized at a point in time, generally upon shipment of products. To achieve that core principle, the Company applies the following steps: 1. Identify the contract(s) with a customer. The Company designs, manufactures and distributes various types of microelectronic circuits, optoelectronics, and sensors and displays. The Company’s products are used as components and assemblies in a broad range of military, space, medical and industrial systems, including aircraft instrumentation and navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200 o The Company’s revenues are from purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 2. Identify the performance obligations in the contract. The majority of the Company’s purchase orders or contracts with customers contain a single performance obligation, the shipment of products. 3. Determine the transaction price. The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that was negotiated, we will generate more or less profit or could incur a loss. 4. Allocate the transaction price to the performance obligations in the contract. The Company’s transaction price is the fixed price per unit per each delivery upon shipment. 5. Recognize revenue when (or as) the Company satisfies a performance obligation. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders for products to be delivered over multiple dates that may extend across reporting periods. The Company accounting policy treats shipping and handling activities as a fulfillment cost. The Company invoices for each delivery upon shipment and recognizes revenues at the fixed price for each distinct product delivered when transfer of control has occurred, which is generally upon shipment. For certain contracts under which the Company produces products with no alternative use and for which the Company has an enforceable right to payment during the production cycle, the Company recognizes revenue for the cost incurred of work in process plus a margin at the end of each period and records a contract asset (unbilled receivable). The majority of these products are shipped weekly and monthly to the customers and the contracts require us to manage and limit the level of work in process to meet the scheduled delivery dates. In addition, the Company may have a contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed, and performance obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied. |
Disaggregation of Revenue | Disaggregation of Revenue The following table summarizes the Company’s Net Sales by Product Line Nov. 30, 2021 Nov. 30, 2020 Microelectronics $ 7,803 $ 7,278 Optoelectronics 7,124 4,984 Sensors and Displays 12,365 10,012 $ 27,292 $ 22,274 Timing of revenue recognition Recognized at a point in time $ 23,555 $ 18,654 Recognized over time 3,737 3,620 Total Revenue $ 27,292 $ 22,274 The following table summarizes the Company’s Net Sales by Major Market 2021 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 10,157 $ 2,364 $ 3,621 $ 498 $ 16,640 Domestic Distribution 7,945 861 — 644 9,450 International 222 751 — 229 1,202 $ 18,324 $ 3,976 $ 3,621 $ 1,371 $ 27,292 2020 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 7,656 $ 1,809 $ 2,749 $ 1,044 $ 13,258 Domestic Distribution 7,155 143 28 641 7,967 International 427 553 — 69 1,049 $ 15,238 $ 2,505 $ 2,777 $ 1,754 $ 22,274 |
Receivables, net, Contract Assets and Contract Liabilities | Receivables, net, Contract Assets and Contract Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Receivables, net, contract assets and contract liabilities November 30, 2021 November 30, 2020 December 1, 2019 Receivables, net $ 4,974 $ 2,639 $ 3,382 Contract assets $ 603 $ 512 $ 519 Deferred Revenue $ 1,258 $ 111 $ 390 Revenue recognized in 2021 that was included in the deferred revenue liability balance at the beginning of the year was $ 88,000 |
Contract costs | Contract costs The Company does not have material incremental costs to obtain a contract in the form of sales commissions or bonuses. The Company incurs other immaterial costs to obtain and fulfill a contract; however, the Company has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. |
Inventories | Inventories Inventories are stated at lower of cost or net realizable value and include material, labor and manufacturing overhead. All inventories are valued using the FIFO (first-in, first-out) method of inventory valuation. The Company determines the need to write inventory down to the lower of cost or net realizable value via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method the Company records deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The resulting deferred tax liabilities and assets are adjusted to reflect changes in tax law or rates in the period that includes the enactment date. The Company records a liability for an unrecognized tax benefit for a tax position that is not “more-likely-than-not” to be sustained. The Company did not record any liability for uncertain tax positions as of November 30, 2021 and November 30, 2020. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are carried at cost, and depreciation Buildings ......................................................................................................................................................... 15 40 Facility improvements ......................................................................................................................................................... 8 15 Machinery and equipment ......................................................................................................................................................... 5 10 Furniture and fixtures ......................................................................................................................................................... 5 8 The Company assesses long-lived assets for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement Construction in progress relates to multiple capital projects ongoing during the years ended November 30, 2021 and 2020, including the construction of the new manufacturing facility. Construction in progress also includes interest and fees on debt that are directly related to the financing of the Company’s capital projects. Repairs and maintenance are expensed as incurred. Improvements which extend the useful lives of property, plant, and equipment are capitalized. |
Research and Development Costs | Research and Development Costs Costs for the design and development of new products are expensed as incurred. |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential common shares. During 2021 and 2020, the Company had no |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Nov. 30, 2021 | |
Accounting Policies [Abstract] | |
Net Sales by Product Line | The following table summarizes the Company’s Net Sales by Product Line |
Net Sales by Product Line | Nov. 30, 2021 Nov. 30, 2020 Microelectronics $ 7,803 $ 7,278 Optoelectronics 7,124 4,984 Sensors and Displays 12,365 10,012 $ 27,292 $ 22,274 Timing of revenue recognition Recognized at a point in time $ 23,555 $ 18,654 Recognized over time 3,737 3,620 Total Revenue $ 27,292 $ 22,274 |
Net Sales by Major Market | The following table summarizes the Company’s Net Sales by Major Market |
Net Sales by Major Market | 2021 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 10,157 $ 2,364 $ 3,621 $ 498 $ 16,640 Domestic Distribution 7,945 861 — 644 9,450 International 222 751 — 229 1,202 $ 18,324 $ 3,976 $ 3,621 $ 1,371 $ 27,292 2020 Sales by Major Market Military Space Medical Commercial Total Domestic Direct $ 7,656 $ 1,809 $ 2,749 $ 1,044 $ 13,258 Domestic Distribution 7,155 143 28 641 7,967 International 427 553 — 69 1,049 $ 15,238 $ 2,505 $ 2,777 $ 1,754 $ 22,274 |
Receivables, net, contract assets and contract liabilities | Receivables, net, contract assets and contract liabilities |
Receivables, Net, Contract Assets and Liabilities | November 30, 2021 November 30, 2020 December 1, 2019 Receivables, net $ 4,974 $ 2,639 $ 3,382 Contract assets $ 603 $ 512 $ 519 Deferred Revenue $ 1,258 $ 111 $ 390 |
Property, plant, and equipment are carried at cost, and depreciation | Property, plant, and equipment are carried at cost, and depreciation |
Schedule of Property Plant and Equipment Useful Lives | Buildings ......................................................................................................................................................... 15 40 Facility improvements ......................................................................................................................................................... 8 15 Machinery and equipment ......................................................................................................................................................... 5 10 Furniture and fixtures ......................................................................................................................................................... 5 8 |
NOTES PAYABLE TO BANKS (Tables)
NOTES PAYABLE TO BANKS (Tables) | 12 Months Ended |
Nov. 30, 2021 | |
Payables and Accruals [Abstract] | |
Debt Disclosure [Text Block] | |
Debt | Debt November 30, 2021 Notes payable $ 3,548,000 Less unamortized debt issuance costs 179,000 Net Debt 3,369,000 Less—Current portion — Total long-term debt $ 3,369,000 |
PRODUCT WARRANTIES (Tables)
PRODUCT WARRANTIES (Tables) | 12 Months Ended |
Nov. 30, 2021 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranty Activity | The following table summarizes Product Warranty Activity |
Product Warranty Activity | 2021 2020 Beginning balance $ 60 $ 25 Additions for current year provision 56 185 Payments for current year (91 ) (150 ) Ending balance $ 25 $ 60 |
LEASE COMMITMENTS (Tables)
LEASE COMMITMENTS (Tables) | 12 Months Ended |
Nov. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Undiscounted Future Minimum Lease Payments | The Undiscounted Future Minimum Lease Payments |
Undiscounted Future Minimum Lease Payments | 2022 $ 55,000 2023 14,000 Total lease payments 69,000 Interest (2,000 ) Present value of lease liabilities $ 67,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Nov. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Tax Provision (Benefit) | The Income Tax Provision (Benefit) |
Income Tax Provision (Benefit) | 2021 2020 Current Provision: Federal $ 574,000 $ 219,000 State 59,000 41,000 633,000 260,000 Deferred federal tax expense 43,000 (42,000 ) Total $ 676,000 $ 218,000 |
Provision for Income Taxes | The Provision for Income Taxes |
Provision for Income Taxes | 2021 2020 Tax at statutory rate $ 784,000 $ 355,000 State income taxes, net of federal benefit 46,000 32,000 Research and Development Tax Credit (197,000 ) (186,000 ) Permanent differences and other 43,000 17,000 Income tax provision $ 676,000 $ 218,000 |
Components of Deferred Tax Assets and Liabilities | The Components of Deferred Tax Assets and Liabilities |
Income Tax Disclosure | 2021 2020 Deferred tax assets (liabilities) Inventory $ 169,000 $ 231,000 Deferred revenue, sales returns and warranty 5,000 12,000 Other accrued liabilities 52,000 50,000 Depreciation (242,000 ) (266,000 ) Net deferred assets (liabilities) $ (16,000 ) $ 27,000 |
Net Sales by Product Line (Deta
Net Sales by Product Line (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Nov. 30, 2020 |
Accounting Policies [Abstract] | ||
Microelectronics | $ 7,803 | $ 7,278 |
Optoelectronics | 7,124 | 4,984 |
Sensors and Displays | 12,365 | 10,012 |
27,292 | 22,274 | |
Timing of revenue recognition | ||
Recognized at a point in time | 23,555 | 18,654 |
Recognized over time | 3,737 | 3,620 |
Total Revenue | $ 27,292 | $ 22,274 |
Net Sales by Major Market (Deta
Net Sales by Major Market (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Domestic Direct | $ 16,640 | $ 13,258 |
Domestic Distribution | 9,450 | 7,967 |
International | 1,202 | 1,049 |
27,292 | 22,274 | |
Military [Member] | ||
Domestic Direct | 10,157 | 7,656 |
Domestic Distribution | 7,945 | 7,155 |
International | 222 | 427 |
18,324 | 15,238 | |
Space [Member] | ||
Domestic Direct | 2,364 | 1,809 |
Domestic Distribution | 861 | 143 |
International | 751 | 553 |
3,976 | 2,505 | |
Medical [Member] | ||
Domestic Direct | 3,621 | 2,749 |
Domestic Distribution | 28 | |
International | ||
3,621 | 2,777 | |
Commercial [Member] | ||
Domestic Direct | 498 | 1,044 |
Domestic Distribution | 644 | 641 |
International | 229 | 69 |
$ 1,371 | $ 1,754 |
Receivables, Net, Contract Asse
Receivables, Net, Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Nov. 30, 2020 | Dec. 01, 2019 |
Accounting Policies [Abstract] | |||
Receivables, net | $ 4,974 | $ 2,639 | $ 3,382 |
Contract assets | 603 | 512 | 519 |
Deferred Revenue | $ 1,258 | $ 111 | $ 390 |
Schedule of Property Plant and
Schedule of Property Plant and Equipment Useful Lives (Details) | 12 Months Ended |
Nov. 30, 2021 | |
Minimum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 15 years |
Minimum [Member] | Facility Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 8 years |
Minimum [Member] | Machinery Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 5 years |
Minimum [Member] | Furniture Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 5 years |
Maximum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 40 years |
Maximum [Member] | Facility Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 15 years |
Maximum [Member] | Machinery Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 10 years |
Maximum [Member] | Furniture Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Furniture and fixtures | 8 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Aug. 28, 2021 | Nov. 30, 2021 | Nov. 30, 2020 | |
Accounting Policies [Abstract] | |||
Deferred Revenue, Additions | $ 88,000 | ||
Dilutive Potential Coommon Stock Instruments | 0 | 0 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details Narrative) - USD ($) | Nov. 30, 2021 | Nov. 30, 2020 |
Fair Value Disclosures [Abstract] | ||
Fair Value Financial Assets Liabilities Recurring Basis | $ 0 | $ 0 |
Fair Value Non Financial Assets Non Recurring Basis | $ 0 | $ 0 |
Debt Disclosure (Details)
Debt Disclosure (Details) - USD ($) | Nov. 30, 2021 | Nov. 30, 2020 |
Payables and Accruals [Abstract] | ||
Notes payable | $ 3,548,000 | |
Less unamortized debt issuance costs | 179,000 | |
Net Debt | 3,369,000 | |
Less—Current portion | 0 | |
Total long-term debt | $ 3,369,000 | $ 0 |
NOTES PAYABLE TO BANKS (Details
NOTES PAYABLE TO BANKS (Details Narrative) - USD ($) | Nov. 30, 2021 | Mar. 26, 2021 |
Maximum Interest Rate | 3.40% | |
Construction Loan Interest Rate | 3.40% | |
Notes Payable | $ 3,548,000 | |
Revolving Loan [Member] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,000,000 | |
Maximum Interest Rate | 3.25% | |
Construction Loan Agreement [Member] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 16,160,000 |
Product Warranty Activity (Deta
Product Warranty Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Guarantees and Product Warranties [Abstract] | ||
Beginning balance | $ 60 | $ 25 |
Additions for current year provision | 56 | 185 |
Payments for current year | (91) | (150) |
Ending balance | $ 25 | $ 60 |
PRODUCT WARRANTIES (Details Nar
PRODUCT WARRANTIES (Details Narrative) - USD ($) | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Guarantees and Product Warranties [Abstract] | ||
Product Warranty Expense | $ 56,000 | $ 185,000 |
Undiscounted Future Minimum Lea
Undiscounted Future Minimum Lease Payments (Details) $ in Thousands | Nov. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2022 | $ 55,000 |
2023 | 14,000 |
Total lease payments | 69,000 |
Interest | (2,000) |
Present value of lease liabilities | $ 67,000 |
LEASE COMMITMENTS (Details Narr
LEASE COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Nov. 30, 2021 | Feb. 27, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Lease, Right-of-Use Asset | $ 165,000 | |
Operating Lease, Expense | $ 50,000 | |
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 3.25% |
EMPLOYEE BENEFITS (Details Narr
EMPLOYEE BENEFITS (Details Narrative) - USD ($) | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Retirement Benefits [Abstract] | ||
Percentage Of Employee Contributions To The Plan Are Matched By The Company At The Amounts Of The Participants Salary | 6.00% | 6.00% |
Accrued Employee Benefits, Current | $ 421,000 | $ 360,000 |
Employees Become Vested In Company Contributions After Two Years | 20.00% | 20.00% |
Income Tax Provision (Benefit)
Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Current Provision: | ||
Federal | $ 574,000 | $ 219,000 |
State | 59,000 | 41,000 |
633,000 | 260,000 | |
Deferred federal tax expense | 43,000 | (42,000) |
Total | $ 676,000 | $ 218,000 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||
Tax at statutory rate | $ 784,000 | $ 355,000 |
State income taxes, net of federal benefit | 46,000 | 32,000 |
Research and Development Tax Credit | (197,000) | (186,000) |
Permanent differences and other | 43,000 | 17,000 |
Income tax provision | $ 676,000 | $ 218,000 |
Income Tax Disclosure (Details)
Income Tax Disclosure (Details) - USD ($) | Nov. 30, 2021 | Nov. 30, 2020 |
Deferred tax assets (liabilities) | ||
Inventory | $ 169,000,000 | $ 231,000,000 |
Deferred revenue, sales returns and warranty | 5,000,000 | 12,000,000 |
Other accrued liabilities | 52,000,000 | 50,000,000 |
Depreciation | (242,000,000) | (266,000,000) |
Net deferred assets (liabilities) | $ (16,000) | $ 27,000 |
SIGNIFICANT CUSTOMER INFORMAT_2
SIGNIFICANT CUSTOMER INFORMATION (Details Narrative) | Nov. 30, 2021 | Nov. 30, 2020 |
Accounting Policies [Abstract] | ||
Sale To Government | 67.00% | 66.00% |
Significant Customers Sales Percentage | 20.00% | 20.00% |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) - $ / shares | 12 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2019 | |
Equity [Abstract] | |||
Dividends Payable, Date Declared | Dec. 7, 2021 | Dec. 8, 2020 | Dec. 10, 2019 |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.10 | $ 0.10 | $ 0.10 |
Dividends Payable, Date of Record | Jan. 11, 2022 | Jan. 6, 2021 | Jan. 8, 2020 |
Dividends Payable, Date to be Paid | Feb. 10, 2022 | Feb. 12, 2021 | Feb. 14, 2020 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - $ / shares | 12 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Nov. 30, 2019 | |
Accounting Policies [Abstract] | |||
Dividends Payable, Date Declared | Dec. 7, 2021 | Dec. 8, 2020 | Dec. 10, 2019 |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.10 | $ 0.10 | $ 0.10 |
Dividends Payable, Date of Record | Jan. 11, 2022 | Jan. 6, 2021 | Jan. 8, 2020 |
Dividends Payable, Date to be Paid | Feb. 10, 2022 | Feb. 12, 2021 | Feb. 14, 2020 |