<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 July 3, 1999      Commission file No. 0-11201
                               -------------                          -------

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


        New Jersey                                           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)                     (Zip code)


Registrant's telephone number including area code (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 August 10, 1999
-----------------------------                  -------------------------------
Common Stock ($.50 par value)                             1,741,533






<PAGE>


PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

                           MERRIMAC INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------
                                 (Unaudited)
                                 -----------
                                                        July 3,    January 2,
                                                          1999        1999
                                                      -----------  -----------
ASSETS
------
Current assets:
  Cash and cash equivalents .......................   $   941,707  $ 1,852,666
  Accounts receivable .............................     3,632,530    3,755,131
  Inventories .....................................     3,483,035    3,101,256
  Income tax refund receivable.....................        34,592      413,018
  Other current assets ............................       802,855      357,906
  Deferred tax assets .............................       900,600      899,600
                                                      -----------  -----------
      Total current assets ........................     9,795,319   10,379,577
                                                      -----------  -----------
Property, plant and equipment .....................    19,953,309   16,539,251
  Less accumulated depreciation ...................    12,744,039   10,322,958
                                                      -----------  -----------
    Net property, plant and equipment .............     7,209,270    6,216,293
Other assets ......................................       305,314      319,512
Goodwill ..........................................     2,849,598          -
                                                      -----------  -----------
      Total Assets ................................   $20,159,501  $16,915,382
                                                      ===========  ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
Current liabilities:
  Current portion of long-term debt ...............   $   633,530  $       -
  Accounts payable ................................     1,667,042    1,479,284
  Accrued liabilities .............................     1,172,035    1,499,917
                                                      -----------  -----------
      Total current liabilities ...................     3,472,607    2,979,201
Long-term debt, net of current portion ............     3,033,477          -
Deferred compensation .............................       247,464      459,322
Deferred tax liabilities ..........................        54,600       54,600
                                                      -----------  -----------
      Total liabilities ...........................     6,808,148    3,493,123
                                                      -----------  -----------
Shareholders' equity:
  Common stock, par value $.50 per share:
    Authorized:  5,000,000 shares
    Issued:  2,697,066 and 2,690,405 shares .......     1,348,533    1,345,203
  Additional paid-in capital ......................    11,249,844   11,220,873
  Retained earnings ...............................     9,244,943    8,950,055
  Translation adjustments .........................       (69,197)         -
                                                      -----------  -----------
                                                       21,774,123   21,516,131
  Less treasury stock, at cost:
    955,904 and 902,549 shares ....................    (8,062,770)  (7,733,872)
  Less loan to officer-shareholder ................      (360,000)    (360,000)
                                                      -----------  -----------
     Total shareholders' equity ...................    13,351,353   13,422,259
                                                      -----------  -----------
     Total Liabilities and Shareholders' Equity ...   $20,159,501  $16,915,382
                                                      ===========  ===========


See accompanying notes to consolidated financial statements.



                                     - 1 -


<PAGE>

                              MERRIMAC INDUSTRIES, INC.
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       -------------------------------------
                                   (Unaudited)
                                   -----------
<TABLE>
<CAPTION>

                                                         Quarter Ended            Six Months Ended
                                                    -----------------------   -------------------------
                                                      July 3,      July 4,      July 3,     July 4,
                                                       1999         1998         1999        1998
                                                    -----------------------   -------------------------
<S>                                                  <C>         <C>         <C>           <C>
Net sales ...................................       $5,125,245   $5,573,659   $9,863,776    $11,366,266
                                                    ----------   ----------   ----------    -----------
Cost and expenses:
  Cost of sales .............................        2,726,151    3,031,727    5,152,891      6,249,579
  Selling, general and administrative .......        1,671,153    1,661,518    3,232,143      3,358,213
  Research and development ..................          552,058      252,145      946,318        463,401
                                                    ----------   ----------   ----------    -----------
                                                     4,949,362    4,945,390    9,331,352     10,071,193
                                                    ----------   ----------   ----------    -----------

Operating income ............................          175,883      628,269      532,424      1,295,073
Interest and other expense (income), net ....           55,964      (16,573)      79,539        (29,315)
                                                    ----------   ----------   ----------    -----------
Income before income taxes ..................          119,919      644,842      452,885      1,324,388
Provision for income taxes ..................           38,000      236,000      158,000        488,000
                                                    ----------   ----------   ----------    -----------
Net income ..................................       $   81,919   $  408,842   $  294,885    $   836,388
                                                    ==========   ==========   ==========    ===========

Net income per common share:
  Basic......................................             $.05         $.23         $.17           $.48
  Diluted....................................             $.05         $.22         $.17           $.46
                                                          ====         ====         ====           ====
Weighted average number of
 shares outstanding:
  Basic......................................        1,739,356    1,756,350    1,753,944      1,746,816
  Diluted....................................        1,769,389    1,845,263    1,781,981      1,834,423


</TABLE>
See accompanying notes to consolidated financial statements.



                                      -2-


<PAGE>



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

                                                          Six Months Ended
                                                      -------------------------
                                                        July 3,        July 4,
                                                         1999           1998
                                                      ----------     ----------
Cash flows from operating activities:
  Net income ........................................ $  294,885     $  836,388
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization..................    746,396        401,663
      Amortization of goodwill ......................     50,857            -
      Deferred compensation .........................      8,179        116,659
      Stock-based compensation expense ..............        -           67,300
      Changes in operating assets and liabilities:
        Accounts and income taxes receivable.........  1,273,879     (1,186,031)
        Inventories..................................   (131,073)     1,075,572
        Other current assets.........................   (454,433)      (134,767)
        Deferred tax assets..........................     (1,000)        26,200
        Other assets.................................     51,217         21,952
        Accounts payable.............................      6,376       (81,358)
        Accrued liabilities..........................   (396,328)      (177,365)
        Income taxes payable.........................     26,802        188,155
        Deferred compensation........................   (220,037)       (25,547)
                                                      ----------     ----------
Net cash provided by operating activities............  1,255,720      1,128,821
                                                      ----------     ----------
Cash flows from investing activities:
  Purchase of capital assets......................... (1,039,421)    (1,595,299)
  Proceeds from sales of capital assets..............        -           12,775
  Acquisition of business, net of cash acquired ..... (4,046,646)           -
                                                      ----------     ----------
Net cash used in investing activities................ (5,086,067)    (1,582,524)
                                                      ----------     ----------
Cash flows from financing activities:
  Borrowings under term loan facilities .............  2,500,000            -
  Borrowings under revolving credit facilities ......  2,000,000            -
  Repayment of borrowings under credit and
    lease facilities ................................ (1,284,119)           -
  Proceeds from the issuance of common stock.........     32,405         98,708
  Payment of dividends...............................         -          (1,009)
  Repurchase of common stock for the treasury .......   (328,898)           -
                                                      ----------     ----------
Net cash provided by financing activities ...........  2,919,388         97,699
                                                      ----------     ----------
Net decrease in cash and cash equivalents............   (910,959)      (356,004)
Cash and cash equivalents at beginning of year.......  1,852,666      2,414,725
                                                      ----------     ----------
Cash and cash equivalents at end of period........... $  941,707     $2,058,721
                                                      ==========     ==========

Supplemental disclosures of cash flows information:
  Cash paid during the period for:
    Income taxes.....................................  $ 139,000     $  300,000
                                                       =========     ==========

See accompanying notes to consolidated financial statements.



                                      -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 the management,  necessary for a fair  presentation
of the  financial  position of the Company as of July 3, 1999 and its results of
operations and cash flows for the periods presented.

B.   Inventories

     Inventories consist of the following:
                                                 July 3,          January 2,
                                                  1999               1999
                                               ----------         ----------
     Finished goods ......................     $  735,637         $  607,738
     Work in process .....................      1,692,373          1,597,215
     Raw materials and purchased parts ...      1,055,025            896,303
                                               ----------         ----------
     Total                                     $3,483,035         $3,101,256
                                               ==========         ==========

C.   Net income per common share

     Effective  January 3, 1998, the Company adopted the provisions of Statement
of  Financial   Accounting  Standards  No.  128,  "Earnings  per  Share,"  which
establishes the new standard for computation and  presentation of net income per
common share.  Under the new requirements  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.

D.   Comprehensive Income

     In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 130, Reporting  Comprehensive Income ("SFAS
130"). SFAS 130 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  shareholders'  equity  during a period except those  resulting  from
investments by or distributions to shareholders. For the Company,



                                      -4-


<PAGE>



                            MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


comprehensive  income  for all  periods  presented  consists  solely of net
income and foreign  currency  translation  adjustments  pursuant to Statement of
Financial  Accounting  Standards  No. 52,  "Foreign  Currency  Translation,"  as
follows:
<TABLE>
 <CAPTION>
                                                        Quarter Ended          Six Months Ended
                                                     --------------------    --------------------
                                                     July 3,     July 4,     JULY 3,     JULY 4,
                                                      1999        1998        1999        1998
                                                     -------     --------    --------    --------
     <S>                                           <C>          <C>         <C>         <C>
     Net income ................................     $81,919     $408,842    $294,885    $836,388
     Foreign currency translation adjustments ..     (33,673)     (35,735)    (69,197)    (35,735)
                                                     -------     --------    --------    --------
     Total comprehensive income                      $48,246     $373,107    $225,688    $800,653
                                                     =======     ========    ========    ========
</TABLE>
E.   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 latest and fiscal year 2002 will
be the next) is added to the fourth  quarter,  making such quarter consist of 14
weeks.

F.   Dividends

     The  Board  of  Directors  (the  "Board")  announced  on May 5,  1998,  the
declaration of a 10% stock dividend  payable on June 5, 1998 to  shareholders of
record on May 15, 1998. Fractional shares were cashed-out and payments were made
to  shareholders  in lieu of  fractional  shares on June 5, 1998.  The basic and
diluted weighted  average number of shares  outstanding and net income per share
information  for all prior  reporting  periods have been restated to reflect the
effects of the stock dividend.

G.   Transactions with management and loan to officer-shareholder

     On May 4, 1998,  the Company sold 20,000 (22,000 after giving effect to the
Company's 10% stock dividend)  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
Company's  Common Stock during the first quarter of 1998).  The Company extended
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 (except
as provided  below),  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.  Payment of interest  accrued from November 1998 until  November  1999,
however,  will be 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




                                      -5-


<PAGE>



                            MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


of Common Stock that were  purchased by Mr. Carter with the proceeds of the
loans. The Company has recorded compensation expense of $52,000,  which is being
charged to  operations  over the one-year  period  commencing on the date of the
transaction,  as Mr. Carter is expected to perform services throughout this time
period.  The sale of these shares of Common  Stock was exempt from  registration
under the Securities Act of 1933, as amended,  as a transaction  not involving a
public offering under Section 4 (2) of the Act.

H.   Acquisition of Filtran Microcircuits Inc.

     In February  1999,  the Company  completed  the  acquisition  of all of the
outstanding  stock of  privately  held  Filtran  Microcircuits  Inc.  ("FMI") of
Ottawa,  Ontario,  Canada.  FMI,  which  had 1998  sales of  approximately  $3.2
million, is a manufacturer of microwave micro circuitry.  The purchase price was
approximately  $4.5  million,  net of $203,000  cash  acquired and including the
assumption of $451,000 existing  indebtedness,  and was financed by utilizing an
existing  unused credit  facility.  The  acquisition is being accounted for as a
purchase,  and,  accordingly,  the  purchase  price  has been  allocated  to the
underlying  assets and  liabilities  based on their estimated fair values at the
date of the  acquisition,  with the excess cost of  approximately  $2.9  million
recorded as goodwill which is being amortized over 20 years.

     The  unaudited  pro forma  combined  results  for the  comparative  periods
presented  for 1999 and 1998,  as if FMI had been  acquired at the  beginning of
1998, are estimated to be as follows:
<TABLE>
<CAPTION>
                                          Quarter Ended           Six Months Ended
                                     ----------------------   ------------------------
                                       July 3,     July 4,      July 3,       July 4,
                                        1999        1998         1999          1998
                                     ----------  ----------   -----------  -----------
     <S>                             <C>          <C>          <C>            <C>
     Net sales.....................  $5,125,000  $6,284,000   $10,494,000  $13,084,000
     Net income....................      82,000     289,000       254,000      680,000
     Diluted net income per share..        $.05        $.16          $.14         $.37

</TABLE>

     The  proforma  results  are  based  on  various  assumptions  and  are  not
necessarily  indicative of what would have actually occurred had the acquisition
and related financing transactions been completed at the beginning of last year,
nor are they necessarily indicative of future consolidated results.



                                       -6-


<PAGE>

                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


I.   Debt

     Long-term debt consists of the following:

     Revolving credit facility, interest 1/2% below prime........  $1,000,000
     Term loan, interest 1/2% below prime, due 2004..............   2,250,000
     Equipment loans, interest prime plus 1%, due July 1999
     to May 2001.................................................      88,695
     Capital leases, interest 6.9%, due November 2003............     328,312
                                                                   ----------
                                                                    3,667,007
     Less current portion........................................     633,530
                                                                   ----------
     Long-term portion...........................................  $3,033,477
                                                                   ==========

     The term loan is  secured  by  $2,500,000  of  recently  acquired  tangible
personal  property  and the  equipment  loans are covered by a general  security
agreement.  The revolving credit facility is unsecured.  Capital leases included
in  property,  plant and  equipment  have a  depreciated  cost of  approximately
$200,000.


J.   Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities").  This statement  establishes  accounting  and reporting  standards
requiring  that  all  derivative   instruments   (including  certain  derivative
instruments  embedded in other contracts) be recorded on the balance sheet as an
asset or liability and measured at its fair value.  This  statement is effective
for  fiscal  years  beginning  after June 15,  2000 but can be adopted  earlier.
Management has not yet determined the timing of or method to be used in adopting
this  statement.  Management  does not  believe at this time that such  adoption
would have a material impact on its consolidated financial statements.



                                      -7-


<PAGE>





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


                         STATEMENT 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
                                                  -----------------------------------------
                                                   Second Quarter          Year-to-date
                                                  -----------------------------------------
                                                   Quarter Ended         Six Months Ended
                                                  -----------------     -------------------
                                                  July 3,    July 4,    July 3,     July 4,
                                                   1999       1998       1999        1998
                                                  ------     ------     ------      ------
<S>                                               <C>        <C>        <C>         <C>
Net sales....................................     100.0%     100.0%     100.0%      100.0%
                                                  ------     ------      -----      ------
Costs and expenses:
  Cost of sales..............................      53.2       54.4       52.2        55.0
  Selling, general and administrative........      32.6       29.8       32.8        29.5
  Research and development...................      10.8        4.5        9.6         4.1
                                                  ------     ------      -----      ------
                                                   96.6       88.7       94.6        88.6
                                                  ------     ------      -----      ------

Operating income.............................       3.4       11.3        5.4        11.4
Interest and other expense (income), net.....       1.1        (.3)        .8         (.3)
                                                  ------     ------      -----      ------

Income before income taxes...................       2.3       11.6        4.6        11.7
Provision for income taxes...................        .7        4.2        1.6         4.3
                                                  ------     ------      -----      ------

Net income...................................       1.6%       7.4%       3.0%        7.4%
                                                  ======     ======      =====      ======

</TABLE>


                                      -8-

<PAGE>



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


     Quarter and six months  ended July 3, 1999  compared to the quarter and six
months ended July 4, 1998

     Results of operations  for the quarter  reflect  decreases in: net sales of
$448,000 or 8.0%;  operating income of $452,000 or 72.0%; net income of $327,000
or 80.0%;  and diluted net income per share of $.17 or 77.3%. Six months results
of operations reflect decreases in: net sales of $1,502,000 or 13.2%;  operating
income of  $763,000 or 58.9%;  net income of $542,000 or 64.7%;  and diluted net
income per share of $.29 or 63.0%.

     The net sales decrease was primarily  attributable  to shipments  against a
smaller  firm order  backlog  that  existed as of the  beginning  of the current
fiscal year,  with the order release dates that  coincided  with  production and
shipment  schedules,  partially offset by net sales of recently acquired Filtran
Microcircuits Inc. ("FMI").

     Orders  received  for the second  quarter of 1999 of  $6,407,000  increased
$2,824,000  or 78.8%  compared  to that of the second  quarter of 1998,  and the
backlog of firm unfilled  orders at July 3, 1999 increased  $906,000 or 11.4% to
$8,857,000 for the same end of quarter  comparisons,  including $860,000 backlog
at recently  acquired FMI. Orders received for the first six months of 1999 were
$11,656,000 and for the comparable six month time periods  increased  $2,104,000
or 22.3%.  Compared to year-end  1998,  backlog  increased  $2,689,000 or 43.6%,
including $860,000 backlog at recently acquired FMI. An extended continuation in
a delay of or reduction in new orders for Company products could have a material
financial impact on future sales and earnings. Customer requests for design work
have  increased  and are  currently  under  development  utilizing the Company's
proprietary Multi-Mix (TM) Microtechnology. This technology provides greater per
unit  content  and enables the  Company's  entry into new markets for  increased
order opportunities.

     As a result of the  decreases in the quarter and six month net sales,  cost
of sales decreased $306,000 or 10.1% for the quarter and $1,097,000 or 17.5% for
six months.  Cost of sales as a percentage of net sales  decreased 1.2% to 53.2%
for the quarter and 2.8% to 52.2% for six months. These decreases were primarily
attributable  to the effects of the  decrease in sales  revenue on cost of sales
and a reduction in direct labor and manufacturing  overhead costs partly related
to  efficiency   improvements   resulting   from  last  year's  fourth   quarter
restructuring.  Depreciation  expense increased  $108,000 for the second quarter
and  $170,000 for the first six months as a result of higher  capital  equipment
purchases in the current and prior years.



                                       -9-


<PAGE>

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


     Selling,  general and administrative expenses increased $10,000 or 0.6% for
the quarter and decreased $126,000 or 3.8% for six months, and when expressed as
a percentage  of net sales  increased  2.8% to 32.6% for the quarter and 3.3% to
32.8% for six months.  Decreases in selling expenses were related to a reduction
in sales  commissions  due to the decrease in sales  revenue.  For the first six
months general and  administrative  expenses decreased partly due to a reduction
in compensation costs related to last year's fourth quarter  restructuring which
was partially offset by additional  marketing and administrative  costs,  higher
depreciation  and  amortization  expense of $51,000  for the second  quarter and
$86,000  for the  first six  months,  including  the  amortization  of  goodwill
attributable to the acquisition of FMI.

     Research and development expenses for new products,  primarily the recently
introduced  Multi-Mix (TM)  Microtechnology were $552,000 for the second quarter
and $946,000  for the six months,  increases of $300,000 or 119% and $483,000 or
104% compared to $252,000 and $463,000 for the prior year.

     Interest  expense was  $56,000  for the second  quarter and $80,000 for the
first six  months of 1999 and was  incurred  on  borrowings  of  $2,500,000  for
capital  expenditures  under the term loan facility,  and  borrowings  under its
revolving  credit  facility in connection with the acquisition of FMI during the
first quarter of 1999,  partially  offset by interest  income.  During 1998, the
Company  earned  interest  income on its invested  cash  balances of $17,000 and
$29,000 for the corresponding quarter and six-month periods, respectively.

     Net income of $82,000 for the second  quarter was  $327,000  lower than net
income of $409,000 reported for the second quarter of 1998, a decrease of 80.0%.
Diluted net income per share was $.05,  a decrease of 77.3%  compared to diluted
net income per share of $.22 reported for the second  quarter of last year.  Net
income decreased  $542,000 or 64.7% to $295,000 for the first six months of 1999
compared to $836,000 reported in 1998. Diluted net income per share was $.17, on
a 2.9%  decrease  in the  number  of  weighted  average  diluted  common  shares
outstanding,  compared  to the  diluted  net  income  per  share  amount of $.46
reported for the first six months of the prior year.


Liquidity and Capital Resources

     The Company had liquid  resources  comprised  of cash and cash  equivalents
totaling  approximately  $900,000  at the  end of the  second  quarter  of  1999
compared to approximately $2,000,000 at the end of the second quarter of 1998.



                                      -10-


<PAGE>

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


The Company's working capital was approximately $6,300,000 and its current ratio
was 2.8 at the end of the second quarter of 1999 compared to $8,600,000 and 4.7,
respectively, at the end of the second quarter of 1998.

     The Company's operating activities provided cash flows of $1,256,000 in the
first six months of 1999 compared to $1,129,000 in the first six months of 1998.
The primary  reasons for the increase in  operating  cash flows in the first six
months of 1999 are a decrease  in accounts  receivable  as a result of lower net
sales and higher  depreciation  and  amortization  charges  partially  offset by
decreases  in  net  income  and  payments  made  on  accounts  payable,  accrued
liabilities  and  deferred  compensation.  The Company made net  investments  in
property,  plant and  equipment  of  $1,039,000  in the first six months of 1999
compared  to  $1,583,000  in  the  first  six  months  of  1998.  These  capital
expenditures  are related to new production and test equipment  capabilities  in
connection with the  introduction  of new products and  enhancements to existing
products.

     The cost to the Company for its  acquisition  of FMI, net of $203,000  cash
acquired and excluding indebtedness assumed of $451,000,  was $4,047,000,  which
was financed by borrowings under a previously unused credit facility.


     The Company has a $7,000,000  revolving credit and term loan agreement with
Summit Bank,  at one-half  percent  below the bank's  floating  prime rate.  The
Company  borrowed  $2,500,000  for  capital  expenditures  under  the term  loan
facility and $2,000,000  under its revolving  credit facility in connection with
the  acquisition  of FMI during the first  quarter of 1999.  The Company  repaid
$1,000,000 of the revolving  credit facility during the second quarter 1999. The
unused portion of the revolving  credit  facility of $3,500,000 is available for
working capital and general corporate purposes.

     Management  believes that with the liquid  resources and the remaining line
of  credit  available,  along  with  cash  flows  expected  to  be  provided  by
operations,   the  Company  will  have   sufficient   resources   for  currently
contemplated operations in 1999.

     The  Company's  capital   expenditures  for  new  projects  and  production
equipment are anticipated to exceed its depreciation  and amortization  expenses
in 1999.  The  Company  has issued  purchase  order  commitments  to  processing
equipment  manufacturing vendors for approximately $400,000 of capital equipment
and  building  improvements.  The  Company  anticipates  that  during  1999 such
equipment  will be purchased and become  operational  and building  improvements
will be completed.



                                      -11-


<PAGE>

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


     The Company was  authorized  by its Board of Directors to  repurchase up to
110,000 shares  (adjusted for the 10% stock dividend) of its common stock,  from
time to time, depending on market conditions,  and has repurchased approximately
65,000  shares to date under  such  authorization.  There  were 8,000  shares of
common stock repurchased  during fiscal 1998 and there were no share repurchases
during 1997.  During the first quarter of 1999, the Company  repurchased  53,000
shares of common stock at a cost of $329,000.

     The Board of Directors  approved the declaration of a 10% stock dividend to
shareholders  of record on May 15, 1998,  which was  distributed on June 5, 1998
along with payments made for fractional shares.

     Periodically,  the Company  explores the  possibility of acquiring  similar
manufacturers of electronic  devices or companies in related fields.  Management
believes that any such  acquisitions and business  operation  expansion could be
financed  through  its liquid  and  capital  resources  currently  available  as
previously  discussed and/or through additional  borrowing or issuance of equity
or debt securities.  The additional debt from any acquisitions,  if consummated,
would  increase  the  Company's  debt-to-equity  ratio  and such  debt or equity
securities  might,  at least in the near  term,  have a  dilutive  effect on net
income per share.  In February  1999, the Company  completed the  acquisition of
Filtran Microcircuits Inc.

Year 2000 Readiness Disclosure

     The Company  recognizes the need to assure that its operations  will not be
adversely impacted by Year 2000 software failures.  The impact on operations has
been evaluated and plans were formulated to ensure complete Year 2000 compliance
by  September  30,  1999.  The  Company's  manufactured  products do not contain
software of any kind and therefore are not subject to Year 2000 problems. All of
the Company's  existing  mission-critical  manufacturing  software and financial
computer applications were made Year 2000 compliant as of December 31, 1998. Key
suppliers  have been contacted to obtain their Year 2000  compliance  status and
the Company  anticipates that these key suppliers will be Year 2000 compliant by
September 30, 1999.

     Information Technology Systems

     Without  remediation,  certain of the Company's  internally developed order
processing and manufacturing support applications would not have been capable of
processing  dates beyond  December 31, 1999 properly.  The Company has corrected



                                      -12-


<PAGE>


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


the  programs,  and all business  order  processing  and  manufacturing  support
operations  applications should properly process dates beyond December 31, 1999.
The Company does not have any third-party  software  applications  that are date
dependent.  The Company's desktop computers and internal local area network have
been  checked  for Year 2000  problems  and none have been found.  All  programs
purchased  from third  parties are believed to be Year 2000  compliant  based on
certification received from the vendors.


     Non-Information Technology Systems

     Internal systems used in the Company's manufacturing processes are not date
dependent.  Other support systems,  such as security and HVAC, have been checked
and will not be adversely affected by dates beyond December 31, 1999.

     Costs to Company to Address Year 2000 Issues

     To date,  the Company has  expended  approximately  $70,000  (exclusive  of
internal  personnel  compensation  costs) to perform the program  remediation to
non-compliant  programs  and for  training and other  consulting  services.  The
Company  estimates  remaining  costs to project  completion to be  approximately
$50,000 to replace non-compliant systems that are not mission-critical.

     Risks of the Company to Year 2000 Issues

     The Company believes that the risks of the Year 2000 problem are moderately
low because its products are not date  dependent  and it has been  utilizing its
Year 2000 compliant internal software  applications since December 31, 1998. The
Company  will be  evaluating  the  Year  2000  readiness  of its  key  suppliers
throughout 1999 and will find alternate sources for those suppliers that are not
Year 2000 compliant.  The potential  impact and related costs resulting from the
Company's  failure  to find  alternate  suppliers  has not been  determined.  In
addition,  the Company's  customers are evaluating their own Year 2000 readiness
and have circulated  questionnaires regarding the Company's level of compliance.
The Company  will  continue to update its  customers  with  respect to Year 2000
readiness and will monitor the progress of its customers to assess the attendant
risks of inadequate Year 2000 compliance.



                                      -13-


<PAGE>

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


     Contingency Plans

     Currently, the Company does not have a contingency plan, since its products
are not date dependent.  In addition, the Company's Year 2000 compliance program
is on schedule and nearly complete.


Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities").  This statement  establishes  accounting  and reporting  standards
requiring  that  all  derivative   instruments   (including  certain  derivative
instruments  embedded in other contracts) be recorded on the balance sheet as an
asset or liability and measured at its fair value.  This  statement is effective
for  fiscal  years  beginning  after June 15,  2000 but can be adopted  earlier.
Management has not yet determined the timing of or method to be used in adopting
this  statement.  Management  does not  believe at this time that such  adoption
would have a material impact on its consolidated financial statements.


Forward-Looking Statements

     This 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; competitive products and pricing
pressures;  risks relating to governmental  regulatory actions in communications
and defense programs;  and inventory risks due to technological  innovation,  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.



                                      -14-


<PAGE>


PART II. OTHER INFORMATION

Item 4.  Submission of matters to a Vote of Security Holders.

     On June 10,  1999,  the Company  held its annual  shareholders'  meeting at
which the  shareholders  of the Company (i) elected six members to the Company's
Board  of  Directors,   (ii)  approved  an  amendment  to  the   Certificate  of
Incorporation of the Company  providing for the  classification  of the Board of
Directors  into  three  classes,  with  two  directors  in each  class,  serving
staggered terms and (iii) ratified the appointment of Arthur Andersen LLP as the
Company's  independent auditors for the current fiscal year. The shareholders of
the Company  elected Joel H. Goldberg and Eugene W. Niemiec as Class I directors
whose term expires at the 2000 annual shareholders' meeting, Edward H. Cohen and
Arthur A.  Oliner as Class II  directors  whose term  expires at the 2001 annual
shareholders'  meeting  and Mason N.  Carter  and  Albert H.  Cohen as Class III
directors whose term expires at the 2002 annual shareholders' meeting. At future
annual  meetings of  shareholders,  directors  will be elected for full terms of
three years to succeed those directors whose terms are then expiring.

     The following sets forth the number of votes cast for, against or withheld,
as well as the number of  abstentions  and broker  non-votes,  as to the matters
voted upon at the Company's June 10, 1999 annual shareholders' meeting:


             Election of Directors
                                             Elected
                                    ------------------------
                                       For          Withheld
                                    ------------------------
               Mason N. Carter      1,574,758        116,689
               Albert H. Cohen      1,575,418        116,029
               Edward H. Cohen      1,577,319        114,128
               Joel H. Goldberg     1,577,319        114,128
               Eugene W. Niemiec    1,574,700        116,747
               Arthur A. Oliner     1,573,765        117,682

             Amendment to the Company's Certificate of Incorporation
             providing for a classified Board of Directors whose members
             will serve staggered terms.

                         For       Against    Abstain   Broker non-votes
                       -------     -------    -------   ----------------
                       973,060     238,202     6,115        474,070


             Ratification of Arthur Andersen LLP as the Company's
             independent auditors.

                         For       Against    Abstain
                      ---------    -------    -------
                      1,672,255     17,012     2,180




                                      -15-


    <PAGE>


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

(a) Exhibits:

Exhibit No.
-----------

3(a)(1)           Amendment dated June 10,1999 to the By-laws of the Company.

3(a)(2)           By-laws of the Company, as amended on June 10, 1999.

3(b)(1)           Amendment to the Certificate of Incorporation of the Company
                  filed on June 11, 1999.

3(b)(2)           Restated Certificate of Incorporation of the Company filed
                  on June 14, 1999.

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

10                Shareholder's Agreement dated as of June 3, 1999 among the
                  Company, William D. Witter, Inc. and William D. Witter.

11                Statement re: Computation of earnings per share.

27                Financial Data Schedule for the Second Quarter Ended
                  July 3, 1999.


(b)      Reports on Form 8-K.

        A Current Report on Form 8-K was filed on May 6, 1999 reporting the
        Company's results of operations for the first quarter 1999.

        A Current Report on Form 8-K was filed on June 9, 1999 announcing that
        the Company's Board of Directors had amended the Company's Shareholder
        Rights Plan.

        A Current Report on Form 8-K/A was filed on June 18, 1999 amending and
        restating the Current Report on Form 8K filed on March 1, 1999 that had
        announced the completion of the Company's acquisition of Filtran
        Microcircuits Inc.

        A Current Report on Form 8-K was filed on August 5, 1999 reporting the
        Company's results of operations for the second quarter 1999.



                                        -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: August 12, 1999            By: /s/ Mason N. Carter
                                         -------------------------------------
                                         Mason N. Carter
                                         Chairman, President and
                                         Chief Executive Officer


    Date: August 12, 1999            By: /s/ Robert V. Condon
                                         -------------------------------------
                                         Robert V. Condon
                                         Vice President, Finance, Treasurer,
                                         Secretary and Chief Financial Officer



                                      -17-


<PAGE>
                                 EXHIBIT INDEX                    Sequentially
Exhibit                                                           Numbered Page

3(a)(1)           Amendment dated June 10,1999 to the By-laws of the Company.

3(a)(2)           By-laws of the Company, as amended on June 10, 1999.

3(b)(1)           Amendment to the Certificate of Incorporation of the Company
                  filed on June 11, 1999.

3(b)(2)           Restated Certificate of Incorporation of the Company filed
                  on June 14, 1999.

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

10                Shareholder's Agreement dated as of June 3, 1999 among the
                  Company, William D. Witter, Inc. and William D. Witter.

11                Statement re: Computation of earnings per share.

27                Financial Data Schedule for the Second Quarter Ended
                  July 3, 1999.



                                      -18-