MPAD Micropac Industries Inc (PK)

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended August 26, 2023

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 0-5109

 

MICROPAC INDUSTRIES, INC.

 

Delaware		75-1225149
(State of Incorporation)		(IRS Employer Identification No.)
905 E. Walnut, Garland, Texas		75040
(Address of Principal Executive Office)		(Zip Code)

 

Registrant’s Telephone Number, including Area Code: (972) 272-3571

 

Securities Registered Pursuant to Section 12(g) of the Act: common stock, par value $0.10.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o

 

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

 

Large accelerated filer	o	Emerging growth company	o
Accelerated filer	o	Smaller reporting company	x
Non-accelerated filer	o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

On October 10, 2023, there were 2,578,315 shares of Common Stock, $0.10 par value, outstanding.

 

 

MICROPAC INDUSTRIES, INC.

 

 

 

FORM 10-Q

 

 

August 26, 2023

 

INDEX

 

PART I - FINANCIAL INFORMATION
	ITEM 1 - FINANCIAL STATEMENTS			3
		Condensed Balance Sheets as of August 26, 2023 (unaudited) and November 30, 2022		3
		Condensed Statements of Operations for the three and nine months ended August 26, 2023 and August 27, 2022 (unaudited)		4
		Condensed Statements of Cash Flows for the nine months ended August 26, 2023 and August 27, 2022 (unaudited)		5
		Statements of Shareholders’ Equity for the three and nine months ended August 26, 2023 and August 27, 2022 (unaudited)		6
		Notes to Condensed Financial Statements (unaudited)		7
	ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			14
	ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			17
	ITEM 4 - CONTROLS AND PROCEDURES			17
PART II - OTHER INFORMATION
	ITEM 1 - LEGAL PROCEEDINGS			17
	ITEM 1A - RISK FACTORS			17
	ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			17
	ITEM 3 - DEFAULTS UPON SENIOR SECURITIES			17
	ITEM 4 - MINE SAFETY DISCLOSURE			17
	ITEM 5 - OTHER INFORMATION			17
	ITEM 6 - EXHIBITS			18
SIGNATURES				18

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

MICROPAC INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(Dollars in thousands)

CURRENT ASSETS		August 26, 2023				November 30, 2022
		(Unaudited)
Cash and cash equivalents		$	11,449			$	15,375
Receivables, net of allowance for doubtful accounts of $0 at August 26, 2023 and November 30 2022			3,288				3,644
Other receivables			1,010				920
Contract assets			623				408
Inventories:
Raw materials and supplies			7,198				6,715
Work in process			4,921				3,573
Total inventories			12,119				10,288
Prepaid expenses and other assets			408				564
Total current assets			28,897				31,199
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land			1,518				1,518
Buildings			21,013				498
Facility improvements			1,126				1,126
Furniture and fixtures			2,065				1,036
Construction in process			153				19,415
Machinery and equipment			10,173				9,952
Total property, plant, and equipment			36,048				33,545
Less accumulated depreciation			(11,707	)			(11,082	)
Net property, plant, and equipment			24,341				22,463
Operating lease right to use asset			-				14
Deferred income taxes, net			102				86
Total assets		$	53,340			$	53,762
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	1,225			$	1,173
Accrued compensation			926				1,086
Deferred revenue			560				1,192
Property taxes payable			521				560
Income tax payable			12				149
Short term debt			429				224
Other accrued liabilities			24				47
Total current liabilities			3,697				4,431
Long Term Debt, net of debt issuance costs			15,417				14,535
Total liabilities			19,114				18,966
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Common stock, $.10 par value, authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding at August 26, 2023 November 30, 2022			308				308
Additional paid-in-capital			944				885
Treasury stock, 500,000 shares, at cost			(1,250	)			(1,250	)
Retained earnings			34,224				34,853
Total shareholders’ equity			34,226				34,796
Total liabilities and shareholders’ equity		$	53,340			$	53,762

 

See accompanying notes to financial statements.

 

 

MICROPAC INDUSTRIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Dollars in thousands except share data)

(Unaudited) 

		Three months ended								Nine Months Ended
		August 26, 2023				August 27, 2022				August 26, 2023				August 27, 2022
NET SALES		$	6,458			$	6,940			$	20,091			$	20,194
COST AND EXPENSES:
Cost of goods sold			(4,576	)			(3,667	)			(13,098	)			(11,188	)
Research and development			(454	)			(568	)			(1,731	)			(1,534	)
Selling, general & administrative expenses			(2,017	)			(2,231	)			(5,833	)			(5,849	)
Total cost and expenses			(7,047	)			(6466	)			(20,662	)			(18,571	)
OPERATING INCOME (LOSS)			(589	)			474				(571	)			1,623
Interest and other income, net			44				966				218				967
INCOME (LOSS) BEFORE TAXES			(545	)			1,440				(353	)			2,590
(Provision) benefit for taxes			15				(335	)			(18	)			(530	)
NET INCOME (LOSS)		$	(530	)		$	1,105			$	(371	)		$	2,060
NET INCOME (LOSS) PER SHARE, BASIC AND DILUTED		$	(0.21	)		$	0.43			$	(0.14	)		$	0.80
DIVIDENDS PER SHARE		$	-			$	-			$	0.10			$	0.10
WEIGHTED AVERAGE OF SHARES, basic and diluted			2,578,315				2,578,315				2,578,315				2,578,315

 

See accompanying notes to financial statements.

 

 

MICROPAC INDUSTRIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited) 

		Nine months ended
CASH FLOWS FROM OPERATING ACTIVITIES:		August  26, 2023				August 27, 2022
Net income (loss)		$	(371	)		$	2,060
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation			650				297
Stock-based compensation			59				-
Amortization of debt issuance cost			38				-
Deferred tax expense (benefit)			(16	)			4
Amortization of right of use assets			14				40
Changes in certain current assets and liabilities:
Decrease in accounts receivable			265				443
Increase in contract assets			(215	)			(309	)
Increase in inventories			(1,831	)			(884	)
Increase (decrease) in prepaid expenses			157				(387	)
Decrease in deferred revenue			(632	)			(103	)
Increase in accounts payable			29				328
Decrease in accrued compensation			(159	)			(189	)
(Decrease) increase in income taxes payable			(138	)			224
Decrease in lease liabilities			(14	)			(40	)
(Decrease) increase in all other accrued liabilities			(47	)			65
Net cash (used in) provided by operating activities			(2,211	)			1,549
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment			(2,506	)			(11,931	)
Net cash used in investing activities			(2,506	)			(11,931	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend			(258	)			(258	)
Proceeds from long term debt			1,222				10,990
Payment on long term debt			(173	)			-
Net cash provided by financing activities			791				10,732
Net increase (decrease) in cash and cash equivalents			(3,926	)			350
Cash and cash equivalents at beginning of period			15,375				15,252
Cash and cash equivalents at end of period		$	11,449			$	15,602
Supplemental Cash Flow Disclosure:
Cash paid for income taxes		$	177			$	302
Cash paid for interest		$	405			$	373
Supplemental Non-Cash Flow Disclosure:
Changes in accrued property, plant, and equipment		$	22			$	402

 

See accompanying notes to financial statements.

 

 

MICROPAC INDUSTRIES, INC.

STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE QUARTERS ENDED AUGUST 26, 2023 AND AUGUST 27, 2022

(Dollars in thousands)

(Unaudited)

		Common				Additional				Treasury				Retained
		Stock				paid-in-capital				Stock				Earnings				Total
BALANCE, November 30, 2021		$	308			$	885			($	1,250	)		$	32,324			$	32,267
Dividend			-				-				-				(258	)			(258	)
Net income			-				-				-				464				464
BALANCE, February 26, 2022		$	308			$	885			($	1,250	)		$	32,530			$	32,473
Net income			-				-				-				491				491
BALANCE, May 28, 2022		$	308			$	885			($	1,250	)		$	33,021			$	32,964
Net income			-				-				-				1,105				1,105
BALANCE, August 27, 2022		$	308			$	885			($	1,250	)		$	34,126			$	34,069

 

 

		Common				Additional				Treasury				Retained
		Stock				paid-in-capital				Stock				Earnings				Total
BALANCE, November 30, 2022		$	308			$	885			($	1,250	)		$	34,853			$	34,796
Dividend			-				-				-				(258	)			(258	)
Net loss			-				-				-				(56	)			(56	)
BALANCE, February 26, 2023		$	308			$	885			($	1,250	)		$	34,539			$	34,482
Stock-based compensation							39				-				-				39
Net income			-				-				-				215				215
BALANCE, May 27, 2023		$	308			$	924			($	1,250	)		$	34,754			$	34,736
Stock-based compensation							20				-				-				20
Net loss			-				-				-				(530	)			(530	)
BALANCE, August 26, 2023		$	308			$	944			($	1,250	)		$	34,224			$	34,226

 

See accompanying notes to financial statements.

 

 

MICROPAC INDUSTRIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1 BASIS OF PRESENTATION

 

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 C) products.

 

The Company’s facilities are certified and qualified by the Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level) and MIL-PRF-19500 JANS (space level) and are certified to ISO 9001:2015 and AS 9100D. Micropac is a National Aeronautics and Space Administration (NASA) core supplier and is registered to AS9100-Aerospace Industry standard for supplier certification. The Company has Underwriters Laboratories (UL) approval on our industrial power controllers.

 

The Company’s core technologies are microelectronic and optoelectronic designs to include the packaging and interconnecting of multi-chip microelectronics modules. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors, and electronic integration used in the Company’s optoelectronic components and assemblies.

 

The Company was started in 1963 as a sole proprietorship. On March 3, 1969, the Company was incorporated under the name of “Micropac Industries, Inc.” in the state of Delaware. The stock was publicly held by 434 shareholders on August 26, 2023.

 

In the opinion of management, the unaudited financial statements include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position as of August 26, 2023, the results of operations for the three and nine months ended August 26, 2023 and August 27, 2022 and the cash flows for the three and nine months ended August 26, 2023 and August 27, 2022, including the statement of shareholders equity. Unaudited financial statements are prepared on a basis substantially consistent with those audited for the year ended November 30, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission. The Company’s fiscal year ends on the last day of November. The quarterly results end on the last Saturday of the quarter.

 

It is suggested that these financial statements be read in conjunction with the November 30, 2022 Form 10-K filed with the SEC, including the audited financial statements and the accompanying notes thereto. 

 

Note 2 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 is 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 C) products.

 

7

 

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.

Schedule of net sales by product line
		8/26/2023				8/27/2022
Microcircuits		$	4,985			$	5,585
Optoeletronics			5,432				6,056
Sensors and Displays			9,674				8,553
		$	20,091			$	20,194
Timing of revenue recognition:
Transferred at a point in time		$	16,521			$	17,393
Transferred over time			3,570				2,801
Total Revenue		$	20,091			$	20,194

 

The following table summarizes the Company’s net sales by major market.

 

2023 Third Quarter Sales by Major Market

 

Schedule of net sales by major market
		Military				Space				Medical				Commercial				Total
Domestic Direct		$	3,312			$	254			$	489			$	294			$	4,349
Domestic Distribution			1,444				81				7				313				1,845
International			139				20				-				105				264
		$	4,895			$	355			$	496			$	712			$	6,458

 

8

 

2022 Third Quarter Sales by Major Market

 

		Military				Space				Medical				Commercial				Total
Domestic Direct		$	2,684			$	317			$	754			$	401			$	4,156
Domestic Distribution			2,101				278				-				156				2,535
International			20				104				-				125				249
		$	4,805			$	699			$	754			$	682			$	6,940

 

2023 Nine Months Sales by Major Market

 

		Military				Space				Medical				Commercial				Total
Domestic Direct		$	7,618			$	952			$	2,275			$	2,220			$	13,065
Domestic Distribution			4,318				910				-				737				5,965
International			238				185				-				638				1,061
		$	12,174			$	2,047			$	2,275			$	3,595			$	20,091

 

2022 Nine Months Sales by Major Market

 

		Military				Space				Medical				Commercial				Total
Domestic Direct		$	8,322			$	1,116			$	2,138			$	935			$	12,511
Domestic Distribution			5,485				996				-				629				7,110
International			91				254				-				228				573
		$	13,898			$	2,366			$	2,138			$	1,792			$	20,194

 

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 (deferred revenue) on the Condensed Balance Sheets. 

 

Receivables, net, contract assets and contract liabilities were as follows:

 

Receivables, net, Contract Assets and Contract Liabilities

(Dollars in thousands)

Schedule of receivables, net, contract assets and contract liabilities
		August 26, 2023				November 30, 2022				December 1, 2021
Receivables, net		$	3,288			$	3,644			$	4,974
Contract assets		$	623			$	408			$	603
Deferred revenue		$	560			$	1,192			$	1,258

 

There was $642,260 of revenue recognized in fiscal year 2023 that was included in the deferred revenue liability balance at the beginning of the fiscal year.

 

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.

 

Leases

 

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 for operating lease liabilities and right-of-use assets in accordance with ASC 842. The Company had an operating lease expense of $14,000 for the first nine months of 2023 and $40,000 for the first nine months of 2022. The Company used an estimated incremental borrowing rate of 3.25% representative of the rate of interest that the company would have to pay to borrow on the Company’s line of credit. The lease expired in March 2023 and was not renewed.

 

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.

 

9

 

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 August 26, 2023 or November 30, 2022.

 

Property, Plant, and Equipment

 

Property, plant, and equipment are carried at cost, and depreciation is provided using the straight-line method at rates based upon the following estimated useful lives (in years) of the assets: 

Schedule of property,plant and equipment useful lives
Buildings	15-39
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. When events or circumstances indicate that an asset may be impaired, an assessment is performed. The estimated future undiscounted cash flows associated with the asset are compared to the asset’s net book value to determine if a write down to market value less cost to sell is required.

 

Construction in progress relates to multiple capital projects ongoing during the year ended November 30, 2022 and the nine months ended August 26, 2023, 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. In March 2023, the new manufacturing facility was completed and placed in service.

 

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 respective periods.

 

The following is a reconciliation of the number of shares used in the calculation of the basic and diluted earnings per share for the three and nine months ended August 26, 2023 and August 27, 2022:

Schedule of the basic and diluted earnings per share
		Three months ended								Nine Months Ended
		August 26, 2023				August 27, 2022				August 26, 2023				August 27, 2022
Weighted average of shares, basic			2,578,315				2,578,315				2,578,315				2,578,315
Restricted stock units			-				-				-				-
Weighted average of shares, diluted			2,578,315				2,578,315				2,578,315				2,578,315

 

Due to the current loss position, the Company has not included the 35,650 restricted stock units due to being anti-dilutive in nature.

 

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.

 

10

 

Note 3 NEW ACCOUNTING PRONOUNCEMENTS

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires the use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 1, 2023 for Smaller Reporting Companies, including interim periods within those fiscal years and requires a modified-retrospective approach to adoption. The Company believes that adopting ASU 2016-13 will have no material impact on the financial statements and related disclosures.

 

Note 4 FAIR VALUE MEASUREMENT

 

The Company had no financial assets or liabilities measured at fair value on a recurring basis as of August 26, 2023 or November 30, 2022.  The fair value of financial instruments such as cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying amount based on the short maturity of these instruments.

 

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 nonfinancial assets measured at fair value on a nonrecurring basis August 26, 2023 and November 30, 2022.

 

Note 5 COMMITMENTS

 

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 with an interest rate of (3.40%) per annum.

 

On March 26, 2021, the Company renewed the Revolving Loan Agreement with Frost through the “Sixth Amendment to Loan Agreement.”. The Revolving Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000 with a rate equal to prime rate with a floor of 3.25%. The Revolving Loan Agreement was originally entered into on January 23, 2013, between the Company as borrower and Frost as lender.  

 

Construction Loans.  Subject to the terms of the Loan Agreement, Frost will lend to the Company an aggregate amount not to exceed $16,160,000.

 

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%) per annum includes an Interest-Only Period. Interest only shall be due and payable monthly as it accrues on the twenty-sixth (26th) day of each and every calendar month, beginning April 26, 2021, and continuing regularly and monthly thereafter until March 26, 2023; 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 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.  Subject to the terms of the, Loan Agreement, Frost will lend to the Company, on a revolving basis, amounts not to exceed a total principal balance of $6,000,000, minus amounts available and amounts previously disbursed under outstanding Frost letters of credit. Subject to certain terms and conditions, the Company may borrow, repay and reborrow under the Loan Agreement. There are no borrowings outstanding as of August 26, 2023. The loan has a maturity date of April 23, 2025.

 

11

 

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 borrowed $16,160,000 against the construction loan as of August 26, 2023. 

Schedule of long-term debt
Debt August 26, 2023
Notes payable		$	15,987,000
Less unamortized debt issuance costs			141,000
Net Debt			15,846,000
Less—Current portion			429,000
Total long-term debt		$	15,417,000

 

Estimated maturities of our long-term debt over the next 5 years are as follows:

Estimated maturities of long-term debt
		2023				2024				2025				2026				2027				Thereafter				Total
Frost Bank		$	106			$	433			$	447			$	463			$	479			$	14,059			$	15,987

 

Note 6 EARNINGS PER COMMON SHARE

 

Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the respective periods. Diluted earnings per share gives effect to all dilutive potential common shares. For the three and nine months ended August 26, 2023, the Company has dilutive potential common stock instruments with the restricted stock units.

 

Note 7 SHAREHOLDERS’ EQUITY

 

On December 7, 2022, the Board of Directors of Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 11, 2023. The dividend was paid to shareholders on February 10, 2023.

 

On December 7, 2021, the Board of Directors of Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 11, 2022. The dividend was paid to shareholders on February 10, 2022.

 

NOTE 8 STOCK-BASED COMPENSATION

 

We have issued restricted stock units ("RSUs") stock-based compensation awards as part of Micropac Industries Inc.’s 2023 Equity Incentive Plan. Our 2023 annual grant of RSUs occurred in the second quarter. The weighted -average grant-date fair value of each unit granted in 2023 was $13.13. All the RSUs granted in 2023 vest over a three-year period.

 

The following is a summary of our RSUs activity for nine months ended August 26, 2023 and August 27, 2022:

Schedule of restricted stock units activity
		2023								2022
(shares in thousands)		Number of Shares				Weighted- Average Grant Date Fair Value				Number of Shares				Weighted- Average Grant Date Fair Value
Unvested at beginning of period			-				-				-				-
Granted			35.7			$	13.13				-				-
Vested			-				-				-				-
Cancelled			-				-				-				-
Unvested at end of the period			35.7			$	13.13				-				-

 

12

 

The following table sets forth the stock-based compensation expense recorded in selling, general and administrative ("SG&A") expense (in thousands): 

Schedule of stock-based compensation
		August 26, 2023 and August 27, 2022
		Three Months Ended								Nine Months Ended
		2023				2022				2023				2022
Stock-based compensation expense		$	20.00				-			$	59.00				-

 

 

The following table sets forth the stock-based unvested compensation expense by year to be recognized (in thousands):

 

Schedule of stock-based unvested compensation expense		2023				2024				2025				Total
Stock-based unvested compensation expense			20				78				78				176

 

 

MICROPAC INDUSTRIES, INC.

(Unaudited)

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Business

 

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 and industrial systems, including aircraft instrumentation and navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200^o C) products.

 

The Company’s facilities are certified and qualified by the Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level) and MIL-PRF-19500 JANS (space level) and are certified to ISO 9001:2008 and AS 9100D. Micropac is a National Aeronautics and Space Administration (NASA) core supplier, and is registered to AS9100-Aerospace Industry standard for supplier certification. The Company has Underwriters Laboratories (UL) approval on our industrial power controllers.

 

The Company’s core technology are microelectronic and optoelectronic designs to include the packaging and interconnecting of multi-chip microelectronics modules. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors, and electronic integration used in the Company’s optoelectronic components and assemblies.

 

Critical Accounting Policies

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions and factors that are believed to be reasonable under the circumstances. Note 2 to the Financial Statements in the Quarterly Report Form 10-Q for the quarter ended August 26, 2023, describes the significant accounting policies and methods used in the preparation of the Financial Statements. Actual results could differ from these estimates.

 

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. The application of GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Specifically, the determination of whether revenues related to our revenue contracts should be recognized over time or at a point in time, as these determinations impact the timing and amount of our reported revenues and net income. Other significant judgments include the estimation of the point in the manufacturing process at which we are entitled to receive payment, as well as the progress of the job order to completion in order to determine the amount of consideration earned for contractual revenue recognized over time.

 

The allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than our historical experience, our estimates of the recoverability of amounts due us could be adversely affected.

 

Inventory purchases and commitments are based upon future demand. If there is a sudden and significant decrease in demand for our products or there is a higher risk of inventory obsolescence because of changing customer requirements, we may be required to increase our inventory allowances and our gross margin could be adversely affected.

 

The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. If we were to determine we would not be able to realize all or part of the deferred tax asset in the future, an adjustment to the deferred tax asset would be necessary which would reduce our net income for that period.

 

Depreciable and useful lives estimated for property and equipment are based on initial expectations of the period of time these assets will provide benefit. Changes in circumstances related to a change in our business or other factors could result in these assets becoming impaired, which could adversely affect the value of these assets

 

 

Results of Operations

 

		Three months ended								Nine months ended
			8/26/2023				8/27/2022				8/26/2023				8/27/2022
NET SALES			100.0	%			100.0	%			100.0	%			100.0	%
COST AND EXPENSES:
Cost of Goods Sold			70.8	%			52.9	%			65.2	%			55.4	%
Research and development			7.0	%			8.2	%			8.6	%			7.6	%
Selling, general & administrative expenses			31.2	%			32.1	%			29.0	%			29.0	%
Total cost and expenses			109.0	%			93.2	%			102.8	%			92.0	%
OPERATING INCOME (LOSS)			(9.0	%)			6.8	%			(2.8	%)			8.0	%
Interest and other income, net			0.7	%			13.9	%			1.0	%			4.8	%
INCOME (LOSS) BEFORE TAXES			(8.3	%)			20.7	%			(1.8	%)			12.8	%
(Provision) benefit for taxes			0.2	%			(4.7	%)			(0	%)			(2.6	%)
NET INCOME (LOSS)			(8.1	%)			16.0	%			(1.8	%)			10.2	%

 

Sales for the three and nine month periods ended August 26, 2023 totaled $6,458,000 and $20,091,000, respectively. Sales for the third quarter decreased $482,000 from the same period of 2022 while sales for the first nine months of 2023 decreased $103,000 from the first nine months of 2022. The majority of the decrease for the three months ended August 26, 2023 is related to timing of shipments of customer orders of standard solid state relays products. Sales were 18% in the commercial market, 11% in the medical market, 61% in the military market, and 10% in the space market for the nine months ended August 26, 2023 compared to 9% in the commercial market, 10% in the medical market, 69% in the military market, and 12% in the space market for the nine months ended August 27, 2022.

 

Three customers accounted for 13%, 11%, and 10% of the Company’s sales for the three months ended August 26, 2023, and two customers accounted for 12% and 10% for the nine months ended August 26, 2023, while one customer accounted for 18% of the Company’s sales for the three months ended August 27, 2022, and two customers accounted for 17% and 10% for the nine months ended August 27, 2022.

 

Cost of goods sold for the third quarters of 2023 and 2022 totaled 70.8% and 52.9% of net sales, respectively, while cost of goods sold for the nine months ended August 26, 2023 and August 27, 2022 totaled 65.2% and 55.4% of net sales, respectively. In actual dollars, cost of goods sold increased $909,000 in the third quarter of 2023 compared to the same period of 2022. Year to date cost of goods sold increased $1,910,000 for the first nine months of 2023 as compared to the same period in 2022. Most of the increase in cost of goods sold was an increase in material cost on a custom product for a customer during the engineering and first production builds resulting in lower gross margins. The contract with the customer on the custom product has been completed. In addition, depreciation expense increased associated with the new facility being placed into service.

 

Research and development expense decreased $114,000 for the third quarter of 2023 versus 2022 and increased $197,000 for the first nine months of 2023 compared to the same period of 2022. The research and development expenditures were associated with continued development of several power management products and fiber optic transceivers. The Company will continue to invest in research and development of these products and other new opportunities.

 

Selling, general and administrative expense for the third quarter and first nine months of 2023 totaled 31.2% and 29.0% respectively of net sales compared to 32.1% and 29.0% for the same periods in 2022. In actual dollars, selling, general and administrative expense decreased $214,000 for the third quarter and decreased $16,000 for the first nine months of 2023 compared to the same periods in 2022. The majority of the decrease for the three months ended August 26, 2023 resulted from an decrease in consultant fees.

 

 

Provisions for taxes decreased $350,000 for the third quarter of 2023 and decreased $512,000 for the first nine months of 2023 compared to the same period in 2022.

 

Net income decreased $1,635,000 for the third quarter of 2023 versus 2022 and decreased $2,431,000 for the first nine months of 2023 compared to the same period of 2022.

 

Liquidity and Capital Resources

 

The Company used a combination of cash and a commercial real estate construction loan for the construction of a the new 76,000 square foot manufacturing center on the 9.2 acres of land in Garland, Texas the Company purchased. On March 26, 2021, the Company (acting as borrower) entered into a Construction Loan Agreement with Frost Bank (“Frost”), (acting as lender). The Construction Loan Agreement provides for a construction loan as discussed in Note 5 to the condensed financial statements.

 

As of August 26, 2023, the Company has $15,987,000 in notes payable on the construction loan. In addition, the Company has unamortized loan fees on the construction loan in the amount of $141,000.

 

In addition, the Company continues on-going investigations for the use of cumulative cash for business expansion and improvements, such as operational improvements and new product expansion.

 

Cash and cash equivalents totaled $11,449,000 as of August 26, 2023 compared to $15,375,000 on November 30, 2022, an decrease of $3,926,000. The decrease in cash and cash equivalents is attributable to $2,249,000 cash used in operations, the payment of a cash dividend of $258,000, $223,000 in cash for additional manufacturing equipment and $2,283,000 for construction of the new facility offset by $1,087,000 net proceeds from the financing

 

In addition to cash on hand, the Company also has the ability to borrow under a loan agreement as discussed in Note 5 to the condensed financial statements.

 

The Company has no significant off-balance sheet arrangements.

 

Outlook

 

New orders for year-to-date 2023 totaled $29,349,000 compared to $19,792,000 for 2022. The increase resulted from timing of new orders for $8,432,000 in space level solid state relays.

 

Backlog totaled $42,718,000 on August 26, 2023 compared to $36,421,000 as of August 27, 2022 and $32,686,000 on November 30, 2022 and represents a good mix of the company’s products and technologies.

 

2023 Current Backlog by Major Market
		Military				Space				Medical				Commercial				Total
Domestic Direct		$	19,962			$	841			$	2,259			$	1,364			$	24,426
Domestic Distribution			13,886				1,829				-				1,056				16,771
International			372				706				-				443				1,521
		$	34,220			$	3,376			$	2,259			$	2,863			$	42,718

 

2023 Current Backlog by Product Line
Microelectronics		$	22,195
Optoelectronics			5,745
Sensors and Displays			14,778
		$	42,718

 

The Company cannot assure that the results of operations for the interim period presented are indicative of total results for the entire year due to fluctuations in customer delivery schedules, or other factors over which the Company has no control.

 

Impact of COVID-19 on our Business

 

In March 2020 the World Health Organization declared the spread of the COVID-19 virus a pandemic. The Company continues to monitor our supply chain and orders from customers for COVID-19 pandemic related changes. We are continuing to serve our customers while taking precautions to provide a safe work environment for our employees and customers. We have been staggering some shifts and otherwise adjusting work schedules to maximize our capacity while adhering to recommended precautions. We have established and implemented a work from home provision where possible.

 

 

To date, we have not experienced significant raw material shortages; however, supply-chain disruptions could potentially delay or prevent us from fulfilling customer orders.

 

Cautionary Statement

 

This Form 10-Q contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially. Investors are warned that forward-looking statements involve risks and unknown factors including, but not limited to: our expectations regarding the potential impacts on our operations of the COVID-19 pandemic; our expectations regarding the potential impacts on our supply chain and on our customers of the COVID-19 pandemic; overall changes in governmental spending for military and space programs; customer cancellation or rescheduling of orders, problems affecting delivery of vendor-supplied raw materials and components, unanticipated manufacturing problems and availability of direct labor resources.

 

The Company does not intend to update the forward-looking statements contained herein, except as may be required by law.

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable

 

ITEM 4.

CONTROLS AND PROCEDURES

 

(a)

Evaluation of disclosure controls and procedures.

 

The Chief Executive Officer and Chief Financial Officer of the Company evaluated the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of August 26, 2023 and, based on this evaluation, concluded that the Company’s disclosure controls and procedures are functioning in an effective manner to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

 

(b)

Changes in internal controls.

 

There has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting during the nine month period ended August 26, 2023.

 

 

PART II - OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

 

The Company is not involved in any material current or pending legal proceedings.

 

ITEM 1A

RISK FACTORS

 

Information about risk factors for the three and nine months ended August 26, 2023 does not differ materially from that set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended November 30, 2022

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4.

MINE SAFETY DISCLOSURE

 

Not Applicable

 

ITEM 5.

OTHER INFORMATION

 

None

 

 

ITEM 6.

EXHIBITS

 

(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, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
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.

 

 

SIGNATURES 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

 

 

 

MICROPAC INDUSTRIES, INC.

 

 

 

October 10, 2023	/s/ Mark King
Date	Mark King
	Chief Executive Officer
October 10, 2023	/s/ Patrick Cefalu
Date	Patrick Cefalu
	Chief Financial Officer

 

 

18

 

 

 

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Mark King, certify that:

 

1.

I have reviewed this quarterly report of Micropac Industries, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Dated: October 10, 2023	/s/ Mark King
	Mark King
	Chief Executive Officer
	(Principal Executive Officer)

 

 

 

 

 

 

 

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Patrick S. Cefalu, certify that:

 

1.

I have reviewed this quarterly report of Micropac Industries, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Dated: October 10, 2023	/s/ Patrick Cefalu
	Patrick S. Cefalu
	Executive Vice President and Chief Financial Officer
	(Principal Accounting Officer)

 

 

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Micropac Industries, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

1.

The Quarterly Report on Form 10-Q for the period ended August 26, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: October 10, 2023	/s/ Mark King
	Mark King
	Chief Executive Officer
	(Principal Executive Officer)

 

 

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Micropac Industries, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

1.

The Quarterly Report on Form 10-Q for the period ended August 26, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated October 10, 2023	/s/ Patrick Cefalu
	Patrick S. Cefalu
	Executive Vice President and Chief Financial Officer
	(Principal Accounting Officer)

 

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

 

v3.23.3

Cover - shares	9 Months Ended
	Aug. 26, 2023	Oct. 10, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Aug. 26, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--11-30
Entity File Number	0-5109
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
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
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 Common Stock, Shares Outstanding		2,578,315

v3.23.3

CONDENSED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Aug. 26, 2023	Nov. 30, 2022
CURRENT ASSETS
Cash and cash equivalents	$ 11,449	$ 15,375
Receivables, net of allowance for doubtful accounts of $0 at August 26, 2023 and November 30 2022	3,288	3,644
Other receivables	1,010	920
Contract assets	623	408
Inventories:
Raw materials and supplies	7,198	6,715
Work in process	4,921	3,573
Total inventories	12,119	10,288
Prepaid expenses and other assets	408	564
Total current assets	28,897	31,199
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land	1,518	1,518
Buildings	21,013	498
Facility improvements	1,126	1,126
Furniture and fixtures	2,065	1,036
Construction in process	153	19,415
Machinery and equipment	10,173	9,952
Total property, plant, and equipment	36,048	33,545
Less accumulated depreciation	(11,707)	(11,082)
Net property, plant, and equipment	24,341	22,463
Operating lease right to use asset		14
Deferred income taxes, net	102	86
Total assets	53,340	53,762
CURRENT LIABILITIES:
Accounts payable	1,225	1,173
Accrued compensation	926	1,086
Deferred revenue	560	1,192
Property taxes payable	521	560
Income tax payable	12	149
Short term debt	429	224
Other accrued liabilities	24	47
Total current liabilities	3,697	4,431
Long Term Debt, net of debt issuance costs	15,417	14,535
Total liabilities	19,114	18,966
SHAREHOLDERS’ EQUITY
Common stock, $.10 par value, authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding at August 26, 2023 November 30, 2022	308	308
Additional paid-in-capital	944	885
Treasury stock, 500,000 shares, at cost	(1,250)	(1,250)
Retained earnings	34,224	34,853
Total shareholders’ equity	34,226	34,796
Total liabilities and shareholders’ equity	$ 53,340	$ 53,762

v3.23.3

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Aug. 26, 2023	Nov. 30, 2022
Statement of Financial Position [Abstract]
Common stock, par 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

v3.23.3

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Income Statement [Abstract]
NET SALES	$ 6,458	$ 6,940	$ 20,091	$ 20,194
COST AND EXPENSES:
Cost of goods sold	(4,576)	(3,667)	(13,098)	(11,188)
Research and development	(454)	(568)	(1,731)	(1,534)
Selling, general & administrative expenses	(2,017)	(2,231)	(5,833)	(5,849)
Total cost and expenses	(7,047)	(6,466)	(20,662)	(18,571)
OPERATING INCOME (LOSS)	(589)	474	(571)	1,623
Interest and other income, net	44	966	218	967
INCOME (LOSS) BEFORE TAXES	(545)	1,440	(353)	2,590
(Provision) benefit for taxes	15	(335)	(18)	(530)
NET INCOME (LOSS)	$ (530)	$ 1,105	$ (371)	$ 2,060
NET INCOME PER SHARE, BASIC	$ (0.21)	$ 0.43	$ (0.14)	$ 0.80
NET INCOME PER SHARE, DILUTED	(0.21)	0.43	(0.14)	0.80
DIVIDENDS PER SHARE			$ 0.10	$ 0.10
WEIGHTED AVERAGE OF SHARES, basic	2,578,315	2,578,315	2,578,315	2,578,315
WEIGHTED AVERAGE OF SHARES, diluted	2,578,315	2,578,315	2,578,315	2,578,315

v3.23.3

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (371)	$ 2,060
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	650	297
Stock-based compensation	59
Amortization of debt issuance cost	38
Deferred tax expense (benefit)	(16)	4
Amortization of right of use assets	14	40
Changes in certain current assets and liabilities:
Decrease in accounts receivable	265	443
Increase in contract assets	(215)	(309)
Increase in inventories	(1,831)	(884)
Increase (decrease) in prepaid expenses	157	(387)
Decrease in deferred revenue	(632)	(103)
Increase in accounts payable	29	328
Decrease in accrued compensation	(159)	(189)
(Decrease) increase in income taxes payable	(138)	224
Decrease in lease liabilities	(14)	(40)
(Decrease) increase in all other accrued liabilities	(47)	65
Net cash (used in) provided by operating activities	(2,211)	1,549
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(2,506)	(11,931)
Net cash used in investing activities	(2,506)	(11,931)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend	(258)	(258)
Proceeds from long term debt	1,222	10,990
Payment on long term debt	(173)
Net cash provided by financing activities	791	10,732
Net increase (decrease) in cash and cash equivalents	(3,926)	350
Cash and cash equivalents at beginning of period	15,375	15,252
Cash and cash equivalents at end of period	11,449	15,602
Supplemental Cash Flow Disclosure:
Cash paid for income taxes	177	302
Cash paid for interest	405	373
Supplemental Non-Cash Flow Disclosure:
Changes in accrued property, plant, and equipment	$ 22	$ 402

v3.23.3

STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stocks [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Nov. 30, 2021	$ 308	$ 885	$ 1,250	$ 32,324	$ 32,267
Dividend				(258)	(258)
Net loss				464	464
Ending balance, value at Feb. 26, 2022	308	885	1,250	32,530	32,473
Net loss				491	491
Ending balance, value at May. 28, 2022	308	885	1,250	33,021	32,964
Net loss				1,105	1,105
Ending balance, value at Aug. 27, 2022	308	885	1,250	34,126	34,069
Beginning balance, value at Nov. 30, 2022	308	885	1,250	34,853	34,796
Dividend				(258)	(258)
Net loss				(56)	(56)
Ending balance, value at Feb. 26, 2023	308	885	1,250	34,539	34,482
Stock-based compensation		39			39
Net loss				215	215
Ending balance, value at May. 27, 2023	308	924	1,250	34,754	34,736
Stock-based compensation		20			20
Net loss				(530)	(530)
Ending balance, value at Aug. 26, 2023	$ 308	$ 944	$ 1,250	$ 34,224	$ 34,226

v3.23.3

BASIS OF PRESENTATION	9 Months Ended
	Aug. 26, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION	Note 1 BASIS OF PRESENTATION   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 (200o C) products.   The Company’s facilities are certified and qualified by the Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level) and MIL-PRF-19500 JANS (space level) and are certified to ISO 9001:2015 and AS 9100D. Micropac is a National Aeronautics and Space Administration (NASA) core supplier and is registered to AS9100-Aerospace Industry standard for supplier certification. The Company has Underwriters Laboratories (UL) approval on our industrial power controllers.   The Company’s core technologies are microelectronic and optoelectronic designs to include the packaging and interconnecting of multi-chip microelectronics modules. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors, and electronic integration used in the Company’s optoelectronic components and assemblies.   The Company was started in 1963 as a sole proprietorship. On March 3, 1969, the Company was incorporated under the name of “Micropac Industries, Inc.” in the state of Delaware. The stock was publicly held by 434 shareholders on August 26, 2023.   In the opinion of management, the unaudited financial statements include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position as of August 26, 2023, the results of operations for the three and nine months ended August 26, 2023 and August 27, 2022 and the cash flows for the three and nine months ended August 26, 2023 and August 27, 2022, including the statement of shareholders equity. Unaudited financial statements are prepared on a basis substantially consistent with those audited for the year ended November 30, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission. The Company’s fiscal year ends on the last day of November. The quarterly results end on the last Saturday of the quarter.   It is suggested that these financial statements be read in conjunction with the November 30, 2022 Form 10-K filed with the SEC, including the audited financial statements and the accompanying notes thereto.

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Aug. 26, 2023
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES	Note 2 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 is 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 (200o C) products.   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. Schedule of net sales by product line                     8/26/2023     8/27/2022   Microcircuits   $ 4,985     $ 5,585   Optoeletronics     5,432       6,056   Sensors and Displays     9,674       8,553       $ 20,091     $ 20,194                     Timing of revenue recognition:                 Transferred at a point in time   $ 16,521     $ 17,393   Transferred over time     3,570       2,801   Total Revenue   $ 20,091     $ 20,194     The following table summarizes the Company’s net sales by major market.   2023 Third Quarter Sales by Major Market   Schedule of net sales by major market                                             Military     Space     Medical     Commercial     Total   Domestic Direct   $ 3,312     $ 254     $ 489     $ 294     $ 4,349   Domestic Distribution     1,444       81       7       313       1,845   International     139       20       -       105       264       $ 4,895     $ 355     $ 496     $ 712     $ 6,458     2022 Third Quarter Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 2,684     $ 317     $ 754     $ 401     $ 4,156   Domestic Distribution     2,101       278       -       156       2,535   International     20       104       -       125       249       $ 4,805     $ 699     $ 754     $ 682     $ 6,940     2023 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 7,618     $ 952     $ 2,275     $ 2,220     $ 13,065   Domestic Distribution     4,318       910       -       737       5,965   International     238       185       -       638       1,061       $ 12,174     $ 2,047     $ 2,275     $ 3,595     $ 20,091     2022 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 8,322     $ 1,116     $ 2,138     $ 935     $ 12,511   Domestic Distribution     5,485       996       -       629       7,110   International     91       254       -       228       573       $ 13,898     $ 2,366     $ 2,138     $ 1,792     $ 20,194     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 (deferred revenue) on the Condensed Balance Sheets.    Receivables, net, contract assets and contract liabilities were as follows:   Receivables, net, Contract Assets and Contract Liabilities (Dollars in thousands) Schedule of receivables, net, contract assets and contract liabilities                             August 26, 2023     November 30, 2022     December 1, 2021   Receivables, net   $ 3,288     $ 3,644     $ 4,974   Contract assets   $ 623     $ 408     $ 603   Deferred revenue   $ 560     $ 1,192     $ 1,258     There was $642,260 of revenue recognized in fiscal year 2023 that was included in the deferred revenue liability balance at the beginning of the fiscal year.   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.   Leases   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 for operating lease liabilities and right-of-use assets in accordance with ASC 842. The Company had an operating lease expense of $14,000 for the first nine months of 2023 and $40,000 for the first nine months of 2022. The Company used an estimated incremental borrowing rate of 3.25% representative of the rate of interest that the company would have to pay to borrow on the Company’s line of credit. The lease expired in March 2023 and was not renewed.   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 August 26, 2023 or November 30, 2022.   Property, Plant, and Equipment   Property, plant, and equipment are carried at cost, and depreciation is provided using the straight-line method at rates based upon the following estimated useful lives (in years) of the assets:  Schedule of property,plant and equipment useful lives   Buildings 15-39 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. When events or circumstances indicate that an asset may be impaired, an assessment is performed. The estimated future undiscounted cash flows associated with the asset are compared to the asset’s net book value to determine if a write down to market value less cost to sell is required.   Construction in progress relates to multiple capital projects ongoing during the year ended November 30, 2022 and the nine months ended August 26, 2023, 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. In March 2023, the new manufacturing facility was completed and placed in service.   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 respective periods.   The following is a reconciliation of the number of shares used in the calculation of the basic and diluted earnings per share for the three and nine months ended August 26, 2023 and August 27, 2022: Schedule of the basic and diluted earnings per share                                     Three months ended     Nine Months Ended       August 26, 2023     August 27, 2022     August 26, 2023     August 27, 2022                             Weighted average of shares, basic     2,578,315       2,578,315       2,578,315       2,578,315   Restricted stock units     -       -       -       -   Weighted average of shares, diluted     2,578,315       2,578,315       2,578,315       2,578,315     Due to the current loss position, the Company has not included the 35,650 restricted stock units due to being anti-dilutive in nature.   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.

v3.23.3

NEW ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Aug. 26, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NEW ACCOUNTING PRONOUNCEMENTS	Note 3 NEW ACCOUNTING PRONOUNCEMENTS   In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires the use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective for fiscal years beginning after December 1, 2023 for Smaller Reporting Companies, including interim periods within those fiscal years and requires a modified-retrospective approach to adoption. The Company believes that adopting ASU 2016-13 will have no material impact on the financial statements and related disclosures.

v3.23.3

FAIR VALUE MEASUREMENT	9 Months Ended
	Aug. 26, 2023
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENT	Note 4 FAIR VALUE MEASUREMENT   The Company had no financial assets or liabilities measured at fair value on a recurring basis as of August 26, 2023 or November 30, 2022.  The fair value of financial instruments such as cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying amount based on the short maturity of these instruments.   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 nonfinancial assets measured at fair value on a nonrecurring basis August 26, 2023 and November 30, 2022.

v3.23.3

COMMITMENTS	9 Months Ended
	Aug. 26, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS	Note 5 COMMITMENTS   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 with an interest rate of (3.40%) per annum.   On March 26, 2021, the Company renewed the Revolving Loan Agreement with Frost through the “Sixth Amendment to Loan Agreement.”. The Revolving Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000 with a rate equal to prime rate with a floor of 3.25%. The Revolving Loan Agreement was originally entered into on January 23, 2013, between the Company as borrower and Frost as lender.     Construction Loans.  Subject to the terms of the Loan Agreement, Frost will lend to the Company an aggregate amount not to exceed $16,160,000.   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%) per annum includes an Interest-Only Period. Interest only shall be due and payable monthly as it accrues on the twenty-sixth (26th) day of each and every calendar month, beginning April 26, 2021, and continuing regularly and monthly thereafter until March 26, 2023; 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 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.  Subject to the terms of the, Loan Agreement, Frost will lend to the Company, on a revolving basis, amounts not to exceed a total principal balance of $6,000,000, minus amounts available and amounts previously disbursed under outstanding Frost letters of credit. Subject to certain terms and conditions, the Company may borrow, repay and reborrow under the Loan Agreement. There are no borrowings outstanding as of August 26, 2023. The loan has a maturity date of April 23, 2025.   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 borrowed $16,160,000 against the construction loan as of August 26, 2023.  Schedule of long-term debt         Debt August 26, 2023     Notes payable   $ 15,987,000   Less unamortized debt issuance costs     141,000   Net Debt     15,846,000   Less—Current portion     429,000   Total long-term debt   $ 15,417,000     Estimated maturities of our long-term debt over the next 5 years are as follows: Estimated maturities of long-term debt                                               2023     2024     2025     2026     2027     Thereafter     Total   Frost Bank   $ 106     $ 433     $ 447     $ 463     $ 479     $ 14,059     $ 15,987

v3.23.3

EARNINGS PER COMMON SHARE	9 Months Ended
	Aug. 26, 2023
Earnings Per Share [Abstract]
EARNINGS PER COMMON SHARE	Note 6 EARNINGS PER COMMON SHARE   Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the respective periods. Diluted earnings per share gives effect to all dilutive potential common shares. For the three and nine months ended August 26, 2023, the Company has dilutive potential common stock instruments with the restricted stock units.

v3.23.3

SHAREHOLDERS’ EQUITY	9 Months Ended
	Aug. 26, 2023
Equity [Abstract]
SHAREHOLDERS’ EQUITY	Note 7 SHAREHOLDERS’ EQUITY   On December 7, 2022, the Board of Directors of Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 11, 2023. The dividend was paid to shareholders on February 10, 2023.   On December 7, 2021, the Board of Directors of Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 11, 2022. The dividend was paid to shareholders on February 10, 2022.

v3.23.3

STOCK-BASED COMPENSATION	9 Months Ended
	Aug. 26, 2023
Stock-based Compensation
STOCK-BASED COMPENSATION	NOTE 8 STOCK-BASED COMPENSATION   We have issued restricted stock units ("RSUs") stock-based compensation awards as part of Micropac Industries Inc.’s 2023 Equity Incentive Plan. Our 2023 annual grant of RSUs occurred in the second quarter. The weighted -average grant-date fair value of each unit granted in 2023 was $13.13. All the RSUs granted in 2023 vest over a three-year period.   The following is a summary of our RSUs activity for nine months ended August 26, 2023 and August 27, 2022: Schedule of restricted stock units activity                                     2023     2022   (shares in thousands)   Number of Shares     Weighted- Average Grant Date Fair Value     Number of Shares     Weighted- Average Grant Date Fair Value   Unvested at beginning of period     -       -       -       -   Granted     35.7     $ 13.13       -       -   Vested     -       -       -       -   Cancelled     -       -       -       -   Unvested at end of the period     35.7     $ 13.13       -       -     The following table sets forth the stock-based compensation expense recorded in selling, general and administrative ("SG&A") expense (in thousands):  Schedule of stock-based compensation           August 26, 2023 and August 27, 2022       Three Months Ended     Nine Months Ended       2023     2022     2023     2022   Stock-based compensation expense   $ 20.00       -     $ 59.00       -       The following table sets forth the stock-based unvested compensation expense by year to be recognized (in thousands):   Schedule of stock-based unvested compensation expense   2023     2024     2025     Total   Stock-based unvested compensation expense     20       78       78       176

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Aug. 26, 2023
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 is 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 (200o C) products.   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. Schedule of net sales by product line                     8/26/2023     8/27/2022   Microcircuits   $ 4,985     $ 5,585   Optoeletronics     5,432       6,056   Sensors and Displays     9,674       8,553       $ 20,091     $ 20,194                     Timing of revenue recognition:                 Transferred at a point in time   $ 16,521     $ 17,393   Transferred over time     3,570       2,801   Total Revenue   $ 20,091     $ 20,194     The following table summarizes the Company’s net sales by major market.   2023 Third Quarter Sales by Major Market   Schedule of net sales by major market                                             Military     Space     Medical     Commercial     Total   Domestic Direct   $ 3,312     $ 254     $ 489     $ 294     $ 4,349   Domestic Distribution     1,444       81       7       313       1,845   International     139       20       -       105       264       $ 4,895     $ 355     $ 496     $ 712     $ 6,458     2022 Third Quarter Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 2,684     $ 317     $ 754     $ 401     $ 4,156   Domestic Distribution     2,101       278       -       156       2,535   International     20       104       -       125       249       $ 4,805     $ 699     $ 754     $ 682     $ 6,940     2023 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 7,618     $ 952     $ 2,275     $ 2,220     $ 13,065   Domestic Distribution     4,318       910       -       737       5,965   International     238       185       -       638       1,061       $ 12,174     $ 2,047     $ 2,275     $ 3,595     $ 20,091     2022 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 8,322     $ 1,116     $ 2,138     $ 935     $ 12,511   Domestic Distribution     5,485       996       -       629       7,110   International     91       254       -       228       573       $ 13,898     $ 2,366     $ 2,138     $ 1,792     $ 20,194
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 (deferred revenue) on the Condensed Balance Sheets.    Receivables, net, contract assets and contract liabilities were as follows:   Receivables, net, Contract Assets and Contract Liabilities (Dollars in thousands) Schedule of receivables, net, contract assets and contract liabilities                             August 26, 2023     November 30, 2022     December 1, 2021   Receivables, net   $ 3,288     $ 3,644     $ 4,974   Contract assets   $ 623     $ 408     $ 603   Deferred revenue   $ 560     $ 1,192     $ 1,258     There was $642,260 of revenue recognized in fiscal year 2023 that was included in the deferred revenue liability balance at the beginning of the fiscal year.
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.
Leases	Leases   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 for operating lease liabilities and right-of-use assets in accordance with ASC 842. The Company had an operating lease expense of $14,000 for the first nine months of 2023 and $40,000 for the first nine months of 2022. The Company used an estimated incremental borrowing rate of 3.25% representative of the rate of interest that the company would have to pay to borrow on the Company’s line of credit. The lease expired in March 2023 and was not renewed.
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 August 26, 2023 or November 30, 2022.
Property, Plant, and Equipment	Property, Plant, and Equipment   Property, plant, and equipment are carried at cost, and depreciation is provided using the straight-line method at rates based upon the following estimated useful lives (in years) of the assets:  Schedule of property,plant and equipment useful lives   Buildings 15-39 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. When events or circumstances indicate that an asset may be impaired, an assessment is performed. The estimated future undiscounted cash flows associated with the asset are compared to the asset’s net book value to determine if a write down to market value less cost to sell is required.   Construction in progress relates to multiple capital projects ongoing during the year ended November 30, 2022 and the nine months ended August 26, 2023, 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. In March 2023, the new manufacturing facility was completed and placed in service.   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 respective periods.   The following is a reconciliation of the number of shares used in the calculation of the basic and diluted earnings per share for the three and nine months ended August 26, 2023 and August 27, 2022: Schedule of the basic and diluted earnings per share                                     Three months ended     Nine Months Ended       August 26, 2023     August 27, 2022     August 26, 2023     August 27, 2022                             Weighted average of shares, basic     2,578,315       2,578,315       2,578,315       2,578,315   Restricted stock units     -       -       -       -   Weighted average of shares, diluted     2,578,315       2,578,315       2,578,315       2,578,315     Due to the current loss position, the Company has not included the 35,650 restricted stock units due to being anti-dilutive in nature.
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.

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Aug. 26, 2023
Accounting Policies [Abstract]
Schedule of net sales by product line	Schedule of net sales by product line                     8/26/2023     8/27/2022   Microcircuits   $ 4,985     $ 5,585   Optoeletronics     5,432       6,056   Sensors and Displays     9,674       8,553       $ 20,091     $ 20,194                     Timing of revenue recognition:                 Transferred at a point in time   $ 16,521     $ 17,393   Transferred over time     3,570       2,801   Total Revenue   $ 20,091     $ 20,194
Schedule of net sales by major market	Schedule of net sales by major market                                             Military     Space     Medical     Commercial     Total   Domestic Direct   $ 3,312     $ 254     $ 489     $ 294     $ 4,349   Domestic Distribution     1,444       81       7       313       1,845   International     139       20       -       105       264       $ 4,895     $ 355     $ 496     $ 712     $ 6,458     2022 Third Quarter Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 2,684     $ 317     $ 754     $ 401     $ 4,156   Domestic Distribution     2,101       278       -       156       2,535   International     20       104       -       125       249       $ 4,805     $ 699     $ 754     $ 682     $ 6,940     2023 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 7,618     $ 952     $ 2,275     $ 2,220     $ 13,065   Domestic Distribution     4,318       910       -       737       5,965   International     238       185       -       638       1,061       $ 12,174     $ 2,047     $ 2,275     $ 3,595     $ 20,091     2022 Nine Months Sales by Major Market       Military     Space     Medical     Commercial     Total   Domestic Direct   $ 8,322     $ 1,116     $ 2,138     $ 935     $ 12,511   Domestic Distribution     5,485       996       -       629       7,110   International     91       254       -       228       573       $ 13,898     $ 2,366     $ 2,138     $ 1,792     $ 20,194
Schedule of receivables, net, contract assets and contract liabilities	Schedule of receivables, net, contract assets and contract liabilities                             August 26, 2023     November 30, 2022     December 1, 2021   Receivables, net   $ 3,288     $ 3,644     $ 4,974   Contract assets   $ 623     $ 408     $ 603   Deferred revenue   $ 560     $ 1,192     $ 1,258
Schedule of property,plant and equipment useful lives	Schedule of property,plant and equipment useful lives   Buildings 15-39 Facility improvements 8-15 Machinery and equipment 5-10 Furniture and fixtures 5-8
Schedule of the basic and diluted earnings per share	Schedule of the basic and diluted earnings per share                                     Three months ended     Nine Months Ended       August 26, 2023     August 27, 2022     August 26, 2023     August 27, 2022                             Weighted average of shares, basic     2,578,315       2,578,315       2,578,315       2,578,315   Restricted stock units     -       -       -       -   Weighted average of shares, diluted     2,578,315       2,578,315       2,578,315       2,578,315

v3.23.3

COMMITMENTS (Tables)	9 Months Ended
	Aug. 26, 2023
Commitments and Contingencies Disclosure [Abstract]
Schedule of long-term debt	Schedule of long-term debt         Debt August 26, 2023     Notes payable   $ 15,987,000   Less unamortized debt issuance costs     141,000   Net Debt     15,846,000   Less—Current portion     429,000   Total long-term debt   $ 15,417,000
Estimated maturities of long-term debt	Estimated maturities of long-term debt                                               2023     2024     2025     2026     2027     Thereafter     Total   Frost Bank   $ 106     $ 433     $ 447     $ 463     $ 479     $ 14,059     $ 15,987

v3.23.3

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Aug. 26, 2023
Stock-based Compensation
Schedule of restricted stock units activity	Schedule of restricted stock units activity                                     2023     2022   (shares in thousands)   Number of Shares     Weighted- Average Grant Date Fair Value     Number of Shares     Weighted- Average Grant Date Fair Value   Unvested at beginning of period     -       -       -       -   Granted     35.7     $ 13.13       -       -   Vested     -       -       -       -   Cancelled     -       -       -       -   Unvested at end of the period     35.7     $ 13.13       -       -
Schedule of stock-based compensation	Schedule of stock-based compensation           August 26, 2023 and August 27, 2022       Three Months Ended     Nine Months Ended       2023     2022     2023     2022   Stock-based compensation expense   $ 20.00       -     $ 59.00       -
Schedule of stock-based unvested compensation expense	Schedule of stock-based unvested compensation expense   2023     2024     2025     Total   Stock-based unvested compensation expense     20       78       78       176

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Product Information [Line Items]
Total Revenue	$ 6,458	$ 6,940	$ 20,091	$ 20,194
Transferred at Point in Time [Member]
Product Information [Line Items]
Total Revenue			16,521	17,393
Transferred over Time [Member]
Product Information [Line Items]
Total Revenue			3,570	2,801
Microelectronics [Member]
Product Information [Line Items]
Total Revenue			4,985	5,585
Optoelectronics [Member]
Product Information [Line Items]
Total Revenue			5,432	6,056
Sensorsand Displays [Member]
Product Information [Line Items]
Total Revenue			$ 9,674	$ 8,553

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Domestic Direct	$ 4,349	$ 4,156	$ 13,065	$ 12,511
Domestic Distribution	1,845	2,535	5,965	7,110
International	264	249	1,061	573
Revenue	6,458	6,940	20,091	20,194
Military [Member]
Domestic Direct	3,312	2,684	7,618	8,322
Domestic Distribution	1,444	2,101	4,318	5,485
International	139	20	238	91
Revenue	4,895	4,805	12,174	13,898
Space [Member]
Domestic Direct	254	317	952	1,116
Domestic Distribution	81	278	910	996
International	20	104	185	254
Revenue	355	699	2,047	2,366
Medical [Member]
Domestic Direct	489	754	2,275	2,138
Domestic Distribution	7
International
Revenue	496	754	2,275	2,138
Commercial [Member]
Domestic Direct	294	401	2,220	935
Domestic Distribution	313	156	737	629
International	105	125	638	228
Revenue	$ 712	$ 682	$ 3,595	$ 1,792

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	Aug. 26, 2023	Nov. 30, 2022	Dec. 02, 2021
Accounting Policies [Abstract]
Receivables, net	$ 3,288	$ 3,644	$ 4,974
Contract assets	623	408	603
Deferred revenue	$ 560	$ 1,192	$ 1,258

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details 3)	Aug. 26, 2023
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	39 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

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details 4) - shares	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Accounting Policies [Abstract]
Weighted average of shares, basic	2,578,315	2,578,315	2,578,315	2,578,315
Restricted stock units
Weighted average of shares, diluted	2,578,315	2,578,315	2,578,315	2,578,315

v3.23.3

SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Nov. 30, 2022
Accounting Policies [Abstract]
Deferred revenue recognized	$ 642,260
Operating lease liability and right-of-use asset	165,000
Operating lease expense	$ 14,000	$ 40,000
Interest rate	3.25%
Uncertain tax positions	$ 0		$ 0

v3.23.3

FAIR VALUE MEASUREMENT (Details Narrative) - USD ($)	Aug. 26, 2023	Nov. 30, 2022
Fair Value Disclosures [Abstract]
Fair value financial assets liabilities recurring basis	$ 0	$ 0

v3.23.3

COMMITMENTS (Details) - USD ($) $ in Thousands	Aug. 26, 2023	Nov. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Notes payable	$ 15,987
Less unamortized debt issuance costs	141
Net Debt	15,846
Less—Current portion	429
Total long-term debt	$ 15,417	$ 14,535

v3.23.3

COMMITMENTS (Details 1) $ in Thousands	Aug. 26, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023	$ 106
2024	433
2025	447
2026	463
2027	479
Thereafter	14,059
Total	$ 15,987

v3.23.3

COMMITMENTS (Details Narrative) - USD ($)	9 Months Ended
	Aug. 26, 2023	Mar. 26, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Borrowings outstanding	$ 0
Maurity date	Apr. 23, 2025
Notes payable	$ 15,987,000
Construction Loan [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Notes payable	$ 16,160,000
Revolving Loan [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Line of credit facility, maximum borrowing capacity		$ 6,000,000
Maximum interest rate		3.25%
Construction Loan Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Line of credit facility, maximum borrowing capacity		$ 16,160,000
Maximum interest rate		3.40%

v3.23.3

SHAREHOLDERS’ EQUITY (Details Narrative) - $ / shares	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Equity [Abstract]
Dividends payable, date declared			Dec. 07, 2022	Dec. 07, 2021
Common stock, dividends, per share, cash paid			$ 0.10	$ 0.10
Dividends payable, date of record			Jan. 11, 2022	Jan. 11, 2023
Dividends payable, date to be paid			Feb. 10, 2023	Feb. 10, 2022

v3.23.3

STOCK-BASED COMPENSATION (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares outstanding at beginning of period
Weighted average exercise price beginning of period
Number of shares granted	35.7
Weighted average exercise price granted	$ 13.13
Number of shares vested
Weighted average exercise price vested
Number of shares cancelled
Weighted average exercise price cancelled
Number of shares outstanding at end of the period	35.7
Weighted average exercise price end of the period	$ 13.13

v3.23.3

STOCK-BASED COMPENSATION (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Aug. 26, 2023	Aug. 27, 2022	Aug. 26, 2023	Aug. 27, 2022
Stock-based Compensation
Stock-based compensation expense	$ 20		$ 59

v3.23.3

STOCK-BASED COMPENSATION (Details 2) $ in Thousands	Aug. 26, 2023 USD ($)
Stock-based Compensation
Stock-based unvested compensation expense for 2023	$ 20
Stock-based unvested compensation expense for 2024	78
Stock-based unvested compensation expense for 2025	78
Stock-based unvested compensation expense	$ 176

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