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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 1934For the Quarterly period ended
                        March 29, 2003[X]
                   
                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934


MERRIMAC INDUSTRIES, INC.

(Exact Name of
            Small Business Issuer as specified in Its Charters)

Delaware
                   
                   22-1642321(State or Other Jurisdiction
                        ofIncorporation or Organization)
                   
                   (I.R.S. Employer Identification
                        No.)


41 Fairfield Place, West Caldwell, New Jersey 07006

(Address of
            Principal Executive Offices)

Registrant's telephone number (973) 575-1300

Former name, former
            address and former fiscal year, if changed since last report: N/A

As of May 12, 2003,
            3,120,591 shares of Common Stock, par value $0.01 per share, were issued and
            outstanding.

Transitional Small
            Business Disclosure Format (check one): Yes
            [ ]    No
            [X]

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

MERRIMAC INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS

March 29,2003
                   
                   December 28, 2002(Unaudited)
                   
                   (Audited)ASSETSCurrent assets:Cash and cash equivalents
                   
                   $
                   2,146,160
                   
                   
                   $
                   3,610,798Accounts receivable, net
                   
                   
                   5,535,830
                   
                   
                   
                   3,801,198Income tax refunds receivable
                   
                   
                   302,085
                   
                   
                   
                   300,914Inventories, net
                   
                   
                   3,803,224
                   
                   
                   
                   4,015,331Other current assets
                   
                   
                   394,642
                   
                   
                   
                   318,141Deferred tax assets
                   
                   
                   945,000
                   
                   
                   
                   945,000Total current assets
                   
                   
                   13,126,941
                   
                   
                   
                   12,991,382Property, plant and equipment at
                        cost
                   
                   
                   37,242,455
                   
                   
                   
                   36,420,776Less accumulated depreciation and
                        amortization
                   
                   
                   17,993,061
                   
                   
                   
                   17,138,713Property, plant and equipment,
                        net
                   
                   
                   19,249,394
                   
                   
                   
                   19,282,063Other assets
                   
                   
                   790,525
                   
                   
                   
                   817,305Deferred tax assets, non-current
                   
                   
                   929,000
                   
                   
                   
                   905,000Goodwill, net
                   
                   
                   2,691,670
                   
                   
                   
                   2,491,146Total Assets
                   
                   $
                   36,787,530
                   
                   
                   $
                   36,486,896LIABILITIES AND STOCKHOLDERS'
                        EQUITYCurrent liabilities:Current portion of long-term debt
                   
                   $
                   6,112,365
                   
                   
                   $
                   6,239,758Accounts payable
                   
                   
                   1,932,462
                   
                   
                   
                   1,554,517Accrued liabilities
                   
                   
                   1,655,482
                   
                   
                   
                   1,541,309Income taxes payable
                   
                   
                   28,997
                   
                   
                   
                   37,857Total current liabilities
                   
                   
                   9,729,306
                   
                   
                   
                   9,373,441Long-term debt, net of current
                        portion
                   
                   
                   416,524
                   
                   
                   
                   429,420Deferred compensation
                   
                   
                   115,067
                   
                   
                   
                   123,452Deferred liabilities
                   
                   
                   240,739
                   
                   
                   
                   155,483Deferred tax liabilities
                   
                   
                   1,717,000
                   
                   
                   
                   1,703,000Total liabilities
                   
                   
                   12,218,636
                   
                   
                   
                   11,784,796Commitments and contingenciesStockholders' equity:Preferred stock, par value $.01 per
                        share:Authorized: 1,000,000 sharesNo shares issuedCommon stock, par value $.01 per
                        share:Authorized: 20,000,000 sharesIssued: 3,202,691 and 3,201,069
                        shares
                   
                   
                   32,027
                   
                   
                   
                   32,011Common stock warrants
                   
                   
                   837,200
                   
                   
                   
                   837,200Additional paid-in capital
                   
                   
                   17,848,697
                   
                   
                   
                   17,841,970Retained earnings
                   
                   
                   6,940,593
                   
                   
                   
                   7,395,978Accumulated other comprehensive income
                        (loss)
                   
                   
                   52,243
                   
                   
                   
                   (263,193
                   )25,710,760
                   
                   
                   
                   25,843,966Less treasury stock, at cost:82,100 shares at March 29, 2003 and
                        December 28, 2002
                   
                   
                   (573,866
                   )
                   
                   
                   (573,866
                   )Less loan to officer-stockholder
                   
                   
                   (568,000
                   )
                   
                   
                   (568,000
                   )Total stockholders' equity
                   
                   
                   24,568,894
                   
                   
                   
                   24,702,100Total Liabilities and Stockholders'
                        Equity
                   
                   $
                   36,787,530
                   
                   
                   $
                   36,486,896


See accompanying notes.

1

MERRIMAC INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONSAND
            COMPREHENSIVE INCOME (LOSS)(Unaudited)

Quarter EndedMarch 29,2003
                   
                   March 30,2002OPERATIONSNet sales
                   
                   $
                   6,511,644
                   
                   
                   $
                   6,850,587Costs and expenses:Cost of sales
                   
                   
                   4,059,703
                   
                   
                   
                   3,656,307Selling, general and administrative
                   
                   
                   2,329,394
                   
                   
                   
                   2,343,780Research and development
                   
                   
                   599,731
                   
                   
                   
                   575,5476,988,828
                   
                   
                   
                   6,575,634Operating income (loss)
                   
                   
                   (477,184
                   )
                   
                   
                   274,953Interest and other expense, net
                   
                   
                   59,201
                   
                   
                   
                   62,116Income (loss) before income taxes
                   
                   
                   (536,385
                   )
                   
                   
                   212,837Provision (benefit) for income taxes
                   
                   
                   (81,000
                   )
                   
                   
                   70,000Net income (loss)
                   
                   $
                   (455,385
                   )
                   
                   $
                   142,837Net income (loss) per common
                        share:Basic and diluted
                   
                   $
                   (.15
                   )
                   
                   $
                   .05Weighted average number of shares
                        outstanding:Basic
                   
                   
                   3,120,095
                   
                   
                   
                   2,835,381Diluted
                   
                   
                   3,120,095
                   
                   
                   
                   2,943,428COMPREHENSIVE INCOME
                        (LOSS)Net income (loss)
                   
                   $
                   (455,385
                   )
                   
                   $
                   142,837Comprehensive income (loss):Foreign currency translation
                        adjustment
                   
                   
                   315,436
                   
                   
                   
                   (13,607
                   )Comprenhensive income (loss)
                   
                   $
                   (139,949
                   )
                   
                   $
                   129,230


See accompanying notes.

2

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

Quarter EndedMarch 29,2003
                   
                   March 30, 2002Cash flows from operating
                        activities:Net income (loss)
                   
                   $
                   (455,385
                   )
                   
                   $
                   142,837Adjustments to reconcile net income
                        (loss) to net cash provided by operating activities:Depreciation and amortization
                   
                   
                   796,717
                   
                   
                   
                   613,043Amortization of deferred income
                   
                   
                   (21,822
                   )
                   
                   
                   (21,822
                   )Deferred and other compensation
                   
                   
                   1,802
                   
                   
                   
                   2,174Changes in operating assets and
                        liabilities:Accounts receivable
                   
                   
                   (1,734,632
                   )
                   
                   
                   1,082,626Income tax refunds receivable
                   
                   
                   —
                   
                   
                   
                   8,836Inventories
                   
                   
                   212,107
                   
                   
                   
                   91,093Other current assets
                   
                   
                   (76,501
                   )
                   
                   
                   325,415Other assets
                   
                   
                   26,780
                   
                   
                   
                   (39,971
                   )Accounts payable
                   
                   
                   259,703
                   
                   
                   
                   (1,878,603
                   )Accrued liabilities
                   
                   
                   114,173
                   
                   
                   
                   (256,370
                   )Income taxes payable
                   
                   
                   (8,860
                   )
                   
                   
                   7,646Deferred compensation
                   
                   
                   (10,187
                   )
                   
                   
                   (10,299
                   )Other liabilities
                   
                   
                   107,078
                   
                   
                   
                   100,556Net cash (used in) provided by
                        operating activities
                   
                   
                   (789,027
                   )
                   
                   
                   167,161Cash flows from investing
                        activities:Purchase of capital assets
                   
                   
                   (565,802
                   )
                   
                   
                   (708,940
                   )Net cash used in investing activities
                   
                   
                   (565,802
                   )
                   
                   
                   (708,940
                   )Cash flows from financing
                        activities:Borrowing under mortgage facility
                   
                   
                   —
                   
                   
                   
                   2,500,000Repayment of borrowings
                   
                   
                   (179,280
                   )
                   
                   
                   (6,543,001
                   )Proceeds from the issuance of common
                        stock, net
                   
                   
                   —
                   
                   
                   
                   5,084,130Proceeds from the exercise of stock
                        options
                   
                   
                   6,743
                   
                   
                   
                   74,052Net cash (used in) provided by
                        financing activities
                   
                   
                   (172,537
                   )
                   
                   
                   1,115,181Effect of exchange rate changes
                   
                   
                   62,728
                   
                   
                   
                   (3,715
                   )Net (decrease) increase in cash and
                        cash equivalents
                   
                   
                   (1,464,638
                   )
                   
                   
                   569,687Cash and cash equivalents at beginning
                        of period
                   
                   
                   3,610,798
                   
                   
                   
                   1,844,434Cash and cash equivalents at end of
                        period
                   
                   $
                   2,146,160
                   
                   
                   $
                   2,414,121Supplemental disclosures of cash flow
                        information:Cash paid during the period for:Income taxes
                   
                   $
                   28,000
                   
                   
                   $
                   61,760Loan interest
                   
                   $
                   68,354
                   
                   
                   $
                   73,200Unpaid purchases of capital assets
                   
                   $
                   118,000
                   
                   
                   $
                   249,000


See accompanying notes.

3

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    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 March 29, 2003 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 28, 2002.

2.    Debt classification and management's plans

As discussed in Note 12, on April 17, 2003, the Company and Fleet Bank
            entered into bank modification agreements that waived compliance with certain
            covenants and further amended the applicable terms of the agreement and
            covenants. The Company has classified the amounts owed to Fleet Bank which are
            due on January 31, 2004, as a current liability at March 29, 2003 and December
            28, 2002.

Management of the Company is contemplating additional cost and capital
            expenditure reductions as a means to improve cash flow. Management also
            believes that the potential exists for various financing alternatives,
            including but not limited to obtaining secured financing from an asset based
            lender and/or a sale and lease-back of certain property. Management believes
            any one of these financing alternatives, combined with current liquid resources
            and the expected cash flows from operations should be sufficient to meet the
            obligations to Fleet Bank and currently contemplated operations during the next
            twelve months.

3.    Contract revenue recognition

Contract revenue and related costs 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.

4.    Private placement of common stock

On February 28, 2002, the Company sold to DuPont Electronic Technologies
            528,413 shares of Common Stock, representing approximately 16.6% of the
            Company's outstanding Common Stock after giving effect to the sale, for an
            aggregate purchase price of $5,284,000. The Company and DuPont Electronic
            Technologies have also agreed to work together to better understand the
            dynamics of the markets for high-frequency electronic components and modules.
            David B. Miller, Vice President and General Manager of DuPont Electronic
            Technologies, was appointed to the Company's Board of Directors. As a result of
            this sale, pursuant to the anti-dilution provisions of the Warrants issued in
            conjunction with the private placement of 360,000 shares of Common Stock in
            October 2000, the exercise price of the Warrants was reduced to $17.80 and the
            number of shares subject to the Warrants was increased to 429,775.

5.    Adoption of Accounting Standards

SFAS No. 143, "Accounting for Asset Retirement Obligations", requires the
            fair value for an asset retirement obligation to be recorded in the period in
            which it is incurred. The Company adopted the provisions of SFAS No. 143,
            effective December 29, 2002. The adoption of SFAS No. 143 did not have a
            material impact on the Company's financial position or results of operations.

4

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment
            of FASB Statement No. 13 and Technical Corrections", requires gains and losses
            on extinguishments of debt to be classified as income or loss from continuing
            operations rather than as extraordinary items as previously required under SFAS
            No. 4. Extraordinary treatment is required for certain extinguishments as
            provided in APB Opinion No. 30. The statement also amended SFAS No. 13 for
            certain sale-leaseback and sublease accounting. The Company adopted the
            provisions of SFAS No. 145, effective December 29, 2002. The adoption of SFAS
            No. 145 did not have a material impact on the Company's financial position or
            results of operations.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
            Activities," nullifies EITF Issue No. 94-3. SFAS No. 146 requires that a
            liability for a cost associated with an exit or disposal activity be recognized
            when the liability is incurred, whereas EITF No. 94-3 had recognized the
            liability at the commitment date to an exit plan. The Company adopted the
            provisions of SFAS No. 146, effective for exit or disposal activities initiated
            after December 28, 2002. The adoption of SFAS No. 146 did not have a material
            impact on the Company's financial position or results of operations.

FASB Interpretation No. 45, ("FIN 45"), "Guarantor's Accounting and
            Disclosure Requirements for Guarantees, Including Indirect Guarantees of
            Indebtedness of Others," elaborates on the disclosures to be made by a
            guarantor about its obligations under certain guarantees issued. It also
            clarifies that a guarantor is required to recognize, at the inception of a
            guarantee, a liability for the fair value of the obligation undertaken in
            issuing the guarantee. FIN 45 expands on the accounting guidance of SFAS No. 5
            "Accounting for Contingencies," SFAS No. 57, "Related Party Disclosures," and
            SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." It also
            incorporates without change the provisions of FASB Interpretation No. 34,
            "Disclosure of Indirect Guarantees of the Indebtedness of Others," which is
            superseded. The initial recognition requirements in this Interpretation are
            effective for periods ending after December 15, 2002. The adoption of this
            interpretation did not have a material impact on the Company's financial
            position or results of operations.

6.    Goodwill

The changes in the carrying amount of goodwill for the three-month
            periods ended March 29, 2003 and March 30, 2002 are as follows:

2003
                   
                   2002Balance, beginning of period
                   
                   $
                   2,491,146
                   
                   
                   $
                   2,451,037Foreign currency adjustment
                   
                   
                   200,524
                   
                   
                   
                   (8,504
                   )Balance, end of period
                   
                   $
                   2,691,670
                   
                   
                   $
                   2,442,533


7.    Inventories

Inventories consist of the following:

March 29, 2003
                   
                   December 28, 2002Finished goods
                   
                   $
                   217,200
                   
                   
                   $
                   414,233Work in process
                   
                   
                   2,014,444
                   
                   
                   
                   2,019,779Raw materials and purchased parts
                   
                   
                   1,571,580
                   
                   
                   
                   1,581,319Total
                   
                   $
                   3,803,224
                   
                   
                   $
                   4,015,331


Total inventories are net of valuation allowances for obsolescence of
            $1,159,000 at March 29, 2003 and $1,422,000 at December 28, 2002.

5

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.    Net income (loss) per common share

Basic net income (loss) per common share is calculated by dividing net
            income (loss), less dividends on preferred stock, if any, by the weighted
            average common shares outstanding during the period.

The calculation of diluted net income (loss) 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 and warrants, were issued during the reporting
            period to the extent they are not anti-dilutive.

9.    Comprehensive income (loss)

Comprehensive income (loss) includes all changes in stockholders' equity
            during a period except those resulting from investments by or distributions to
            stockholders. The Company has determined the component of comprehensive income
            (loss) impacting the Company is cumulative translation adjustments.

10.    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. Periodically, the additional week to
            make a 53-week year (fiscal year 1997 was the last and fiscal year 2003 will be
            the next) is added to the fourth quarter, making such quarter consist of 14
            weeks.

11.    Transactions with management and loan to
            officer-stockholder

In May 1998, the Company sold 22,000 shares of Common Stock to Mason N.
            Carter, Chairman, President and Chief Executive Officer of the Company, at a
            price of $11.60 per share, which approximated the average closing price of the
            Company's Common Stock during the first quarter of 1998. The Company lent Mr.
            Carter $255,000 in connection with the purchase of these shares and combined
            that loan with a prior loan to Mr. Carter in the amount of $105,000. The
            resulting total principal amount of $360,000 was payable May 4, 2003 and bore
            interest at a variable interest rate based on the prime rate of the Company's
            lending bank. This loan was further amended on July 29, 2002. Accrued interest
            of $40,000 was added to the principal, bringing the new principal amount of the
            loan to $400,000, the due date was extended to May 4, 2006, and interest (at
            the same rate as was previously applicable) is now payable monthly. Mr. Carter
            has pledged 33,000 shares of Common Stock as security for this loan which is a
            full-recourse loan.

On August 31, 2000, in connection with an amendment of Mr. Carter's
            employment agreement, the Company loaned Mr. Carter an additional $280,000.
            Interest on the loan will be calculated at a variable interest rate based on
            the prime rate of the Company's lending bank, payable in accordance with Mr.
            Carter's employment agreement. Each year the Company is required to forgive 20%
            of the amount due under this loan and the accrued interest thereon. During
            2002, the amount of $56,000 principal and $12,000 of accrued interest was
            forgiven. For fiscal year 2003, the Company projects that $56,000 of principal
            and $8,000 of accrued interest will be forgiven.

6

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.    Current and long-term debt

The Company was obligated under the following debt instruments at March
            29, 2003 and December 28, 2002:

March 29, 2003
                   
                   December 28, 2002Fleet Bank (A):Mortgage loan, callable January 31,
                        2004, interest 1⁄2% below prime
                   
                   $
                   3,325,000
                   
                   
                   $
                   3,368,750Term loan, callable January 31, 2004,
                        interest LIBOR plus 2%
                   
                   
                   2,622,857
                   
                   
                   
                   2,720,000The Bank of Nova Scotia (B):Capital leases, interest 6.7%, due
                        October 2004
                   
                   
                   66,296
                   
                   
                   
                   70,553Capital leases, interest 8.7%, due
                        June 2005
                   
                   
                   202,416
                   
                   
                   
                   202,420Capital leases, interest 7.3%, due
                        April 2006
                   
                   
                   169,873
                   
                   
                   
                   167,435Capital leases, interest 7.9%, due
                        June 2006
                   
                   
                   142,447
                   
                   
                   
                   140,0206,528,889
                   
                   
                   
                   6,669,178Less current portion
                   
                   
                   6,112,365
                   
                   
                   
                   6,239,758Long-term portion
                   
                   $
                   416,524
                   
                   
                   $
                   429,420


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|(A) | The
                   Company commenced borrowing in April 2001 under a $7,500,000 revolving credit
                   facility with Fleet Bank, at an interest rate of one-half percent below the
                   bank's floating prime rate. The weighted average interest rate on the
                   borrowings under this facility during 2002 was 4.22% and the interest rate at
                   March 29, 2003 and December 28, 2002 was 3.75%.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
                   the first quarter of 2002, the Company obtained an increase of $2,500,000 in
                   the Company's lines of credit with Fleet Bank to a total of $10,000,000,
                   $3,500,000 of which consisted of a first mortgage originally callable in March
                   2007 on the Company's West Caldwell, New Jersey manufacturing facility.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
                   December 2002 the Company borrowed $2,720,000 under a seven-year term loan with
                   Fleet Bank, which lowered the amount available under its revolving line of
                   credit to $3,780,000. The interest rate on the borrowings under this facility
                   was 3.34% and 3.42% at March 29, 2003 and December 28, 2002, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
                   Company successfully completed a private placement of 528,413 shares of Company
                   Common Stock on February 28, 2002 that raised $5,284,000 before offering
                   expenses. From the proceeds of that offering, the Company repaid the $5,000,000
                   then outstanding under the revolving credit facility.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
                   revolving credit facility, mortgage loan and term loan are secured by
                   substantially all assets located within the United States and the pledge of 65%
                   of the stock of the Company's subsidiaries located in Costa Rica. The
                   provisions of the revolving credit and term loan agreement require the Company
                   to maintain certain financial covenants. At December 28, 2002, the Company was
                   not in compliance with certain of these covenants.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
                   April 17, 2003, the Company and Fleet Bank entered into bank modification
                   agreements, that waived compliance with certain covenants and further amended
                   the applicable terms of the agreements and covenants. The Company is in
                   compliance with the amended covenants at March 29, 2003. Under the amended loan
                   agreements, Fleet Bank reduced the amount available under its revolving credit
                   facility to $1,000,000, based upon availability under a borrowing base
                   calculation (70% of eligible accounts receivable as defined in the modified
                   loan agreements), and changed the maturity date of the Company's $3,500,000
                   first mortgage loan and the $2,720,000 term loan to January 31, 2004, while
                   extending the maturity date of the revolving credit facility to January 31,
                   2004. In connection with these modification agreements, the Company paid a
                   $100,000 fee to Fleet Bank and will accelerate the amortization of deferred
                   financing costs of $190,000 through January 31, 2004. The loan agreements
                   contain a material adverse change clause, under which Fleet Bank, in its good
                   faith opinion, can determine that the Company is in default under the
                   agreements. The Company believes that this clause is a Subjective Acceleration
                   Clause as indicated in FASB Technical Bulletin 79-3, and, based upon the
                   Company's assessment under those guidelines, among other factors, has
                   classified the amounts as a current liability at March 29, 2003 and December
                   28, 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Management's
                   plans in connection with its debt obligations are outlined in Note 2.
| | -----------------------------------------------------------------------------------------------------

|(B) | Capital
                   leases included in property, plant and equipment, net, have a depreciated cost
                   of approximately $540,000 at March 29, 2003 and $559,000 at December 28,
                   2002.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.    Stock-based compensation

SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and
            Disclosure," provides alternative methods of transition for a voluntary change
            to the fair value method of accounting for stock-based employee compensation.
            In addition, this statement amends the disclosure requirements of SFAS No. 123,
            "Accounting for Stock-Based Compensation", to require more prominent
            disclosures about the method of accounting for stock-based employee
            compensation and the effect of the method used on reported results in both
            annual and interim financial statements. The Company is required to adopt the
            provisions of SFAS No. 148 in its financial statements for the fiscal year
            ending January 3, 2004. As permitted by SFAS No. 148, the Company will continue
            to apply the provisions of APB Opinion No. 25 "Accounting for Stock-Based
            Compensation," for all employee stock option grants and has elected to disclose
            pro forma net income and earnings per share amounts as if the fair-value based
            method had been applied in measuring compensation costs.

The table below sets forth the pro forma net income (loss) and the pro
            forma net income (loss) per share information as calculated in accordance with
            SFAS No. 123 for the three-month periods ended March 29, 2003 and March 30,
            2002:

2003
                   
                   2002Net income (loss) – as reported
                   
                   $
                   (455,385
                   )
                   
                   $
                   142,837Less: Stock-based compensation expense
                        determined using the fair value method
                   
                   
                   (74,000
                   )
                   
                   
                   (136,500
                   )Net income (loss) – pro forma
                   
                   $
                   (529,385
                   )
                   
                   $
                   6,337Basic earnings (loss) per share:As reported
                   
                   $
                   (.15
                   )
                   
                   $
                   .05Pro forma
                   
                   $
                   (.17
                   )
                   
                   $
                   .00Diluted earnings (loss) per
                        share:As reported
                   
                   $
                   (.15
                   )
                   
                   $
                   .05Pro forma
                   
                   $
                   (.17
                   )
                   
                   $
                   .00


The SFAS No. 123 method of accounting has been applied to options granted
            in periods after December 31, 1994 and the resulting pro forma compensation
            expense may not be indicative of pro forma expense in future years.

The fair value of each of the options granted in 2003 and 2002 was
            estimated on the date of grant using the Black-Scholes option valuation model.

The following weighted average assumptions were utilized:

2003
                   
                   2002Expected option life (years)
                   
                   
                   1.0
                   
                   
                   
                   2.4Expected volatility
                   
                   
                   45.00
                   %
                   
                   
                   45.00
                   %Risk-free interest rate
                   
                   
                   2.50
                   %
                   
                   
                   3.50
                   %Expected dividend yield
                   
                   
                   0.00
                   %
                   
                   
                   0.00
                   %


The Black-Scholes option valuation model was developed for use in
            estimating the fair value of traded options, which have no vesting restrictions
            and are fully transferable. In addition, option valuation models require the
            input of highly subjective assumptions including the expected stock price
            volatility. Because the Company's employee stock options and subscription
            rights have characteristics significantly different from those of traded
            options, and because changes in the subjective input assumptions can materially
            affect the fair value estimate, in management's opinion, the existing models do
            not necessarily provide a reliable single measure of the fair value of its
            employee stock options and subscription rights.

8

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



14.    Lease modification and facility sharing
            agreement

The Company entered into an agreement effective January 2001, with a
            customer to relinquish to this customer 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. On March
            31, 2003, the Company relinquished the balance of the space to its customer.

In connection with the 2001 agreement, the Company received $350,000 from
            its customer with the final payment of $100,000 received in January 2003.

In February 2001, the Company entered into a five-year lease in Costa
            Rica for a 36,200 square-foot facility for manufacturing new Multi-Mix®
            Microtechnology products. The leasehold improvements and capital equipment for
            this manufacturing facility were completed at a cost of approximately
            $5,600,000 and this facility was opened for production in August 2002.

15.    Pro forma weighted average number of common
            shares outstanding

Had the sale of 528,413 shares of common stock on February 28, 2002
            referred to in Note 4, Private placement of common stock, occurred at the
            beginning of the year, the pro forma basic and diluted weighted average number
            of common shares outstanding would have been:

Quarter Ended March 30,
                        2002Basic:Actual
                   
                   
                   2,835,381Adjustments for sale of Common Stock
                        on February 28, 2002
                   
                   
                   348,404Basic – pro forma
                   
                   
                   3,183,785Effect of dilutive securities - Stock
                        options
                   
                   
                   108,047Diluted – pro forma
                   
                   
                   3,291,832


16.    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, 80% are located in the United States
            and 20% are located in Costa Rica.

Microwave micro-circuitry: Design, manufacture and sale of microstrip,
            bonded stripline and thick metal-backed Teflon® (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 are immaterial.

9

MERRIMAC INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Quarter EndedMarch 29, 2003
                   
                   March 30, 2002(In thousands of dollars)Industry segments:Sales to unaffiliated customers:Electronic components
                   
                   $
                   5,956
                   
                   
                   $
                   6,036Microwave micro-circuitry
                   
                   
                   642
                   
                   
                   
                   1,001Intersegment sales
                   
                   
                   (86
                   )
                   
                   
                   (186
                   )Consolidated
                   
                   $
                   6,512
                   
                   
                   $
                   6,851Income (loss) before provision for
                        income taxes:Operating income (loss):Electronic components
                   
                   $
                   (352
                   )
                   
                   $
                   289Microwave micro-circuitry
                   
                   
                   (125
                   )
                   
                   
                   (14
                   )Interest and other (expense) income,
                        net
                   
                   
                   (59
                   )
                   
                   
                   (62
                   )Consolidated
                   
                   $
                   (536
                   )
                   
                   $
                   213Identifiable assets:Electronic components
                   
                   $
                   29,690
                   
                   
                   $
                   28,950Microwave micro-circuitry
                   
                   
                   5,110
                   
                   
                   
                   5,311Corporate
                   
                   
                   2,146
                   
                   
                   
                   2,414Intersegment
                   
                   
                   (158
                   )
                   
                   
                   (248
                   )Consolidated
                   
                   $
                   36,788
                   
                   
                   $
                   36,427Depreciation and amortization:Electronic components
                   
                   $
                   742
                   
                   
                   $
                   544Microwave micro-circuitry
                   
                   
                   55
                   
                   
                   
                   69Consolidated
                   
                   $
                   797
                   
                   
                   $
                   613Capital expenditures, net:Electronic components
                   
                   $
                   524
                   
                   
                   $
                   672Microwave micro-circuitry
                   
                   
                   42
                   
                   
                   
                   37Consolidated
                   
                   $
                   566
                   
                   
                   $
                   709


10

|                           |                                                                                                         
|-------------------------- | --------------------------------------------------------------------------------------------------------
|ITEM
                   2. | MANAGEMENT'S
                   DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS SUMMARY (Unaudited)

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

Percentage of Net SalesQuarter EndedMarch 29,2003
                   
                   March 30, 2002Net sales
                   
                   
                   100.0
                   %
                   
                   
                   100.0
                   %Costs and expenses:Cost of sales
                   
                   
                   62.3
                   
                   
                   
                   53.4Selling, general and
                        administrative
                   
                   
                   35.8
                   
                   
                   
                   34.2Research and development
                   
                   
                   9.2
                   
                   
                   
                   8.4107.3
                   
                   
                   
                   96.0Operating income (loss)
                   
                   
                   (7.3
                   )
                   
                   
                   4.0Interest and other expense, net
                   
                   
                   .9
                   
                   
                   
                   .9Income (loss) before income taxes
                   
                   
                   (8.2
                   )
                   
                   
                   3.1Provision (benefit) for income
                        taxes
                   
                   
                   (1.2
                   )
                   
                   
                   1.0Net income (loss)
                   
                   
                   (7.0
                   )%
                   
                   
                   2.1
                   %


On April 17, 2003, Fleet Bank amended the Company's loan agreements
            reducing its revolving credit facility from $3,780,000 to $1,000,000, extending
            the maturity date of the revolving credit facility from June 30, 2003 to
            January 31, 2004 and shortening the maturity date on each of its first mortgage
            loan from March 2007 and term loan from December 2009, to January 31, 2004. The
            Company is treating these loans as current at March 29, 2003 and December 28,
            2002. Please see "LIQUIDITY AND CAPITAL RESOURCES".

Critical Accounting Estimates and Policies

The Company's management makes certain assumptions and estimates that
            impact the reported amounts of assets, liabilities and stockholders' equity,
            and revenues and expenses. The management judgments that are currently the most
            critical are related to the accounting for the Company's investments in
            Multi-Mix® Microtechnology, contract revenue recognition, inventory
            valuation, valuation of goodwill and valuation of deferred tax assets.

Following is a summary of the carrying amounts of the Multi-Mix®
            Microtechnology net assets included in the Company's consolidated financial
            statements at March 29, 2003 and the related future planned purchases and lease
            obligation commitments through January 2006.

Net assets:Property, plant and equipment, at cost
                   
                   $
                   13,297,000Less accumulated depreciation and
                        amortization
                   
                   
                   2,700,000Property, plant and equipment,
                        net
                   
                   
                   10,597,000Inventories
                   
                   
                   1,014,000Other assets, net
                   
                   
                   357,000Total net assets at March 29,
                        2003
                   
                   $
                   11,968,000Commitments:Planned equipment purchases for the
                        remainder of 2003
                   
                   $
                   250,000Lease obligations through January
                        2006
                   
                   
                   874,000Total commitments
                   
                   $
                   1,124,000Total net assets and commitments
                   
                   $
                   13,092,000


11

The Company anticipates receiving increasing levels of orders during 2003
            for its Multi-Mix® Microtechnology products, for which substantial research
            and development costs have also been incurred. Due to economic and market
            conditions in the wireless industry, the telecommunications system service
            providers have curtailed their capital equipment purchases from our customers.
            These circumstances have caused the Company's customers to continue to delay
            Multi-Mix® Microtechnology product purchases that had been anticipated. A
            continued extended delay or reduction from planned levels in new orders
            expected from customers for these products could require the Company to pursue
            alternatives related to the utilization or realization of these assets and
            commitments, the net result of which could be materially adverse to the
            financial results and position of the Company. The Company has determined no
            provision is required at this time.

The Company's planned equipment purchases and other commitments are
            expected to be funded through a revolving credit facility of $1,000,000, which
            becomes due January 31, 2004, supplemented by cash resources and cash flows
            that are expected to be provided by operations.

Contract revenue and related costs on fixed-price contacts 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.

Inventories are valued at the lower of average cost or market.
            Inventories are periodically reviewed for their projected manufacturing usage
            utilization and, when slow-moving or obsolete inventories are identified, a
            provision for a potential loss is made and charged to operations. At March 29,
            2003, total inventories of $3,803,000 are net of a $1,159,000 valuation
            allowance for obsolescence.

With the adoption of SFAS No. 142 by the Company on December 30, 2001,
            goodwill is no longer 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 has performed the required initial assessment as of the beginning
            of the 2002 fiscal year as well as the annual assessment during the fourth
            quarter of 2002 and there was no impairment of goodwill.

The Company currently has significant deferred tax assets resulting from
            net operating loss carryforwards, tax credit carryforwards and deductible
            temporary differences, which will reduce taxable income in future periods. A
            valuation allowance (or write-down) is required when it is more likely than not
            that all or a portion of a deferred tax asset will not be realized. The
            Company's 2002 net loss weighed heavily in the overall assessment. As a result
            of the Company's assessment, the Company established a full valuation allowance
            for its remaining net domestic deferred tax assets at December 28, 2002.

First quarter 2003 compared to first quarter 2002

Consolidated results of operations for the first quarter of 2003 reflect
            a decrease in net sales from the first quarter of 2002 of $339,000 (or 4.9%) to
            $6,512,000. This decrease was attributable to an $80,000 decrease in net sales
            of electronic components and a $259,000 decrease in sales of microwave
            micro-circuitry products from the Company's wholly-owned subsidiary Filtran
            Microcircuits Inc. ("FMI"). The decline in sales was primarily attributable to
            a $1.8 million lower backlog at the beginning of 2003 compared to the beginning
            of 2002, which reflected continuing significant weakness in certain
            communications markets that are served by the Company.

Orders of $8,133,000 were received during the first quarter of 2003, an
            increase of $2,308,000 or 39.6% compared to $5,825,000 in orders received
            during the first quarter of 2002. Orders received during the first quarter of
            2003 exceeded sales during the first quarter of 2003 by approximately 24.9%. As
            a result, backlog increased by $1,621,000 or 16.1% to $11,665,000 at the end of
            first quarter 2003 compared to $10,044,000 at year-end 2002, reflecting recent
            orders received near the end of the first quarter of 2003.

The Company believes that the current economic downturn, resulting in
            reduced spending by wireless service providers, has caused many wireless
            companies to delay or forego purchases of the Company's products. However, the
            Company expects that its defense customers should continue to

12

maintain their approximate current levels of orders during fiscal year
            2003, although there are no assurances they will do so. The Company also
            anticipates increased levels of orders during the fiscal year 2003 for its new
            Multi-Mix® Microtechnology products, for which the Company has made a
            significant capital investment and incurred substantial research and
            development costs. The Company expects that softness in the telecommunications
            sector that FMI serves, principally millimeter wave applications for wireless
            broadband solutions, which caused a substantial reduction in the microwave
            micro-circuitry segment sales and profitability for the first quarter of 2003
            compared to prior-year results, will continue in the near term.

Cost of sales increased $403,000 or 11.0%, and as a percentage of net
            sales increased 8.9 percentage points to 62.3% for the first quarter of 2003.
            Cost of sales increased $413,000 for the electronic components segment,
            resulting from higher manufacturing cost increases that were attributable to
            increases in depreciation and other occupancy expenses related to the expansion
            of the Company's West Caldwell, New Jersey and Costa Rica manufacturing
            production facilities. Cost of sales declined $10,000 in the microwave
            micro-circuitry segment, resulting from the decline in first quarter 2003
            segment sales of approximately 31.8% compared to the first quarter of the prior
            year.

Depreciation expense included in cost of sales was $692,000, an increase
            of $151,000. For the first quarter of 2003, approximately $419,000 of
            depreciation expense was associated with Multi-Mix® Microtechnology capital
            assets. The increase in depreciation expense was a result of higher capital
            equipment purchases in the prior year related to the new Costa Rica
            manufacturing facility and the expansion of the West Caldwell, New Jersey
            manufacturing facility.

Gross profit for the first quarter of 2003 for the electronic components
            segment decreased by $493,000 to $2,313,000 or 38.8% of segment net sales of
            $5,956,000 compared to gross profit of $2,806,000 or 46.5% of segment net sales
            of $6,036,000 in the first quarter of 2002. Gross profit for the first quarter
            of 2003 for the microwave micro-circuitry segment decreased by $250,000 to
            $138,000 or 21.5% of segment net sales of $642,000, compared to $388,000 or
            38.7% of segment net sales of $1,001,000 in the first quarter of 2002. FMI
            sales include intersegment sales of $86,000 and $186,000 in the first quarter
            of 2003 and 2002, respectively. The decline is primarily attributable to
            competitive pricing conditions in commercial product markets and from
            under-utilization of the Company's manufacturing facilities.

Selling, general and administrative expenses of $2,329,000 for the first
            quarter of 2003 decreased by $15,000 or 0.6%, and when expressed as a
            percentage of net sales, increased by 1.6% to 35.8%.

Research and development expenses for new products were $600,000 for the
            first quarter of 2003, an increase of $24,000 or 4.2% compared to the first
            quarter of 2002. Except for $38,000 of expenses in the first quarter of 2003 at
            FMI, a decrease of $109,000 from the first quarter of the prior year, a
            majority of the research and development expenses were related to
            Multi-Mix® Microtechnology and Multi-Mix PICOTM products.

Consolidated operating loss for the first quarter of 2003 was $477,000
            compared to consolidated operating income of $275,000 in the first quarter of
            2002.

Operating loss for the electronic components segment was $352,000 for the
            first quarter of 2003 compared to operating income of $289,000 in the first
            quarter of 2002. Operating loss for the microwave micro-circuitry segment was
            $125,000 for the first quarter of 2003 compared to an operating loss of $14,000
            for the first quarter of 2002.

Interest expense, net was $59,000 for the first quarter of 2003 compared
            to net interest expense of $62,000 for the first quarter of 2002. Interest
            expense for the first quarter of 2003 was principally incurred on borrowings
            under the mortgage loan and the term loan taken out during fiscal year 2002.
            Interest expense for the first quarter of 2002 was principally incurred on
            borrowings under a revolving credit facility and mortgage loan in connection
            with capital equipment purchases and the building expansion constructed during
            fiscal year 2001.

An income tax benefit of $81,000 was recorded for the first quarter of
            2003 with an effective tax rate of 15% compared to a tax provision of $70,000
            for the first quarter of 2002 with an effective tax rate of 33%. The tax
            benefit recorded represents the carryback of the 2003 FMI net operating loss
            and $20,000 of FMI investment tax credits. No U.S. tax benefits have been
            recorded in 2003.

13

Net loss for the first quarter of 2003 was $455,000 compared to net
            income of $143,000 for the first quarter of 2002. Net loss per share for the
            first quarter of 2003 was $.15 compared to net income of $.05 per share that
            was reported in the first quarter of 2002.

The weighted average number of diluted shares outstanding increased by
            approximately 177,000 shares or 6.0% for the first quarter of 2003 compared to
            the first quarter of 2002. The increase in shares outstanding was primarily due
            to the issuance of 528,413 shares to DuPont Electronic Technologies during the
            first quarter of 2002.

Liquidity and Capital Resources

The Company had liquid resources comprised of cash and cash equivalents
            totaling approximately $2,100,000 at the end of the first quarter of 2003
            compared to approximately $3,600,000 at the end of 2002. The Company's working
            capital was approximately $3,400,000 and its current ratio was 1.3 at the end
            of the first quarter of 2003 compared to $3,600,000 and 1.4, respectively, at
            the end of 2002.

The Company's operating activities utilized cash of $789,000 during the
            first quarter of 2003 compared to $167,000 of net positive cash flows during
            the first quarter of 2002. The primary reasons for the operating cash flow
            usage resulted from the net loss of $455,000, and an increase in accounts
            receivable of $1,735,000 offset by depreciation and amortization charges of
            $797,000, lower inventory levels and increases in accounts payable and accrued
            liability amounts.

The Company made net cash investments in property, plant and equipment of
            $566,000 during the first quarter of 2003, (and had unpaid invoices for such
            investments of $118,000 at March 29, 2003), compared to net cash investments
            made in property, plant and equipment of $709,000 (and unpaid invoices for such
            investments of $249,000 at March 30, 2002) during the first quarter of 2002.
            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 depreciated cost of capital equipment
            associated with Multi-Mix® Microtechnology was $10,597,000 at the end of
            the first quarter 2003, an increase of $124,000 compared to $10,473,000 at the
            end of fiscal year 2002.

In April 2001, the Company commenced borrowing under a $7,500,000
            revolving credit facility with Fleet Bank, at an interest rate of one-half
            percent below the bank's floating prime rate. The weighted average interest
            rate on the borrowings under this facility during 2002 was 4.22%, and the
            current interest rate is 3.75% at March 29, 2003 and December 28, 2002.

During the first quarter of 2002, the Company obtained an increase of
            $2,500,000 in the Company's lines of credit with Fleet Bank to a total of
            $10,000,000, $3,500,000 of which consisted of a first mortgage originally
            callable in March 2007 on the Company's West Caldwell, New Jersey manufacturing
            facility.

In December 2002 the Company borrowed $2,720,000 under a seven-year term
            loan with Fleet Bank, which lowered the amount available under its revolving
            line of credit to $3,780,000. The interest rate on the borrowings under this
            facility was 3.34% and 3.42% at March 29, 2003 and December 28, 2002,
            respectively.

The Company successfully completed a private placement of 528,413 shares
            of Company Common Stock on February 28, 2002 that raised $5,284,000 before
            offering expenses. From the proceeds of that offering, the Company repaid the
            $5,000,000 then outstanding under the revolving credit facility.

The revolving credit facility, mortgage loan and term loan are secured by
            substantially all assets located within the United States and the pledge of 65%
            of the stock of the Company's subsidiaries located in Costa Rica. The
            provisions of the revolving credit and term loan agreement require the Company
            to maintain certain financial covenants. At December 28, 2002, the Company was
            not in compliance with certain of these covenants.

On April 17, 2003, the Company and Fleet Bank entered into bank
            modification agreements, that waived compliance with certain covenants and
            further amended the applicable terms of the agreements and covenants. The
            Company is in compliance with the amended covenants at March 29, 2003. Under
            the amended loan agreements, Fleet Bank reduced the amount available under its
            revolving credit facility to $1,000,000, based upon availability under a
            borrowing base calculation (70% of eligible accounts

14

receivable as defined in the modified loan agreements), and changed the
            maturity date of the Company's $3,500,000 first mortgage loan and the
            $2,720,000 term loan to January 31, 2004, while extending the maturity date of
            the revolving credit facility to January 31, 2004. In connection with these
            modification agreements, the Company paid a $100,000 fee to Fleet Bank and will
            accelerate the amortization of deferred financing costs of $190,000 through
            January 31, 2004. The loan agreements contain a material adverse change clause,
            under which Fleet Bank, in its good faith opinion, can determine that the
            Company is in default under the agreements. The Company believes that this
            clause is a Subjective Acceleration Clause as indicated in FASB Technical
            Bulletin 79-3, and, based upon the Company's assessment under those guidelines,
            among other factors, it has classified the amounts as a current liability at
            March 29, 2003 and December 28, 2002.

Management of the Company is contemplating additional cost and capital
            expenditure reductions as a means to improve cash flow. Management also
            believes that the potential exists for various financing alternatives,
            including but not limited to obtaining secured financing from an asset based
            lender and/or a sale and lease-back of certain property. While management
            believes any one of these financing alternatives, combined with current liquid
            resources and the expected cash flows from operations should be sufficient to
            meet the obligations to Fleet Bank and currently contemplated operations during
            the next twelve months, there can be no assurance that any alternative
            financings can be obtained by the Company.

Depreciation and amortization expenses exceeded capital expenditures for
            new projects and production equipment during the first quarter of 2003 by
            approximately $231,000, and the Company anticipates that depreciation and
            amortization expenses will exceed capital expenditures in fiscal year 2003. The
            Company intends to issue commitments to purchase $500,000 of capital equipment
            from various vendors. The Company anticipates that such equipment will be
            purchased and become operational during the second and third quarters of 2003.

The Company entered into an agreement effective January 2001, with a
            customer to relinquish to this customer 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. On March
            31, 2003, the Company relinquished the balance of the space to its customer.

In connection with the 2001 agreement, the Company received $350,000 from
            its customer with the final payment of $100,000 received in January 2003.

In February 2001, the Company entered into a five-year lease in Costa
            Rica for a 36,200 square-foot facility for manufacturing new Multi-Mix®
            Microtechnology products. The leasehold improvements and capital equipment for
            this manufacturing facility were recently completed at a cost of approximately
            $5,600,000 and this facility was opened for production in August 2002.

Related Party Transactions

In May 1998, the Company sold 22,000 shares of Common Stock to Mason N.
            Carter, Chairman, President and Chief Executive Officer of the Company, at a
            price of $11.60 per share, which approximated the average closing price of the
            Company's Common Stock during the first quarter of 1998. The Company lent Mr.
            Carter $255,000 in connection with the purchase of these shares and combined
            that loan with a prior loan to Mr. Carter in the amount of $105,000. The
            resulting total principal amount of $360,000 was payable May 4, 2003 and bore
            interest at a variable interest rate based on the prime rate of the Company's
            lending bank. This loan was further amended on July 29, 2002. Accrued interest
            of $40,000 was added to the principal, bringing the new principal amount of the
            loan to $400,000, the due date was extended to May 4, 2006, and interest (at
            the same rate as was previously applicable) is now payable monthly. Mr. Carter
            has pledged 33,000 shares of Common Stock as security for this loan, which is a
            full-recourse loan.

On August 31, 2000, in connection with an amendment of Mr. Carter's
            employment agreement, the Company loaned Mr. Carter an additional $280,000.
            Interest on the loan varies and is based on the prime rate of the Company's
            lending bank, payable in accordance with Mr. Carter's employment agreement.

15

Each year the Company is required to forgive 20% of the amount due under
            this loan and the accrued interest thereon. During 2002, the Company forgave
            $56,000 of principal and $12,000 of accrued interest and projects that $56,000
            of principal and $8,000 of accrued interest will be forgiven in fiscal year
            2003.

The Company is a party to a stockholder's agreement, dated as of October
            30, 1998, with a former director and Chairman of the Company. Pursuant to the
            stockholder's agreement, this former director is required to vote his shares of
            Common Stock as directed by the Board of Directors or the Chief Executive
            Officer of the Company. There are no other obligations of the Company pursuant
            to such agreement.

During the first quarter of 2003, the Company's General Counsel KMZ
            Rosenman was paid $39,000 for providing legal services to the Company. A
            director of the Company is Counsel to KMZ Rosenman but does not share in the
            fees that the Company pays to such law firm and his compensation is not based
            on such fees.

During 2003, the Company retained Career Consultants, Inc. and SK
            Associates to perform executive searches and to provide other services to the
            Company. The Company paid an aggregate of $29,000 to these companies during the
            first quarter of 2003. A director of the Company is the Chairman and Chief
            Executive Officer of these companies.

During the first quarter of 2003, a director of the Company was paid
            $9,000 for providing financial-related consulting services to the Company.

During the first quarter of 2003, a director of the Company was paid
            $9,000 for providing technology-related consulting services to the Company.

During the first quarter of 2003, DuPont Electronic Technologies, a
            stockholder, was paid $25,000 for providing technological and marketing related
            services on a cost-sharing basis to the Company.

Each director who is not an employee of the Company receives a monthly
            director's fee of $1,500, plus an additional $500 for each meeting of the Board
            and of any Committees of the Board attended. The directors are also reimbursed
            reasonable travel expenses incurred in attending Board and Committee meetings.
            In addition, pursuant to the 2001 Stock Option Plan, each non-employee director
            is granted an immediately exercisable option to purchase 2,500 shares of the
            Common Stock of the Company on the date of each Annual Meeting of Stockholders.
            Each such grant is priced at the fair market value of the Common Stock on the
            date of such grant.

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 shares of Common Stock, representing approximately 17.5% of the
            Company's outstanding Common Stock after giving effect to the sale, for an
            aggregate purchase price of $3,375,000. The stock purchase and exclusivity
            agreement also provides that the Company will design, develop and produce
            exclusively for Ericsson certain Multi-Mix® products that incorporate
            active RF power transistors for use in wireless basestation applications,
            television transmitters and certain other applications that are intended for
            Bluetooth transceivers.

On October 26, 2000, the Company entered into subscription agreements for
            Common Stock and three-year warrants to purchase shares of Common Stock
            ("Warrants") with a group of investors led by Adam Smith Investment Partners,
            L.P. and certain of its affiliates (the "Adam Smith Investors"), EHI and
            Messrs. E. Cohen, Goldberg and Fuller, members of the Board (the "Director
            Investors"). 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 Warrant with an
            exercise price of $21.25 which expire on October 26, 2003 ("Units"). The Adam
            Smith Investors purchased 240,000 Units, EHI purchased 100,000 Units and
            Messrs. E. Cohen, Goldberg and Fuller purchased 5,000, 11,000 and 4,000 Units,
            respectively, for an aggregate purchase price of $4,608,000. The Common Stock
            portion of the Units represented an aggregate of approximately 14% of the
            outstanding Common Stock of the Company after giving effect to the sales. The
            Warrants contain certain anti-dilution provisions.

On February 28, 2002, the Company sold to DuPont Electronic Technologies
            528,413 shares of Common Stock, representing approximately 16.6% of the
            Company's outstanding Common Stock after giving effect to the sale, for an
            aggregate purchase price of $5,284,000. The Company and DuPont

16

Electronic Technologies have also agreed to work together to better
            understand the dynamics of the markets for high-frequency electronic components
            and modules. David B. Miller, Vice President and General Manager of DuPont
            Electronic Technologies, was appointed to the Company's Board of Directors. As
            a result of this sale, pursuant to the anti-dilution provisions of the Warrants
            issued in October 2000, the exercise price of the Warrants was reduced to
            $17.80 and the number of shares subject to the Warrants was increased to
            429,775.

On October 1, 2002, EHI completed the sale of most of its
            microelectronics to Infineon Technologies AG ("Infineon"). As part of this
            transaction, EHI transferred to Infineon 475,000 shares of the Company and the
            right to acquire 119,380 shares of the Company's Common Stock pursuant to the
            Warrants, and EHI assigned to Infineon its rights in the various agreements
            between EHI and the Company, which were modified in certain respects pursuant
            to an agreement with Infineon.

Infineon, the Adam Smith Investors and DuPont hold registration rights
            which give them the right to register certain shares of Common Stock of the
            Company.

Recent Accounting Pronouncements

SFAS No. 143, "Accounting for Asset Retirement Obligations", requires the
            fair value for an asset retirement obligation to be recorded in the period in
            which it is incurred. The Company adopted the provisions of SFAS No. 143,
            effective December 29, 2002. The adoption of SFAS No. 143 did not have a
            material impact on the Company's financial position or results of operations.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment
            of FASB Statement No. 13 and Technical Corrections", requires gains and losses
            on extinguishments of debt to be classified as income or loss from continuing
            operations rather than as extraordinary items as previously required under SFAS
            No. 4. Extraordinary treatment is required for certain extinguishments as
            provided in APB Opinion No. 30. The statement also amended SFAS No. 13 for
            certain sale-leaseback and sublease accounting. The Company adopted the
            provisions of SFAS No. 145, effective December 29, 2002. The adoption of SFAS
            No. 145 did not have a material impact on the Company's financial position or
            results of operations.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
            Activities" nullifies EITF Issue No. 94-3. SFAS No. 146 requires that a
            liability for a cost associated with an exit or disposal activity be recognized
            when the liability is incurred, whereas EITF No. 94-3 had recognized the
            liability at the commitment date to an exit plan. The Company adopted the
            provisions of SFAS No. 146 effective for exit or disposal activities initiated
            after December 28, 2002. The adoption of SFAS No. 146 did not have a material
            impact on the Company's financial position or results of operations.

SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and
            Disclosure," provides alternative methods of transition for a voluntary change
            to the fair value method of accounting for stock-based employee compensation.
            In addition, this statement amends the disclosure requirements of SFAS No. 123,
            "Accounting for Stock-Based Compensation", to require more prominent
            disclosures about the method of accounting for stock-based employee
            compensation and the effect of the method used on reported results in both
            annual and interim financial statements. The Company is required to adopt the
            provisions of SFAS No. 148 in its financial statements for the fiscal year
            ending January 3, 2004. As permitted by SFAS No. 148, the Company will continue
            to apply the provisions of APB Opinion No. 25 "Accounting for Stock-Based
            Compensation," for all employee stock option grants and has elected to disclose
            pro-forma net income and earnings per share amounts as if the fair-value based
            method had been applied in measuring compensation costs. In addition, the
            Company is awaiting further guidance and clarity that may result from current
            FASB and International Accounting Standards Board stock compensation projects
            and will continue to evaluate any developments concerning mandated, as opposed
            to optional, fair-value based expense recognition.

FASB Interpretation No. 45, ("FIN 45") "Guarantor's Accounting and
            Disclosure Requirements for Guarantees, Including Indirect Guarantees of
            Indebtedness of Others," elaborates on the disclosures to be made by a
            guarantor about its obligations under certain guarantees issued. It also
            clarifies that a guarantor is required to recognize, at the inception of a
            guarantee, a liability for the fair value of the

17

obligation undertaken in issuing the guarantee. FIN 45 expands on the
            accounting guidance of SFAS No. 5 "Accounting for Contingencies," SFAS No. 57
            "Related Party Disclosures," and SFAS No. 107, "Disclosures about Fair Value of
            Financial Instruments." It also incorporates without change the provisions of
            FASB Interpretation No. 34, "Disclosure of Indirect Guarantees of the
            Indebtedness of Others," which is superseded. The initial recognition
            requirements in this Interpretation are effective for periods ending after
            December 15, 2002. The adoption of this interpretation did not have a material
            impact on the Company's financial position or results of operations.

Forward-Looking Statements

This quarterly report on Form 10-QSB contains statements relating to
            future results of Merrimac Industries, Inc. ("Merrimac" and together with its
            subsidiaries, 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 ability to protect
            proprietary information and technology; competitive products and pricing
            pressures; the risk that Merrimac 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; inventory risks due
            to technological innovation and product obsolescence; and the risk that the
            benefits expected from the acquisition of Filtran Microcircuits Inc. are not
            realized, as well as other risks and uncertainties, including but not limited
            to those detailed from time to time in Merrimac's Securities and Exchange
            Commission filings. These forward-looking statements are made only as of the
            date of the filing of this Form 10-QSB, and Merrimac undertakes no obligation
            to update or revise the forward-looking statements, whether as a result of new
            information, future events or otherwise.

18

ITEM 3.    CONTROLS AND PROCEDURES

In designing and evaluating the Company's disclosure controls and
            procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange
            Act of 1934, as amended (the "Exchange Act")), management recognized that any
            controls and procedures, no matter how well designed and operated, can provide
            only reasonable assurances of achieving the desired control objectives, as ours
            are designed to do, and management necessarily was required to apply its
            judgment in evaluating the cost-benefit relationship of possible controls and
            procedures.

Within the 90 days prior to the date of this report, the Company carried
            out an evaluation, under the supervision and with the participation of the
            Company's management, including the Company's Chief Executive Officer and Chief
            Financial Officer, of the effectiveness of the design and operation of the
            Company's disclosure controls and procedures. Based upon that evaluation, the
            Chief Executive Officer and Chief Financial Officer concluded that the
            Company's disclosure controls and procedures are effective in timely alerting
            them to material information relating to the Company (including the Company's
            consolidated subsidiaries) required to be included in periodic reports filed
            under the Exchange Act. There were no significant changes in the Company's
            internal controls or in other factors that could significantly affect these
            controls subsequent to the date of their evaluation.

PART II

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit Number
                   
                   Description of Exhibit3(a)
                   
                   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, 2001.3(b)
                   
                   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, 2001.4(a)
                   
                   Stockholder Rights Agreement dated as of
                        March 9, 1999, between Merrimac and ChaseMellon Stockholder Services, L.L.C.,
                        as Rights Agent, is hereby incorporated by reference to Exhibit 1 to Merrimac's
                        Current Report on Form 8-K for the period ending March 9, 1999.4(b)
                   
                   Amendment No. 1 dated as of June 9, 1999,
                        to the Stockholder Rights Agreement dated as of March 9, 1999, between Merrimac
                        and ChaseMellon Stockholder Services, L.L.C., as Rights Agent, is hereby
                        incorporated by reference to Exhibit 1 to Merrimac's Current Report on Form 8-K
                        for the period ending June 9, 1999.4(c)
                   
                   Amendment No. 2 dated as of April 7, 2000,
                        to the Stockholder Rights Agreement dated as of March 9, 1999, between Merrimac
                        and ChaseMellon Stockholder Services, L.L.C., as Rights Agent, is hereby
                        incorporated by reference to Exhibit 2 to Merrimac's Current Report on Form 8-K
                        for the period ending April 10, 2000.4(d)
                   
                   Amendment No. 3 dated as of October 26,
                        2000, to the Stockholder Rights Agreement dated as of March 9, 1999, between
                        Merrimac and ChaseMellon Stockholder Services, L.L.C., as Rights Agent, is
                        hereby incorporated by reference to Exhibit 2 to Merrimac's Current Report on
                        Form 8-K for the period ending October 27, 2000.


19

Exhibit Number
                   
                   Description of Exhibit4(e)
                   
                   Amendment No. 4 dated as of February 21,
                        2001, to the Stockholder Rights Agreement dated as of March 9, 1999, between
                        Merrimac and Mellon Investor Services, L.L.C. (formerly known as ChaseMellon
                        Stockholder 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 for the
                        period ending February 21, 2001.4(f)
                   
                   Amendment No. 5, dated February 28, 2002,
                        to the Rights Agreement, between Merrimac and Mellon Investor Services LLC
                        (f.k.a. ChaseMellon Shareholder Services, L.L.C.), as Rights Agent is hereby
                        incorporated by reference to Exhibit 99.4 to Merrimac's Form 8-K for the period
                        ending March 6, 2002.4(g)
                   
                   Amendment No. 6, dated September 18, 2002,
                        to the Rights Agreement, between Merrimac and Mellon Investor Services LLC, as
                        Rights Agent is hereby incorporated by reference to Exhibit 99.3 to Merrimac's
                        Form 8-K for the period ending September 18, 2002.10(a)
                   
                   Stock Purchase and Exclusivity Letter
                        Agreement dated April 7, 2000, among Ericsson Microelectronics, A.B., Ericsson
                        Holdings International, B.V. and Merrimac is hereby incorporated by reference
                        to Exhibit 10(a) to Merrimac's Quarterly Report on Form 10-QSB for the period
                        ending August 15, 2000.10(b)
                   
                   Letter Agreement, dated February 1, 2002,
                        among Merrimac, Ericsson Holding International B.V. and Ericsson
                        Microelectronics, A.B., which amends the Stock Purchase and Exclusivity Letter,
                        dated April 7, 2000 is hereby incorporated by reference to Exhibit 99.4 to
                        Merrimac's Form 8-K for the period ending September 18, 2002.10(c)
                   
                   Registration Rights Agreement dated as of
                        April 7, 2000, between Merrimac and Ericsson Holding International, B.V. is
                        hereby incorporated by reference to Exhibit 10(b) to Merrimac's Quarterly
                        Report on Form 10-QSB for the period ending August 15, 2000.10(d)
                   
                   Subscription Agreement for Common Stock
                        and Warrants dated October 26, 2000, between Merrimac and Ericsson Holding
                        International, B.V. (with a form of Warrant attached) is hereby incorporated by
                        reference to Exhibit 10(t) to Merrimac's Annual Report on Form 10-KSB for the
                        year ending December 30, 2000.10(e)
                   
                   Registration Rights Agreement dated
                        October 26, 2000, between Merrimac and Ericsson Holding International, B.V. is
                        hereby incorporated by reference to Exhibit 10(u) to Merrimac's Annual Report
                        on Form 10-KSB dated for the year ending December 30, 2000.10(f)
                   
                   Subscription Agreement for Common Stock
                        and Warrants dated October 26, 2000, between Merrimac and certain entities and
                        individuals related to Adam Smith Investment Partners, L.P. (with a form of
                        Warrant attached) is hereby incorporated by reference to Exhibit 10(v) to
                        Merrimac's Annual Report on Form 10-KSB for the year ending December 30,
                        2000.10(g)
                   
                   Registration Rights Agreement dated
                        October 26, 2000, between Merrimac and certain entities and individuals related
                        to Adam Smith Investment Partners, L.P. is hereby incorporated by reference to
                        Exhibit 10(w) to Merrimac's Annual Report on Form 10-KSB for the year ending
                        December 30, 2000.10(h)
                   
                   Subscription Agreement for Common Stock
                        and Warrants dated October 26, 2000, among Merrimac, Edward H. Cohen, Joseph B.
                        Fuller and Joel H. Goldberg (with a form of Warrant attached) is hereby
                        incorporated by reference to Exhibit 10(x) to Merrimac's Annual Report on Form
                        10-KSB for the year ending December 30, 2000.


20

Exhibit Number
                   
                   Description of Exhibit10(i)
                   
                   Registration Rights Agreement, dated
                        February 28, 2002 between Merrimac and DuPont Chemical and Energy Operations,
                        Inc., a subsidiary of E.I. DuPont de Nemours and Company is hereby incorporated
                        by reference to Exhibit 99.3 to Merrimac's Form 8-K for the period ending
                        February 28, 2002.10(j)
                   
                   Consent and Waiver, dated as of September
                        18, 2002, among Merrimac, Ericsson Holding International B.V. and Infineon
                        Technologies AG is hereby incorporated by reference to Exhibit 99.1 to
                        Merrimac's Form 8-K for the period ending September 18, 2002.10(k)
                   
                   Modification Agreement, dated as of
                        September 27, 2002, between Merrimac and Infineon Technologies AG is hereby
                        incorporated by reference to Exhibit 99.2 to Merrimac's Form 8-K for the period
                        ending September 18, 2002.10(l)
                   
                   Profit Sharing Plan of Merrimac is hereby
                        incorporated by reference to Exhibit 10(n) to Merrimac's Registration Statement
                        on Form S-1 (No. 2-79455).*10(m)
                   
                   1983 Key Employees Stock Option Plan of
                        Merrimac effective March 21, 1983, is hereby incorporated by reference to
                        Exhibit 10(m) to Merrimac's Annual Report on Form 10-KSB for the year ending
                        March 31, 1983.*10(n)
                   
                   1993 Stock Option Plan of Merrimac
                        effective March 31, 1993, is hereby incorporated by reference to Exhibit 4(c)
                        to Merrimac's Registration Statement on Form S-8 (No. 33-68862) dated September
                        14, 1993.*10(o)
                   
                   1997 Long-Term Incentive Plan of Merrimac
                        is hereby incorporated by reference to Exhibit A to Merrimac's Proxy Statement
                        for the period ending April 11, 1997.*10(p)
                   
                   Resolutions of the Stock Option Committee
                        of the Board of Directors of Merrimac adopted June 3, 1998, amending the 1983
                        Key Employees Stock Option Plan of Merrimac, the 1993 Stock Option Plan of
                        Merrimac and the 1997 Long-Term Incentive Plan of Merrimac and adjusting
                        outstanding awards thereunder to give effect to Merrimac's 10% stock dividend
                        paid June 5, 1998, are hereby incorporated by reference to Exhibit 10(f) to
                        Merrimac's Annual Report on Form 10-KSB for the year ending March 30,
                        1999.*10(q)(1)
                   
                   1995 Stock Purchase Plan of Merrimac is
                        hereby incorporated by reference to Exhibit A to the Proxy Statement of
                        Merrimac for the period ending December 31, 1994.*10(q)(2)
                   
                   Resolutions of the Stock Purchase Plan
                        Committee of the Board of Directors of Merrimac adopted June 3, 1998, amending
                        the 1995 Stock Purchase Plan of Merrimac and adjusting outstanding awards
                        thereunder to give effect to Merrimac's 10% stock dividend paid June 5, 1998,
                        are hereby incorporated by reference to Exhibit 10(g)(2) to Merrimac's Annual
                        Report on Form 10-KSB for the year ending January 2, 1999.*10(u)(1)
                   
                   1996 Stock Option Plan for Non-Employee
                        Directors of Merrimac is hereby incorporated by reference to Exhibit 10(d) to
                        Merrimac's Annual Report on Form 10-KSB dated for the year ending December 28,
                        1996.*10(u)(2)
                   
                   Resolutions of the Board of Directors of
                        Merrimac, adopted June 3, 1998, amending the 1996 Stock Option Plan for
                        Non-Employee Directors of Merrimac and adjusting outstanding awards thereunder
                        to give effect to Merrimac's 10% stock dividend paid June 5, 1998, are hereby
                        incorporated by reference to Exhibit 10(h)(2) to Merrimac's Annual Report on
                        Form 10-KSB for the year ending January 2, 1999.*10(x)
                   
                   Amended and Restated Employment Agreement
                        dated as of January 1, 1998, between Merrimac and Mason N. Carter is hereby
                        incorporated by reference to Exhibit 10(a) to Merrimac's Quarterly Report on
                        Form 10-QSB for the period ending July 4, 1998.*


21

Exhibit Number
                   
                   Description of Exhibit10(y)
                   
                   Amendment dated August 31, 2000 to the
                        Amended and Restated Employment Agreement dated January 1, 1998, between
                        Merrimac and Mason N. Carter is hereby incorporated by reference to Exhibit
                        10(a) to Merrimac's Quarterly Report on Form 10-QSB for the period ending
                        September 30, 2000.*10(z)
                   
                   Amended and Restated Pledge Agreement
                        dated as of May 4, 1998, between Merrimac and Mason N. Carter is hereby
                        incorporated by reference to Exhibit 10(c) to Merrimac's Quarterly Report on
                        Form 10-QSB for the period ending July 4, 1998.*10(aa)
                   
                   Amended Promissory Note dated as of May 4,
                        1998, executed by Mason N. Carter in favor of Merrimac is hereby incorporated
                        by reference to Exhibit 10(l) to Merrimac's Annual Report on Form 10-KSB for
                        the year ending January 2, 1999.*10(bb)(1)
                   
                   Registration Rights Agreement dated as of
                        May 4, 1998, between Merrimac and Mason N. Carter is hereby incorporated by
                        reference to Exhibit 10(e) to Merrimac's Quarterly Report on Form 10-QSB for
                        the period ending July 4, 1998.*10(bb)(2)
                   
                   Form of Severance Agreement entered into
                        with certain officers of Merrimac is hereby incorporated by reference to
                        Exhibit 10(i) to Merrimac's Annual Report on Form 10-KSB for the year ending
                        January 3, 1998.*10(cc)
                   
                   Schedule of officers with substantially
                        identical agreements to the form filed as Exhibit 10(o)(1) hereto is hereby
                        incorporated by reference to Exhibit 10(j) to Merrimac's Annual Report on Form
                        10-KSB for the year ending January 3, 1998.*10(dd)
                   
                   Consulting Agreement dated as of January
                        1, 1998, between Merrimac and Arthur A. Oliner is hereby incorporated by
                        reference to Exhibit 10 to Merrimac's Quarterly Report on Form 10-QSB for the
                        period ending April 4, 1998.*10(ee)
                   
                   Separation Agreement dated as of December
                        31, 1998, between Merrimac and Eugene W. Niemiec is hereby incorporated by
                        reference to Exhibit 10(p) to Merrimac's Annual Report on Form 10-KSB for the
                        year ending January 2, 1999.*10(ff)
                   
                   Stockholder's Agreement dated as of
                        October 30, 1998, between Merrimac and Charles F. Huber II is hereby
                        incorporated by reference to Exhibit 10 to Merrimac's Quarterly Report on Form
                        10-QSB for the period ending October 3, 1998.10(gg)
                   
                   Shareholder's Agreement dated as of June
                        3, 1999, among Merrimac, William D. Witter, Inc. and William D. Witter is
                        hereby incorporated by reference to Exhibit 10 to Merrimac's Quarterly Report
                        on Form 10-QSB for the period ending July 3, 1999.10(hh)
                   
                   2001 Key Employee Incentive Plan is hereby
                        incorporated by reference to Exhibit 4.01 to Merrimac's Form S-8 (No.
                        333-63434) dated June 20, 2001.10(ii)
                   
                   2001 Stock Option Plan is hereby
                        incorporated by reference to Exhibit 4.01 to Merrimac's Form S-8 (No.
                        333-63436) dated June 20, 2001.10(jj)
                   
                   2001 Stock Purchase Plan is hereby
                        incorporated by reference to Exhibit 4.01 to Merrimac's Form S-8 (No.
                        333-63438) dated June 20, 2001.10(kk)
                   
                   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 for the period ending June 30, 2001.10(ll)
                   
                   Subscription Agreement, dated February 28,
                        2002 between Merrimac and DuPont Chemical and Energy Operations, Inc., a
                        subsidiary of E.I. DuPont de Nemours and Company is hereby incorporated by
                        reference to Exhibit 99.2 to Merrimac's Form 8-K for the period ending February
                        28, 2002.


22

Exhibit Number
                   
                   Description of Exhibit10(mm)
                   
                   Third Amended and Restated Credit
                        Agreement, dated December 23, 2002, between Merrimac and Fleet National Bank,
                        which amends the Credit and Security Agreement, dated October 7, 1997.10(nn)
                   
                   Revolving Loan Modification Agreement,
                        dated April 17, 2003, between Merrimac and Fleet National Bank, which amends
                        the Third Amended and Restated Credit Agreement, dated December 23, 2002.10(oo)
                   
                   Term Loan and Security Agreement, dated
                        December 23, 2002, between Merrimac and Fleet National Bank.10(pp)
                   
                   Term Loan Modification Agreement, dated
                        April 17, 2003, between Merrimac and Fleet National Bank, which amends the Term
                        Loan and Security Agreement, dated December 23, 2003.10(qq)
                   
                   Term Loan and Security Agreement, dated
                        March 26, 2002, between Merrimac and Fleet National Bank.10(rr)
                   
                   Term Loan Modification Agreement, dated
                        April 17, 2003, which amends the Term Loan and Security Agreement, dated March
                        26, 2002.11†
                   
                   Statement regarding Computation of
                        Earnings per Share.99.1†
                   
                   Certification pursuant to 18 U.S.C.
                        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                        2002


|  |                                                                                                        
|- | -------------------------------------------------------------------------------------------------------
|* | Indicates
                   that exhibit is a management contract or compensatory plan or arrangement.

|  |                                                                         
|- | ------------------------------------------------------------------------
|† | Indicates
                   that exhibit is filed as an exhibit hereto.

|    |                                       
|--- | --------------------------------------
|(b) | Reports
                   on Form 8-K

The Company filed a Form 8-K on April 24, 2003, in connection with a
            press release dated April 21, 2003 announcing its fourth quarter and 2002 year
            end financial results.

23

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: May 13, 2003
                   
                   By:
                        /s/ Mason N. CarterMason
                        N. Carter
                                                Chairman,
                        President and
                                                Chief
                        Executive OfficerDate: May 13, 2003
                   
                   By:
                        /s/ Robert V. CondonRobert
                        V. Condon
                                                Chief
                        Financial Officer


24

CERTIFICATION

I, Mason N. Carter, certify that:

|   |                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------
|1. | I
                   have reviewed this quarterly report on Form 10-QSB of Merrimac Industries,
                   Inc.;

|   |                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based
                   on my knowledge, this quarterly report does not contain any untrue statement of
                   a material fact or omit to state a material fact necessary to make the
                   statements made, in light of the circumstances under which such statements were
                   made, not misleading with respect to the period covered by this quarterly
                   report;

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Based
                   on my knowledge, the financial statements, and other financial information
                   included in this quarterly report, fairly present in all material respects the
                   financial condition, results of operations and cash flows of the registrant as
                   of, and for, the periods presented in this quarterly report;

|   |                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | The
                   registrant's other certifying officers and I are responsible for establishing
                   and maintaining disclosure controls and procedures (as defined in Exchange Act
                   Rules 13a-14 and 15d-14) for the registrant and we have:

| |    |                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed
                   such disclosure controls and procedures to ensure that material information
                   relating to the registrant, including its consolidated subsidiaries, is made
                   known to us by others within those entities, particularly during the period in
                   which this quarterly report is being prepared;

| |    |                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | evaluated
                   the effectiveness of the registrant's disclosure controls and procedures as of
                   a date within 90 days prior to the filing date of this quarterly report (the
                   "Evaluation Date"); and

| |    |                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) | presented
                   in this quarterly report our conclusions about the effectiveness of the
                   disclosure controls and procedures based on our evaluation as of the Evaluation
                   Date;

|   |                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The
                   registrant's other certifying officers and I have disclosed, based on our most
                   recent evaluation, to the registrant's auditors and the audit committee of
                   registrant's board of directors (or persons performing the equivalent
                   function):

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all
                   significant deficiencies in the design or operation of internal controls which
                   could adversely affect the registrant's ability to record, process, summarize
                   and report financial data and have identified for the registrant's auditors any
                   material weaknesses in internal controls; and

| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | any
                   fraud, whether or not material, that involves management or other employees who
                   have a significant role in the registrant's internal controls; and

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The
                   registrant's other certifying officers and I have indicated in this quarterly
                   report whether or not there were significant changes in internal controls or in
                   other factors that could significantly affect internal controls subsequent to
                   the date of our most recent evaluation, including any corrective actions with
                   regard to significant deficiencies and material weaknesses.

Date: May 13, 2003

/s/ Mason N. CarterChairman,
            President and Chief Executive Officer

25

CERTIFICATION

I, Robert V. Condon, certify that:

|   |                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------
|1. | I
                   have reviewed this quarterly report on Form 10-QSB of Merrimac Industries,
                   Inc.;

|   |                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based
                   on my knowledge, this quarterly report does not contain any untrue statement of
                   a material fact or omit to state a material fact necessary to make the
                   statements made, in light of the circumstances under which such statements were
                   made, not misleading with respect to the period covered by this quarterly
                   report;

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Based
                   on my knowledge, the financial statements, and other financial information
                   included in this quarterly report, fairly present in all material respects the
                   financial condition, results of operations and cash flows of the registrant as
                   of, and for, the periods presented in this quarterly report;

|   |                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | The
                   registrant's other certifying officers and I are responsible for establishing
                   and maintaining disclosure controls and procedures (as defined in Exchange Act
                   Rules 13a-14 and 15d-14) for the registrant and have:

| |    |                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed
                   such disclosure controls and procedures to ensure that material information
                   relating to the registrant, including its consolidated subsidiaries, is made
                   known to us by others within those entities, particularly during the period in
                   which this quarterly report is being prepared;

| |    |                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | evaluated
                   the effectiveness of the registrant's disclosure controls and procedures as of
                   a date within 90 days prior to the filing date of this quarterly report (the
                   "Evaluation Date"); and

| |    |                                                                                                                                                                                                                                 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) | presented
                   in this quarterly report our conclusions about the effectiveness of the
                   disclosure controls and procedures based on our evaluation as of the Evaluation
                   Date;

|   |                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The
                   registrant's other certifying officers and I have disclosed, based on our most
                   recent evaluation, to the registrant's auditors and the audit committee of
                   registrant's board of directors (or persons performing the equivalent
                   functions):

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all
                   significant deficiencies in the design or operation of internal controls which
                   could adversely affect the registrant's ability to record, process, summarize
                   and report financial data and have identified for the registrant's auditors any
                   material weaknesses in internal controls; and

| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | any
                   fraud, whether or not material, that involves management or other employees who
                   have a significant role in the registrant's internal controls; and

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The
                   registrant's other certifying officers and I have indicated in this quarterly
                   report whether there were significant changes in internal controls or in other
                   factors that could significantly affect internal controls subsequent to the
                   date of our most recent evaluation, including any corrective actions with
                   regard to significant deficiencies and material weaknesses.

Date: May 13, 2003

/s/ Robert V. CondonVice President,
            Finance and Chief Financial Officer

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