Attached files

file filename
EX-32.1 - MICROPAC INDUSTRIES INCmicro10qex321053114.htm
EX-32.2 - MICROPAC INDUSTRIES INCmicro10qex322053114.htm
EX-31.2 - MICROPAC INDUSTRIES INCmicro10qex312053114.htm
EX-31.1 - MICROPAC INDUSTRIES INCmicro10qex311053114.htm
EXCEL - IDEA: XBRL DOCUMENT - MICROPAC INDUSTRIES INCFinancial_Report.xls


 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549

FORM 10-Q


(Mark One)
     
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended May 31, 2014
OR
     
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number 0-5109

MICROPAC INDUSTRIES, INC.
 
Delaware
   75-1225149              
(State of Incorporation)
(IRS Employer Identification No.)
   
905 E. Walnut, Garland, Texas
75040     
(Address of Principal Executive Office)
(Zip Code)
   
Registrant’s Telephone Number, including Area Code
(972) 272-3571

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer  o
Accelerated filer  o
Non-accelerated filero
Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
On July 14, 2014 there were 2,578,315 shares of Common Stock, $.10 par value outstanding.
 

 
1

 
 
 
MICROPAC INDUSTRIES, INC.
 
 
FORM 10-Q
 

May 31, 2014

INDEX
 
PART I - FINANCIAL INFORMATION
   
 
ITEM 1 - FINANCIAL STATEMENTS
   
 
Condensed Balance Sheets as of May 31, 2014 (unaudited) and November 30, 2013
 
Condensed Statements of Operations for the three and six months ended May 31, 2014 and June 1, 2013 (unaudited)
 
Condensed Statements of Cash Flows for the six months ended May 31, 2014 and June 1, 2013 (unaudited)
 
Notes to Condensed Financial Statements (unaudited)
   
 
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 
   
 
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 
ITEM 4 - CONTROLS AND PROCEDURES
   
   
   
PART II - OTHER INFORMATION
 
 
ITEM 1 - LEGAL PROCEEDINGS
 
ITEM 1A -RISK FACTORS
 
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
 
ITEM 4 - MINE SAFETY DISCLOSURE
 
ITEM 5 - OTHER INFORMATION
 
ITEM 6 - EXHIBITS
   
   
   
SIGNATURES
 

 



 
2

 

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
MICROPAC INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)

ASSETS
 
CURRENT ASSETS
 
05/31/14
   
11/30/13
 
   
(Unaudited)
       
             
Cash and cash equivalents
  $ 9,310     $ 9,263  
Short-term investments
    2,008       2,006  
       Receivables, net of allowance for doubtful accounts of
       $2 at May 31, 2014  and $2 at November 30, 2013
    2,658       2,946  
Inventories:
               
Raw materials and supplies
    3,051       2,968  
Work-in process
    2,609       2,901  
                             Total inventories
    5,660       5,869  
Deferred income taxes
    713       738  
Prepaid income tax
    37       2  
Prepaid expenses and other assets
    202       171  
                             Total current assets
    20,588       20,995  
                 
PROPERTY, PLANT AND EQUIPMENT, at cost:
               
Land
    80       80  
Buildings
    498       498  
Facility improvements
    1,074       1,074  
Machinery and equipment
    8,298       8,171  
Furniture and fixtures
    697       677  
                      Total property, plant, and equipment
    10,647       10,500  
Less accumulated depreciation
    (8,696 )     (8,537 )
                                     Net property, plant, and equipment
      1,951       1,963  
 
                                      Total assets
  $ 22,539     $ 22,958  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES:
               
Accounts payable
  $ 400     $ 713  
Accrued compensation
    500       597  
Deferred revenue
    325       622  
Other accrued liabilities
    162       209  
Income taxes payable
    88       173  
                        Total current liabilities
    1,475       2,314  
                 
DEFERRED INCOME TAXES
    445       454  
                 
SHAREHOLDERS’ EQUITY
               
Common stock, ($.10 par value), authorized 10,000,000
            shares, 3,078,315 issued and 2,578,315 outstanding at
            May 31, 2014 and November 30, 2013
    308       308  
Additional paid-in capital
    885       885  
       Treasury stock, 500,000 shares, at cost
    (1,250 )     (1,250 )
Retained earnings
    20,676       20,247  
                 
                                Total shareholders’ equity
    20,619       20,190  
                 
                                        Total liabilities and shareholders’ equity
  $ 22,539     $ 22,958  
 
 
See accompanying notes to financial statements.
 
 
 
3

 

MICROPAC INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except share data)
(Unaudited)


   
 Three months ended
   
 Six months ended
 
   
05/31/14
   
06/01/13
   
05/31/14
   
06/01/13
 
                         
                         
NET SALES
  $ 5,162     $ 5,093     $ 10,021     $ 9,731  
                                 
COST AND EXPENSES:
                               
                                 
    Cost of goods sold
    (3,239 )     (3,062 )     (5,983 )     (6,044 )
                                 
    Research and development
    (443 )     (434 )     (853 )     (773 )
                                 
    Selling, general & administrative expenses
    (1,083 )     (990 )     (2,106 )     (1,979 )
                                 
                                    Total cost and expenses
    (4,765 )     (4,486 )     (8,942 )     (8,796 )
                                 
OPERATING INCOME BEFORE INTEREST,OTHER   INCOME AND INCOME TAXES
    397       607       1,079       935  
                                 
    Interest (expense) income, net
    (2 )     -       (6 )     1  
                                 
INCOME BEFORE TAXES
  $ 395     $ 607     $ 1,073     $ 936  
                                 
    Provision for taxes
    (142 )     (219 )     (386 )     (337 )
                                 
NET INCOME
  $ 253     $ 388     $ 687     $ 599  
NET INCOME PER SHARE, BASIC AND DILUTED
  $ 0.10     $ 0.15     $ 0.27     $ 0.23  
                                 
DIVIDENDS PER SHARE
  $ -     $ -     $ 0.10     $ 0.10  
                                 
WEIGHTED AVERAGE OF SHARES, basic and diluted
    2,578,315       2,578,315       2,578,315       2,578,315  
 


See accompanying notes to financial statements.




 
4

 


MICROPAC INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)


   
Six months ended
 
   
5/31/14
   
6/01/13
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 687     $ 599  
Adjustments to reconcile net income to
               
net cash provided by operating activities:
               
    Depreciation
    159       157  
                    Deferred tax expense
    16       232  
    Changes in certain current assets and liabilities
               
       Decrease in accounts receivable
    288       238  
       Decrease in inventories
    209       602  
      (Increase) decrease in prepaid expense and other current assets
    (66 )     45  
      (Decrease) increase in deferred revenue
    (297 )     131  
       Decrease accounts payable
    (313 )     (135 )
       Decrease in accrued compensation
    (97 )     (47 )
       Decrease in other accrued liabilities
    (47 )     (58 )
       Decrease in income taxes payable
    (85 )     (28 )
                 
                                 Net cash provided by operating activities
    454       1,736  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
        Purchase of short term investments
    (2 )     (1 )
        Additions to property, plant and equipment
    (147 )     (142 )
                 
                         Net cash used in investing activities
    (149 )     (143 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
         Cash dividend
    (258 )     (258 )
                 
                                  Net cash used in financing activities
    (258 )     (258 )
                 
Net change in cash and cash equivalents
    47       1,335  
                 
Cash and cash equivalents at beginning of period
    9,263       7,415  
                 
Cash and cash equivalents at end of period
  $ 9,310     $ 8,750  
                 
Supplemental Cash Flow Disclosure:                 
                 
              Cash paid for income taxes     490      48  



See accompanying notes to financial statements.


 
5

 
 

MICROPAC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Note 1 BASIS OF PRESENTATION

Business Description

Micropac Industries, Inc. (the “Company”), a Delaware corporation, manufactures and distributes various types of hybrid microelectronic circuits, solid state relays, power management products, and optoelectronic components and assemblies.  The Company’s products are used as components in a broad range of military, space and industrial systems, including aircraft instrumentation and navigation systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200o C) products.

In the opinion of management, the unaudited financial statements include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position as of May 31, 2014, the results of operations for the three months and six months ended May 31, 2014 and June 1, 2013, and the cash flows for the six months ended May 31, 2014 and June 1, 2013. Unaudited financial statements are prepared on a basis substantially consistent with those audited for the year ended November 30, 2013. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission.  However, management believes that the disclosures contained are adequate to make the information presented not misleading.

Note 2 SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 sales and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

Sales 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.

The Company recognizes sales in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-10-S99, Revenue Recognition (ASC 605-10-S99). ASC 605-10-S99 requires that four basic criteria must be met before sales can be recognized: (1) persuasive evidence of an arrangement exists; (2) shipment has occurred or services have been rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably assured.

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

Short-Term Investments

The Company has $2,008,000 in short term investments at May 31, 2014. Short-term investments consist of certificates of deposits with initial maturities greater than 90 days.  These investments are reported at historical cost, which approximates fair value. All highly liquid investments with initial 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 market 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 below its cost via an analysis based on the usage of inventory over a three year period and projected usage based on current backlog.
 
 
 
6

 

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.

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:
 
Buildings
15
 
Facility improvements
8-15
 
Machinery and equipment
5-10
 
Furniture and fixtures
5-8
 
 
The Company assesses long-lived assets for impairment under 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 life of property, plant, and equipment are capitalized.

Research and Development Costs

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

Note 3 NEW ACCOUNTING PRONOUNCEMENT

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expect to be entitled for the transfer of promised goods and services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on December 1, 2017. Early application is not permitted. The standard permits the use 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. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

Note 4 FAIR VALUE MEASUREMENT

The Company had no financial assets or liabilities measured at fair value on a recurring basis as of May 31, 2014 and November 30, 2013.  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 May 31, 2014 and November 30, 2013.

Note 5 COMMITMENTS

On January 23, 2013, the Company entered into a Loan Agreement with a Texas banking institution.  The Loan Agreement replaces the Company's revolving line of credit with the Texas banking institution entered into on June 1, 2011.  The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000, and specific advance loans for acquisitions with an aggregate amount not to exceed $7,500,000 in a single advance or in multiple advances.  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 loan agreement or the revolving line of credit and is currently in compliance with the financial covenants.

Note 6 EARNINGS PER COMMON SHARE
 
Basic and diluted earnings per share are computed based upon the weighted average number of shares outstanding during the respective periods. Diluted earnings per share gives effect to all dilutive potential common shares. For the three months and six months ended May 31, 2014 and June 1, 2013, the Company had no dilutive potential common stock.
 
 
 
7

 

Note 7 SHAREHOLDERS’ EQUITY

On December 17, 2013, the Board of Directors of Micropac Industries, Inc. approved the payment of a special dividend of $0.10 per share for shareholders of record as of January 15, 2014.  The dividend was paid to the Company’s shareholders on February 12, 2014.

On December 12, 2012, the Board of Directors of Micropac Industries, Inc. approved the payment of a $.10 per share special dividend to all shareholders of record as of January 15, 2013.  The dividend was paid to shareholders on February 12, 2013.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business

Micropac Industries, Inc. (the “Company”), a Delaware corporation, manufactures and distributes various types of hybrid microelectronic circuits, solid state relays, power management products, and optoelectronic components and assemblies.  The Company’s products are used as components in a broad range of military, space and industrial systems, including aircraft instrumentation and navigation systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200o C) products.  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 such as catalog items.

The Company’s facilities are certified and qualified by Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level), MIL-PRF-19500 JANS (space level), and MIL-PRF-28750 (class K-space level) and is certified to ISO 9001-2002. Micropac is a NASA core supplier, and is registered to AS9100-Aerospace Industry standard for supplier certification. The Company has UL approval on the new isolated solid state industrial power controllers.

The Company’s core technology is the packaging and interconnecting of miniature electronic components, utilizing thick film substrates, forming microelectronics circuits. Other technologies include light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors used in the Company’s optoelectronic components and assemblies.

Results of Operations


   
Three months ended
   
Six months ended
 
   
5/31/2014
   
6/01/2013
   
5/31/2014
   
6/01/2013
 
NET SALES
    100.0 %     100.0 %     100.0 %     100.0 %
                                 
COST AND EXPENSES:
                               
    Cost of Goods Sold
    62.7 %     60.2 %     59.7 %     62.2 %
    Research and development
    8.6 %     8.5 %     8.5 %     7.9 %
    Selling, general & administrative expenses
    21.0 %     19.4 %     21.0 %     20.3 %
                                    Total cost and expenses
    92.3 %     88.1 %     89.2 %     90.4 %
                                 
OPERATING INCOME BEFORE INTEREST
    7.7 %     11.9 %     10.8 %     9.6 %
           AND INCOME TAXES
                               
                                 
    Interest income
    -       -       (0.1 )%     -  
                                 
INCOME BEFORE TAXES
    7.7 %     11.9 %     10.7 %     9.6 %
                                 
    Provision for taxes
    2.7 %     4.3 %     3.8 %     3.5 %
                                 
NET INCOME
    4.9 %     7.6 %     6.9 %     6.1 %
 
 
 
 
8

 
 
Sales for the three and six month periods ended May 31, 2014 totaled $5,162,000 and $10,021,000, respectively.  Sales for the second quarter increased 1.4% or $69,000 above sales for the same period of 2013, while sales for the first six months of 2014 increased 3.0% or $290,000 above the first six months of 2013. Sales were 24% in the commercial market, 63% in the military market, and 13% in the space market for the six months ended May 31, 2014 compared to 25% in the commercial market, 53% in the military market, and 22% in the space market for the six months ended June 1, 2013.

Two customers accounted for 12% and 10% of the Company’s sales for the three months ended May 31, 2014 and two customers accounted for 9% each of the Company’s sales for the six months ended May 31, 2014, while one customer accounted for 18% of the Company’s sales for the three months ended June 1, 2013, and one customer accounted for 9% of the Company’s sales for the six months ended June 1, 2013.

Cost of goods sold for the second quarters of 2014 and 2013 totaled 62.7% and 60.2% of net sales, respectively, while cost of goods sold for the six months ended May 31, 2014 and June 1, 2013 totaled 59.7% and 62.2% of net sales, respectively. In actual dollars, cost of goods sold increased $177,000 in the second quarter of 2014 compared to the same period of 2013. The increase in the second quarter resulted from additional cost on light emitting diode die produced in the Company’s front end manufacturing area and additional cost on one standard solid state relay product. Year to date cost of goods sold decreased $61,000 for the first six months of 2014 as compared to the same periods in 2013 attributable to changes in product mix and lower overhead cost.

Research and development expense increased $9,000 for the second quarter of 2014 versus 2013 and increased $80,000 for the first six months of 2014 compared to the same period of 2013. The research and development expenditures were associated with continued development of several power management products, fiber optic transceivers and high voltage optocouplers. The Company will continue to invest in research and development of these products and other new opportunities.

Selling, general and administrative expense for the second quarter and first six months of 2014 totaled 21.0% of net sales for both periods compared to 19.4% and 20.3% for the same periods in 2013. In actual dollars, selling, general and administrative expense increased $93,000 for the second quarter and increased $127,000 for the first six months of 2014 compared to the same periods in 2013. The increase was associated with an increase in sales and marketing activity including consultant and travel expenses.

Provisions for taxes increased $49,000 for the first six months of 2014 compared to the same period in 2013. The estimated effective tax rate was 36% for both periods.

Net income decreased $135,000 for the second quarter of 2014 versus 2013 and increased $88,000 for the first six months of 2014 compared to the same period of 2013.


Liquidity and Capital Resources

Cash and cash equivalents totaled $9,310,000 as of May 31, 2014 compared to $9,263,000 on November 30, 2013, an increase of $47,000.  The increase in cash and cash equivalents is primarily attributable to $454,000 cash provided from operations with an inventory decrease of $210,000 since November 30, 2013 associated with the completion and shipment of contracts that required the purchase of long lead material in 2013 and a deferred revenue decrease of  $297,000 since November 30, 2013 with completion and shipment of contracts with advance payments offset by a payment of a cash dividend of $258,000, and the investment of $147,000 in equipment and an increase of $2,000 in investments.

On January 23, 2013, the Company entered into a Loan Agreement with a Texas banking institution.  The Loan Agreement replaces the Company's revolving line of credit with the Texas banking institution entered into on June 1, 2011.  The Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000, and specific advance loans for acquisitions with an aggregate amount not to exceed $7,500,000 in a single advance or in multiple advances.  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 loan agreement or the revolving line of credit and is currently in compliance with the financial covenants.

The Company expects to continue to generate adequate amounts of cash to meet its liquidity needs from the sale of products and services and the collection thereof for at least the next twelve months.



 
9

 
 
Outlook

New orders for the second quarter and year-to-date 2014 totaled $3,753,000 and $7,126,000, respectively, compared to $5,380,000 and $9,728,000 for the comparable periods of 2013.  The reduction resulted from lower orders on power management space level products and down-hole oil production products as compared to the same periods of last year. The major decrease is associated with the decrease of new orders of various power management space level products and delays in new orders on various custom products.

Backlog totaled $9,639,000 on May 31, 2014 compared to $9,847,000 as of June 1, 2013 and $12,531,000 on November 30, 2013. The majority of the backlog on May 31, 2014 is expected to be shipped in the next twelve (12) months and represents a mix of the company’s products and technologies with 13% in the commercial market, 75% in the military market, and 12% in the space market compared to 23% in the commercial market, 66% in the military market, and 11% in the space market on June 1, 2013.

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


Cautionary Statement

This Form 10-Q contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Actual results could differ materially.  Investors are warned that forward-looking statements involve risks and unknown factors including, but not limited to, customer cancellation or rescheduling of orders, problems affecting delivery of vendor-supplied raw materials and components, unanticipated manufacturing problems and availability of direct labor resources.

The Company 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.

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


ITEM 3.                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not  applicable

ITEM 4.                      CONTROLS AND PROCEDURES

(a)  
Evaluation of disclosure controls and procedures.

The Chief Executive Officer and Chief Financial Officer of the Company evaluated the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e)) as of May 31, 2014 and, based on this evaluation, concluded that the Company’s disclosure controls and procedures are functioning in an effective manner to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

(b)  
Changes in internal controls.

There has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting during the three month period ended May 31, 2014.


PART II - OTHER INFORMATION

ITEM 1.                     LEGAL PROCEEDINGS

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

ITEM 1A                   RISK FACTORS
 
 
 
10

 

                                    Information about risk factors for the three months ended May 31, 2014 does not differ materially from that set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended November 30, 2013.

ITEM 2.                     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

  None

ITEM 3.                     DEFAULTS UPON SENIOR SECURITIES

                   None

ITEM 4.                      MINE SAFETY DISCLOSURE

                    Not Applicable

ITEM 5.                      OTHER INFORMATION

                   None


ITEM 6.                      EXHIBITS

(a)          Exhibits
 
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
31.2
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
 
32.2
Certification of Chief Accounting Officer pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.
  101  Interactive data files pursuant to Rule 405 of Regulation S-T. 
    

SIGNATURES

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




MICROPAC INDUSTRIES, INC.

July 15, 2014
/s/ Mark King
Date
Mark King
 
Chief Executive Officer
   
   
July 15, 2014
/s/ Patrick Cefalu
Date
Patrick Cefalu
  Chief Financial Officer


 
11