| Maryland                                 | 06-0737363             |
|------------------------------------------|------------------------|
| (State or other jurisdiction of          | (I.R.S. Employer       |
| incorporation or organization)           | Identification number) |
|                                     |                   |
| 75 South St., Hopkinton, Massachusetts   | 01748                  |
| (Address of principal executive offices) | (Zip Code)             |

| Title of each class:        | Name of each exchange on which registered: |
|-----------------------------|--------------------------------------------|
| Common Stock $.05 par value | The NASDAQ Stock Market LLC                |

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|           Large accelerated filer [   ]       | Accelerated filer [   ] |
|-----------------------------------------------------------------------------------------------------------|-----------------------------------|
|           Non-accelerated filer [   ]         | Smaller reporting company [X]     |
|           (Do not check if a smaller reporting company) |                              |

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| -   | high-reliability, precision crystals and oscillators used in sophisticated industrial, military and aerospace applications. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------|

| -   | ultra-high frequency crystals used in crystal filters and oscillators for original equipment manufacturers (“OEMs”) telecommunications and microwave applications. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | highly-customized timing modules including jitter attenuators and frequency translators for microwave and wireless markets. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------|

| -   | high-volume, low cost crystals and oscillators for consumer and commercial applications. |
|---------------|------------------------------------------------------------------------------------------|

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| ·   | the diversion of our management’s attention from our existing business to integrate the operations and personnel of the acquired business, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the possible adverse effects on the Company’s operating results during the integration period, |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | the loss of key employees, customers and vendors as a result of the change in management, and |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | our possible inability to achieve the intended objectives of the transaction. |
|--------------------|-------------------------------------------------------------------------------|

| ·   | political and economic instability in countries where our products are sold or manufactured, |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | expropriation or the imposition of government controls, |
|--------------------|---------------------------------------------------------|

| ·   | export license requirements, |
|--------------------|------------------------------|

| ·   | trade restrictions, |
|--------------------|---------------------|

| ·   | high levels of inflation or deflation, |
|--------------------|----------------------------------------|

| ·   | greater difficulty in collecting our accounts receivable and longer payment terms, |
|--------------------|------------------------------------------------------------------------------------|

| ·   | less favorable intellectual property laws, and |
|--------------------|------------------------------------------------|

| ·   | increases in duties. |
|--------------------|----------------------|

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| For the years ended December 31,                                                     |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                      |   | High   |   |   | Low    |   |   | High |   |   | Low |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|              4th quarter |   | $      | 1.59   |   |   | $      | 1.20 |   |   | $ | 4.79 |   |   | $ | 0.91 |   |
|              3rd quarter |   |   | 1.60   |   |   |   | 1.10 |   |   |   | 4.86 |   |   |   | 2.94 |   |
|              2nd quarter |   |   | 1.58   |   |   |   | 1.00 |   |   |   | 5.30 |   |   |   | 3.80 |   |
|              1st quarter |   |   | 1.95   |   |   |   | 0.91 |   |   |   | 5.10 |   |   |   | 3.85 |   |

|            Plan Category |   |   Number of securities to be issued upon exercise of outstanding options, warrants and rights |                 |   |   Weighted-average exercise price of outstanding options,warrants and rights |   |             | Number of securities remaining available for future issuance under equity compensation plans(excluding securities reflected in the first column) |   |
|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|----------------------|--------|----------------------------------------------------------------------------------------|--------|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                            |   |                                                                                                    |                 |   |                                                                                   |   |             |                                                                                                                                             |   |
| Equity compensation plans approved by security holders (1)                      |   |                                                                                                    |    887,891 |   |                                                                                   | $      |  1.45       |                                                                                                                                             |   |   |    95,040 |   |
| Equity compensation plans not approved by security holders (2)                  |   |                                                                                                    |    -0-     |   |                                                                                   |   |    -0- |                                                                                                                                             |   |   |    -0- |   |

| (1) | Includes the 2003, 2001, 1999 and 1992 Stock Option Plans. |
|-----|------------------------------------------------------------|

| (2) | Does not include 100,000 shares of Restricted Stock awarded pursuant to the Restricted Stock Agreement dated December 19, 2002 between Mr. Ferrantino and us. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Years Ended December 31,                                                |   | 2009 (1)                              |   |   | 2008 (1) |   |   | 2007 (1) |   |   | 2006(1) |   |   | 2005   |   |
|-------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|----------|--------|--------|----------|--------|--------|---------|--------|--------|--------|--------|
|                                                                    |   | (in thousands, except per share data) |   |
| Continuing operations:                                                  |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |
|       Net sales                           |   | $                                     | 10,378 |   |     | $      | 13,021 |     |   | $      | 13,419  |   |   | $      | 11,782 |   |   | $ | 11,427 |   |
|       Gross profit                        |   |                                  | 3,452  |   |     |   | 5,061  |     |   |   | 5,441   |   |   |   | 4,469  |   |   |   | 3,814 |   |
|       Earnings (loss) before income taxes |   |                                  | (300   | )      |     |   | 1,328  |     |   |   | 1,712   |   |   |   | 778    |   |   |   | 499 |   |
|       Income tax (expense) benefit        |   |                                  | 87     |   |     |   | (592   | )        |   |   | (521    | )      |   |   | 71     |   |   |   | (195 | ) |
|       Earnings (loss)                     |   |                                  | (213   | )      |     |   | 736    |     |   |   | 1,191   |   |   |   | 849    |   |   |   | 304 |   |
| Discontinued operations- net of income tax benefit                      |   |                                  | -      |   |     |   | -      |     |   |   | -       |   |   |   | (180   | ) |   |   | (60 | ) |
| Net earnings (loss)                                                     |   | $                                     | (213   | )      |     | $      | 736    |     |   | $      | 1,191   |   |   | $      | 669    |   |   | $ | 244 |   |
|                                                                    |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share:                                        |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |
|       Continuing operations               |   | $                                     | (.05   | )      |     | $      | .17    |     |   | $      | .28     |   |   | $      | .20    |   |   | $ | .07 |   |
|       Discontinued operations             |   |                                  | -      |   |     |   | -      |     |   |   | -       |   |   |   | (.04   | ) |   |   | (.01 | ) |
|                                                                    |   | $                                     | (.05   | )      |     | $      | .17    |     |   | $      | .28     |   |   | $      | .16    |   |   | $ | .06 |   |
|                                                                    |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share:                                      |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |
|       Continuing operations               |   | $                                     | (.05   | )      |     | $      | .17    |     |   | $      | .27     |   |   | $      | .20    |   |   | $ | .07 |   |
|       Discontinued operations             |   |                                  | -      |   |     |   | -      |     |   |   | -       |   |   |   | (.04   | ) |   |   | (.01 | ) |
|                                                                    |   | $                                     | (.05   | )      |     | $      | .17    |     |   | $      | .27     |   |   | $      | .16    |   |   | $ | .06 |   |
|                                                                    |   |                                  |   |   |     |   |   |     |   |   |    |   |   |   |   |   |   |   |   |   |
| Cash dividends per share                                                |   | $                                     | -      |   |     | $      | 1.50   |     |   | $      | -       |   |   | $      | -      |   |   | $ | - |   |
| Total assets, end of year                                               |   | $                                     | 9,549  |   |     | $      | 10,086 |     |   | $      | 15,950  |   |   | $      | 14,529 |   |   | $ | 13,617 |   |
| Long-term debt, end of year                                             |   | $                                     | -      |   |     | $      | -      |     |   | $      | -       |   |   | $      | -      |   |   | $ | - |   |

| (1)   | Effective January 1, 2006,  we changed our method of accounting for stock-based compensation to conform to Financial Accounting Standards Board Accounting Standards Codification 717-10, formerly Statement of Financial Accounting Standards No. 123R “Share-Based Payment”. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| December 31,                                                                                                                                                                         |   | 2009   |       |   | 2008   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Assets                                                                                                                                                                               |   |   |       |   |   |   |
| Current assets:                                                                                                                                                                      |   |   |       |   |   |   |
| Cash and cash equivalents                                                                                                                                                            |   | $      | 4,052,721  |   |   | $      | 4,514,985 |   |
| Receivables, net                                                                                                                                                                     |   |   | 1,743,494  |   |   |   | 1,631,041 |   |
| Inventories, net                                                                                                                                                                     |   |   | 1,105,417  |   |   |   | 1,376,350 |   |
| Deferred income taxes                                                                                                                                                                |   |   | 848,021    |   |   |   | 825,523 |   |
|     Other current assets                                                                                                                                         |   |   | 110,932    |   |   |   | 40,038 |   |
| Total current assets                                                                                                                                                                 |   |   | 7,860,585  |   |   |   | 8,387,937 |   |
|                                                                                                                                                                                 |   |   |       |   |   |   |   |   |
| Property, plant and equipment, at cost:                                                                                                                                              |   |   |       |   |   |   |   |   |
| Land and improvements                                                                                                                                                                |   |   | 226,505    |   |   |   | 226,505 |   |
| Buildings and improvements                                                                                                                                                           |   |   | 2,058,873  |   |   |   | 2,058,873 |   |
| Machinery and equipment                                                                                                                                                              |   |   | 9,328,008  |   |   |   | 8,971,689 |   |
|                                                                                                                                                                                 |   |   | 11,613,386 |   |   |   | 11,257,067 |   |
| Less accumulated depreciation                                                                                                                                                        |   |   | 10,127,624 |   |   |   | 9,748,875 |   |
|                                                                                                                                                                                 |   |   | 1,485,762  |   |   |   | 1,508,192 |   |
|                                                                                                                                                                                 |   |   |       |   |   |   |   |   |
| Other assets                                                                                                                                                                         |   |   | 202,502    |   |   |   | 190,132 |   |
|                                                                                                                                                                                 |   | $      | 9,548,849  |   |   | $      | 10,086,261 |   |
| Liabilities and Stockholders’ Equity                                                                                                                                           |   |   |       |   |   |   |   |   |
| Current liabilities:                                                                                                                                                                 |   |   |       |   |   |   |   |   |
| Accounts payable                                                                                                                                                                     |   | $      | 948,799    |   |   | $      | 605,851 |   |
| Accrued liabilities                                                                                                                                                                  |   |   | 861,145    |   |   |   | 1,610,802 |   |
| Total current liabilities                                                                                                                                                            |   |   | 1,809,944  |   |   |   | 2,216,653 |   |
|                                                                                                                                                                                 |   |   |       |   |   |   |   |   |
| Deferred income taxes                                                                                                                                                                |   |   | 175,171    |   |   |   | 149,722 |   |
|                                                                                                                                                                                 |   |   |       |   |   |   |   |   |
| Commitments and contingencies                                                                                                                                                        |   |   | -          |   |   |   | - |   |
| Stockholders’ equity:                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Preferred stock, $1.00 par value-Authorized 1,000,000 shares; issued, none                                                                                                           |   |   | -          |   |   |   | - |   |
| Common stock, $.05 par value-Authorized 10,000,000 shares;         issued and outstanding: 4,297,898 and 4,297,898 shares, respectively |   |   | 214,895    |   |   |   | 214,895 |   |
| Capital surplus                                                                                                                                                                      |   |   | 5,666,925  |   |   |   | 5,609,608 |   |
| Retained earnings                                                                                                                                                                    |   |   | 1,681,914  |   |   |   | 1,895,383 |   |
| Total stockholders’ equity                                                                                                                                                     |   |   | 7,563,734  |   |   |   | 7,719,886 |   |
|                                                                                                                                                                                 |   | $      | 9,548,849  |   |   | $      | 10,086,261 |   |

----

| For the Years Ended December 31,                       |   | 2009   |       |   | 2008   |   |
|--------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Net sales                                              |   | $      | 10,378,206 |   |   | $      | 13,020,834 |   |
| Cost of sales                                          |   |   | 6,925,823  |   |   |   | 7,960,198 |   |
| Gross profit                                           |   |   | 3,452,383  |   |   |   | 5,060,636 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Selling and advertising expenses                       |   |   | 1,612,622  |   |   |   | 1,653,977 |   |
| General and administrative expenses                    |   |   | 1,279,301  |   |   |   | 1,659,760 |   |
| Retirement agreement                                   |   |   | 265,225    |   |   |   | - |   |
| Research and development expenses                      |   |   | 627,100    |   |   |   | 611,321 |   |
|                                                   |   |   | 3,784,248  |   |   |   | 3,925,058 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Operating profit (loss)                                |   |   | (331,865   | )      |   |   | 1,135,578 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Interest income                                        |   |   | 31,796     |   |   |   | 192,226 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Earnings (loss) before income taxes                    |   |   | (300,069   | )      |   |   | 1,327,804 |   |
| Income tax (expense) benefit                           |   |   | 86,600     |   |   |   | (592,000 | ) |
| Net earnings (loss)                                    |   | $      | (213,469   | )      |   | $      | 735,804 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Basic and diluted earnings (loss)  per share |   | $      | ( .05      | )      |   | $      | .17 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Cash dividend per share                                |   | $      | -          |   |   | $      | 1.50 |   |

----

| For the Years Ended December 31,                                                                                                                       |   | 2009   |         |   | 2008   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|
| Cash Flows from Operating Activities:                                                                                                                  |   |   |         |   |   |   |
|    Net earnings (loss)                                                                                                                  |   | $      | (213,469     | )      |   | $      | 735,804 |   |
|    Adjustments to reconcile net earnings (loss) to net      cash provided (used) by operating activities: |   |   |         |   |   |   |   |   |
|       Depreciation                                                                                                       |   |   | 378,749      |   |   |   | 422,339 |   |
|       Provisions for inventory                                                                                           |   |   | 188,775      |   |   |   | 178,715 |   |
|       Deferred income taxes                                                                                              |   |   | (103,100     | )      |   |   | (38,891 | ) |
|       Stock based compensation                                                                                           |   |   | 57,317       |   |   |   | 71,456 |   |
|    Changes in operating assets and liabilities:                                                                                         |   |   |         |   |   |   |   |   |
|       Receivables, net                                                                                                   |   |   | (112,453     | )      |   |   | 306,910 |   |
|       Inventories, net                                                                                                   |   |   | 82,158       |   |   |   | (280,852 | ) |
|       Other current assets                                                                                               |   |   | (70,894      | )      |   |   | 21,532 |   |
|       Accounts payable and accrued liabilities                                                                           |   |   | (212,181     | )      |   |   | (46,942 | ) |
|    Net cash provided (used) by operating activities of continuing operations                                                       |   |   |  (5,098 | )      |   |   |  1,191,356 |   |
|    Deferred income taxes                                                                                                                |   |   | 59,600       |   |   |   | 27,190 |   |
|    Change in accrued liabilities                                                                                                        |   |   | (148,077     | )      |   |   | (67,519 | ) |
|    Net cash (used) by operating activities of discontinued operations                                                                   |   |   | (88,477      | )      |   |   | (40,329 | ) |
|    Net cash provided (used) by operating activities                                                                                     |   |   | (93,575      | )      |   |   | 1,151,027 |   |
|                                                                                                                                                   |   |   |         |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                                                                                  |   |   |         |   |   |   |   |   |
|    Capital expenditures                                                                                                                 |   |   | (356,319     | )      |   |   | (214,929 | ) |
|    Other                                                                                                                                |   |   | (12,370      | )      |   |   | (11,673 | ) |
|    Net cash (used) by investing activities                                                                                              |   |   | (368,689     | )      |   |   | (226,602 | ) |
| Cash Flows from Financing Activities:                                                                                                                  |   |   |         |   |   |   |   |   |
|    Dividend paid                                                                                                                        |   |   | -            |   |   |   | (6,446,847 | ) |
|    Stock options exercised                                                                                                              |   |   | -            |   |   |   | 68,678 |   |
|    Purchases of common stock                                                                                                            |   |   | -            |   |   |   | (32,293 | ) |
|    Net cash (used) by financing activities                                                                                              |   |   | -            |   |   |   | (6,410,462 | ) |
|                                                                                                                                                   |   |   |         |   |   |   |   |   |
| Net (Decrease) in Cash and Cash Equivalents                                                                                                            |   |   | (462,264     | )      |   |   | (5,486,037 | ) |
| Cash and Cash Equivalents at beginning of year                                                                                                         |   |   | 4,514,985    |   |   |   | 10,001,022 |   |
| Cash and Cash Equivalents at end of year                                                                                                               |   | $      | 4,052,721    |   |   | $      | 4,514,985 |   |

| Supplemental Disclosures of Cash Flow Information                               |   |   |   |   |   |   |    |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|
|   Cash paid during the year by continuing operations for income taxes |   | $      | 87,500 |   |   | $      | 525,000 |   |

----

|                                     |   | Common Stock |      |   | Capital |   |    | Retained |   |
|------------------------------------------|--------|--------------|-----------|--------|---------|--------|---------|----------|--------|
|                                     |   | Shares       |      |   | Amount  |   |    | Surplus  |   |   | Earnings |   |
|                                     |   |         |      |   |    |   |    |     |   |   |   |   |
| Balance, January 1, 2008                 |   |         | 4,282,503 |   |    | $      | 214,125 |     |   | $ | 5,502,538 |   |   | $ | 7,606,426 |   |
| Net earnings                             |   |         | -         |   |    |   | -       |     |   |   | - |   |   |   | 735,804 |   |
| Exercise of stock options                |   |         | 23,200    |   |    |   | 1,160   |     |   |   | 67,517 |   |   |   | - |   |
| Stock based compensation                 |   |         | -         |   |    |   | -       |     |   |   | 71,456 |   |   |   | - |   |
| Dividend paid ($1.50 per share)          |   |         | -         |   |    |   | -       |     |   |   | - |   |   |   | (6,446,847 | ) |
| Purchases and retirement of common stock |   |         | (7,805    | )      |    |   | (390    | )        |   |   | (31,903 | ) |   |   | - |   |
| Balance, December 31, 2008               |   |         | 4,297,898 |   |    |   | 214,895 |     |   |   | 5,609,608 |   |   |   | 1,895,383 |   |
| Net (loss)                               |   |         | -         |   |    |   | -       |     |   |   | - |   |   |   | (213,469 | ) |
| Stock based compensation                 |   |         | -         |   |    |   | -       |     |   |   | 57,317 |   |   |   | - |   |
| Balance, December 31, 2009               |   |         | 4,297,898 |   |    | $      | 214,895 |     |   | $ | 5,666,925 |   |   | $ | 1,681,914 |   |
|                                     |   |         |      |   |    |   |    |     |   |   |   |   |   |   |   |   |
|                                     |   |         |      |   |    |   |    |     |   |   |   |   |   |   |   |   |

----

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|                                     |   | 2009   |   |   | 2008   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cost of sales                            |   | $      | 14     |   |   | $      | 20 |   |
| Selling and advertising                  |   |   | 15     |   |   |   | 16 |   |
| General and administrative               |   |   | 18     |   |   |   | 24 |   |
| Research and development                 |   |   | 10     |   |   |   | 11 |   |
| Pre-tax stock-based compensation expense |   |   | 57     |   |   |   | 71 |   |
| Income tax (benefit)                     |   |   | (4     | )      |   |   | (5 | ) |
| Net stock-based compensation expense     |   | $      | 53     |   |   | $      | 66 |   |

----

|                                                                                                                   |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Accounts receivables, less allowance for doubtful accounts of     $100,000 in 2009 and $105,000 in 2008 |   | $      | 1,672,894 |   |   | $      | 1,631,041 |   |
| Refundable income taxes                                                                                                |   |   | 70,600    |   |   |   | - |   |
|                                                                                                                   |   | $      | 1,743,494 |   |   | $      | 1,631,041 |   |

----

|            |   | 2009   |      |   | 2008   |   |
|-----------------|--------|--------|-----------|--------|--------|--------|
| Raw materials   |   | $      | 634,334   |   |   | $      | 903,051 |   |
| Work in process |   |   | 182,020   |   |   |   | 149,760 |   |
| Finished goods  |   |   | 289,063   |   |   |   | 323,539 |   |
|            |   | $      | 1,105,417 |   |   | $      | 1,376,350 |   |

|                |   | 2009   |     |   | 2008   |   |
|---------------------|--------|--------|----------|--------|--------|--------|
| Current:            |   |   |     |   |   |   |
| Federal             |   | $      | 2,500    |   |   | $      | 603,700 |   |
| State               |   |   | 14,000   |   |   |   | - |   |
|                |   |   | 16,500   |   |   |   | 603,700 |   |
| Deferred:           |   |   |     |   |   |   |   |   |
| Federal             |   |   | (66,525  | )      |   |   | (136,200 | ) |
| State               |   |   | (36,575  | )      |   |   | 132,500 |   |
|                |   |   | (103,100 | )      |   |   | (3,700 | ) |
| Valuation allowance |   |   | -        |   |   |   | (8,000 | ) |
| Total               |   | $      | (86,600  | )      |   | $      | 592,000 |   |

|                                                      |   | 2009   |     |   | 2008   |   |
|-----------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Income taxes at statutory rates                           |   | $      | (102,000 | )      |   | $      | 451,500 |   |
| State income taxes, net of federal tax effect             |   |   | (14,900  | )      |   |   | (27,400 | ) |
| Stock based compensation                                  |   |   | 16,200   |   |   |   | 20,100 |   |
| Federal tax effect of state tax operating losses utilized |   |   | -        |   |   |   | 115,200 |   |
| Change in valuation allowance                             |   |   | -        |   |   |   | (8,000 | ) |
| Other, net                                                |   |   | 14,100   |   |   |   | 40,600 |   |
|                                                      |   | $      | (86,600  | )      |   | $      | 592,000 |   |

----

|                           |   | 2009   |    |   | 2008   |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|
| Deferred tax assets:           |   |   |    |   |   |   |
| Inventory valuation            |   | $      | 676,700 |   |   | $      | 575,600 |   |
| Accruals and allowances        |   |   | 152,200 |   |   |   | 235,100 |   |
| Stock compensation             |   |   | 16,700  |   |   |   | 14,800 |   |
| State tax loss carryforward    |   |   | 2,400   |   |   |   | - |   |
| Net deferred tax assets        |   |   | 848,000 |   |   |   | 825,500 |   |
|                           |   |   |    |   |   |   |   |   |
| Deferred tax liabilities:      |   |   |    |   |   |   |   |   |
| Depreciation                   |   |   | 175,200 |   |   |   | 149,700 |   |
| Total deferred tax liabilities |   |   | 175,200 |   |   |   | 149,700 |   |
| Net deferred tax assets        |   | $      | 672,800 |   |   | $      | 675,800 |   |

|                  |   | 2009   |    |   | 2008   |   |
|-----------------------|--------|--------|---------|--------|--------|--------|
| Employee compensation |   | $      | 250,900 |   |   | $      | 688,000 |   |
| Environmental costs   |   |   | 166,300 |   |   |   | 314,400 |   |
| Profit sharing 401(k) |   |   | 99,900  |   |   |   | 84,200 |   |
| Professional fees     |   |   | 90,000  |   |   |   | 110,000 |   |
| Commissions           |   |   | 51,200  |   |   |   | 93,600 |   |
| Other                 |   |   | 202,845 |   |   |   | 320,602 |   |
|                  |   | $      | 861,145 |   |   | $      | 1,610,802 |   |

----

|                              |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Expected dividend yield           |   |   | 0      | %      |   |   | 0 | % |
| Risk-free interest rate           |   |   | 2.3    | %      |   |   | 1.9 | % |
| Expected life of options in years |   |   | 4.7    |   |   |   | 4.8 |   |
| Assumed volatility                |   |   | 46     | %      |   |   | 46 | % |

----

|                        |   | 2009             |    |   | 2008                                |   |
|-----------------------------|--------|------------------|---------|--------|-------------------------------------|--------|
|                        |   | Number of shares |    |   | Weighted-AverageExercise Price |   |   |  Number of shares |   |   | Weighted-AverageExercise Price |   |
| Outstanding, January 1      |   |             | 823,265 |   |                                | $      | 1.45 |   |   |   | 460,250 |   |   | $ | 3.43 |   |
| Granted                     |   |             | 75,000  |   |                                |   | 1.39 |   |   |   | 20,000 |   |   |   | 2.83 |   |
| Exercised                   |   |             | -       |   |                                |   | - |   |   |   | (23,200 | ) |   |   | 2.96 |   |
| Forfeited                   |   |             | (10,374 | )      |                                |   | 1.26 |   |   |   | (21,000 | ) |   |   | 3.59 |   |
| Special dividend adjustment |   |             | -       |   |                                |   | - |   |   |   | 387,215 |   |   |   | 1.45 |   |
| Outstanding, December 31    |   |             | 887,891 |   |                                | $      | 1.45 |   |   |   | 823,265 |   |   | $ | 1.45 |   |
| Exercisable, December 31    |   |             | 757,149 |   |                                | $      | 1.46 |   |   |   | 699,952 |   |   | $ | 1.47 |   |

|                           |       |   | Options Outstanding      |   |    | Options Exercisable            |   |
|--------------------------------|------------|--------|--------------------------|--------|---------|--------------------------------|--------|
|  Range of exercise prices |       |   |    Number |   |    | Weighted AverageExercise Price |   |   | WeightedAverage Remaining Life in Years |   |   |    Number |   |   | Weighted AverageExercise Price |   |   | WeightedAverage Remaining Life in Years |   |
|                           |       |   |                     |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                              | 1.09 -1.34 |   |                     |   | 367,002 |                           |   | $ | 1.22 |   |   |   | 4.6 |   |   |   | 319,453 |   |   | $ | 1.21 |   |   |   | 4.5 |   |
| $                              | 1.36 -1.72 |   |                     |   | 484,764 |                           |   |   | 1.38 |   |   |   | 0.9 |   |   |   | 401,571 |   |   |   | 1.37 |   |   |   | 0.2 |   |
| $                              | 4.62       |   |                     |   | 36,125  |                           |   |   | 4.62 |   |   |   | 0.8 |   |   |   | 36,125 |   |   |   | 4.62 |   |   |   | 0.8 |   |
|                           |       |   |                     |   | 887,891 |                           |   | $ | 1.45 |   |   |   | 2.4 |   |   |   | 757,149 |   |   | $ | 1.46 |   |   |   | 2.0 |   |

----

|                           |   |   Shares |    |   | Weighted-AverageGrant-DateFair Value |   |
|--------------------------------|--------|--------------------|---------|--------|--------------------------------------|--------|
| Nonvested at December 31, 2008 |   |               | 123,313 |   |                                 | $      | 1.70 |   |
| Granted                        |   |               | 75,000  |   |                                 |   | .58 |   |
| Vested                         |   |               | (66,533 | )      |                                 |   | 1.71 |   |
| Forfeited                      |   |               | (1,038  | )      |                                 |   | 1.82 |   |
| Nonvested at December 31, 2009 |   |               | 130,742 |   |                                 | $      | 1.05 |   |

|                                                                         |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Basic:                                                                       |   |   |      |   |   |   |
| Net earnings (loss)                                                          |   | $      | (213,469  | )      |   | $      | 735,804 |   |
| Weighted average shares outstanding                                          |   |   | 4,297,898 |   |   |   | 4,285,096 |   |
| Basic earnings (loss) per share                                              |   | $      | (.05      | )      |   | $      | .17 |   |
| Diluted:                                                                     |   |   |      |   |   |   |   |   |
| Net earnings (loss)                                                          |   | $      | (213,469  | )      |   | $      | 735,804 |   |
| Weighted average shares outstanding                                          |   |   | 4,297,898 |   |   |   | 4,285,096 |   |
| Diluted effect of stock options outstanding, using the treasury stock method |   |   |  -   |   |   |   |  102,625 |   |
| Diluted weighted average shares outstanding                                  |   |   | 4,297,898 |   |   |   | 4,387,721 |   |
| Diluted earnings (loss) per share                                            |   | $      | (.05      | )      |   | $      | .17 |   |

----

|                   |   | 2009   |      |   | 2008   |   |
|------------------------|--------|--------|-----------|--------|--------|--------|
| Asia Pacific           |   | $      | 2,209,500 |   |   | $      | 2,419,700 |   |
| Mexico                 |   |   | 394,900   |   |   |   | 865,900 |   |
| Europe and Middle East |   |   | 581,200   |   |   |   | 691,700 |   |
| Canada                 |   |   | 278,800   |   |   |   | 363,900 |   |
| Other                  |   |   | 34,300    |   |   |   | 29,800 |   |
|                   |   | $      | 3,498,700 |   |   | $      | 4,371,000 |   |

|                                 |   | First                                 |   |   | Second |   |   | Third  |   |   | Fourth |   |
|--------------------------------------|--------|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   | (in thousands, except per share data) |   |
| 2009                                 |   |                                  |   |
| Net sales                            |   | $                                     | 2,582  |   |   | $      | 2,496  |   |   | $      | 2,502  |   |   | $ | 2,798 |   |
| Gross profit                         |   |                                  | 849    |   |   |   | 815    |   |   |   | 881    |   |   |   | 908 |   |
| Earnings (loss) before income taxes  |   |                                  | (44    | )      |   |   | (57    | )      |   |   | (257   | )      |   |   | 59 |   |
| Net earnings (loss)                  |   | $                                     | (16    | )      |   | $      | (82    | )      |   | $      | (138   | )      |   | $ | 23 |   |
| Basic and diluted earnings per share |   | $                                     | -      |   |   | $      | (.02   | )      |   | $      | (.03   | )      |   | $ | .01 |   |

|                                 |   | First                                 |   |   | Second |   |   | Third  |   |   | Fourth |   |
|--------------------------------------|--------|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   | (in thousands, except per share data) |   |
| 2008                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Net sales                            |   | $                                     | 3,455  |   |   | $      | 3,262  |   |   | $      | 3,346  |   |   | $ | 2,958 |   |
| Gross profit                         |   |                                  | 1,413  |   |   |   | 1,316  |   |   |   | 1,348  |   |   |   | 984 |   |
| Earnings before income taxes         |   |                                  | 373    |   |   |   | 380    |   |   |   | 394    |   |   |   | 181 |   |
| Net earnings                         |   | $                                     | 209    |   |   | $      | 207    |   |   | $      | 197    |   |   | $ | 123 |   |
| Basic and diluted earnings per share |   | $                                     | .05    |   |   | $      | .05    |   |   | $      | .05    |   |   | $ | .03 |   |

----

----

----

----

----

| Exhibit No. |   |                                                 Description |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        | 2.     |                                                                                                                                                                                                                                                                                                        | Agreement of Merger and Recapitalization |
|        | 3.1    |                                                                                                                                                                                                                                                                                                        | Restated and Amended Articles of Incorporation |
|        | 3.2    |                                                                                                                                                                                                                                                                                                        | By-Laws effective July 23, 2009 |
|        | 10.1   | *                                                                                                                                                                                                                                                                                                           | 1992 Stock Option Plan, as amended |
|        | 10.2   | *                                                                                                                                                                                                                                                                                                           | 1999 Stock Option Plan, as amended |
|        | 10.3   | *                                                                                                                                                                                                                                                                                                           | 2001 Stock Option Plan, as amended |
|        | 10.4   | *                                                                                                                                                                                                                                                                                                           | Restricted Stock Agreement |
|        | 10.5   | *                                                                                                                                                                                                                                                                                                           | 2003 Stock Option Plan, as amended |
|        | 10.6   | *                                                                                                                                                                                                                                                                                                           | Key Employee Bonus Plan for 2009 |
|        | 10.7   | *                                                                                                                                                                                                                                                                                                           | Change in Control Severance Agreement, dated April 4, 2007, between the Company and Michael J. Kroll |
|        | 10.8   | *                                                                                                                                                                                                                                                                                                           | Amendment effective August 7, 2008 to Change in Control Severance Agreement, dated April 4, 2007, between the Company and Michael J. Kroll. |
|        | 10.9   | *                                                                                                                                                                                                                                                                                                           | Change in Control Severance Agreement, dated October 21, 2009, between the Company and Michael J. Ferrantino, Jr. |
|        | 10.10  | *                                                                                                                                                                                                                                                                                                           | Change in Control Retention Agreement, dated April 4, 2007, between the Company and Walt Oliwa |
|        | 10.11  | *                                                                                                                                                                                                                                                                                                           | Amendment effective August 7, 2008 to Change in Control Retention Agreement, dated April 4, 2007, between the Company and Walt Oliwa. |
|        | 10.12  | *                                                                                                                                                                                                                                                                                                           | Retirement Agreement and General Release dated September 3, 2009 between the Company and Michael J. Ferrantino, Sr. |
|        | 14     |                                                                                                                                                                                                                                                                                                        | Code of Ethics of the Chief Executive Officer and the Chief Financial and Accounting Officer |
|        | 14.1   |                                                                                                                                                                                                                                                                                                        | Code of Business Conduct and Ethics |
|        | 21     |                                                                                                                                                                                                                                                                                                        | Subsidiaries of the Registrant |
|        | 23     |                                                                                                                                                                                                                                                                                                        | Independent Registered Public Accounting Firm’s Consent |
|        | 31.1   |                                                                                                                                                                                                                                                                                                        | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|        | 31.2   |                                                                                                                                                                                                                                                                                                        | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|        | 32.1   |                                                                                                                                                                                                                                                                                                        | Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

----

|                                  | Valpey-Fisher Corporation |                                  |
|---------------------------------------|---------------------------|---------------------------------------|
|                                  |                      |                                  |   |
| Date:  March 24, 2010  | By:                       | /s/ Michael J. Ferrantino, Jr.   |   |
|                                  |                      | Michael J. Ferrantino, Jr.            |   |
|                                  |                      | President and Chief Executive Officer |   |
|                                  |                      | (Principal Executive Officer)         |   |

| Signature                      | Title                                                                                                                                                                                                                                                                                                                                              | Date           |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/ Ted Valpey, Jr.            | Chairman of the Board                                                                                                                                                                                                                                                                                                                              | March 24, 2010 |
| Ted Valpey, Jr.                | and Director                                                                                                                                                                                                                                                                                                                                       |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/ Michael J. Ferrantino, Jr. | President, Chief Executive Officer                                                                                                                                                                                                                                                                                                                 | March 24, 2010 |
| Michael J. Ferrantino, Jr.     | and Director (Principal Executive Officer)                                                                                                                                                                                                                                                                                                         |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/ Michael J. Kroll           | Vice President, Treasurer and                                                                                                                                                                                                                                                                                                                      | March 24, 2010 |
| Michael J. Kroll               | Chief Financial Officer                                                                                                                                                                                                                                                                                                                            |           |
|                           | (Principal Financial Officer                                                                                                                                                                                                                                                                                                                       |           |
|                           | and Principal Accounting                                                                                                                                                                                                                                                                                                                           |           |
|                           | Officer)                                                                                                                                                                                                                                                                                                                                           |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/ Mario Alosco               | Director                                                        | March 24, 2010 |
| Mario Alosco                   |                                                                                                                                                                                                                                                                                                                                               |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/Gary Ambrosino              | Director                                                        | March 24, 2010 |
| Gary Ambrosino                 |                                                                                                                                                                                                                                                                                                                                               |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/Richard W. Anderson         | Director                                                                                                                                                                                                                                                                                                                                           | March 24, 2010 |
|  Richard W. Anderson      |                                                                                                                                                                                                                                                                                                                                               |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/Eli Fleisher                | Director                                                                                                                                                                                                                                                                                                                                           | March 24, 2010 |
| Eli Fleisher                   |                                                                                                                                                                                                                                                                                                                                               |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/Lawrence Holsborg           | Director                                                                                                                                                                                                                                                                                                                                           | March 24, 2010 |
| Lawrence Holsborg              |                                                                                                                                                                                                                                                                                                                                               |           |
|                           |                                                                                                                                                                                                                                                                                                                                               |           |
| /s/Steven Schaefer             | Director                                                                                                                                                                                                                                                                                                                                           | March 24, 2010 |
| Steven Schaefer                |                                                                                                                                                                                                                                                                                                                                               |           |

----

|                            |   |                         |      |   | Additions                   |   |    | Additions               |   |   |             |   |   |                   |    |
|---------------------------------|--------|------------------------------|-----------|--------|-----------------------------|--------|---------|-------------------------|--------|--------|------------------|--------|--------|------------------------|---------|
| Description                     |   | Balance atBeginningof Period |      |   | Charged toCosts andExpenses |   |    | Charged toOtherAccounts |   |   |  Deductions |   |   | Balance atEndof Period |    |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |
| Allowance forDoubtful Accounts: |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |
| Year Ended:                     |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |
| December 31, 2009               |   | $                            | 105,000   |   |                        | $      | 5,086   |                    |   | $      | -                |   |   | $                      | (10,086 | ) (1) |   | $ | 100,000 |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
| December 31, 2008               |   | $                            | 105,000   |   |                        | $      | 3,108   |                    |   | $      | -                |   |   | $                      | (3,108  | ) (1) |   | $ | 105,000 |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
| Inventory Reserve:              |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
| Year Ended:                     |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
| December 31, 2009               |   | $                            | 1,050,000 |   |                        | $      | 188,775 |                    |   | $      | -                |   |   | $                      | (38,775 | )(2) |   | $ | 1,200,000 |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
| December 31, 2008               |   | $                            | 925,000   |   |                        | $      | 178,715 |                    |   | $      | -                |   |   | $                      | (53,715 | )(2) |   | $ | 1,050,000 |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |
|                            |   |                         |      |   |                        |   |    |                    |   |   |             |   |   |                   |    |   |   |   |   |   |

----

| Exhibit No. |   | (inapplicable items are omitted)                                                                                                                                                                                                                                       |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                   |
| 2.          |   | Agreement of Merger and Recapitalization between MATEC Corporation a Delaware corporation and MATEC Corporation a Maryland corporation.  (incorporated by reference to Exhibit 2 on Registrant’s Form 10-K for the year ended December 31, 2004). |
| 3.1         |   | Restated and Amended Articles of Incorporation as of June 3, 2002.  (incorporated by reference to Exhibit 3.1 on Registrant’s Form 10-K for the year ended December 31, 2007).                                                                         |
| 3.2         |   | By-Laws effective July 23, 2009.  (incorporated by reference to Exhibit 3.3 on Registrant’s Form 8-K dated July 23, 2009).                                                                                                                             |
| 10.1        |   | 1992 Stock Option Plan, as amended.  (incorporated by reference to Exhibit 10.1 on Registrant’s Form 10-K for the year ended December 31, 2008).                                                                                                       |
| 10.2        |   | 1999 Stock Option Plan, as amended.  (incorporated by reference to Exhibit 10.2 on Registrant’s Form 10-K for the year ended December 31, 2008).                                                                                                       |
| 10.3        |   | 2001 Stock Option Plan, as amended.  (incorporated by reference to Exhibit 10.3 on Registrant’s Form 10-K for the year ended December 31, 2008).                                                                                                       |
| 10.4        |   | Restricted Stock Agreement.  (incorporated by reference to Exhibit 10.4 on Registrant’s Form 10-K for the year ended December 31, 2008).                                                                                                               |
| 10.5        |   | 2003 Stock Option Plan, as amended. (incorporated by reference to Exhibit 10.5 on Registrant’s Form 10-K for the year ended December 31, 2008).                                                                                                                  |
| 10.6        |   | Key Employee Bonus Plan for 2009. (incorporated by reference to Exhibit 10.1 on Registrant’s Form 10-Q for the quarterly period ended March 29, 2009).                                                                                                           |
| 10.7        |   | Change in Control Severance Agreement, dated April 4, 2007, between the Company and Michael J. Kroll. (incorporated by reference to Exhibit 10.3 on Registrant’s Form 10-Q for the quarterly period ended April 1, 2007).                                        |
| 10.8        |   | Amendment effective August 7, 2008 to Change in Control Severance Agreement, dated April 4, 2007, between the Company and Michael J. Kroll. (incorporated by reference to Exhibit 10.11 on Registrant’s Form 10-K for the year ended December 31, 2008).         |
| 10.9        |   | Change in Control Severance Agreement, dated October 21, 2009, between the Company and Michael J. Ferrantino, Jr.  (incorporated by reference to Exhibit 10.1 on Registrant’s Form 8-K dated October 27, 2009).                                        |
| 10.10       |   | Change in Control Retention Agreement, dated April 4, 2007, between the Company and Walt Oliwa.  (incorporated by reference to Exhibit 10.5 on Registrant’s Form 10-Q for the quarterly period ended April 1, 2007).                                   |

----

| 10.11 |   | Amendment effective August 7, 2008 to Change in Control Retention Agreement, dated April 4, 2007, between the Company and Walt Oliwa.  (incorporated by reference to Exhibit 10.15 on Registrant’s Form 10-K for the year ended December 31, 2008). |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.12 |   | Retirement Agreement and General Release dated September 3, 2009 between the Company and Michael J. Ferrantino, Sr. (incorporated by reference to Exhibit 10.1 on Registrant’s Form 8-K dated September 10, 2009).                                            |
| 14    |   | Code of Ethics of the Chief Executive Officer and the Chief Financial and Accounting Officer.  Filed herewith.                                                                                                                                            |
| 14.1  |   | Code of Business Conduct and Ethics. (incorporated by reference to Exhibit 14.1 on Registrant’s Form 10-K for the year ended December 31, 2004).                                                                                                              |
| 21    |   | Subsidiaries of the Registrant. Filed herewith.                                                                                                                                                                                                                     |
| 23    |   | Consent of Independent Registered Public Accounting Firm.  Filed herewith.                                                                                                                                                                                |
| 31.1  |   | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.                                                                                                                                  |
| 31.2  |   | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.                                                                                                                                  |
| 32.1  |   | Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Filed herewith.                                                       |

----