United States Securities and Exchange Commission

WASHINGTON, D.C. 20549D.C.20549

FORM 10-K10-K/A

Amendment No. 1 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☐ [  ] No ☑[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐[  ] No ☑[X]

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yesþ . Yes [X] No¨ [  ]

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

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. [  ]

Indicate by Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐[  ] No ☑ [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of May 27, 201730, 2020 representing the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $5,077,000,$8,257,000, The number of shares of the registrant’s common stock, $0.10 par value, outstanding as of February 8, 201811, 2021 was 2,578,315.

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement to be filed with the Securities and Exchange Commission relating to the registrant'sregistrant’s Annual Meeting of Shareholders, to be held March 10, 20175, 2021 is incorporated by reference in Part III to the extent described therein.

EXPLANATORY NOTE

The registrant filed with the Securities and Exchange Commission an Annual Report on Form 10-K for the year ended November 30, 2020 on February 11, 2021 (the “Form 10-K”). The registrant is filing this Amendment solely to correct a typographical error on the signature page and add a director name and signature.

Table of Contents

PART I 

INTRODUCTIONGENERAL

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 optoelectronicsensor 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 isare certified to ISO 9001:2008 and AS 9100C.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 is microelcetronicmicroelectronic and optoelectroicoptoelectronic 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 intergrationintegration used in the Company’s optoelectronic components and assemblies.

The business of 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 452439 shareholders on November 30, 2017.2020.

PRODUCTS AND TECHNOLOGIES

The Company’s products are either custom (being application-specific circuits designed and manufactured to meet the particular requirements of a single customer) or standard proprietary components. Custom-designed components and assemblies accounted for approximately 41%31% of the Company’s sales for the fiscal year ended November 30, 2017,2020, and were 40%42% for fiscal 2016.2019. Standard components and assemblies accounted for approximately 59%69% of the Company’s sales for the fiscal year ended November 30, 2017,2020, and were 60%58% for fiscal 2016.2019.

The Company provides power management and controls,microelectronics, sensors and displays, and optocouplersoptoelectronics products, to include components and assemblies that offersoffer a wide range of products sold to the industrial, medical, military, aerospace and space markets.

The power management and controlsmicroelectronic technologies, including custom microcircuits, solid state relays, power operational amplifiers, and regulators accounted for 41%33% of the Company’s business in 20172020 compared to 36%32% in 2016.2019. Sensors and displays accounted for 33%45% of the Company’s business and the optocouplers product accounted for 26%22% of the Company’s business in 2017,2020, compared to 35%43% and 29%25% in 2016,2019, respectively.

The Company’s basic products and technologies include:

Micropac’s products are primarily sold to original equipment manufacturers (OEM’s) who serve the following major markets:

The Company has two patents. On July 11, 2017, the Company received its patent for the “Power Controller”, which expires on July 10, 2031. On January 6, 2018, the Company received its patent for the “Voltage bus protection and isolation devices”, which expires on January 5, 2032.

The Company has no licenses, franchises or labor contracts. The Company’s trademark “Mii” ishas two trademarks registered with the U.S. Patent and Trademark Office.

Sales of our products internationally are subject to government regulations, including export control regulations of the U.S. Department of State and Department of Commerce. Violation of these regulations by the Company could result in monetary penalties and denial of export privileges. The Company is not aware of any violations of export control regulations or any othersimilar applicable government regulations.

Five of the Company’s principal product families require government approval. Further, a significant portion of our business is military and is dependent on maintaining our facility certifications to MIL-PRF-38534 and MIL-PRF-19500. In addition, several customers require the Company maintain AS 9100 certifications. We expect to maintain these certifications and qualifications; however, the loss of any of these certifications would have a significant negative impact on our business.

Government regulations impose certain controls on chemicals used in electronics and semiconductor manufacturing. Micropac has obtained all the necessaryappropriate environmental permits, and routinely monitors and reports the wastewater stream results to the local governing agency. Micropac is classified as a small generator of hazardous waste, and the annual cost of complying with the regulations is minimal.

In 2017,2020, the Company’s investment in technology through research and development, which was expensed, totaled approximately $1,704,000$1,431,000 ($1,152,0001,707,000 in 2016)2019). The Company’s research and development expenditures were directed primarily toward standard proprietary power managementmicroelectronic products, including industrial power controllers and DC-DC converters, fiber optic transceivers, high voltage optocouplers and continued product development and improvement associated with the Company’s space level and other high reliability products.

In addition to the Company’s investment in research and development, various customers paid the Company approximately $1,368,000$2,227,000 in non-recurring engineering revenue with $1,310,000$1,722,000 recorded within cost of goods sold associated with the development of custom products for specific applications.

The Company provides a one yearone-year warranty from the date of shipment to the original purchaser. The Company is obligated under this warranty to either replace or repair defective goods or refund the purchase price paid by the buyer.

CUSTOMERS

The Company’s products are marketed throughout the United States and in Western Europe, through a direct technical sales staff, independent representatives and independent stocking distributors. Approximately 20%5% of the sales for fiscal year 2017 (26%2020 (11% in 2016)2019) were to international customers. Sales to Western European customers are made by independent representatives under the coordination of the Company’s office in Bremen, Germany.

Sales through the Company’s distribution channels were $5,433,000$7,966,000 in 20172020 compared to $4,308,000$8,507,000 in 2016,2019, or 28%36% and 25%33% of sales, respectively.

The Company’s major customers include contractors to the United States government. Sales to these customers for the Department of Defense (DOD) and NASA contracts accounted for approximately 60%66% of the Company’s revenues in 20172020 compared to 56%59% in 2016.2019.

The Company’s major customers are Lockheed Martin, Northrop Grumman, Rockwell Collins, United Technologies, , Raytheon, Boeing and L-3. Three customersBoeing. One customer accounted for 16%, 13% and 10%20% of the Company’s sales during 20172020 and two customers accounted for 18% and 11% of the Company’s sales in 2016.2019.

BACKLOG

At November 30, 2017,2020, the Company had a backlog of unfilled orders totaling approximately $12,864,000$29,793,000 compared to

approximately $17,102,000$22,021,000 at November 30, 2016.2019. The Company expects to complete and ship the majority of its November 30, 2017 backlog during fiscal 2018.the increase was associated with 3 new custom products orders for $4,000,000 and an increase in $2,900,000 in orders on existing products.

EMPLOYEESHuman Capital

Micropac Industries, Inc., is committed to attracting and retaining the brightest and best talent. Therefore, investing, developing, and maintaining human capital is critical to our success .

At November 30, 2017,2020, the Company had 119143 full-time employees (compared to 121132 at November 30, 2016)2019), of which 14 were executive and managerial employees, 2639 were engineers and quality-control personnel, 1624 were clerical and administrative employees, and 6366 were production personnel. None of the Company’s employees are covered by collective bargaining agreements.

The Company is an equal opportunity employer. It is the Company’s policy to recruit, hire, train and promote personnel in all job classifications, without regard to race, religion, color, national origin, sex or age. Above and beyond non-discrimination, we are committed to an Affirmative Action Program, dedicated to the hiring, training, and advancement within the Company of minority group members, women, veterans, and handicapped individuals.

COMPETITION

The Company competes with two or more companies with respect to each of its major products. Some of these competitors are larger and have greater capital resources than the Company. Management believes the Company’s competitive position is favorable with regard to our product reliability and integrity, past performance, customer service and responsiveness, timely delivery and pricing; however, no assurance can be given that the Company can compete successfully in the future.

There are approximately 5144 independent manufacturing companies who are certified to supply microcircuits to MIL-PRF-38534 or supply semiconductors to MIL-PRF-19500, in addition to OEM’s, who manufacture hybrid microcircuits for their internal needs. Micropac may compete with all of these for hybrid microcircuit, power management and optoelectronics business. Some of the Company’s primary competitors are Anaren Avago, Isolink,Microwave, Broadcom Inc., Cobham Advanced Electronic Solutions, and International Rectifier.Infineon Technologies.

SUPPLY CHAIN

The parts and raw materials for the Company’s products are generally available from more than one source. Except for certain optoelectronic products, the Company does not manufacture the basic parts or materials used in production of its products. From time to time, the Company has experienced difficulty in obtaining certain materials when needed. The Company’s inability to secure materials for any reason could have adverse effects on the Company’s ability to deliver products on a timely basis and could result in loss of customers or sales. However, the Company has not been materially affected by such shortages. The Company uses capacitors, active semiconductor devices (primarily in chip form), hermetic packages, ceramic substrates, resistor inks, conductor pastes, precious metals and other materials in its manufacturing operations. The Company’s delivery commitments to customers allow for adequate lead times for production of the products including lead time for order and receipt from the supply chain.

Some of the Company’s primary suppliers are NTK Technologies, Electrovac,Cirexx International, Schott AG,Electronic Packaging, Semi-Dice, Micross Components, and Materion Advanced Materials.

This annual report on Form 10-K contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. ActualForward-looking statements are subject to risks and uncertainties that could cause actual results couldto differ materially. Investors are warned that forward-looking statements involveThese risks and unknown factors including,uncertainties include, but are not limited to, 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 risks and uncertainties described below are not the only risks and uncertainties we face. There may be risks and uncertainties not presently known to us or that we do not deem material at this time.

The Company disclaims any responsibility to update the forward-looking statements contained herein, except as may be required by law.

Fabrication efforts may not be successfulConcentration Related Risk Factors

The Company is heavily dependent on a few major customers

The Company produces silicon phototransistorsCompany’s major customers include contractors to the United States government. Sales to these customers for DOD and light emitting diode dieNASA contracts accounted for useapproximately 66% of the Company’s revenues in certain military, standard2020 compared to 59% in 2019. The Company’s major customers are Lockheed Martin, Northrop Grumman, United Technologies, Raytheon, and custom products. Fabrication efforts sometimes may not result in successful results, limitingBoeing. One customer accounted for 20% of the availabilityCompany’s sales during 2020 and 2019. The contracts of these components. Competitors offer commercial level alternatives and our customers with the United States government may purchase our competitors’ products if the Company is not ablebe subject to manufacture the products using these technologies to meet the customer demands.

Majority shareholder ability to controlrenegotiation of profits or termination of contracts or subcontracts at the election of the Boardgovernment, which would in turn might materially affect the Company’s sales. The loss of Directorsany one of these customers or a significant reduction in their purchases would be likely to adversely affect our business.

The Company’s majority shareholder, Mr. Heinz-Werner Hempel, established a partnership organized under the laws of Germany, which owns 1,952,577 shares or 75.7% of the outstanding voting shares. Mr. Hempel, through the partnership, has the ability to control the election of the Company’s Board of Directors and elect individuals who may be more attuned to such majority shareholder’s vision forIn addition, the Company and not necessarilyhas several custom commercial products with a current backlog of $4,907,000. The loss of these custom products or a significant reduction in their purchases would be likely to those of minority shareholders as to the policies and directions of the Company. However, the ability to control the election of the Board of Directors does not modify the fiduciary duties of the Board of Directors to represent the interests of all shareholders.adversely affect our business.

Availability of public shares for purchase and saleFinancing Related Risk Factors

A small number of shares are available for public purchase and sale. As a result, the Company’s reported share price may be subject to extreme fluctuations due in part to the small number of shares traded at any time.

PricingWe experience pricing pressures from customers for reduction in selling prices

The Company continues to experience pricing pressures from some of its OEM customers. In some cases, the Company’s customers request the review of pricing for possible reduction in selling price on future orders. This requires the Company to improve its productivity and to request similar price reductions from its supplier chain. If one or both of the approaches by the Company does not succeed, the Company could be required to reduce the selling price on future orders, reducing the product gross margins and affecting the Company’s net earnings in order to receive future orders from the customer. However, the Company has no agreement that requires a reduction in the selling price on any current customer order. All contracts are firm fixed pricing.

The Company has potential warranty obligations

The Company provides a one year warranty from the date of shipment to the original purchaser. The Company is obligated under this warranty to either replace or repair defective goods or refund the purchase price paid by the buyer. An unexpected number of warranty claims could negatively impact the profitability of the Company.

Operations Related Risk Factors

Fabrication efforts may not be successful

The Company produces silicon phototransistors and light emitting diode die for use in certain military, standard and custom products. Fabrication efforts sometimes may not result in successful results, limiting the availability of these components. Competitors offer commercial level alternatives and our customers may purchase our competitors’ products if the Company is not able to manufacture the products using these technologies to meet the customer demands.

Component shortages from suppliers could affect ability to manufacture products or delay shipments to customers

The Company relies on suppliers to deliver quality raw materials in a timely and cost-effective manner. Most of the materials and components are generally available from multiple sources; however, from time to time vendors do not deliver the product as needed due to manufacturing problems or a decision to discontinue that product. Such interruption of supply or price increases could have a material adverse effect on the Company’s operations; however, the Company is not currently impacted by material shortages.

We must maintain the ability to enhance our products and develop new products for the military, space or aerospace markets

The Company’s base products and technologies generally have long life cycles. The Company’s products are primarily used in military, space or aerospace applications, which also have long life cycles. Our future success may, however, depend in part on our ability to enhance the functionality of our existing products in a timely and cost-effective manner, our ability to continue close working relationships with major customers for the design of their new products, and our ability to develop new products and technologies for existing and emerging markets. We must also continue to make significant investments in research and development efforts in order to meet customer specifications for specially

fabricated products. We may not be able to retain or obtain engineers, or other technical support staff, to conduct our research and development efforts as needed. There can be no assurance that the Company will be able to define, develop and market new products and technologies on a timely and cost effective basis. Failure to respond to our customers’ requirements and to our competitors’ progress in technological changes could have a material adverse effect on the Company’s business.

Regulatory Related Risk Factors

We are significantly affected by government policy

The Company could be adversely affected by changes in laws and regulations made by U.S. and non-U.S. governments and agencies dealing with foreign shipments. Changes in trade agreements or taxes on imports or exports could adversely affect our operations or financial condition.

Sales of our products internationally are subject to government regulations, including export control regulations of the U.S. Department of State and Department of Commerce. Changes in these regulations could adversely affect our business. Violation of these regulations by the Company could result in monetary penalties and denial of export privileges.

The Company is subject to the Foreign Corrupt Practices Act (FCPA), which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business.  Any violation of the FCPA or similar laws and regulations could result in significant expenses, divert management attention, have a material adverse effect on our business, our financial condition and our results of operations and otherwise have a negative impact on the Company and its reputation.

Reductions or changes in U.S. government spending

The loss or significant reduction of a U.S. government or NASA program in which our major customers participate could adversely affect our business. U.S. government contracts generally are conditioned on the continuing availability of Congressional appropriations. Congress usually appropriates funds for on-going programs on a fiscal year basis even though contract performance may extend over many years. At the beginning of a major program, the contract is often only partially funded, and additional monies are committed only as Congress makes appropriations in future fiscal years. In addition, most U.S. government contracts are subject to modification if funding is changed. Key programs in which our customers participate must compete with other programs for consideration during the federal budgeting and appropriation process, and support and funding for any U.S. government program may be influenced by general economic conditions, political considerations and other factors. A decline in support and funding for programs in which our customers participate could result in contract terminations, delays in contract awards, failure to extend contracts, cancellation of planned procurements and fewer new business opportunities for our customers. Our business may be adversely affected as a result of changes or reductions in U.S. government or NASA spending.

Market Related Risk Factors

Majority shareholder ability to control the election of the Board of Directors

The Company’s majority shareholder, Mr. Heinz-Werner Hempel, established a partnership organized under the laws of Germany, which owns 1,952,577 shares or 75.7% of the outstanding voting shares. Mr. Hempel, through the partnership, has the ability to control the election of the Company’s Board of Directors and elect individuals who may be more attuned to such majority shareholder’s vision for the Company and not necessarily to those of minority shareholders as to the policies and directions of the Company. However, the ability to control the election of the Board of Directors does not modify the fiduciary duties of the Board of Directors to represent the interests of all shareholders.

There are limited shares for purchase and sale

A small number of shares are available for public purchase and sale. The Company’s reported share price may be subject to extreme fluctuations, or one or a few trades may determine the reported market price, due in part to the small number of shares traded at any time.

General Risk Factors

Impact of COVID-19 on our Business

The impact of the COVID-19 pandemic continues to unfold. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at

this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We are subject to cybersecurity risks

Cybersecurity risks and attacks continue to grow. Cybersecurity attacks are evolving and not always predictable. Attacks include malicious software, threats to information technology infrastructure, denial-of-service attacks on the Company or its service providers’ websites, attempts to gain unauthorized access to data, and other breaches. EvenData breaches can originate with authorized or unauthorized persons. Authorized persons could inadvertently or intentionally release confidential or proprietary information.information, and recipients could misuse data. Such events could lead to interruption of our operations or business, unauthorized release or use of information, corruptioncompromise of data, damage to our reputation, damage to our customers or vendors, and increased costs to prevent, respond to or mitigate any events.

Insurance coverage and exposure to substantial claims or liabilities

The Company operates manufacturing facilities in Garland, Texas and subcontracts portions of the Company’s manufacturing to a contract manufacturer in Juarez, Mexico. These facilities use industrial machines and chemicals that could provide risks of personal injury and/or property damage. There is no assurance that accidents will not occur. If accidents do occur, the Company could be exposed to substantial liability. The Company maintains worker’s compensation insurance and general liability insurance for protection of its employees and for protection of the Company’s assets in Garland, Texas and for equipment and inventory located at the contract manufacturer in Juarez, Mexico. In addition to the basic policies mentioned, the Company maintains an umbrella insurance policy. The Company reviews all insurance coverage on an annual basis, and makes any necessary adjustments based on risk assessment and changes in its business. In the opinion of the Company’s management, and its insurance advisors, the Company is adequately insured; however, the Company’s financial position could be materially affected by claims not covered or exceeding coverage currently carried by the Company.

The Company is subject to numerous environmentalEnvironmental regulations and changes in government policy

The Company is subject to governmentalincreasingly stringent environmental laws and regulations, pertainingincluding those relating to the use, storage, handlingair emissions, wastewater discharges, chemical and disposalhazardous waste management and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances used in connectionor wastes. Other environmental laws and regulations require that we obtain and comply with its manufacturing activities. Failureenvironmental permits. To date, costs of complying with environmental requirements have not been material. Future events, including those relating to climate change or greenhouse gas emissions, could require the Company to incur expenses related to installation of pollution control all activities dealing with hazardous chemicals could subjectequipment, or investigation and cleanup of contaminated sites. If the Company fails to comply with environmental laws and regulations, the Company could be subject to significant liabilities or could cause the Companybe required to curtail or cease its manufacturing activities.

The Company could be adversely affected by changes in laws and regulations made by U.S. and non-U.S. governments and agencies dealing with foreign shipments. Changes in trade agreementsenvironmental laws or taxes on imports or exports could affect our operations or financial condition. Changes by regulatory agencies dealing with environmental issuesregulations could affect the cost of the Company’s products and make it hard for the Company to be competitive with larger companies.

Sales of our products internationally are subject to government regulations, including export control regulations of the U.S. Department of State and Department of Commerce. Violation of these regulations by the Company could result in monetary penalties and denial of export privileges.

The Company issubject to the Foreign Corrupt Practices Act (the “FCPA”), which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business.  Any violation of the FCPA or similar laws and regulations could result in significant expenses, divert management attention, have a material adverse effect on our business, our financial condition and our results of operations and otherwise have a negative impact on the Company and its reputation.

Product liability claims

The use of the Company’s products in commercial or government applications may subject the Company to product liability claims. Although the Company has not experienced any product liability claims, the sale of any product may provide risk of such claims. Product liability claims brought against the Company could have a material adverse effect on the Company’s operating results and financial condition.

Component shortages from suppliers could affect ability to manufacture products or delay shipments to customers

The Company relies on suppliers to deliver quality raw materials in a timely and cost-effective manner. Most of the materials and components are generally available from multiple sources; however, from time to time vendors do not deliver the product as needed due to manufacturing problems or a decision to discontinue that product. Such interruption of supply or price increases could have a material adverse effect on the Company’s operations; however, the Company is not currently impacted by material shortages.

The ability to develop new products and technologies used in the military, space or aerospace markets

The Company’s base products and technologies generally have long life cycles. The Company’s products are primarily used in military, space or aerospace applications, which also have long life cycles. There can be no assurance that the Company will be able to define, develop and market new products and technologies on a timely and cost effective basis. Failure to respond to our customers’ requirements and to our competitors’ progress in technological changes could have a material adverse effect on the Company’s business.

General economic downturn

The Company cannot assure you that our business will not be adversely affected as a result of an industry or general economic downturn. If the Company’s supply chain is adversely affected by the current economic downturn, this could result in the Company’s inability to secure materials and could have adverse effects on the Company’s ability to deliver products on a timely basis. 

The Company has potential warranty obligations

The Company provides a one year warranty from the date of shipment to the original purchaser. The Company is obligated under this warranty to either replace or repair defective goods or refund the purchase price paid by the buyer. An unexpected number of warranty claims could negatively impact the profitability of the Company.

The Company may default on its line of credit

The Company currently has an existing line of credit with a Texas banking institution. In connection therewith, the Company is obligated to maintain certain minimum financial requirements in order to receive advances therefrom. The Company is currently in compliance with such financial requirements, but there is no guarantee that the Company will remain in compliance. If the Company does not maintain compliance with each of the requirements, its ability to receive advances from the line of credit will be impaired.

The Company is heavily dependent on a few major customersWe may incur product liability claims

The Company’s major customers include contractors to the United States government. Sales to these customers for the Department of Defense (DOD) and NASA contracts accounted for approximately 60%use of the Company’s revenuesproducts in 2017 comparedcommercial or government applications may subject the Company to 56% in 2016. The Company’s major customers are Lockheed Martin, Northrop Grumman, Rockwell Collins, United Technologies, Raytheon, Boeing and L-3. The Company’s top 10 customers accounted for 49%product liability claims. Although the Company has not experienced any significant product liability claims, the risk of such claims continues. Product liability claims brought against the Company could have a material adverse effect on the Company’s salesoperating results and financial condition.

Our products may have errors or defects that we find only after deployment

Our products are complex, designed to be incorporated in sophisticated applications, and may contain undetected

defects, errors, or failures. Although our products are generally tested during 2017manufacturing, prior to shipping, they may contain defects that are discovered only after the products are incorporated in customer applications. The occurrence of any defects, errors, or failures could result in installation delays, product returns, termination of contracts with our customers, diversion of our resources, increased service and 48%warranty costs, and other losses to our customers, their end users, or to us. Any of these occurrences could also result in the Company’s sales during 2016.loss of customers, and could damage our reputation, which could reduce our sales. In addition to the risk of unanticipated warranty or recall expenses, our customer contracts may contain provisions that could cause us to incur penalties, be liable for damages, or incur other expenses, if we experience difficulties with respect to the functionality, deployment, operation, and availability of our products and services.

None.

The Company occupies approximately 37,000 square feet of manufacturing, engineering and office space in Garland, Texas. The Company owns 32,200 square feet of that space and leases an additional 4,800 square feet. The Company considers its facilities adequate for its current level of operations.

In addition, the Company purchased 9.2 acres of land in Garland, Texas for $1,438,000. With the purchase of this tract of land, it is the intent of the Company to consolidate the three existing buildings into a new manufacturing center in the future. The Company is currently working with a contractor on the design of the new facility.

The Company also subcontracts some manufacturing to Inmobiliaria San Jose De Ciuddad Juarez S.A. DE C.V., a maquila contract manufacturer in Juarez, Mexico. The Company owns all equipment and inventory with temporary importation into Mexico under the maquila rules of Mexico. The Company does not lease or own any real property in Mexico.

The Company employs a sales team in Bremen, Germany who coordinates sales to Western European customers made by independent representatives. The sales manager maintains an office in a private residence. The Company does not lease or own any real property in Germany, or any other foreign country.

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

None.

PART II

Market Information, Holders and Dividends

On February 8, 2018,5, 2021 there were 452438 shareholders of record of the Company’s common stock. The stock of the Company is closely held; and, therefore, certain shareholders have the ability to significantly influence decisions. The Company’s common stock is quoted on the OTC Bulletin BoardMarket Pink Sheets under the symbol “MPAD.OB”. The following sets forth the high and low sell price for each quarter during the last two fiscal years:

The market price of a share of the common stock as of February 2,5, 2021, the latest practical date, was $7.70.$12.50.

During the three month period ended November 30, 2017,2020, approximately 21,20045,800 shares of the Company’s common stock were traded in the over-the-counter market at a price range of $7.75$10.75 to $7.00$12.75 per share. For the two year period ending November 30, 2017,2020, approximately 94,500318,900 shares of the Company’s common stock were traded in the over-the-counter market at prices ranging from a low of $7.00$8.12 to a high of $9.90. Due$16.99. The Company’s reported share price may be subject to this average monthly volumeextreme fluctuations, or one or a few trades may determine the reported market price, due in part to the small number of less than 4,000 shares of common stock being publicly bought and sold during this two year period, the Company does not believe this share trading volume results in prices which represent the market value of the Company’s common stock held by non-affiliates.traded at any time.

On December 15, 2015,10, 2019, 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 12, 2016.8, 2020. The dividend was paid to shareholders on February 11, 2016.14, 2020.

On December 13, 2016,8, 2020, 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 10, 2017. The dividend was paid to shareholders on February 8, 2017.

On December 12, 2017, 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, 10 2018.6, 2021. The dividend will be paid to shareholders on or about February 8, 2018.12, 2021.

Securities Issued under Equity Compensation Plan

None.

Purchases of equity securities by the issuer and affiliated purchasers.

None

Item 6.   Selected Financial Data

Not applicable.

Micropac Industries, Inc. (the “Company”), a Delaware corporation,The Company designs, manufactures and distributes various types of microelectronic circuits including solid state relays and power controllers, optoelectronic components, and optoelectronicsensor 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 isare certified to ISO 9001:2008 and AS 9100C. 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 is microelcetronicmicroelectronic and optoelectroicoptoelectronic 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 intergratioinintegration used in the Company’s optoelectronic components and assemblies.

Company sales totaled $19,725,000$22,274,000 resulting in an increasea decrease of $2,126,000$3,176,000 from 2016.2020. The increase was associated with higher overallmajority of the decrease in sales were due to timing of shipments of $8,268,000 of backlog from customers on the Company standard relaycustom sensor products and an increasea decrease in customer funded non-recurring engineering from several customers.sales of space level solid state relays compared to 2019.

At November 30, 2017,2020, the Company had a backlog of unfilled orders totaling approximately $12,864,000$29,793,000 compared to approximately $17,102,000$22,021,000 at November 30, 2016.2019. The decrease was in part due to the debooking of orders as explained below. The Company expects to complete and ship the majority of its November 30, 2017 backlog during fiscal 2018.the increase was associated with 3 new custom products orders for $4,000,000 and an increase in $2,900,000 in orders on existing products.

New orders for fiscal year 20172020 totaled $15,506,000$30,012,000 compared to $15,752,000$30,179,000 for fiscal 2016. The new orders for fiscal year 2017 consist of $18,343,000 of new orders minus $2,837,000 which was debooked for an order booked in 2015 due to the start delay from one international customer.2019. Approximately $7,735,000$6,677,000 of the new orders received in 20172020 was delivered to customers in 2017,2020, along with approximately $12,008,000$15,597,000 of the Company’s $17,102,000$22,021,000 backlog of orders at November 30, 20162019 resulting in revenue of $19,743,000. In addition, the Company had freight revenue and a net increase in customer returns allowances of $18,000 for total revenue of $19,725,000 in 2017.$22,208,000.

Cost of sales,goods sold, as a percentage of net sales, was 61.8%61.4% in 20172020 compared to 68.3%54.0% in 2016.2019 with lower margins from the decrease in sales of space level solid state relay microelectronic products. In actual dollars, cost of sales increased $150,000decreased $78,000 for 20172020 versus 20162019. The delay in shipments of custom products, lower sales of space level solid state relays with a small increasetraditional higher margins, and approximately $540,000 associated with COVID-19 production down time resulted in overhead cost. The change relative to sales was the result of the increase in customer funded non-recurring engineering without the cost overrun experienced in 2016 on the customer funded projects.lower overall gross margin.

In 2017,2020, the Company’s investmentsinvestment in technology through research and development, which was expensed, totaled

approximately $1,704,000$1,431,000 ($1,152,0001,707,000 in 2016)2019). The Company’s research and development expenditures were directed primarily toward standard proprietary power managementmicroelectronic products, including industrial power controllers and DC-DC converters, fiber optic transceivers, high voltage optocouplers and continued product development and improvementsimprovement associated with the Company’s space level and other high reliability programs. products.

In addition to the Company’s investment in research and development, various customers paid the Company approximately $1,368,000$2,227,000 in non-recurring engineering revenue with $1,310,000$1,722,000 recorded within cost of goods sold associated with the development of custom products for specific applications.

Selling, general, and administrative expenses totaled 21.5%24.9% of net sales in 20172020 compared to 23.5%22.3% in 2016.2019. In dollars expensed, selling, general and administrative expenses totaled $4,245,000$5,543,000 in 20172020 as compared to $4,132,000$5,673,000 in 2016.2019, an decrease or $130,000.

Other income and net interest income (expense) for fiscal 20172020 totaled $77,000$65,000 compared to $56,000$122,000 for fiscal 2016. The majority of the other income is related to reclamation of precious metals, such as gold and silver (from scrap and obsolete material).2019.

Income before taxes for fiscal 20172020 was approximately $1,677,000,$1,690,000, or 8.5%7.6% of net sales, compared to $345,000,$4,439,000, or 1.9%17.4% of net sales in fiscal 2016. The increase in income was associated with higher revenues.2019.

Provisions for income tax for fiscal 20172020 totaled $271,000$218,000 compared to $110,000$726,000 for fiscal 2016.2019. The Company’s effective income tax rate was 16%13.0% for the year ended November 30, 20172020 and 32%16.5% for the year ended November 30, 2016. The decrease in the effective rate is associated with a R&D tax credit of $279,000 in 2017.2019.

Net income totaled approximately $1,406,000$1,472,000 or $0.55$0.57 per share in 20172020 versus 20162019 net income of $235,000$3,713,000 or $0.09$1.44 per share.

Impact of COVID-19 on our Business

The spread of the COVID-19 virus during the first half of 2020 has caused an economic downturn on a global scale, as well as significant volatility in the financial markets. 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. In this time of uncertainty as a result of the COVID-19 pandemic, 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 such as social distancing. We have established and implemented a work from home provision where possible. We may have to take further actions that we determine are in the best interests of our employees or as required by federal, state, or local authorities.

We experienced multiple confirmed case of COVID-19 during 2020, which caused us to shut down our Garland facility for a few days to thoroughly clean the facility and address employee concerns. Production in the Garland facility has been impacted, although we are not able to quantify the impact at this time. Our maquiladora contractor in Mexico was shut down during April and May but reopened as of mid-June at limited capacity due to local restrictions in that area. We have relocated some of that production to our Garland facility. We are working with our customers to meet their current requirements and believe that our customers have not incurred any major impact related to our position in their supply chain as of the date of this filing. The combined impact of reduced production in the Garland facility as well as stopped production from Mexico has impacted our cost of production by an estimated 2% to 3% in 2020 due to overhead cost that could not be allocated to work in process.

The impact of the COVID-19 pandemic continues to unfold. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.

Liquidity and Capital Resources

On April 23, 2016,August 29, 2019, the Company renewed the Loan Agreement with a Texas banking institution. The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000.$6,000,000 with a rate equal to prime rate. The Loan Agreement also contains financial covenants to maintain at all times including (i) minimum working capital of not less than $4,000,000, (ii) a ratio of senior funded debt, minus the Company’s balance sheet cash on hand to the extent in excess of $2,000,000 to EBITDA of not more than 3.0 to 1.0, and (iii) a ratio of free cash flow to debt service of not less than 1.2 to 1.0. The Company has not, to date, drawn any amounts under the revolving line

of credit and is currently in compliance with the financial covenants. The Company has not received any indication that borrowing under the Loan Agreement may be restricted due to COVID-19 uncertainties. The agreement termination date is April 23, 2021.

On April 17, 2020, Micropac Industries, Inc. (the Company) obtained an unsecured $1,924,400 loan under the Paycheck Protection Program (the PPP Loan). The Paycheck Protection Program (or PPP) was established under the recently congressionally-approved Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and is administered by the U.S. Small Business Administration. The PPP Loan to the Company is being made through Frost Bank, the Company s existing lender (the Lender).

Based upon updated guidance issued April 23, 2020 by the Federal Government including a presumption that no publicly traded companies with sources of liquidity are eligible for a PPP loan, the Company returned the loan proceeds within the time period imposed under these new guidelines and paid off the loan on May 4, 2020.

The Company provided $1,549,000used $416,000 of cash from operating activities in 20172020 compared to the use of $2,133,000$3,944,000 of cash fromprovided by operating activities in 2016.2019. The increasedecrease in net cash provided by operations is due to higherlower revenues in 2017.2020 and an increase in inventory associated with the increase in backlog. The Company used $460,000$686,000 in cash for investment in additional manufacturing equipment and construction in 2017process on the new facility in 2020 compared to $238,000$249,000 in 2016. In addition, the Company purchased 9.2 acres of land in Garland, Texas for $1,438,000. With the purchase of this tract of land, it is the intent of the Company to consolidate the three existing buildings into a new manufacturing center in the future.2019.

The Company issued a dividend payment of $0.10 per share to all shareholders of record for each of the last two years. The total dividend payment was $258,000 per year.

As of November 30, 2017,2020, the Company had $9,388,000$14,619,000 in cash and cash equivalents compared to $10,012,000$13,890,000 in cash and cash equivalents on November 30, 2016.2019. The Company held $2,031,000$2,089,000 in short term investments at November 30, 2017 and $2,014,000 at November 30, 2016. 2019.

The Company anticipates that it will use somea combination of this cash and a commercial real estate construction loan for the construction of a new 76,000 square foot manufacturing center.center on the 9.2 acres of land in Garland, Texas the Company purchased. 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, facility upgrades, and acquisition opportunities.expansion.

Company management believes it will meet its 20182021 capital requirements through the use of cash derived from operations for the year and/or usage of the Company’s cash and cash equivalents. There were no significant outstanding commitments for equipment purchases or improvements at November 30, 2017.

Off-Balance Sheet Arrangements2020.

The Company has no significant off-balance sheet arrangements.

Critical Accounting Policies

Revenue Recognition

RevenuesThe 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 recorded as shipments are made based upon contract prices. Any losses anticipatedbelieved to be reasonable under the circumstances. Note 2 to the Financial Statements in the Annual Report on fixed price contracts are providedForm 10-K for currently. Sales are recorded netthe year ended November 30, 2020, describes the significant accounting policies and methods used in the preparation of sales returns, allowances and discounts.the Financial Statements. liabilities. Actual results could differ from these estimates.

Deferred Revenue represents prepayments from customers and will be recognized as revenue when the products are shipped per the terms of the contract.

On May 28, 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers, which requires an entity to recognize the amountThe 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 which it expects to be entitled fordepict the transfer of promised goods andor services to customers.customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU will replace most existingCompany’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 guidanceof 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 U.S. GAAP when it becomes effective. 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 standard permitsallowance for doubtful accounts is based on our assessment of the usecollectability of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. On July 9, 2015, the FASB agreed to defer the effective date to annual reporting periods beginning after December 15, 2017specific customer accounts and the interim periods within that year. The Company has not yet selected a transition method nor has it determined the effectaging of the standard on its ongoing financial reporting. The standard willaccounts 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 effective for the Company for fiscal year ending November 30, 2019.adversely affected.

Inventories

InventoriesInventory purchases and commitments are stated at lower of costbased upon future demand. If there is a sudden and significant decrease in demand for our products or market value and include material, labor and manufacturing overhead. All inventories are valued using the FIFO (first-in, first-out) methodthere is a higher risk of inventory valuation. The Company determines the need to write inventory down to the lowerobsolescence because of cost or market via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog.

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. This ASU eliminates from GAAP the requirement to measure inventory at the lower of cost or market. Market under the previous requirement could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. Entities within scope of this update will nowchanging customer requirements, we may be required to measureincrease our inventory at the lower of costallowances and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory using LIFO or the retail inventory method. The amendments in this update are effective for fiscal years beginning after December 15, 2016, with early adoption permitted, and shouldour gross margin could be applied prospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Income Taxesadversely affected.

The Company accounts for income taxes using the assetrecognizes deferred tax assets and liability method. Under this method the Company records deferred income taxes for the temporaryliabilities based on differences between the financial reporting basis and the tax basis of assets and liabilities atusing the enacted tax rates and laws that are expected to be in effect when such amountsthe differences are realizedexpected to be recovered. If we were to determine we would not be able to realize all 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.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or allpart of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent uponasset in the generation of future, taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in whichan 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 are deductible, management believes it is more likely than not thatwill 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 Company will realize the benefitsvalue of these deductible differences.assets.

New Accounting Pronouncements

In November 2015,June 2016, the FASB issued ASU No. 2015-17, Income Taxes2016-13, Financial Instruments-Credit Losses (Topic 740)326): Balance Sheet ClassificationMeasurement of Deferred Taxes.Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The ASU requires entitiesthe use of an “expected loss” model for instruments measured at amortized cost, in which companies will be required to classify deferred tax liabilitiesestimate the lifetime expected credit loss and assets as noncurrentrecord an allowance to offset the amortized cost basis, resulting in a classified statementnet presentation of the amount expected to be collected on the financial position. This ASUasset. The new guidance is effective for fiscal years beginning after December 15, 2016, and2022 for Smaller Reporting Companies, including interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We early adopted this guidance as of December 1, 2016. Our adoption of this guidance did notfiscal years and requires a modified-retrospective approach to adoption. The Company believes that adopting ASU 2016-13 will have ano material impact on our consolidatedthe financial statements. We reclassified $417 thousand of noncurrent deferred tax liability from noncurrent liability to reduce the carrying value of deferred tax assets as of November 30, 2016 to conform to current financial statement presentation.

The Company records a liability for an unrecognized tax benefit for a tax position that is not “more-likely-than-not” to be sustained.  The Company did not record any liability for uncertain tax positions as of November 30, 2017statements and 2016.related disclosures.

Not applicable.

Page No.

Report of Independent Registered Public Accounting Firm

To the REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Micropac Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Micropac Industries, Inc. (the “Company”), as of November 30, 20172020 and 2016,2019, and the related statements of income, shareholders’ equity, and cash flows for the years then ended. Theended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management is responsible for these financial statements.management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’sentity’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,We have served as the financial statements referred to above present fairly, in all material respects, the financial position of Micropac Industries, Inc. as of November 30, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Company's auditor since 2016.

/s/ Whitley Penn LLP

Dallas, Texas

February 8, 201811, 2021

MICROPAC INDUSTRIES, INC.

BALANCE SHEETS

NOVEMBER 30, 20172020 AND 20162019

(Dollars in thousands except share and per share data)

See accompanying notes to financial statements.

MICROPAC INDUSTRIES, INC.

STATEMENTS OF INCOME

FOR THE YEARS ENDED NOVEMBER 30, 20172020 AND 20162019

(Dollars in thousands except share and per share data)

See accompanying notes to financial statements.

MICROPAC INDUSTRIES, INC.

STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016

(Dollars in thousands)

See accompanying notes to financial statements.

MICROPAC INDUSTRIES, INC.

STATEMENTS OF CASH FLOWSSHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED NOVEMBER 30, 20172020 AND 20162019

(Dollars in thousands)

See accompanying notes to financial statements.

MICROPAC INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED NOVEMBER 30, 2020 AND 2019

(Dollars in thousands)

See accompanying notes to financial statements.

MICROPAC INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS

NOVEMBER 30, 20172020 AND 20162019

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 optoelectronicsensor 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.

2.       

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

Revenue Recognition

Revenues are recorded as shipments are made based upon contract prices. Any losses anticipated on fixed price contracts are provided for currently. Sales are recorded net of sales returns, allowances and discounts.

Deferred Revenue represents prepayments from customers and will be recognized as revenue when the products are shipped per the terms of the contract.

On May 28, 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers, which requires an entity to recognize the amountThe 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 which it expects to be entitled fordepict the transfer of promised goods andor services to customers. customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The ASU will replace most existingCompany’s revenue on the majority of its customer contracts are recognized at a point in time, generally upon shipment of products.

To achieve that core principle, the Company applies the following steps:

The core principle of revenue recognition guidanceunder GAAP is that the Company should recognize revenue to depict the transfer of promised goods or services to customers in U.S. GAAPan amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company’s revenue on the majority of its customer contracts are recognized at a point in time, generally upon shipment of products.

To achieve that core principle, the Company applies the following steps:

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

The standard permitsmajority of the useCompany s purchase orders or contracts with customers contain a single performance obligation, the shipment of eitherproducts.

The transaction price reflects the retrospectiveCompany 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 cumulative effect transition method. 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.

The Company transaction price is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. On July 9, 2015,fixed price per unit per each delivery upon shipment.

This performance obligation is satisfied when control of the FASB agreedproduct is transferred to defer the effective date to annual reporting periods beginning after December 15, 2017 and the interim periods within that year.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 not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. The standard will be effective for the Company for fiscal year ending November 30, 2019.

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 customer and the contract 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.

Short-Term Investments Disaggregation of Revenue

The following table summarizes the Company’s net sales by product line.

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

Receivables, net, Contract Assets and Contract Liabilities

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. 

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

Revenue recognized in 2020 that was included in the deferred revenue liability balance at the beginning of the year was $367,000.

Contract costs

The Company does not have material incremental costs to obtain a contract in the form of sales commissions or bonuses. The Company incurs other immaterial costs to obtain and fulfill a contract; however, the Company has $2,031,000 and $2,014,000elected 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.

Short-Term Investments

The Company had $2,089,000 in short-term investments at November 30, 2017 and 2016, respectively.2019. Short-term investments consist of certificates of deposits with maturities greater than 90 days. These investments are reported at historical cost, which approximates fair value. All highly liquid investments with maturities of 90 days or less are classified as cash equivalents. All short-term investments are securities which the Company has the ability and intent to hold to maturity and mature within one year.

Inventories

Inventories are stated at lower of cost or marketnet 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 marketnet realizable value via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog.

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. This ASU eliminates from GAAP the requirement to measure inventory at the lower of cost or market. Market under the previous requirement could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. Entities within scope of this update will now be required to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory using LIFO or the retail inventory method. The amendments in this update are effective for fiscal years beginning after December 15, 2016, with early adoption permitted, and should be applied prospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method the Company records deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The resulting deferred tax liabilities and assets are adjusted to reflect changes in tax law or rates in the period that includes the enactment date.

The Company records a liability for an unrecognized tax benefit for a tax position that is not “more-likely-than-not” to be sustained.  The Company did not record any liability for uncertain tax positions as of November 30, 20172020 and 2016.November 30, 2019.

In November 2015, the FASB issued ASU No. 2015-17,Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The ASU requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We early adopted this guidance as of December 1, 2016. Our adoption of this guidance did not have a material impact on our financial statements. We reclassified $417 thousand of noncurrent deferred tax liability from noncurrent liability to reduce the carrying value of deferred tax assets as of November 30, 2016 to conform to current financial statement presentation.

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:

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.

Repairs and maintenance are expensed as incurred. Improvements which extend the useful lives of property, plant, and equipment are capitalized.

Research and Development Costs

Costs for the design and development of new products are expensed as incurred.

Basic and Diluted Earnings Per Share

Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential common shares. During 20172020 and 2016,2019, the Company had no dilutive potential common stock.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of AmericaGAAP 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.

The Company had no financial assets and liabilities measured at fair value on a recurring basis as of November 30, 20172020 and 2016.2019.  The fair value of financial instruments such as cash and cash equivalents, short-term investments, accounts receivable, and accounts payable approximate their carrying amount based on the short maturity of these instruments.  There were no nonfinancial assets measured at fair value on a nonrecurring basis at November 30, 20172020 and 2016.2019.

4.       NOTES PAYABLE TO BANKS:

On April 23, 2016,May 30, 2019, the Company renewed the Loan Agreement with a Texas banking institution. The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000. The Loan Agreement also contains financial covenants to maintain at all times including (i) minimum working capital of not less than $4,000,000, (ii) a ratio of senior funded debt, minus the Company’s balance sheet cash on hand to the extent in excess of $2,000,000 to EBITDA of not more than 3.0 to 1.0, and (iii) a ratio of free cash flow to debt service of not less than 1.2 to 1.0. The Company has not, to date, drawn any amounts under the revolving line of credit and is currently in compliance with the financial covenants.

5.       PRODUCT WARRANTIES:

In general, the Company warrants that its products, when delivered, will be free from defects in material workmanship under normal use and service. The obligations are limited to replacing, repairing or giving credit for, at the option of the Company, any products that are returned within one year after the date of shipment. The Company does not provide extended warranties.

The Company reserves for potential warranty costs based on historical warranty claims experience. While management considers the process to be adequate to effectively quantify its exposure to warranty claims based on historical performance, changes in warranty claims on a specific or cumulative basis may require management to adjust its reserve for potential warranty costs.

Warranty expense was approximately $49,000$185,000 and $100,000$117,000 in 20172020 and 2016,2019, respectively.

6.       LEASE COMMITMENTS:The following table summarizes product warranty activity recorded during the years ended November 30, 2020 and 2019.

Rent expense for each of the years ended November 30, 20172020 and 20162019 was $50,000$51,000 and $50,000 respectively.

The Company has no future minimum lease payments under non-cancellable operating leases for office and manufacturing space with remaining terms in excess of one year.Leases

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02,Leases (Topic 842). Under the new standard, lessees will be required to recognize lease assets and liabilities for all leases, with certain exceptions, on their balance sheets. Public business entities are required to adopt the standard for reporting periods beginning after December 15, 2018. The Company does not expectadopted in the adoptionfirst quarter of this guidance to have a2020 and had no material impact on its consolidated financial statements. The Company adopted ASC 842 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the nine months ended August 24, 2019 or as of November 30, 2019. Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

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 upon adoption of ASC 842. The Company had an operating lease expense of $51,000 for the first nine months of 2020. 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 remaining lease term is three years.

5.       EMPLOYEE BENEFITS:

The undiscounted future minimum lease payments consist of the following at:

The Company sponsors an Employees’ Profit Sharing Plan and Trust (the Plan). Pursuant to section 401(k) of the Internal Revenue Code, the Plan is available to substantially all employees of the Company. Employee contributions to the Plan are matched by the Company at amounts up to 6% of the participant’s salary. Contributions made by the Company were expensed and totaled approximately $292,000$360,000 in 20172020 and $325,000$363,000 in 2016.2019. Employees become vested in Company contributions in 20% increments in years two through six of employment. If the employee leaves the Company prior to being fully vested, the unvested portion of the Company contributions are forfeited and such forfeitures are used to lower future Company contributions. The Company does not offer other post-retirement benefits to its employees at this time.

8.INCOME TAXES:

The income tax provision (benefit) consisted of the following for the years ended November 30:

The provision for income taxes differs from that computed at the federal statutory corporate tax rate as follows:

The components of deferred tax assets and liabilities were as follows:

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. 

9.       SIGNIFICANT CUSTOMER INFORMATION:

The Company’s major customers include contractors to the United States government. Sales to these customers for the Department of Defense (DOD)DOD and NASA contracts accounted for approximately 60%66% of the Company’s revenues in 20172020 compared to 56%59% in 2016.2019. The Company’s major customers are Lockheed Martin, Northrop Grumman, Rockwell Collins, United Technologies, Raytheon, Boeing and L-3. Three customersBoeing. One customer accounted for 16%, 13% and 10%20% of the Company’s sales during 20172020 and two2019. The contracts of our customers accounted for 18% and 11%with the United States government may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Company’s salesgovernment, which would in 2016. The Company’s top 10 customers accounted for 49% ofturn might materially affect the Company’s sales during 2017 and 48%sales. The loss of the Company’s sales during 2016. Threeany one of these customers accounted for 19%, 18% and 14% of the accounts receivable balance as of November 30, 2017.or a significant reduction in their purchases would be likely to adversely affect our business.

10.       SHAREHOLDERS’ EQUITY:

On December 15, 2015,11, 2018, 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 12, 2016.9, 2019. The dividend was paid to shareholders on February 11, 2016.8, 2019.

On December 13, 2016,10, 2019, 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 10, 2017.8, 2020. The dividend was paid to shareholders on February 9, 2017.14, 2020.

11.       SUBSEQUENT EVENTS:

On December 12, 2017,8, 2020, the Board of Directors of Micropac Industries, Inc. approved the payment of a special dividend of $0.10 per share forspecial dividend to all shareholders of record as of January 10 2018.6, 2021. The dividend will be paid to shareholders on or about February 9, 2018.12, 2021.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into United States tax law, which among other provisions will lower the corporate tax rate to 21%. Given this date of enactment, our financial statements as of and for the year ended November 30, 2017 do not reflect the impact of the Act. The Company is in the process of analyzing the potential aggregate impact of the Act and will reflect any such impact in the quarterly report for the period in which the law was enacted. 

None.

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this report was prepared. The Certifying Officers have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) (the Rules) under the Securities Exchange Act of 1934 (or Exchange Act)) and determined that as of November 30, 2017,2020, the Company's disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control Over Financial Reporting

Management of Micropac is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act Rule 13a-15(f). Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), the Company’s management conducted an evaluation of the effectiveness of its internal control over financial reporting as of November 30, 20172020 as required by the Securities Exchange Act of 1934 Rule13a-15(c). In making this assessment, the Company’s management used the criteria set forth in the framework in “Internal Control – Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation conducted under the framework in “Internal Control – Integrated Framework” (2013), management concluded that the Company’s internal control over financial reporting was effective as of November 30, 2017.2020.

During our most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

None.

PART III

In accordance with General Instruction G(3) of Form 10-K, the information required by this Part III is incorporated by reference to Micropac Industries, Inc.’s definitive proxy statement relating to its 20182021 Annual Meeting of Stockholders, as set forth below. The 20182021 Proxy Statement will be filed with the Securities and Exchange Commission on or about February 09, 2018.11, 2021.

Mr. King is the current President and Chief Executive of the Company. Prior to November 2002, Mr. King was the President and Chief Operating Officer of Lucas Benning Power Electronics. Mr. King joined the Company in November of 2002, and was elected Chief Executive Officer, President and Director in October 2005.

Mr. Hempel has served as the Chief Operating Officer of Hanseatische Waren-Gesellschaft MBH & Co, KG, Bremen, Germany for over 25 years.

Mr. Robinson has 35 years of experience in the electronics industry, including 26 years with Texas Instruments, Inc. and later Raytheon through acquisition. During the past 10 years, Mr. Robinson has been actively engaged in consulting with numerous high technology organizations. He has served on several advisory boards for high technology companies and universities.

Mr. Hoesterey is an experienced executive with over 35 years in general management and manufacturing operations management in a variety of industries including high tech electronics, industrial products, and power regulation. He served as the President and Chief Executive Officer of Components Corporation of America from January 2000 to August 2009. In September 2009, he began serving as the President and Chief Executive Officer of R.K. Hoesterey & Associates.

Ms. Dittrich was an Executive Vice President of Raytheon Systems Company and the General Manager of the Sensor and Electronic Systems segment. Before working for Raytheon, Ms. Dittrich was a Senior Vice President of Texas Instruments (TI) Systems Group, a Malcolm Baldrige Quality Award winner, and the General Manager of the Electronic Systems Division. Her prior assignments include TI Systems Group Vice President and Engineering Manager, Software Engineering Director for the defense business, and Senior Member of Technical Staff. She has had senior executive responsibility for product engineering efforts that involve large scale software and hardware development and integration. Ms. Dittrich provided consulting services with a focus on business strategy and operational performance to various technology companies after leaving Raytheon. She became a Visiting Scientist at the Carnegie Mellon University Software Engineering Institute (SEI), a Federally Funded Research and Development Center and chaired the SEI Board of Advisors for over 10 years. She was a Fellow of the Cutter Business Technical Council and a senior consultant for Cutter Consortium. In addition, she has held membership positions on the Army Science Board, the Department of Defense Software Best Practices - Airlie Software Council and other advisory boards.

Mr. Tobey was a Vice President of Business Development at Raytheon Missile Systems Company retiring in 2016 following a 38-year38 year career in the defense, aerospace, and civil security sectors. He also served as Vice President of International Business Development for both Raytheon's Missile Systems and Network Centric Systems businesses. Until 1997, when Texas Instruments' Defense Systems and Electronics Group was acquired by Raytheon, Mr. Tobey served as that company's Vice President of International Business Development and Managing Director of Texas Instruments UK, Ltd. (a wholly owned TI subsidiary). During Mr. Tobey's career, he has served in various business creation and capture, strategy, program and manufacturing management positions both in the U.S. and abroad. Mr. Tobey holds a Bachelor of Science and a Masters of Business Administration degree from Utah State University. He is a graduate of the U.S. Defense Department's Defense Acquisition University, and has completed Executive Study at

the Anderson School of Management at UCLA.

Mr. Robinson is a practical, executive-level leader interested in making a difference within organizations and maximizing the potential collective impact of people. He has deep experience in corporate strategy, structuring and executing successful complex corporate initiatives, manufacturing, and mergers and acquisitions. As a partner-level consultant, Mr. Robinson has led engagements in strategy development, M&A integration and executing complex corporate initiatives. His industry experience includes time as an Industrial Engineer with Texas Instruments’ Defense Systems Group and as an executive over industrial engineering, safety and quality systems with Decibel Products, a $35M in annual revenue manufacturer which grew into Allen Telecom. He served on the Chicago and North Texas chapter boards of the National Association of Corporate Directors (NACD), a national organization focused on providing information and education to corporate directors. Mr. Robinson served as a Business Leadership Center Instructor at the SMU Cox School of Business in Dallas, TX and is a two-time recipient of the Teaching Excellence Award. He holds an MBA from the University of Dallas and a B.S. in Industrial Engineering from Texas A&M University.

Ms. Shaunna Black is President of Shaunna Black and Associates. Ms. Black advises companies on global operations, provides experienced executive talent, and coaches leadership teams. The focus of her company is start-ups, business turnarounds and growth, strategy, organization and systems design, and leadership development. Ms. Black is an innovative and highly accomplished operations/manufacturing executive, who enables leaders to rapidly solve complicated problems. She has managed operations internationally in 25 countries. Ms. Black’s methodology delivers extraordinary performance utilizing the power of diverse, multi-generational teams, creating high performance cultures and metrics-driven systems. She has expertise in leadership and team development, technical and systems design, and production methodology in the technology, industrial, manufacturing and hospitality sectors. Her executive career has provided significant experience in strategy, global operations, technology, risk management and sustainability. Ms. Black has served on Audit, Governance, Safety/Risk and M&A Committees. Her industry experience includes Texas Instruments Vice President, (24 years) Dallas/Fort Worth Area including Vice President, Worldwide Facilities - responsible for the design, construction and operation of TI facilities, environmental, safety and health programs, global real estate, worldwide security, and TI's sustainability strategy; Vice President, Dallas Fabrication - Manager for semiconductor manufacturing in one of TI's premier analog wafer fabrication facilities; and Vice President, Worldwide Facilities and Worldwide Environmental, Safety and Health.

Mr. Cefalu has over 35 years of experience in management, manufacturing and financial operations in a variety of industries. Mr. Cefalu has been the Chief Financial Officer and Executive Vice President of the Company since September 2001.

Board Meetings and Committees

The Board of Directors held five (5) board meetings during the year ended November 2017.2020. Directors received a fee of $1,500 (other than Mr. King) for each meeting attended during the year ended November 2017.2020. In addition, the Board agreed to pay an annual retainer of $10,000 to Mr. Donald Robinson, Mr. Hoesterey, and Ms. Dittrich, and $5,000 to Mr. Tobey. Ms. DittrichShaunna Black and Mr. Robinson attended all of the meetings. Mr. Hempel attended one (1) of the meetings, Mr. Hoesterey attended (3) of the meetings, Mr. Tobey attended two (2) of the meetings.Gerald Tobey.

The Audit Committee held four (4) meetings during the year ended November 30, 2017.2020. Members of the Audit Committee received a fee of $750 for each meeting attended during the year ended November 2017.2020. Mr. King did not receive any payments for attending meetings of the Audit Committee. Ms. Dittrich and Mr. Robinson attended four (4) of the meetings. Mr. Hoesterey attended three (3) of the meetings, Mr. Tobey attended two (2) of the meetings and Mr. Hempel attendded one (1) of the meetings.