<PAGE>



                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

               Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934


For the quarterly period ended September 29, 2001    Commission file No. 0-11201
                               ------------------                    -----------

                           MERRIMAC INDUSTRIES, INC.
--------------------------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)


        Delaware                                           22-1642321
-------------------------------                     ----------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)


41 Fairfield Place, West Caldwell, New Jersey 07006
---------------------------------------------------
 (Address of principal executive offices)


Registrant's telephone number (973) 575-1300
                              --------------

Securities registered pursuant to Section 12(b) of the Exchange Act:

      Title of each class            Name of each exchange on which registered
 ----------------------------        -------------------------------------------
        Common Stock                          American Stock Exchange
 Common Stock Purchase Rights                 American Stock Exchange

Securities registered pursuant to Section 12(g) of the Exchange Act: None
                                                                     ----


     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15 (d) of the Exchange Act during the  past 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
      ---    ---

     State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

           Class                                Outstanding at November 12, 2001
-----------------------------                   --------------------------------
Common Stock ($.01 par value)                              2,650,345


<PAGE>


PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

                           MERRIMAC INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------


                                                    September 29,  December 30,
                                                         2001         2000
                                                    -------------  ------------
                                                      (Unaudited)   (Audited)
                                                    -------------  ------------
ASSETS
------
Current assets:
  Cash and cash equivalents .......................   $   930,688  $ 3,425,390
  Accounts receivable, net.........................     4,716,762    5,617,085
  Income tax refunds receivable....................       138,492       42,924
  Inventories......................................     4,928,790    3,627,535
  Other current assets ............................       646,966      384,224
  Deferred tax assets .............................       931,000      871,000
                                                      -----------  -----------
      Total current assets ........................    12,292,698   13,968,158
                                                      -----------  -----------
Property, plant and equipment at cost..............    31,771,586   22,789,788
  Less accumulated depreciation and amortization...    14,440,494   12,770,791
                                                      -----------  -----------
    Property, plant and equipment, net.............    17,331,092   10,018,997

Other assets ......................................       680,070      752,381
Goodwill, net of accumulated amortization
  of $397,426 and $285,934.........................     2,506,030    2,774,248
                                                      -----------  -----------
      Total Assets ................................   $32,809,890  $27,513,784
                                                      ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Current liabilities:
  Current portion of long-term debt ...............   $ 4,676,016  $   119,932
  Accounts payable ................................     3,907,346    2,838,198
  Accrued liabilities .............................     1,121,283    1,432,128
  Income taxes payable.............................            -       173,000
                                                      -----------  -----------
      Total current liabilities ...................     9,704,645    4,563,258

Long-term debt, net of current portion ............       612,430      402,828
Deferred compensation .............................       163,182      185,406
Other liabilities..................................        65,169           -
Deferred tax liabilities ..........................       458,000      458,000
                                                      -----------  -----------
      Total liabilities ...........................    11,003,426    5,609,492
                                                      -----------  -----------
Stockholders' equity:
  Preferred stock, par value $.01 per share
    Authorized: 1,000,000 shares
     No shares issued
  Common stock, par value $.01 per share:
    Authorized: 20,000,000 shares
    Issued:  2,834,750 and 2,805,373 shares .......        28,348       28,054
  Common stock warrants............................       837,200      837,200
  Additional paid-in capital ......................    14,181,006   13,982,778
  Retained earnings ...............................     9,403,782    9,507,366
  Accumulated comprehensive loss...................      (299,741)     (50,975)
                                                      -----------  -----------
                                                       24,150,595   24,304,423
  Less treasury stock, at cost:
    208,904 shares.................................    (1,760,131)  (1,760,131)
  Less loan to officer-stockholder ................      (584,000)    (640,000)
                                                      -----------  -----------
     Total stockholders' equity ...................    21,806,464   21,904,292
                                                      -----------  -----------
     Total Liabilities and Stockholders' Equity ...   $32,809,890  $27,513,784
                                                      ===========  ===========

See accompanying notes.


                                     - 1 -

<PAGE>


                              MERRIMAC INDUSTRIES, INC.
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE INCOME
                       -------------------------------------
                                   (Unaudited)
                                   -----------
<table>
<caption>
                                                     Thirteen Weeks Ended            Nine Months Ended
                                                    ---------------------------  ---------------------------
                                                    September 29, September 30,  September 29, September 30,
                                                       2001         2000            2001          2000
OPERATIONS                                          ---------------------------  ---------------------------

                                                   <c>         <c>              <C>           <C>
Net sales ...................................         $5,812,301   $6,437,186      $18,668,833   $16,297,983
                                                      ----------   ----------      -----------   -----------
Costs and expenses:
  Cost of sales .............................          2,889,186    3,302,496        8,994,440     8,343,319
  Selling, general and administrative .......          2,281,120    2,230,958        7,013,810     5,948,119
  Research and development ..................            954,076      483,877        2,501,924     1,332,658
  Amortization of goodwill...................             36,948       41,563          111,492       119,557
  Reincorporation charge.....................                -            -            330,000            -
  Restructuring charge.......................                -            -                 -        315,000
                                                      ----------   ----------      -----------   -----------
                                                       6,161,330    6,058,894       18,951,666    16,058,653
                                                      ----------   ----------      -----------   -----------

Operating income (loss)......................           (349,029)     378,292         (282,833)      239,330
Interest and other (income) expense, net ....            (19,690)       9,148          (69,249)      114,868
                                                      ----------   ----------      -----------   -----------
Income (loss) before income taxes............           (329,339)     369,144         (213,584)      124,462
Provision (benefit) for income taxes ........           (120,000)     150,000         (110,000)       30,000
                                                      ----------   ----------      -----------   -----------
Net income (loss)............................         $ (209,339)  $  219,144      $  (103,584)  $    94,462
                                                      ==========   ==========      ===========   ===========

Net income (loss) per common share:
  Basic......................................              $(.08)       $ .10            $(.04)        $ .05
                                                           =====        =====            =====         =====
  Diluted....................................              $(.08)       $ .09            $(.04)        $ .04
                                                           =====        =====            =====         =====
Weighted average number of
 shares outstanding:
  Basic .....................................          2,622,573    2,186,015        2,615,551     2,021,057
                                                       =========    =========        =========     =========
  Diluted....................................          2,622,573    2,379,028        2,615,551     2,171,314
                                                       =========    =========        =========     =========

COMPREHENSIVE INCOME (LOSS)

Net income (loss)............................         $ (209,339)  $  219,144      $  (103,584)  $    94,462
Comprehensive income (loss):
  Foreign currency translation adjustment....           (194,504)     (87,694)        (248,766)     (203,439)
                                                      ----------   ----------      -----------   -----------
Comprehensive income (loss)..................         $ (403,843)  $  131,450      $  (352,350)  $  (108,977)
                                                      ==========   ==========      ===========   ===========
</table>
See accompanying notes.


                                      -2-

<PAGE>


                           MERRIMAC INDUSTRIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
                                  (Unaudited)
                                  -----------

                                                         Nine Months Ended
                                                    ----------------------------
                                                    September 29,  September 30,
                                                         2001           2000
                                                    -------------  -------------
Cash flows from operating activities:
  Net income (loss).................................. $ (103,584)    $   94,462
  Adjustments to reconcile net income (loss) to net
    cash provided by operating activities:
      Depreciation and amortization..................  1,673,277      1,365,693
      Amortization of goodwill ......................    111,492        119,557
      Amortization of deferred rental income.........    (65,474)            -
      Deferred and other compensation................     63,925          9,904
      Deferred income taxes..........................    (60,000)            -
      Changes in operating assets and liabilities:
        Accounts receivable..........................    900,323       (709,417)
        Income tax refunds receivable................    (95,568)       128,889
        Inventories.................................. (1,301,255)      (885,720)
        Other current assets.........................   (262,743)       (38,506)
        Other assets.................................     72,311          5,694
        Accounts payable.............................   (604,443)       994,993
        Accrued liabilities..........................   (300,869)       147,032
        Income taxes payable.........................   (173,000)       263,074
        Deferred compensation........................    (40,126)      (233,772)
        Other liabilities............................    130,643             -
        Loan to officer-stockholder..................         -        (280,000)
                                                      ----------     ----------
Net cash provided by (used in) operating activities..    (55,091)       981,883
                                                      ----------     ----------
Cash flows from investing activities:
  Purchase of capital assets......................... (7,390,777)    (2,321,781)
  Sale of capital assets.............................         -          17,909
                                                      ----------     ----------
Net cash used in investing activities................ (7,390,777)    (2,303,872)
                                                      ----------     ----------
Cash flows from financing activities:
  Borrowings under revolving credit facility.........  4,500,000             -
  Borrowings under lease facility....................    419,192        343,500
  Repayment of borrowings............................   (110,216)    (2,516,772)
  Proceeds from the issuance of common stock, net....         -       3,277,548
  Proceeds from the exercise of stock options........    198,521        528,275
                                                      ----------     ----------
Net cash provided by financing activities............  5,007,497      1,632,551
                                                      ----------     ----------
Effect of exchange rate changes......................   ( 56,331)       (76,139)
                                                      ----------     ----------
Net (decrease) increase in cash and cash equivalents. (2,494,702)       234,423
Cash and cash equivalents at beginning of year.......  3,425,390      1,108,141
                                                      ----------     ----------
Cash and cash equivalents at end of period........... $  930,688     $1,342,564
                                                      ==========     ==========

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Income taxes..................................... $  302,253     $   41,000
                                                      ==========     ==========
    Loan interest.................................... $  126,070     $  209,441
                                                      ==========     ==========

  Unpaid purchases of capital assets................. $1,673,592     $       -
                                                      ==========     ==========

See accompanying notes.


                                      -3-

<PAGE>


                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A.   Basis of presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with the instructions to Form 10-QSB and therefore do not
include  all  information  and  footnote   disclosures   otherwise  required  by
Regulation S-B. The financial  statements do,  however,  reflect all adjustments
which are, in the opinion of management,  necessary for a fair  presentation  of
the  financial  position of the Company as of September 29, 2001 and its results
of operations and cash flows for the periods presented. Results of operations of
interim periods are not necessarily indicative of results for a full year. These
financial statements should be read in conjunction with the audited consolidated
financial  statements in the Company's Annual Report on Form 10-KSB for December
30,  2000.  Certain  prior year  amounts  have been  reclassified  to conform to
current year presentation.

B.  Contract revenues

     Sales and  related  cost of sales on  fixed-price  contracts  that  require
customization of standard  products to customer  specifications  are recorded as
title to these  products  transfers to the  customer,  which is generally on the
date of  shipment.  Prior to  shipment,  manufacturing  costs  incurred  on such
contracts  are  recorded  as work in process  inventory.  Anticipated  losses on
contracts  are  charged  to  operations  when  identified.  Revenue  related  to
non-recurring  engineering charges is generally  recognized upon shipment of the
initial  units  produced  or based  upon  contractually  established  stages  of
completion.

C.   Delaware reincorporation

     On February 22, 2001, the Company (previously  incorporated in the State of
New Jersey) was reincorporated in the State of Delaware.  In connection with the
reincorporation,  each share of Common Stock,  par value $.50 per share,  of the
Company  prior to the  reincorporation  was  converted  into one share of Common
Stock, par value $.01 per share, of the Company,  as reincorporated in Delaware.
As a result of the reincorporation,  the authorized capital stock of the Company
was  increased to 20 million  shares of common  stock,  par value $.01 per share
(from 5 million  shares of Common Stock prior to the  reincorporation),  and one
million shares of preferred  stock,  par value $.01 per share.

     Common  Stock and  additional  paid in capital for December 30, 2000 in the
accompanying  financial  statements have been restated to give the effect to the
reincorporation.  The Company incurred  $330,000 of costs in connection with the
reincorporation  in Delaware.  Such  expense is  reflected as a  reincorporation
charge in the accompanying  statement of operations.  The reincorporation charge
net of tax benefits was $198,000 or $.08 per share.

     The Board of Directors has the authority to issue up to one million  shares
of Preferred Stock and to fix the number of shares  constituting  any series and
the  designation of such series,  and to determine the  preferences,  rights and
qualifications  or  limitations of such series of Preferred  Stock,  without any
further vote or action by the Company's stockholders.

D.   Inventories

     Inventories consist of the following:
                                              September 29,       December 30,
                                                  2001               2000
                                              ------------        -----------
     Finished goods ......................     $  451,449         $  363,387
     Work in process .....................      2,312,077          1,493,784
     Raw materials and purchased parts ...      2,165,264          1,770,364
                                               ----------         ----------
     Total                                     $4,928,790         $3,627,535
                                               ==========         ==========

     Total  inventories  are net of valuation  allowances  for  obsolescence of
$1,081,000 at September 29, 2001 and $1,018,000 at December 30, 2000.


                                       -4-

<page>


                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


E.   Net income (loss) per common share

     Statement of Financial  Accounting Standards No. 128, "Earnings per Share,"
establishes  the  computation  and  presentation of net income per common share.
Under the  standard,  both basic and  diluted  net  income per common  share are
presented.

     Basic net income per common  share is  calculated  by dividing  net income,
less dividends on Preferred Stock, if any, by the weighted average common shares
outstanding during the period.

     The  calculation  of diluted net income per common share is similar to that
of basic net income per common share,  except that the  denominator is increased
to  include  the  number  of  additional  common  shares  that  would  have been
outstanding  if  all  potentially  dilutive  common  shares,  principally  those
issuable under stock options, were issued during the reporting period.

     Stock  options and  warrants did not have an effect on the  computation  of
diluted loss per share in the three months and nine months ended  September  29,
2001 since they were antidilutive.

F.   Comprehensive income

     Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
Comprehensive  Income",  defines  comprehensive  income, which includes items in
addition  to  those  reported  in the  statement  of  operations,  and  requires
disclosures about the components of comprehensive  income.  Comprehensive income
includes  all  changes in  stockholders'  equity  during a period  except  those
resulting from investments by or distributions to stockholders.  The Company has
determined  that the  components  of other  comprehensive  income  impacting the
Company consists primarily of foreign currency translation adjustments.

G.   Accounting period

     The  Company's  fiscal year is the 52-53 week period ending on the Saturday
closest to December 31. The Company has quarterly dates that correspond with the
Saturday  closest  to the last day of each  calendar  quarter  and each  quarter
consists of 13 weeks in a 52-week year. Every fifth year, the additional week to
make a 53-week  year (fiscal year 1997 was the last and fiscal year 2002 will be
the next) is added to the fourth  quarter,  making  such  quarter  consist of 14
weeks.

H.   Transactions with management and loan to officer-stockholder

     On May 4, 1998,  the Company  sold 22,000  shares of Common  Stock from its
treasury to Mason N. Carter, Chairman,  President and Chief Executive Officer of
the Company,  at a price of $12.75 per share (the  approximate  average  closing
price of the  Common  Stock  during  the first  quarter  of 1998).  The  Company
extended to Mr.  Carter a loan of $255,000 in  connection  with the  purchase of
these  shares  and  amended  a  prior  loan to Mr.  Carter  of  $105,000.  A new
promissory note for a total of $360,000, due May 4, 2003, with interest payments
due quarterly, calculated at a variable interest rate based on the prime rate of
the Company's  lending bank, was executed by Mr. Carter in favor of the Company.
However,  payment of the interest accrued from November 1998 until November 1999
was deferred  until the end of the term of the new promissory  note.  Payment of
the loan is secured by the pledge of the 33,000 shares of Common Stock that were
purchased by Mr. Carter with the proceeds of the loans.

     In addition,  on August 31, 2000,  in  connection  with an amendment of Mr.
Carter's  employment  agreement,  the Company  loaned Mr.  Carter  $280,000 with
interest  calculated at a variable  interest rate based on the prime rate of the
Company's lending bank, payable annually. In addition,  pursuant to Mr. Carter's
amended employment agreement, Mr. Carter will receive an annual special bonus on
the next five anniversaries of the agreement  amendment's effective date, in the
form of  forgiveness  of one-fifth of the principal of and interest on the loan.
During 2001,  the annual  special bonus amount of $56,000  principal and $23,000
accrued interest was forgiven totaling $79,000, and the original promissory note
of $280,000 was reduced to $224,000 on August 31, 2001, the anniversary  date of
the amended employment agreement.


                                      -5-

<PAGE>


                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


I.   Current and long-term debt

     The Company was obligated under the following debt instruments at September
29, 2001 and December 30, 2000:
<TABLE>
<CAPTION>
                                                                  September 29,  December 30,
                                                                      2001           2000
                                                                  ------------  -------------

<S>                                                               <C>           <C>

     Fleet Bank:
     Revolving credit facility, interest 1/2% below prime........  $4,500,000    $      -

     The Bank of Nova Scotia:
     Capital leases, interest 7.0%, due October 2003.............     150,100       211,600
     Capital leases, interest 8.7%, due May 2005.................     261,609       311,160
     Capital leases, interest 7.3%, due April 2006...............     206,167            -
     Capital leases, interest 7.9%, due June 2006................     170,570            -
                                                                    ---------      --------
                                                                    5,288,446       522,760
     Less current portion........................................   4,676,016       119,932
                                                                   ----------      --------
     Long-term portion...........................................  $  612,430      $402,828
                                                                   ==========      ========
</TABLE>

     In 2001 the Company borrowed $4,500,000, which includes $1,500,000 borrowed
during the third  quarter,  under its existing  revolving  credit  facility with
Fleet Bank (formerly Summit Bank) which currently bears interest at 4.5%.

     On October 3, 2001,  the Company  obtained an increase of $2,000,000 to the
revolving  credit facility for working capital and general  corporate  purposes.
During October 2001, the Company has borrowed an additional $1,500,000 under its
increased revolving credit facility.

     The Company has been approved  conditionally,  subject to the completion of
certain documentation, for an additional increase of $3,500,000 in the Company's
lines of credit with Fleet Bank. The Company's revolving credit facility expires
June 30, 2002.

     At  September  29,  2001 and  December  30,  2000,  the  fair  value of the
Company's  debt  approximates  carrying  value.  The fair value of the Company's
long-term debt is estimated based on current interest rates.

     Capital  leases  included in property,  plant and  equipment,  net,  have a
depreciated cost of approximately $639,000 at September 29, 2001 and $376,000 at
December 30, 2000.

J.  Restructuring and related charges

     As a result of accelerating the transfer of increased levels and complexity
of production to the Company's Costa Rica  manufacturing  facility,  the Company
implemented  a reduction of its  workforce  and provided  severance  benefits to
certain employees during the first quarter of 2000. The restructuring charge for
the first  quarter of 2000 was  $315,000,  and  charges  net of tax  benefits of
$189,000  or $.10 per  diluted  share  and $.09 per  diluted  share for the nine
months, as a result of increases in common shares from private  placements after
the first quarter 2000.  The reduction in workforce  affected  fifteen  persons,
primarily electronic components  manufacturing labor, and the full amount of the
restructuring charge has been paid.


                                       -6-

<PAGE>


                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


K.   Private placements of Common Stock and Warrants to purchase Common Stock

     On April 7, 2000, the Company entered into a stock purchase and exclusivity
agreement with Ericsson Microelectronics, A.B. ("Ericsson") and Ericsson Holding
International,  B.V.  ("EHI")  pursuant to which the Company sold to EHI 375,000
newly issued shares of Common  Stock,  representing  approximately  17.5% of the
outstanding  Common  Stock after  giving  effect to the sale,  for an  aggregate
purchase cash price of $3,375,000.  The stock purchase and exclusivity agreement
also provides that the Company will design,  develop and produce exclusively for
Ericsson  Multi-Mix(R) products that incorporate active RF power transistors for
use in wireless base station applications,  television  transmitters and certain
other  applications  that are intended for Bluetooth  transceivers  and that the
Company will generally be the priority supplier for such products.  Accordingly,
Ericsson  will  receive  first  priority on all  Multi-Mix(R)  resources  of the
Company and will have priority access to Filtran  Microcircuits Inc. proprietary
technology and manufacturing capabilities.

     On October 26, 2000, the Company entered into  subscription  agreements for
Common Stock and warrants with each of three groups of investors:  (i) investors
led by Adam Smith Investment  Partners,  L.P. and certain of its affiliates (the
"Adam  Smith  Investors"),  (ii) EHI,  and (iii)  three  members of the board of
directors  of  the  Company  (the   "Director   Investors").   Pursuant  to  the
subscription  agreements,  the Company sold to the investors units at a price of
$12.80  per unit,  each  unit  consisting  of one share of common  stock and one
three-year  warrant to purchase  one  additional  share of common  stock with an
exercise price of $21.25 ("Units"). Pursuant to the subscription agreements, the
Adam Smith Investors  purchased  240,000 Units, EHI purchased  100,000 Units and
the Director  Investors  purchased  20,000 Units for an aggregate  cash purchase
price of $4,608,000.  The Common Stock portion represented  approximately 14% of
the outstanding stock of the Company after giving effect to the sales.

     The warrants were valued using the  Black-Scholes  option  valuation  model
with  a  resulting   allocation  of  the  aggregate   proceeds  from  the  Units
attributable  to the warrants of $837,200,  net of issue  costs.  The  following
assumptions were utilized to value the warrants: price per share of Common Stock
of $15.25; expected life of three years; expected volatility of 40%; a risk free
interest rate of 6%; an expected yield of 0.0%; and a liquidity discount of 33%.

L.   Lease modification and resource sharing agreement

     The Company  entered  into an  agreement  effective  January  2001,  with a
customer to relinquish  approximately  half of the Company's 17,000  square-foot
leased  manufacturing  facility in Costa Rica.  Associated with the transaction,
the  Company  entered  into a new  four-year  lease  agreement  with a five-year
renewal option with its Costa Rica landlord for the reduced space.  In addition,
the Company  transferred  certain  employees  to its  customer,  agreed to share
certain  personnel  resources and common costs, and committed to provide certain
management, administrative and other services to its customer.

     In connection with the transaction,  the Company received $200,000 from its
customer and will receive further  payments of $250,000 over a two-year  period.
The Company will reduce its rent expense by approximately $87,000 during each of
the next four years to an aggregate amount of approximately $348,000.

     The Company deferred  approximately  $102,000 of costs at December 30, 2000
incurred in connection  with entering into this agreement and other  incremental
costs,  for the purpose of providing  this customer  with trained  personnel and
certain other services  required for their dedicated  manufacturing  capability.
Such costs are  classified  in the balance sheet as other assets at December 30,
2000, and were recovered  through the $200,000  payment received in January 2001
as described  above.  The deferred rental income of $34,000 is included in other
liabilities.


                                        -7-

<PAGE>


                            MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


M.   Pro forma weighted average number of common shares outstanding

     Had the  sales of  375,000  shares  of  Common  Stock on April 7,  2000 and
360,000  Units  on  October  26,  2000  referred  to in Note K  occurred  at the
beginning of the prior year,  the pro forma basic and diluted  weighted  average
number of Common Shares outstanding would have been:

                                      Quarter    Nine Months
                                     ------------------------
                                     Ended September 30, 2000
                                     ------------------------

Basic:
Actual                               2,186,015    2,021,057
Adjustments for sales of:
Common Stock, April 7, 2000                 -       131,868
Units, October 26, 2000 (a)            360,000      360,000
                                     ---------    ---------
Basic - pro forma                    2,546,015    2,512,925
Effect of dilutive securities-
Stock options                          193,013      150,257
                                     ---------    ---------
Diluted - pro forma                  2,739,028    2,663,182
                                     =========    =========

(a) There is no pro forma  dilutive  impact from the warrants included in the
 Units, as the warrant  exercise price of $21.25 exceeds the per share market
 value of the Common Stock.


N.   Recent Accounting Pronouncements

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative  Instruments
and  Hedging   Activities,"  which  established  new  accounting  and  reporting
standards  and requires  that every  derivative  instrument  (including  certain
derivative  instruments  embedded in other  contracts)  be recorded as assets or
liabilities in the balance sheet  measured at fair value.  SFAS No. 133 requires
that  changes  in the fair  value of  derivatives  be  recognized  currently  in
earnings  unless  specific  hedge  accounting  criteria are met. The Company has
adopted the  provisions of the Statement in 2001. The Company does not currently
hold  derivative  instruments or engage in hedging  activities and therefore the
adoption  of  SFAS  No.  133  has not had a  material  impact  on the  Company's
financial position, results of operations or cash flows.

     On June 30, 2001, the Financial  Accounting Standards Board issued SFAS No.
141,  "Business  Combinations" and SFAS No. 142,  "Goodwill and Other Intangible
Assets".  SFAS No. 141 requires all
business  combinations  initiated after June
30,  2001 to be  accounted  for using the  purchase  method  of  accounting  and
eliminates  the  pooling  method of  accounting.  SFAS No.  141 will not have an
impact on the Company's  business since the Company has  historically  accounted
for business combinations using the purchase method of accounting.

     With the adoption of SFAS  No.142,  which will be adopted by the Company on
December 30, 2001,  goodwill will no longer be subject to amortization  over its
estimated useful life.  However,  goodwill will be subject to at least an annual
assessment  for  impairment  and more  frequently  if  circumstances  indicate a
possible  impairment.  The  Company is  required  to perform a  fair-value-based
goodwill  impairment  test.  In  addition,  under  SFAS  No.  142,  an  acquired
intangible  asset  should  be  separately  recognized  if  the  benefit  of  the
intangible is obtained  through  contractual  or other legal  rights,  or if the
intangible  asset can be sold,  transferred,  licensed,  rented,  or  exchanged.
Intangible  assets will be amortized over their  estimated  useful lives.  Early
adoption of SFAS No. 142 is not  permitted.  Any write-down of goodwill would be
charged to results of operations  in the periods in which the recorded  value of
goodwill and certain  intangibles is more than its fair value.  On an annualized
basis, the Company expects that the adoption of these accounting  standards will
reduce the  amortization of goodwill and intangibles by  approximately  $150,000
commencing  in  2002,  unless  future  impairment  reviews  result  in  periodic
write-downs of goodwill.


                                         -8-

<PAGE>


                            MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


O. Business segment data

   The  Company's  operations  are  conducted  primarily  through two business
segments:  (1) electronic  components and (2) microwave  micro-circuitry.  These
segments, and the principal operations of each, are as follows:

     Electronic components: Design, manufacture and sale of electronic component
devices  offering  extremely  broad  frequency  coverage  and  high  performance
characteristics for communications,  defense and aerospace applications.  Of the
identifiable assets, 90% are located in the United States and 10% are located in
Costa Rica.

     Microwave  micro-circuitry:  Design,  manufacture  and sale of  microstrip,
bonded  stripline and thick  metal-backed  Teflon(R) (PTFE) and mixed dielectric
multilayer circuits for communications,  defense and aerospace applications.  Of
the identifiable assets all are located in Canada.

     Information about the Company's operations in different industries follows.
Operating  income is net  sales  less  operating  expenses.  Operating  expenses
exclude interest expense,  other income and income taxes.  Assets are identified
with the appropriate  operating segment and are substantially all located in the
North America  geographic area.  Corporate  assets consist  principally of cash.
Corporate expenses and inter-segment sales are immaterial.

<Table>
<caption>

                                                Thirteen Weeks Ended            Nine Months Ended
                                             ----------------------------   ----------------------------

                                             September 29,  September 30,   September 29,  September 30,
                                                 2001          2000           2001           2000
                                             ----------------------------   ----------------------------
                                              (In thousands of dollars)     (In thousands of dollars)
<S>                                           <C>             <C>          <C>              <C>
Industry segments:
    Sales to unaffiliated customers:
             Electronic components            $ 4,973         $ 4,855       $15,291         $12,020
             Microwave micro-circuitry            839           1,582         3,378           4,278
                                              -------         -------       -------          ------
             Consolidated                     $ 5,812         $ 6,437       $18,669         $16,298
                                              =======         =======       =======         =======

    Income before provision for income taxes:
      Operating income (loss):
             Electronic components            $  (264)        $   (43)      $  (360)        $  (739)
             Microwave micro-circuitry            (85)            421            77             978
      Interest and other income
        (expense), net                             20              (9)           69            (115)
                                              -------         -------       -------         -------
             Consolidated                     $  (329)        $   369       $  (214)        $   124
                                              =======         =======       =======         =======

      Identifiable assets:
             Electronic components                                          $27,185         $16,896
             Microwave micro-circuitry                                        4,694           5,027
             Corporate                                                          931           1,343
                                                                            -------         -------
             Consolidated                                                   $32,810         $23,266
                                                                            =======         =======
      Depreciation and amortization:
             Electronic components            $   509         $   424       $ 1,432         $ 1,191
             Microwave micro-circuitry            102              62           353             294
                                              -------         -------       -------         -------
             Consolidated                     $   611         $   486       $ 1,785         $ 1,485
                                              =======         =======       =======         =======
      Capital expenditures, net:
             Electronic components            $ 2,473         $   764       $ 6,989         $ 1,937
             Microwave micro-circuitry             -               38           402             367
                                              -------         -------       -------         -------
             Consolidated                     $ 2,473         $   802       $ 7,391         $ 2,304
                                              =======         =======       =======         =======
 </Table>

                                       -9-

<PAGE>


Item 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


                         STATEMENTS OF OPERATIONS SUMMARY
                         --------------------------------
                                   (Unaudited)
                                   -----------


The following table displays line items in the Consolidated Statements of
Operations as a percentage of net sales.

<table>
<caption>
                                                     Percentage of Net Sales     Percentage of Net Sales
                                                   -------------------------     --------------------------
                                                          Third Quarter                Year to Date
                                                   -------------------------     --------------------------
                                                      Thirteen Weeks Ended          Nine Months Ended
                                                   -------------------------     --------------------------
                                                   September 29,  September 30,  September 29, September 30,
                                                        2001        2000              2001        2000
                                                   -------------  ------------   ------------  ------------

                                                     <c>        <c>               <C>        <C>
Net sales....................................            100.0%     100.0%            100.0%     100.0%
                                                         ------     ------            ------     ------
Costs and expenses:
  Cost of sales..............................             49.7       51.3              48.2       51.2
  Selling, general and administrative........             39.2       34.7              37.5       36.5
  Research and development...................             16.4        7.5              13.4        8.2
  Amortization of goodwill...................               .7         .6                .6         .7
  Reincorporation charge.....................               -          -                1.8         -
  Restructuring charge.......................               -          -                 -         1.9
                                                         ------     ------            ------     ------
                                                         106.0       94.1             101.5       98.5
                                                         ------     ------            ------    ------

Operating income (loss)......................             (6.0)       5.9              (1.5)       1.5
Interest and other (income) expense, net.....              (.3)        .2               (.4)        .7
                                                         ------     ------            ------      -----

Income (loss) before income taxes..........               (5.7)       5.7              (1.1)        .8
Provision (benefit) for income taxes.......               (2.1)       2.3              ( .6)        .2
                                                         ------     ------            ------     -------

Net income (loss)..........................               (3.6)%      3.4%              (.5)%       .6%
                                                         ======     ======            ======      ======

</table>

                                       -10-

<PAGE>


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


     Third  quarter  and nine months  2001  compared  to third  quarter and nine
months 2000

     Consolidated  results of  operations  for the third  quarter 2001 reflect a
decrease in net sales of  $625,000  or 9.7% to  $5,812,000.  This  decrease  was
primarily   attributable   to  a  $743,000   decrease  in  sales  of   microwave
micro-circuitry  products from the Company's  subsidiary  Filtran  Microcircuits
Inc. ("FMI"),  which was partially offset by a $118,000 increase in net sales of
electronic components.

     Consolidated results of operations for nine months 2001 reflect an increase
in net sales of $2,371,000 or 14.5% to $18,669,000.  This increase was primarily
attributable to an increase in net sales of electronic components of $3,271,000,
which was partially  offset by a decrease in sales of microwave  micro-circuitry
products of $900,000 from FMI.

     Orders of $6,295,000 were received during third quarter 2001, a decrease of
$1,050,000  or 14.3%  compared to  $7,345,000  in orders  received  during third
quarter 2000. Backlog increased by $2,095,000 or 19.7% to $12,735,000 at the end
of the third  quarter  2001  compared  to  $10,640,000  at  year-end  2000,  and
increased  by $988,000 or 8.4% when  compared to the end of third  quarter  2000
backlog  of  $11,747,000.  Orders  received  during  the third  quarter  of 2001
exceeded the third  quarter 2001 sales level by  approximately  8.3%.  Orders of
$20,764,000  were received  during nine months 2001, a decrease of $1,160,000 or
5.3% compared to $21,927,000 in orders received during nine months 2000.  Orders
received  during the nine  months of 2001  exceeded  the nine  months 2001 sales
level by approximately 11.2%.

     The Company  believes  that the current  economic  downturn,  resulting  in
reduced  spending  by  wireless  service  providers,  has caused  many  wireless
companies  to delay  their  purchases.  However,  the Company  expects  that its
satellite and defense  customers  will continue to increase  their orders during
the fourth  quarter  2001.  The Company also  anticipates  receiving its initial
orders during the fourth quarter 2001 for its new  Multi-Mix(R)  Microtechnology
products,  for  which  a  significant  capital  investment  has  been  made  and
substantial research and development costs have been incurred. An extended delay
or  reduction  from  planned  levels  in new  orders  for the  new  Multi-Mix(R)
Microtechnology  products  could have a material  adverse impact on the Company.
The Company's subsidiary FMI has experienced a slowdown in orders for certain of
its wireless  communication  products,  which has caused a significant financial
impact on the results of operations  in third quarter and nine months 2001.  The
Company further expects that softness in the telecommunications  sector that FMI
serves,   principally   millimeter  wave  applications  for  wireless  broadband
solutions,  will continue  during the remainder of fiscal 2001, and is likely to
cause a substantial reduction in the microwave micro-circuitry segment sales and
profitability  for fiscal  2001  compared  to prior year  results.  The  Company
implemented  a  temporary  reduction  of 25% or 19 persons in the FMI  workforce
during the second  quarter of 2001 in response to the decline in orders for this
segment.

     Cost of sales decreased $413,000 or 12.5%, and as a percentage of net sales
decreased 1.6% to 49.7% for third quarter 2001. Cost of sales increased $651,000
or 7.8%,  and as a  percentage  of net  sales  decreased  3.0% to 48.2% for nine
months 2001.  Percentage  cost  reductions  for cost of sales were achieved from
manufacturing  efficiencies  attributable  to a  reduction  in direct  labor and
manufacturing  overhead  costs,  related  in part  to the  transfer  of  certain
additional  production to the Company's Costa Rica manufacturing  facility,  and
other manufacturing cost reductions  resulting from the personnel  restructuring
in the first quarter of 2000.


                                      -11-

<PAGE>


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


     Depreciation  expense  included  in cost of sales  was  $463,000,  of which
$192,000 was associated with  Multi-Mix(R)  Microtechnology  capital assets,  an
increase of $113,000 in third quarter 2001  compared to third quarter 2000.  For
nine months 2001 compared to nine months 2000,  depreciation expense included in
cost of sales was  $1,352,000,  an increase of  $157,000.  For nine months 2001,
$539,000   of   depreciation    expense   was   associated   with   Multi-Mix(R)
Microtechnology  capital  assets.  The  increase in  depreciation  expense was a
result of higher capital equipment purchases in the current and prior years.

     Gross profit in third quarter 2001 for the  electronic  components  segment
was  $2,588,000 or 52.0% of segment net sales of  $4,973,000,  compared to gross
profit  of  $2,316,000  or 47.7% of  segment  net sales of  $4,855,000  in third
quarter  2000.  Gross  profit  for the  microwave  micro-circuitry  segment  was
$336,000  or 40.0% of segment  net sales of  $839,000,  compared  to $819,000 or
51.8% of third quarter 2000 segment net sales of $1,582,000.

     Gross profit in nine months 2001 for the electronic  components segment was
$8,271,000  or 54.1% of  segment  net sales of  $15,291,000,  compared  to gross
profit of $5,873,000 or 48.9% of segment net sales of $12,020,000 in nine months
2000.  Nine months 2001 gross profit for the microwave  micro-circuitry  segment
was  $1,404,000  or 41.5%  of  segment  net  sales of  $3,378,000,  compared  to
$2,082,000 or 48.7% of nine months 2000 segment net sales of $4,278,000.

     Selling,  general  and  administrative  expenses  of  $2,281,000  for third
quarter 2001 increased by $50,000 or 2.2%, and when expressed as a percentage of
net  sales,  increased  by 4.5% to 39.2%.  Increases  resulted  from  employment
termination  costs for senior level personnel of approximately  $112,000,  which
was partially offset by reduced sales commission expenses.

     Selling,  general and administrative expenses of $7,014,000 for nine months
2001 increased by $1,066,000 or 17.9%, and when expressed as a percentage of net
sales,   increased  by  1.0%  to  37.5%.   Increases  resulted  from  employment
termination costs for senior level personnel of approximately  $198,000,  higher
sales  commission   expenses,   increased  selling  and  marketing  expenses  in
connection  with the Company's  Multi-Mix(R)  Microtechnology  product line, and
higher  engineering  and  technology  personnel  compensation,  recruitment  and
training costs, and patent-associated and other professional fees.

     Amortization expense of $37,000 for the third quarter and $111,000 for nine
months 2001 is attributable to goodwill of approximately $3,000,000 arising from
the acquisition of FMI, which is being amortized on a straight-line basis over a
life of twenty years,  compared to amortization expense of $42,000 for the third
quarter and $120,000 for nine months 2000.

     Research and  development  expenses for new products were $954,000 in third
quarter 2001,  an increase of $470,000 or 97.2%  compared to third quarter 2000.
Except for $75,000 of  expenses at FMI, a decrease of $3,000 from third  quarter
2000,  substantially  all of the  research  and  development  expenses  in third
quarter 2001 were related to Multi-Mix(R) Microtechnology products. Research and
development  expenses for new products  were  $2,502,000 in nine months 2001, an
increase  of  $1,169,000  or 87.7%  compared  to nine  months  2000.  Except for
$226,000  of  expenses  at FMI, a decrease  of $12,000  from nine  months  2000,
substantially  all of the research and development  expenses in nine months 2001
were related to  Multi-Mix(R)  Microtechnology  products,  which resulted in the
third quarter 2001 product launches of Multi-Mix  PICO(TM)  technology  products
that reduce certain microwave components size by more than 84%.

     The consolidated operating loss for third quarter 2001 was $349,000,  which
compared to  consolidated  operating  income of $378,000  for the third  quarter
2000.  The  consolidated   operating  loss  for  nine  months  2001,  after  the
reincorporation charge of $330,000, was $283,000, which compared to consolidated
operating   income  of  $239,000  for  nine  months  2000  after  the  personnel
restructuring charge of $315,000.  Nine month 2001 consolidated operating income
was $48,000, before the effect of charges associated with the reincorporation in
Delaware of $330,000 in first quarter 2001, compared to $554,000 of consolidated
operating income for nine months 2000 before the personnel  restructuring charge
of $315,000 in first quarter 2000.


                                      -12-

<PAGE>


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


     The operating  loss for the electronic  components  segment was $264,000 in
third quarter 2001,  compared to a $43,000 operating loss in third quarter 2000.
The  operating  loss for the  microwave  micro-circuitry  segment was $85,000 in
third quarter 2001 compared to operating  income of $421,000 or 26.6% of segment
net sales in third quarter 2000.

     Operating loss for the electronic  components  segment was $360,000 in nine
months 2001,  after the $330,000  reincorporation  charge in first quarter 2001,
compared  to  a  $739,000   operating   loss  in  nine  months  2000  after  the
restructuring charge of $296,000 in first quarter 2000. Operating income for the
microwave  micro-circuitry  segment  was $77,000 or 2.3% of segment net sales in
nine  months  2001  compared  to  operating  income of $998,000 or 23.3% in nine
months  2000  after  this  segment's  restructuring  charge of  $19,000 in first
quarter 2000. Before the first quarter 2001 reincorporation  charge of $330,000,
operating loss for the electronic  components segment would have been $30,000 in
nine months 2001  compared to an operating  loss of $443,000 in nine months 2000
before this segment's restructuring charge in first quarter 2000 of $296,000.

     Interest  income,  net was $20,000 for third  quarter 2001  compared to net
interest  expense of $9,000 for third quarter 2000.  Interest expense of $58,000
was  capitalized  to in-process  construction  property,  plant and equipment in
third  quarter  2001.  Interest  income,  net was  $69,000  for nine months 2001
compared to net  interest  expense of $115,000  for nine months  2000.  Interest
expense of $81,000 was capitalized to in-process  construction  property,  plant
and  equipment in nine months 2001.  Interest  income was  primarily  due to the
proceeds  received  from the issuance of common stock in private  placements  in
2000 that offset interest expense.  Interest expense was principally incurred on
borrowings  under a term loan and revolving  credit  facility in connection with
the acquisition of FMI in 1999.

     An income tax benefit of $120,000 was recorded for third  quarter 2001 with
an effective  tax benefit rate of 36.4%  compared to a tax provision of $150,000
for third  quarter  2000 with an  effective  tax rate of  40.6%.  The  principal
adjustments  to the statutory  Federal  income tax rate of 34% for third quarter
2001 relates to $20,000 in tax credits  associated with research and development
expenditures and foreign sales  corporation tax benefits,  partially offset by a
$12,000 cost due to non-deductible amortization of goodwill.

     An income tax benefit of $110,000 was recorded for nine months 2001 with an
effective  tax benefit rate of 51.5%  compared to a tax provision of $30,000 for
nine months 2000 with an effective tax rate of 24.2%. The principal  adjustments
to the statutory  Federal income tax rate of 34% for nine months 2001 relates to
$60,000 in tax credits associated with research and development expenditures and
foreign sales corporation tax benefits of $15,000, partially offset by a $38,000
cost due to non-deductible amortization of goodwill.

     Net loss for the third quarter of 2001 was $209,000  compared to net income
of $219,000 for the third quarter 2000. Net loss per share for the third quarter
2001 was $.08  compared to net income per diluted share of $.09 reported for the
third quarter of 2000.

     Net loss for the  first  nine  months of 2001 was  $104,000,  after the net
effects of the first quarter 2001  reincorporation  charge of $198,000.  For the
first nine  months of 2000,  net income of $94,000 was  reported,  after the net
effects of the first quarter 2000 restructuring charge of $189,000. Net loss per
share for the first nine months 2001 was $.04, after the net effects of the $.08
per share reincorporation  charge reported in the first quarter of 2001. For the
first nine months of 2000,  net income per diluted  share of $.04 was  reported,
after the net effects of the $.09 per share restructuring charge reported in the
first quarter of 2000.

     The weighted  average  number of diluted  shares  outstanding  increased by
approximately   244,000  shares  or  10%  during  the  third  quarter  2001  and
approximately  445,000  shares or 20% during the first nine months 2001 compared
to the same  periods of the prior year,  resulting  from the issuance in private
placements of 375,000  shares in the second  quarter 2000 and 360,000  shares in
the fourth  quarter  2000,  as well as stock option  exercises  during the prior
year.


                                      -13-

<PAGE>


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


Liquidity and Capital Resources


     The Company had liquid  resources  comprised  of cash and cash  equivalents
totaling  approximately  $900,000 at the end of third  quarter 2001  compared to
approximately  $3,400,000 at the end of 2000. The Company's  working capital was
approximately  $2,600,000  and its  current  ratio  was 1.3 at the end of  third
quarter 2001 compared to $9,400,000 and 3.0, respectively, at the end of 2000.

     The Company's operating  activities provided negative cash flows of $55,000
in nine months 2001  compared to $982,000 of positive  cash flows in nine months
2000.  The primary  positive  operating  cash flows  resulted from a decrease in
accounts receivable,  an increase in other liabilities,  and higher depreciation
and amortization  charges.  These positive cash flows were offset by an increase
in inventories of $1,301,000 to $4,929,000,  which includes $965,000  associated
with Multi-Mix(R)  Microtechnology products,  reductions of accounts payable and
deferred compensation payments, and the net loss of $104,000.

     The Company has made net  investments  in property,  plant and equipment of
$7,391,000 during nine months 2001, which excludes unpaid invoices of $1,674,000
at September 29, 2001,  compared to net investments made in property,  plant and
equipment  of  $2,304,000   during  the  nine  months  of  2000.  These  capital
expenditures,  which includes capitalized  construction period rent and interest
of $274,000,  are related to new production and test equipment  capabilities  in
connection with the  introduction  of new products and  enhancements to existing
products. The depreciated cost of capital equipment associated with Multi-Mix(R)
Microtechnology  was  $9,153,000  at the end of nine months 2001, an increase of
$5,149,000 compared to $4,004,000 at the end of 2000.

     During the first nine  months of 2001,  the  Company  borrowed  $4,500,000,
which  includes  borrowings of $1,500,000  during the third  quarter,  under its
existing  revolving credit facility with Fleet Bank (formerly Summit Bank) at an
interest  rate of one-half  percent  below the bank's  floating  prime rate.  On
October 3, 2001, the Company obtained an increase of $2,000,000 to the revolving
credit  facility  for working  capital and general  corporate  purposes.  During
October  2001,  the Company  has  borrowed an  additional  $1,500,000  under its
increased revolving credit facility and the current interest rate is 4.5%.

     The Company has been approved  conditionally,  subject to the completion of
certain documentation, for an additional increase of $3,500,000 in the Company's
lines of credit with Fleet Bank. The Company is contemplating raising capital by
a private placement of debt or equity during the fourth quarter of 2001, subject
to economic and market conditions.  There can be no assurances that capital from
either debt or equity  will be  available  to the  Company  and, if so, on terms
favorable to the  Company.  Management  believes  that the  remaining  available
$500,000  revolving credit facility  supplemented by the conditionally  approved
$3,500,000  increase to its lines of credit,  together  with its present  liquid
resources and cash flows that are expected to be provided by operations,  should
provide  sufficient  resources for currently  contemplated  operations in fiscal
year 2001.

     The  Company's  capital   expenditures  for  new  projects  and  production
equipment have exceeded its depreciation and amortization  expenses in the first
nine months of 2001 by approximately $7,400,000. The Company has made $5,600,000
in  payments on purchase  order  commitments  to  processing  equipment  vendors
aggregating  $8,600,000 for capital  equipment and has a remaining  balance on a
purchase order for $700,000 issued to a general contractor for the completion of
the  19,200  square-foot  building  addition  to its West  Caldwell,  New Jersey
manufacturing  facility.  The Company  anticipates  that such  equipment will be
purchased and become  operational  and the building  expansion will be completed
during the fourth quarter of 2001. The Company has temporarily  deferred certain
improvements  and  purchases of  additional  equipment  for the existing  52,000
square-foot facility that are projected to cost approximately $1,300,000.

     Effective  January  2001,  the Company  modified  its existing  lease,  and
entered into a resource sharing  arrangement with a previous  customer,  for its
Costa Rica  manufacturing  facility,  reducing the size to  approximately  8,200
square-feet  and extending the lease to December 2004.  The Company  received an
initial payment of $200,000 in January 2001 under the resource sharing agreement
and recovered approximately $102,000 of costs that were deferred at December 30,
2000 in connection with such agreement.

     In February 2001, the Company  entered into a new five-year  lease in Costa
Rica for approximately 36,200 square-feet for a new Multi-Mix(R) Microtechnology
manufacturing  facility.  It is anticipated that the leasehold  improvements and
capital  equipment for this  manufacturing  facility,  which is expected to cost
approximately  $4,500,000,  should become  operational during the fourth quarter
2001.



                                      -14-

<PAGE>


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


Recent Accounting Pronouncements

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative  Instruments
and  Hedging   Activities,"  which  established  new  accounting  and  reporting
standards  and requires  that every  derivative  instrument  (including  certain
derivative  instruments  embedded in other  contracts)  be recorded as assets or
liabilities in the balance sheet  measured at fair value.  SFAS No. 133 requires
that  changes  in the fair  value of  derivatives  be  recognized  currently  in
earnings  unless  specific  hedge  accounting  criteria are met. The Company has
adopted the  provisions of the Statement in 2001. The Company does not currently
hold  derivative  instruments or engage in hedging  activities and therefore the
adoption  of  SFAS  No.  133  has not had a  material  impact  on the  Company's
financial position, results of operations or cash flows.

     On June 30, 2001, the Financial  Accounting Standards Board issued SFAS No.
141,  "Business  Combinations" and SFAS No. 142,  "Goodwill and Other Intangible
Assets".  SFAS No. 141 requires all business  combinations  initiated after June
30,  2001 to be  accounted  for using the  purchase  method  of  accounting  and
eliminates  the  pooling  method of  accounting.  SFAS No.  141 will not have an
impact on the Company's  business since the Company has  historically  accounted
for business combinations using the purchase method of accounting.

     With the adoption of SFAS  No.142,  which will be adopted by the Company on
December 30, 2001,  goodwill will no longer be subject to amortization  over its
estimated useful life.  However,  goodwill will be subject to at least an annual
assessment  for  impairment  and more  frequently  if  circumstances  indicate a
possible  impairment.  The  Company is  required  to perform a  fair-value-based
goodwill  impairment  test.  In  addition,  under  SFAS  No.  142,  an  acquired
intangible  asset  should  be  separately  recognized  if  the  benefit  of  the
intangible is obtained  through  contractual  or other legal  rights,  or if the
intangible  asset can be sold,  transferred,  licensed,  rented,  or  exchanged.
Intangible  assets will be amortized over their  estimated  useful lives.  Early
adoption of SFAS No. 142 is not  permitted.  Any write-down of goodwill would be
charged to results of operations  in the periods in which the recorded  value of
goodwill and certain  intangibles is more than its fair value.  On an annualized
basis, the Company expects that the adoption of these accounting  standards will
reduce the  amortization of goodwill and intangibles by  approximately  $150,000
commencing  in  2002,  unless  future  impairment  reviews  result  in  periodic
write-downs of goodwill.

Forward-Looking Statements

     This Quarterly Report on Form 10-QSB contains statements relating to future
results of the Company (including certain  projections and business trends) that
are "forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those projected as
a result of  certain  risks and  uncertainties.  These  risks and  uncertainties
include,  but are not limited to:  general  economic  and  industry  conditions;
slower than anticipated penetration into the satellite  communications,  defense
and wireless  markets;  the risk that the benefits expected from the acquisition
of  Filtran  Microcircuits  Inc.  are  not  realized;  the  ability  to  protect
proprietary  information  and  technology;   competitive  products  and  pricing
pressures;  the risk  that the  Company  will not be able to  continue  to raise
sufficient  capital to expand its  operations as currently  contemplated  by its
business  strategy;   risks  relating  to  governmental  regulatory  actions  in
communications and defense programs; risks associated with demand for and market
acceptance of existing and newly developed products;  and inventory risks due to
technological  innovation and product  obsolescence,  as well as other risks and
uncertainties,  including but not limited to those detailed from time to time in
the Company's Securities and Exchange Commission filings.  These forward-looking
statements  are made only as of the date hereof,  and the Company  undertakes no
obligation  to update or revise  the  forward-looking  statements,  whether as a
result of new information, future events or otherwise.



                                      -15-

<PAGE>


PART II. OTHER INFORMATION


ITEM 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits:

Exhibit No.
-----------
        3(a)  By-laws of Merrimac are hereby incorporated by reference to
              Exhibit 3(ii)(b) to Post-Effective Amendment No.2 to the
              Registration Statement on Form S-8 (No.33-68862) of Merrimac dated
              February 23, 2001.

        3(b)  Certificate of Incorporation of Merrimac is hereby incorporated
              by reference to Exhibit 3(i)(b) to Post-Effective Amendment
              No.2 to the Registration Statement on Form S-8 (No.33-68862)
              of Merrimac dated February 23, 2001.

        4(a)  Shareholder Rights Agreement dated as of March 9, 1999 between
              Merrimac and ChaseMellon Shareholder Services, L.L.C., as Rights
              Agent, is hereby incorporated by reference to Exhibit 1 to
              Merrimac's Current report on Form 8-K  dated March 9, 1999.

        4(b)  Amendment No.1 dated as of June 9, 1999 to the Shareholder Rights
              Agreement  dated as of March 9, 1999, between Merrimac and
              ChaseMellon Shareholder Services, L.L.C., as Rights Agent, is
              hereby incorporated by reference to Exhibit 1 to Merrimac's
              Current report on Form 8-K  dated June 9, 1999.

        4(c)  Amendment No. 2 dated as of April 7, 2000, to the Shareholder
              Rights Agreement dated as of March 9, 1999, between Merrimac and
              ChaseMellon Shareholder Services, L.L.C., as Rights Agent, is
              hereby incorporated by reference to Exhibit 2 to Merrimac's
              Current report on Form 8-K  dated April 10, 2000.

        4(d)  Amendment No. 3 dated as of October 26, 2000, to the Shareholder
              Rights Agreement dated as of March 9, 1999, between Merrimac and
              ChaseMellon Shareholder Services, L.L.C., as Rights Agent, is
              hereby incorporated by reference to Exhibit 2 to Merrimac's
              Current report on Form 8-K  dated October 27, 2000.

        4(e)  Amendment No. 4 dated as of February 21, 2001, to the Shareholder
              Rights Agreement dated as of March 9, 1999, between Merrimac and
              Mellon Investor Services, L.L.C., (formerly known as  ChaseMellon
              Shareholder Services, L.L.C.) as Rights Agent, is hereby
              incorporated by reference to Exhibit 1(d) to Merrimac's
              Current report on Form 8-K  dated February 21, 2001.

        4(f)  2001 Stock Option Plan, is hereby incorporated by reference to
              Exhibit 4.1 to Merrimac's Registration Statement on Form S-8
              (File No. 333-63436) dated June 20, 2001.

        4(g)  2001 Stock Purchase Plan, is hereby incorporated by reference to
              Exhibit 4.1 to Merrimac's Registration Statement on Form S-8
              (File No. 333-63438) dated June 20, 2001.


        4(h)   2001 Key Employee Incentive Plan, is hereby incorporated by
               reference to Exhibit 4.1 to Merrimac's Registration Statement
               on Form S-8 (File No. 333-63434) dated June 20, 2001.

        4(i)   2001 Amended and Restated Stock Option Plan, is hereby
               incorporated by reference to Exhibit 4(i) to Merrimac's
               Quarterly Report on Form 10-QSB, filed on August 14, 2001.

        11     Statement re:  Computation of earnings per share.


(b) Reports on Form 8-K:

         None



                                       -16-

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                          MERRIMAC INDUSTRIES, INC.
                                          -------------------------
                                                (Registrant)

    Date: November 12, 2001            By: /s/ Mason N. Carter
                                         -------------------------------------
                                         Mason N. Carter
                                         Chairman, President and
                                         Chief Executive Officer


    Date: November 12, 2001            By: /s/ Robert V. Condon
                                         -------------------------------------
                                         Robert V. Condon
                                         Vice President, Finance, Treasurer,
                                         Secretary and Chief Financial Officer



                                      -17-