U. S. Securities and Exchange Commission
                             Washington, D. C. 20549
                                   Form 10-KSB
                             Dated February 10, 2006


(Mark One)

(X)      ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
         OF 1934 (Fee Required)

                  For the fiscal year ended November 30, 2005


(_)      TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 (No Fee Required)

                  For the transition period from ________ to ________
                          Commission file number 0-5109

                            MICROPAC INDUSTRIES, INC.

          DELAWARE                                               75-1225149
          --------                                               ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

905 E. WALNUT STREET                                                75040
GARLAND, TEXAS                                                   (Zip Code)

                    Issuer's telephone number (972) 272-3571

          Securities to be registered under Section 12 (b) of the Act:

Title of each class                    Name of each exchange on which registered

------------------------------         -----------------------------------------

------------------------------         -----------------------------------------


          Securities to be registered under Section 12 (g) of the Act:

                           COMMON STOCK $.10 par value

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

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-K contained in this form, and no disclosure  will be contained,  to
the best of  registrant's  knowledge,  in any  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

Revenues for its most recent fiscal year: $19,030,000

Based on  approximately  32,578 shares publicly traded during November 2005, the
aggregate market value of the voting common stock held by  non-affiliates of the
registrant (based on the average prices reported on the Over-the-Counter ("OTC")
Bulletin  Board system on November 30, 2005 was  approximately  $5,762,000.  For
purposes  of such  calculation,  shares of Common  Stock held by each  executive
officer and director and by each person who owns more than 5% of the outstanding
Common  Stock  have  been  excluded  in that  such  persons  may be deemed to be
affiliates.  This  determination  of  affiliate  status  is  not  necessarily  a
conclusive determination for other purposes.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of the issuer's only class of common equity, as
of the latest practicable date was 2,578,315 as of November 30, 2005.


                          DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's  definitive Proxy Statement dated February 10, 2006
for the Annual Meeting of  Shareholders  to be held on March 3, 2006 (the "Proxy
Statement") are incorporated by reference into Part III of this Form 10-KSB.

<PAGE>

                                     PART I

Item 1. Description of Business
-------------------------------

INTRODUCTION

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

The Company's  facilities  are certified and qualified by Defense  Supply Center
Columbus  (DSCC) to  MIL-PRF-38534  (class K-space  level);  MIL-PRF-19500  JANS
(space  level),  MIL-PRF-28750  (class K space  level) and is  certified  to ISO
9001-2002.   Micropac   is  a  NASA  core   supplier,   and  is   compliant   to
AS9100-Aerospace Industry standard for supplier certification.

The business was started in 1963 as a sole proprietorship. On March 3, 1969, the
Company was incorporated  under the name of "Micropac  Industries,  Inc." in the
state of Delaware.  The stock was publicly held by 540  shareholders on November
30, 2005.


PRODUCTS AND TECHNOLOGIES
-------------------------

The Company's  products are either custom (being  application  specific circuits
designed  and  manufactured  to meet  the  particular  requirements  of a single
customer)  or  standard,   proprietary   components   such  as  catalog   items.
Custom-designed components are estimated to account for approximately 49% of the
Company's  sales for the fiscal year ended  November 30, 2005, and 50% in fiscal
2004;  standard components are estimated to account for approximately 51% of the
Company's  sales for the fiscal year ended November 30, 2005, and 50% for fiscal
2004.

Micropac Industries, Inc. provides microelectronic and optoelectronic components
and assemblies along with contract electronic  manufacturing services and offers
a wide range of products sold to the industrial,  medical,  military,  aerospace
and space markets.

The Company's  core  technology is the packaging and  interconnect  of miniature
electronic  components,  utilizing thick film and thin film substrates,  forming
microelectronics  circuits.  Other technologies include light emitting and light
sensitive  materials and products,  including  light emitting diodes and silicon
phototransistors   used  in  the  Company's   optoelectronic   components,   and
assemblies. The Company's basic products and technologies include:
         Custom design hybrid microelectronic circuits
         Solid state relays and power controllers
         Custom optoelectronic assemblies and components
         Optocouplers
         Light-emitting diodes
         Hall-Effect devices
         Displays
         Power operational amplifiers
         Fiber optic components and assemblies
         High temperature (200(0) C) products

Micropac's products are primarily sold to original equipment manufacturers (OEM)
who serve the following major markets:
         Military/Aerospace - aircraft instrumentation, guidance and navigations
         systems, control circuitry, power supplies, laser positioning
         Space - control circuitry, power monitoring and sensing
         Industrial - power control equipment, robotics
         Medical

The  Company  has  no  patents,  licenses,  franchises,   concessions,   royalty
agreements or labor contracts.  The Company's trademark "Mii" is registered with
the U.S. Patent and Trademark Office.

Sales of our products  internationally  are subject to  government  regulations,
including  export  control  regulations  of the U.S.  Department  of  State  and
Department  of Commerce.  Violation of these  regulations  by the company  could
result in monetary penalties and denial of export  privileges.  We are not aware
of any violations of export control regulations.

The  Company is not  currently  impacted  by export  restrictions  on  sensitive
technology.  Five  (5) of  the  Company's  principal  product  families  require


<PAGE>

government approval.  Further, a significant portion of our business is military
and is dependent on maintaining our facility  certifications  to  MIL-PRF-38534,
MIL-PRF-19500 and MIL-PRF-28750.  We expect to maintain these certifications and
qualifications;  however,  the loss of any of these  certifications would have a
significant impact on our business.

Government  regulations impose certain controls on chemicals used in electronics
and  semiconductor  manufacturing.  Micropac  has  obtained  all  the  necessary
environmental  permits, and routinely monitors and reports the wastewater stream
results  to the  local  governing  agency.  Micropac  is  classified  as a small
generator  of  hazardous  waste,  and the  annual  cost of  complying  with  the
regulations is minimal.

In  2005,  the  Company's   investment  in  technology   through   research  and
development,  which was expensed,  totals  approximately  $531,000  ($438,000 in
2004).  The  Company's  research  and  development  expenditures  were  directed
primarily toward long-term  specific customer  requirements,  some of which have
future potential as Micropac proprietary  products,  and product development and
improvement associated with the Company's space level and other high reliability
programs.

The Company  introduced  new Solid State  Power  Controllers  (SPPC) as the next
generation  of solid  state  relays  with  enhanced  ruggedness  and voltage and
current  carrying  capabilities.  Micropac's SSPCs feature both an instantaneous
over current  trip as well as I^2T which  compares  power used over time.  These
devices  range from 28VDC to 400VDC and from 5Amps to 40Amps.  The SSPC  Product
Family is fully capable of being Class K screened per MIL-PRF  38534.  Radiation
tolerant  versions of these  products are also  available.  Micropac  strives to
provide the greatest  power  density per package  volume and strives to meet the
stringent efficiency requirements of customers in today's market.

In addition to the  Company's  investment in research and  development,  various
customers paid the Company approximately  $208,000 in non-recurring  engineering
costs   associated   with  the  development  of  custom  products  for  specific
applications.

The  Company  provides  a one year  warranty  from the date of  shipment  to the
original  purchaser.  The  Company is  obligated  under this  warranty to either
replace  or repair  defective  goods or refund  the  purchase  price paid by the
buyer.

CUSTOMERS
---------

The Company's products are marketed  throughout the United States and in Western
Europe, through a direct technical sales staff, independent  representatives and
independent  stocking  distributors.  Approximately  10% of the sales for fiscal
year  2005  (25% in 2004)  were to  international  customers.  Sales to  Western
European   customers  are  made  by   independent   representatives   under  the
coordination of the Company's  office in Bremen,  Germany.  One major industrial
customer  has opened an operation in China and during 2004 moved a major part of
their  domestic  operations to China.  In 2005 this  customer,  Advanced  Energy
Industries,  Inc.,  accounted for 17% of international sales, and their contract
manufacturer  in China,  Celestica,  accounted for 21% of  international  sales.
During 2005, these two customers  accounted for 2% and 2% of the Company's total
sales  compared to 9% and 10% for the year ended  November  30,  2004.  Advanced
Energy has been a major  customer  since 1996 and averaged 15% of the  Company's
sales during this 10 year period from a high of 20% to a low of 2%.

Sales  through the  Company's  distribution  channels  were  $4,672,000  in 2005
compared to $3,041,000 in 2004 or 25% and 20% of sales, respectively.

The  Company's  major  customers  include   contractors  to  the  United  States
government with fixed price  contracts.  Sales to these customers for Department
of  Defense  (DOD) and  National  Aeronautics  and Space  Administration  (NASA)
contracts  accounted for  approximately 70% of the Company's fiscal net sales in
2005 compared to 64% in 2004.

The Company's major customers are Lockheed  Martin,  Northrop  Grumman,  Boeing,
Raytheon,  BAE,  Honeywell,  Rockwell Int'l,  Newport,  Advanced Energy, and St.
Jude.

At any time a single customer may have a disproportionate and material impact on
the company's operations and profit and loss.

BACKLOG
-------

At November 30, 2005, the Company had a backlog of unfilled orders totaling
approximately $9,319,000 compared to approximately $9,292,000 at November 30,
2004. The Company expects to complete and ship most of its November 30, 2005
backlog during fiscal 2006.


<PAGE>

EMPLOYEES
---------

At November 30, 2005, the Company had 146 full-time  employees  (compared to 121
at November 30, 2004), of which 25 were executive and managerial  employees,  31
were   engineers   and   quality-control   personnel,   20  were   clerical  and
administrative  employees,  and  70  were  production  personnel.  None  of  the
Company's employees were covered by collective bargaining agreements.

The Company is an Equal  Opportunity  Employer.  It is the  Company's  policy to
recruit,  hire, train and promote personnel in all job classifications,  without
regard to race, religion,  color,  national origin, sex or age. Above and beyond
non-discrimination, we are committed to an Affirmative Action Program, dedicated
to the hiring,  training,  and advancement  within the Company of minority group
members, women and handicapped individuals.

COMPETITION
-----------

The Company  competes  with two or more  companies  with  respect to each of its
major products,  including custom hybrid  microcircuits,  solid state relays and
power controllers, optocouplers,  light-emitting diodes, light sensitive silicon
phototransistors and diodes,  hall-effect devices,  displays,  power operational
amplifier,  custom optoelectronic components and assemblies.  These products and
technologies are sold into various markets, including military/aerospace, space,
industrial and medical.  Some of these  competitors  are larger and have greater
capital   resources  than  the  Company.   Management   believes  the  Company's
competitive  position is favorable  with regard to our product  reliability  and
integrity,  past  performance,  customer  service  and  responsiveness,   timely
delivery and pricing;  however,  no assurance  can be given that the Company can
compete successfully in the future.

The hybrid  microcircuits  product line, including custom  microcircuits,  solid
state relays,  power operational  amplifiers and regulators accounted for 36% of
the Company's business in 2005, and the  Optoelectronics  product line accounted
for 64% of the Company's business in 2005,  compared to 53% and 47% in 2004. One
customer,   Newport,   accounted  for  15%  of  the  revenue   increase  in  the
Optoelectronics product line.

There  are  approximately  46  independent  hybrid  microcircuit   manufacturing
companies  who are  certified  to  supply  microcircuits  to  MIL-PRF-38534,  in
addition to OEM's,  who  manufacture  hybrid  microcircuits  for their  internal
needs. Micropac may compete with all of these for hybrid microcircuit  business.
Some of the Company's primary  competitors are Teledyne  Industries,  Inc., M.S.
Kennedy, Aeroflex, Agilent, Optek, and Isolink.

SUPPLY CHAIN
------------

The parts and raw materials for the Company's  products are generally  available
from more than one  source.  Except for  certain  optoelectronic  products,  the
Company does not  manufacture the basic parts or materials used in production of
its  products.  From time to time,  the Company has  experienced  difficulty  in
obtaining  certain  materials  when needed.  The  Company's  inability to secure
materials for any reason could have adverse effects on the Company's  ability to
deliver  products  on a  timely  basis.  The  Company  uses  capacitors,  active
semiconductor  devices  (primarily  in chip form),  hermetic  packages,  ceramic
substrates, resistor inks, conductor pastes, precious metals and other materials
in its manufacturing  operations.  However,  the Company has not been materially
affected by such  shortages.  The Company's  delivery  commitments  to customers
allow for adequate lead times for production of the products including lead time
for order and receipt from the supply chain.

Some of the Company's  primary  suppliers are  International  Rectifier,  Sussex
Semiconductors,  Semi-Dice, Accumet Eng. Corp, NTK Technologies, Electrovac, and
Aborn Electronics.

CAUTIONARY STATEMENTS - RISK FACTORS
------------------------------------

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

Such  risks  and  uncertainties  include,  but are  not  limited  to  historical
volatility  and  cyclicality  of the  semiconductor  and  semiconductor  capital
equipment  markets that are subject to significant and often rapid increases and
decreases in demand. In addition, the Company produces silicon  phototransistors
and light  emitting diode die for use in certain  military,  standard and custom
products.  Fabrication  efforts sometimes may not result in successful  results,
limiting the  availability of these  components.  Competitors  offer  commercial
level  alternatives and our customers may purchase our competitors'  products if
the Company is not able to manufacture the products using these  technologies to
meet the customer demands.



<PAGE>

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

Majority shareholder ability to control the election of the Board of Directors

The  majority  shareholder  has the  ability  to  control  the  election  of the
Company's Board of Directors and elect  individuals who may be more  sympathetic
to such majority  shareholders'  desires and not necessarily  sympathetic to the
desires of  minority  shareholders  as to the  policies  and  directions  of the
Company.  However, the ability to control the election of the Board of Directors
does not modify the fiduciary  duties of the Board of Directors to represent the
interests of all shareholders

Availability of public share for purchase and sale

A small number of shares is available for public  purchase and sale. As a result
the company's reported share price may be subject to extreme  fluxuations due in
part to the small number of shares traded at any time.

Pricing pressures from customers for reduction in selling prices

The Company continues to experience  pricing pressures from some of its original
equipment  manufacturer  (OEM) customers.  In some cases, the Company  customers
request the review of pricing for possible  reduction in selling price on future
orders.  This  requires the Company to improve its  productivity  and to request
similar  price  reductions  from  its  supplier  chain.  If one or  both  of the
approaches  by the Company  does not succeed,  the Company  could be required to
reduce the selling price on future orders reducing the product gross margins and
affecting the Company's net earnings in order to receive  future orders from the
customer. However, the Company has no agreement that requires a reduction in the
selling  price on any  current  customer  order.  All  contracts  are firm fixed
pricing.

Insurance coverage and exposure to substantial claims or liabilities

The Company operates manufacturing facilities in Garland, Texas and subcontracts
portions  of the Company  manufacturing  to a contract  manufacturer  in Juarez,
Mexico.  These  facilities  use  industrial  machines and  chemicals  that could
provide risks of personal injury and/or property  damage.  There is no assurance
that  accidents  will not occur.  If  accidents do occur,  the Company  could be
exposed to  substantial  liability.  The Company has no liability for the Mexico
operations.  The Company maintains worker's  compensation  insurance and general
liability  insurance for  protection of its employees and for  protection of the
Company's assets in Garland, Texas. In addition to the basic policies mentioned,
the Company  maintains an umbrella  insurance  policy.  The Company  reviews all
insurance coverage on an annual basis, and makes any necessary adjustments based
on risk assessment and changes in its business.  In the opinion of the Company's
management,  and its'  insurance  advisors,  the Company is adequately  insured;
however, the Company's financial position could be materially affected by claims
not covered or exceeding coverage currently carried by the Company.

The  Company is  subject to  numerous  environmental  regulations  or changes in
government policy

The  Company is  subject  to  governmental  regulations  pertaining  to the use,
storage,  handling and disposal of hazardous  substances used in connection with
its manufacturing  activities.  Failure of the Company to control all activities
dealing  with  hazardous  chemicals  could  subject the  Company to  significant
liabilities or could cause the Company to cease its manufacturing activities.

The Company could be adversely  affected by changes in laws and regulations made
by U.S. and non U.S.  governments and agencies  dealing with foreign  shipments.
Changes by regulatory  agencies dealing with  environmental  issues could affect
the cost of the  Company's  products and make it hard for a small  company to be
competitive with larger companies.

Product liability claims

The use of the Company's  products in commercial or government  applications may
subject the Company to product  liability  claims.  Although the Company has not
experienced any product  liability  claims,  the sale of any product may provide
risk of such claims.  Product liability claims brought against the Company could
have a material adverse effect on the Company's  operating results and financial
condition.

Component  shortages or  obsolescence  from  suppliers  could affect  ability to
manufacture or delay shipments of products

The Company relies on suppliers to deliver quality raw materials in a timely and
cost  effective  manner.  Most of the  materials  and  components  are generally
available  from  multiple  sources;  however,  from time to time  vendors do not
deliver  the  product  as needed due to  manufacturing  problems  or  possibly a
decision not to furnish that product in the future.  Such interruption of supply
or price  increases  could  have a  material  adverse  effect  on the  Company's
operation;  however,  the  Company  is  not  currently  materially  impacted  by
materials shortages.


<PAGE>

The ability to develop new products and technologies used in the military, space
or aerospace markets

The Company's  base products and  technologies  generally have long life cycles.
The  Company's  products  are  primarily  used in  military,  space or aerospace
applications,  which also have long life cycles.  There can be no assurance that
the  Company  will be able to  define,  develop  and  market  new  products  and
technologies  on a timely  and cost  effective  basis.  Failure  to  respond  to
customer's  requirements and to competitors'  progress in technological  changes
could have a material adverse effect on the Company's business.



Item 2. Properties
------------------

The  Company  occupies   approximately  36,000  square  feet  of  manufacturing,
engineering and office space in Garland,  Texas.  The Company owns 31,200 square
feet of that space and leases an  additional  4,800  square  feet.  The  Company
considers its facilities adequate for its current level of operations.

The Company also  subcontracts  some  manufacturing  to Inmobiliaria San Jose De
Ciuddad Juarez S.A. DE C.V, a maquila contract  manufacturer in Juarez,  Mexico.
The Company owns all equipment and inventory  with  temporary  importation  into
Mexico under the maquila rules of Mexico.  The Company does not lease or own any
real property in Mexico.

The  Company  employs an  International  Sales  Manager in Bremen,  Germany  who
coordinates   sales  to  Western   European   customers   made  by   independent
representatives.  The sales manager maintains an office in a private  residence.
The Company  does not lease or own any real  property  in Germany,  or any other
foreign country.

Item 3. Legal Proceedings
-------------------------

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


Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

No matters were submitted to vote of the Company's  security holders through the
solicitation  of proxies by the Company  during the fourth quarter of the fiscal
year ended November 30, 2005.















<PAGE>

                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
--------------------------------------------------------------------------------
Matters
-------

On November 30, 2005, there were approximately 540 shareholders of record of the
Company's  common  stock.  The  stock  of the  Company  is  closely  held;  and,
therefore,  certain  shareholders  have the ability to  significantly  influence
decisions. Our common stock is quoted on the OTC Bulletin Board under the symbol
"MPAD.OB". The following sets forth the high and low bid prices for each quarter
during the last two fiscal years:

                                                        High               Low
 Fiscal Year Ended November 30, 2005
      Fourth Quarter                                    $9.50             $6.60
      Third Quarter                                     $8.00             $5.62
      Second Quarter                                    $7.75             $5.00
      First Quarter                                     $6.31             $3.75

Fiscal Year Ended November, 30, 2004
      Fourth Quarter                                    $4.20             $3.50
      Third Quarter                                     $4.50             $3.25
      Second Quarter                                    $3.75             $2.05
      First Quarter                                     $2.50             $1.77

During the three (3) month period  ending on November  30,  2005,  approximately
109,994  shares  of the  Company's  common  stock was  reportedly  traded in the
over-the-counter  market at a reported  price range of $6.60 to $9.50 per share.
For the two (2) year period  ending  November  30, 2005,  approximately  996,897
shares  of  the   Company's   common  stock  were   reportedly   traded  in  the
over-the-counter  market  at  prices  ranging  from a low of  $2.05 to a high of
$9.50.  Due to this average  monthly  volume of  approximately  41,537 shares of
common stock being  publicly  bought and sold during this two year  period,  the
Company does not believe this share trading  volume  represents the market value
of the Company's common stock held by non-affiliates.

Our stock prices  quoted on the OTC Bulletin  Board  represent  over-the-counter
market  quotations and reflect  inter-dealer  prices,  without  retail  mark-up,
mark-down or commission and may not represent actual transactions.

On December  29,  2004,  the Board of  Directors  of Micropac  Industries,  Inc.
approved the payment of a $.12 per share dividend to all  shareholders of record
on January 25, 2005. The dividend  payment was paid to  shareholders on February
8, 2005.

On January 8, 2004, the Board of Directors of Micropac Industries, Inc. approved
the  payment  of a special  dividend  of $.05 per share to all  shareholders  of
record on January 30, 2004.  The dividend  payment was paid to  shareholders  on
February 13, 2004.

There are no plans to make the dividend permanent.


Item 6. Management's  Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

Liquidity and Capital Resources
-------------------------------


The  Company  currently  has an  existing  line of credit  with a Texas  banking
institution.  The line of  credit  agreement  provides  the  Company  with up to
$3,000,000  for  normal  operation  of the  Company.  The  interest  rate on any
borrowings  against this credit  agreement is equal to the prime rate less 1/4%.
The line of credit requires the Company to maintain  certain  financial  ratios,
including  quick  ratio  of at least  1:1,  maintain  a  tangible  net  worth of
$6,250,000   plus   75%  of   future   net   income,   and   maintain   a  total
liabilities-to-tangible-net-worth  of  less  than  1.25:1.  The  Company  is  in
compliance  with these  covenants.  To date, the Company has not used any of the
available line of credit.  The Company expects to continue to generate  adequate
amounts  of cash to meet its  liquidity  needs  from the  sale of  products  and
services and the collection thereof.

The Company realized  $1,309,000 net in cash flows from operations in 2005. Cash
influx came primarily from the  combination of net income  totaling  $2,176,000;
recovery of depreciation totaling $247,000,  increase of accrued compensation of
$202,000,  increase  in other  accrued  liabilities  of  $106,000,  increase  in
accounts payable of $381,000, and a decrease in prepaid expense of $14,000. Cash

<PAGE>

was used to increase  inventory  $843,000,  accounts  receivables  increased  by
$731,000, net deferred tax assets increased $84,000 and a decrease in income tax
liabilities of $159,000.  Inventories increased due to the purchase of long lead
items for  shipments  within the first  half of 2006.  Day's  sales in  accounts
receivables totaled approximately 53.0 days as of November 30, 2005, compared to
53.0 days at November 30, 2004.

The Company used $497,000 in cash for  investment  in  additional  manufacturing
equipment,  computers and facility  improvements in 2005 compared to $182,000 in
2004.

On December  29,  2004,  the Board of  Directors  of Micropac  Industries,  Inc.
approved the payment of a $.12 per share dividend to all  shareholders of record
on January 25, 2005. The dividend  payment was paid to  shareholders on February
8, 2005.

On January 8, 2004, the Board of Directors of Micropac Industries, Inc. approved
the  payment  of a special  dividend  of $.05 per share to all  shareholders  of
record on January 30, 2004.  The dividend  payment was paid to  shareholders  on
February 13, 2004.

As of November 30, 2005, the Company had $1,722,000 in cash and cash equivalents
and $2,527,000 in short term investments compared to $1,239,000 in cash and cash
equivalents and $2,507,000 in short term investments on November 30, 2004.

Company management believes it will meet its 2006 capital  requirements  through
the use of cash  derived  from  operations  for the  year  and/or  usage  of the
Company's  short-term   investments.   There  were  no  significant  outstanding
commitments for equipment purchases or improvements at November 30, 2005.

















<PAGE>

Results of Operations 2005 vs. 2004
-----------------------------------

                              Three Months Ended          Twelve Months Ended
                            11/30/05      11/30/04       11/30/05       11/30/04

Net Sales                    100.0%        100.0%         100.0%         100.0%

Cost of sales                 66.5%         57.1%          62.4%          65.0%
R & D                          2.6%          5.3%           2.8%           2.9%
S, G, & A                     17.3%         18.7%          17.0%          17.6%
  Total Cost & Exp            86.4%         81.1%          82.2%          85.5%

Operating Income              13.6%         18.9%          17.8%          14.5%

Other and Interest Income      0.8%          0.3%           0.5%           0.2%

Income Before Income Taxes    14.4%         19.2%          18.3%          14.7%

Provision for taxes            5.1%          7.2%           6.9%           5.6%

Net Income                     9.3%         12.0%          11.4%           9.1%



Sales in 2005 were approximately $19,030,000, an increase of 23.9% or $3,674,000
compared  to 2004 sales.  The  increase in sales is  primarily  attributable  to
continued  improved business  conditions in the Company's major market segments.
Increased  sales  from the  introduction  of new solid  state  power  controller
products   and  standard   solid  state   relays,   combined   with  new  custom
optoelectronic  assemblies and increased  requirements for standard optocouplers
have improved the Company's performance in 2005.

The Company's management expects sales and profits to decrease in 2006, based on
the  completion of  significant  long-term  contracts on custom  optoelectronics
assemblies,  certain space product contracts,  and further reduced  requirements
for microcircuits supplied to semiconductor equipment manufacturers.

New orders for fiscal year 2005 total  $19,077,000  compared to $20,946,000  for
fiscal 2004.  Approximately  $11,078,000 of the new orders  received in 2005 was
delivered to  customers  in 2005,  along with  approximately  $7,981,000  of the
Company's $9,292,000 ending backlog on November 30, 2004.

The Company's  backlog as of November 30, 2005,  was  approximately  $9,319,000,
compared to approximately $9,292,000 on November 30, 2004.

Custom-designed components are estimated to account for approximately 49% of the
Company's  sales for the fiscal year ended  November 30, 2005, and 50% in fiscal
2004;  standard components are estimated to account for approximately 51% of the
Company's  sales for the fiscal year ended November 30, 2005, and 50% for fiscal
2004.

Approximately  10% of the sales  for  fiscal  year  2005  (25% in 2004)  were to
international  customers.  Sales  to  Western  European  customers  are  made by
independent  representatives  under the  coordination of the Company's office in
Bremen,  Germany. One major industrial customer has opened an operation in China
and during 2004 moved a major part of their  domestic  operations  to China.  In
2005 this  customer,  Advanced  Energy  Industries,  Inc.,  accounted for 17% of
international  sales,  and their  contract  manufacturer  in  China,  Celestica,
accounted  for 21% of  international  sales.  During 2005,  these two  customers
accounted for 2% and 2% of the Company's  total sales compared to 9% and 10% for
the year ended November 30, 2004.

The  Company's  major  customers  include   contractors  to  the  United  States
government with fixed price  contracts.  Sales to these customers for Department
of  Defense  (DOD) and  National  Aeronautics  and Space  Administration  (NASA)
contracts  accounted for  approximately 70% of the Company's fiscal net sales in
2005 compared to 64% in 2004.

During 2005 one customer,  Newport  accounted  for 15% of the  Company's  sales,
compared to two customers  Advanced  Energy and Celestica  that accounted for 9%
and 10% for the year ended November 30, 2004.  During 2005,  Advanced Energy and
Celestica accounted for 2% and 2% of the Company's total sales.  Advanced Energy
has been a major  customer  since 1996 and averaged 15% of the  Company's  sales
during this 10 year period from a high of 20% to a low of 2%.


<PAGE>

Sales for 2005 compared to 2004  increased 3% in the commercial  market,  44% in
the military market, and 9% in the space market.

Cost of sales, as a percentage of net sales, was 62.4% in 2005 compared to 65.0%
in 2004. The decrease of 2.6% is  attributable  to stable  operating  expense on
higher sales volume;  changes in product mix, and yield  improvements on certain
products. In actual dollars, cost of sales increased $1,898,000 for 2005, versus
2004.

Expenses  for  research  and  development  total  $531,000  in 2005  compared to
$438,000  in  2004.  Most  of  the  research  and   development   expenses  were
concentrated  on expanding the company's line of solid state power  controllers,
detectors, hall-effect devices; and enhancing manufacturing processes to improve
the Company's competitive position.

Selling,  general, and administrative expenses total 17.0% of net sales in 2005,
compared to 17.6% in 2004, based on higher sales. In dollars expensed,  selling,
general and  administrative  expenses  totaled  $3,237,000  in 2005  compared to
$2,709,000 in 2004, an increase of $528,000,  attributable to increased  selling
expense and cost associated with internal control documentation and testing.

Interest income for fiscal 2005 totaled  $87,000  compared to $32,000 for fiscal
2004.  The  increase  is  related  to  higher  interest  rates on the  Company's
investments.

Income before taxes for fiscal 2005 was approximately $3,485,000 or 18.3% of net
sales,  compared to $2,265,000 or 14.7% of net sales in fiscal 2004.  Net income
after taxes  totaled  approximately  $2,176,000 or $.84 per share in 2005 versus
2004 net  earnings  of  $1,408,000  or $.55 per share.  Net income  after  taxes
increased  $768,000 in 2005 compared to 2004,  primarily  attributable to higher
gross  profit  margin  and  continued   control  of  overhead  and  general  and
administrative  expenses.  One  customer for custom  optoelectronics  assemblies
accounted for  approximately  25% of the net income.  Based on the completion of
this contract,  and lower  anticipated  sales in 2006, the Company's  management
expects net income to decrease.

New Accounting Standards
------------------------

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS")  No. 153,  "Exchanges  of
Non-monetary assets - an amendment of APB Opinion No. 29". This Statement amends
APB Opinion 29 to eliminate the exception for non-monetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
non-monetary  assets  that do not  have  commercial  substance.  A  non-monetary
exchange  has  commercial  substance  if the future cash flows of the entity are
expected to change significantly as a result of the exchange. We anticipate that
this pronouncement will not have a material effect on the financial statements.

In December 2004,  the FASB issued SFAS No. 123R,  "Share Based  Payment".  This
Statement is a revision of FASB Statement No. 123,  "Accounting  for Stock-Based
Compensation".  This Statement  supersedes APB Opinion No. 25,  "Accounting  for
Stock  Issued  to  Employees"  and its  related  implementation  guidance.  This
Statement  establishes standards for the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. It also addresses
transactions  in which an entity  incurs  liabilities  in exchange  for goods or
services that are based on the fair value of the entity's equity  instruments or
that may be settled by the issuance of those equity  instruments.  The Statement
focuses  primarily on accounting  for  transactions  in which an entity  obtains
employee services in share-based payment  transactions.  This Statement does not
change the accounting guidance for share-based payment transactions with parties
other than  employees  provided in Statement 123 as  originally  issued and EITF
Issue No. 96-18,  "Accounting  for Equity  Instruments  That Are Issued to Other
Than  Employees  for  Acquiring,  or  in  Conjunction  with  Selling,  Goods  or
Services."  This  Statement  does not address the  accounting for employee share
ownership  plans,  which  are  subject  to AICPA  Statement  of  Position  93-6,
"Employers'  Accounting for Employee Stock Ownership Plans".  The Securities and
Exchange Commission has delayed the adoption  requirement of SFAS No. 123R until
January 1, 2006.  We expect to adopt SFAS No. 123R as  required.  We  anticipate
that  adoption of this  Standard  could have a material  effect on the financial
statements  if the  Company  decided to  utilize  stock  options  to  compensate
employees and members of the Board of Directors.

In May 2005 the FASB issued SFAS 154 "Accounting Changes and Error Corrections".
This  Statement  replaces  APB Opinion No. 20,  "Accounting  Changes",  and FASB
Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements",
and changes the requirements for the accounting for and reporting of a change in
accounting  principle  and  also  corrections  of  error  in  previously  issued
financial  statements.  This Statement  harmonizes US accounting  standards with
existing  international  accounting  standards by requiring  companies to report
voluntary  changes in accounting  principles  via a  retrospective  application,
unless  impracticable.  Also,  the  reporting  of an error  correction  involves
adjustments to previously issued financial statements similar to those generally
applicable to reporting an accounting change retrospectively. This pronouncement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years beginning after December 15, 2005


<PAGE>

Item 7.  Financial Statements
-----------------------------

The  financial  statements  listed  below  appear on pages 19 through 26 of this
Report.  The Company is not required to furnish the Supplementary  Data required
by Item 302 of Regulation S-K.

       Page No.

         18       Report of Independent Registered Public Accounting Firm

         19       Balance Sheets as of
                  November 30, 2005 and 2004

         20       Statements of Income for the years ended
                  November 30, 2005 and  2004

         21       Statements of Shareholders' Equity for the years ended
                  November 30, 2005 and 2004

         22       Statements of Cash Flows for the years ended
                  November 30, 2005  and 2004

         23-26    Notes to Financial Statements for the years ended
                  November 30, 2005 and 2004


Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure
--------------------


None

Item 8A. Controls and Procedures
--------------------------------

The Company maintains disclosure controls and procedures designed to ensure that
information  required to be  disclosed  in reports  filed  under the  Securities
Exchange  Act of 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported  within  the  specified  time  periods.  Disclosure  controls  are also
designed with the objective of ensuring that this information is accumulated and
communicated to our management,  including our Chief Executive Officer and Chief
Financial Officer,  as appropriate to allow timely decisions  regarding required
disclosure.  As of the end of the period  covered by this report,  the Company's
management,  including the Chief Executive Officer and Chief Financial  Officer,
evaluated the effectiveness of the Company's disclosure controls and procedures.
Based on the evaluation, which disclosed no significant deficiencies or material
weaknesses,  the Chief  Executive  Officer  and  Chief  Financial  Officer  each
concluded that the Company's disclosure controls and procedures are effective












<PAGE>

                                    PART III

In  accordance  with  General  Instruction  G(3) of Form 10-K,  the  information
required by this Part III is incorporated  by reference to Micropac  Industries,
Inc.'s  definitive  proxy  statement  relating  to its 2006  Annual  Meeting  of
Stockholders,  as set forth below.  The 2006 Proxy  Statement will be filed with
the Securities and Exchange Commission on or about February 10, 2006.


Item 9.  Directors & Executive Officers of The Registrant

The  information  set  forth in the 2006  Proxy  Statement  under  the  headings
"Election of  Directors",  and  "Principal  Stockholders  and  Stockholdings  of
Management", is incorporated herein by reference.

                                    Position(s) With
Name                  Age             the Company                 Director Since
----                  ---           ----------------              --------------

H. Kent Hearn         69      Director and Member of Audit
                              Committee                            February 1983

Heinz-Werner Hempel   77      Director and Member of Audit
                              Committee                            February 1997

James K. Murphey      63      Director and Member of Audit
                              Committee                             March 1990

Nicholas Nadolsky     72      Director and Member of Audit
                              Committee                             May 2004

Connie Wood           66      Director and Member of Audit
                              Committee, Former CEO and President   May 2002

Mark King             51      Director, CEO, President and
                              Member of Audit Committee             October 2005

Patrick Cefalu         48     CFO, Vice President




Mr. Hearn is currently employed as a stockbroker by Milkie/Ferguson Investments,
Inc. Mr. Hearn was formerly employed by Harris Securities, Dallas, Texas.

Mr. Hempel is the Chief Operating Officer of Hanseatische Waren-Gesellschaft MBH
& Co, KG, Bremen Germany.

Mr. Murphey is an attorney and member of the law firm Glast,  Phillips & Murray,
P.C. in Dallas, Texas. Glast, Phillips & Murray, P.C. serves as legal counsel to
the company. Prior to 2001, Mr. Murphey was a member of the law firm of Secore &
Waller, L.L.P. in Dallas, Texas.

Mr. Nadolsky served as the Company's Chief Executive Officer and Chairman of the
Board  until his  medical  leave of absence  beginning  May 2002.  Mr.  Nadolsky
retired from the Company in May 2004.

Mrs.  Wood is the former Chief  Executive  Officer and President of the Company,
having  retired in October  2005,  and serving as a full-time  consultant  until
December 31, 2005. Mrs. Wood was elected as Chief Executive Officer in May 2002.
Prior to May 2002,  Mrs. Wood was President and Chief  Operating  Officer of the
Company.

Mr. King is the Chief Executive  Officer and President of the Company.  Prior to
November  2002,  Mr. King was  President  and Chief  Operating  Officer of Lucas
Benning  Power  Electronics.  Mr. King joined the company in November of 2002 as
the  Chief  Operating  Officer  and was  elected  as  Chief  Executive  Officer,
President and Board Member in October 2005.

Mr. Cefalu is the Chief Financial Officer and Vice President of the Company. Mr.
Cefalu  joined the  Company in July of 2001 and was  elected as Chief  Financial
Officer in February of 2002. Prior to July 2002, Mr. Cefalu held numerous senior
financial positions at Lucent Technologies.


<PAGE>

The Company has adopted a Code of Ethics for  Principal  Executive  Officers and
Senior Financial Officers,  pursuant to the Sarbanes-Oxley Act of 2002. The Code
of Ethics is  published  on the  Company's  web  site,  www.micropac.com  on the
Investor page.

The Board of Directors does not have a nominating or  compensation  committee or
committees performing similar functions.  The Board of Directors formed an Audit
Committee on May 13, 2002. The members of the Audit Committee are the members of
the Board of Directors.

The  Board of  Directors  has  discussed  with  management  and the  independent
auditors  the  quality and  adequacy of the  Company's  internal  controls.  The
Directors have considered and reviewed with the independent auditors their audit
plans, the scope of the audit, and the identification of audit risks.

The Board of Directors has reviewed the Company's audited  financial  statements
for the fiscal year ended November 30, 2005, and discussed them with  management
and the Company's  independent  auditors.  Management has the responsibility for
the  preparation  and integrity of the Company's  financial  statements  and the
independent  auditors have the responsibility for the audit of those statements.
Based on this and discussions with management and the independent auditors,  the
Board  of  Directors  has  recommended  that  the  Company's  audited  financial
statements  be included in its Annual  Report on Form 10-KSB for the fiscal year
ended November 30, 2005, for filing with the Securities and Exchange Commission.
It is not the duty of the Directors to plan or conduct audits, to determine that
the  Company's  financial  statements  are  complete  and  accurate  and  are in
accordance with accounting  principles  generally accepted in the United States.
Those  responsibilities  belong  to  management  and the  Company's  independent
auditors.   In  giving  its   recommendations,   the  Directors  considered  (a)
management's  representation  that such financial  statements have been prepared
with integrity and  objectivity  and in conformity  with  accounting  principles
generally  accepted in the United  States,  and (b) the report of the  Company's
independent auditors with respect to such financial statements.

The Board of  Directors  has received and  reviewed  written  disclosures  and a
letter from the independent  accountants required by the Independence  Standards
Board Standard No. 1, entitled "Independence  Discussions with Audit Committee,"
as amended to date, and has discussed  with the  independent  accountants  their
independence from management.

The Board of  Directors  held  nine (9) board  meetings  during  the year  ended
November 2005. Directors receive a fee of $500.00 for each meeting.

The Audit  Committee  held four (4) meetings  during the year ended November 30,
2005. Members of the Audit Committee received a fee of $500.00 for each meeting.

With  the  exception  of Mr.  Hearn,  members  of the  Audit  Committee  are not
considered as independent members under applicable United States statutes.

The Board of Directors has evaluated the credentials of Nicholas  Nadolsky,  and
has determined that Mr. Nadolsky is an "audit committee financial expert" within
the meaning of 401(e) of Regulation S-B.

The Board does not have a nominating  committee due to the Company's small size.
The Board does not provide a process for security holders to send communications
to the Board of Directors due to the infrequent nature of such communications.












<PAGE>
<TABLE>
<CAPTION>

Item 10.  Executive Compensation
--------------------------------

The  information  set  forth in the  2006  Proxy  Statement  under  the  heading
"Management Remuneration and Transactions", is incorporated herein by reference.

The following  table shows as of November 30, 2005, all cash  compensation  paid
to, or accrued and vested for the account of Ms. Connie Wood, Past President and
Chief Executive  Officer,  Mr. Mark King,  President and Chief Executive Officer
and Mr. Patrick Cefalu,  Vice President and Chief Financial Officer.  Mrs. Wood,
Mr. King and Mr. Cefalu received no non-cash compensation during 2005.

The company does not have any equity compensation plans.

                                      Annual Compensation
                                      -------------------

Name and                              Annual                        Other            All Other
Principal Position          Year      Salary        Bonus    Annual Compensation   Compensation
                                                                    (a)                (b)
==================================================================================================
<S>                         <C>     <C>            <C>             <C>              <C>
Connie Wood,                2005    $183,294.58    $14,500         $6,500           $23,693.18
Past President and          2004    $172,394.28    $10,000         $6,000           $27,194.25
Chief Executive             2003    $156,000.00       -0-            -0-            $18,490.51
Officer (1)

Mark King,                  2005    $163,395.50    $14,500           $500           $13,383.62
President and               2004    $155,333.82    $ 2,000           -0-            $10,225.38
Chief Executive Officer     2003    $150,000.00       -0-            -0-             $6,467.79

Patrick Cefalu,             2005    $  90,906.21   $14,500           -0-            $10,749.07
Vice President and
Chief Financial Officer (2)
</TABLE>

     (a)  Reflects fees for Board meetings and Audit Committee meetings
     (b)  Reflects  amounts  contributed  by Micropac  Industries,  Inc.,  under
          Micropac's  401(k)  profit  sharing  plan;  unused  vacation  pay; and
          reimbursement  for medical  expenses under  Micropac's  Family Medical
          Reimbursement Plan.
================================================================================
     (1)  Effective May 1, 2002,  the Company and Connie Wood entered into a two
          (2) year  employment  agreement at an annual  salary of $156,000.  The
          employment  agreement  was amended  effective  May 1, 2004 to increase
          Mrs.  Wood's salary to $180,000 and to extend the term for a period of
          three years from said date.  Mrs.  Wood retired as  President  and CEO
          effective October 12, 2005, and has remained as a full-time consultant
          until December 31, 2005.
     (2)  Mr.   Cefalu  joined  the  Company  in  July  2001;   however,   total
          compensation is not reported before fiscal year 2005, as annual salary
          and bonus did not exceed $100,000.

Amounts  included in other annual  compensations  relating to director and audit
--------------------------------------------------------------------------------
committee fees
--------------

The Board of  Directors  held  nine (9) board  meetings  during  the year  ended
November 2004.  Directors  receive a fee of $500.00 for each meeting.  Mrs. Wood
received  fees of $4,500 and Mr.  King  received  fees of $500  which  amount is
included in the "Other Annual Compensation" column.

The Audit  Committee  held four (4) meetings  during the year ended November 30,
2005. Members of the Audit Committee received a fee of $500.00 for each meeting.
Mrs. Wood received  Audit  Committee  fees of $2,000 which amount is included in
the "Other Annual Compensation" column.

Amount included in all other compensation relating to employee benefit plans
----------------------------------------------------------------------------

The Company maintains a Family Medical Reimbursement Plan for the benefit of its
executive  officers  and their  dependents.  The Plan is funded  through a group
insurance policy issued by an independent carrier and provides for reimbursement
of 100% of all bona fide  medical  and dental  expenses  that are not covered by
other medical  insurance plans.  During the fiscal year ended November 30, 2005,
Mrs.  Wood  received  $11,875.20,  Mr. King  received  $2,656.24  and Mr. Cefalu
received  $7,863.45  which amounts are included in the "All Other  Compensation"
column shown in the preceding remuneration table.



<PAGE>

In July 1984,  the Company  adopted a Salary  Reduction Plan pursuant to Section
401(k) of the Internal  Revenue Code.  The Plan's  benefits are available to all
Company  employees who are at least 18 years of age and have  completed at least
six months of service to the Company as of the  beginning  of a Plan year.  Plan
participants  may elect to defer up to 15% of their total  compensation as their
contributions,  subject to the  maximum  allowed by the  Internal  Revenue  code
401(k),  and the Company  matches their  contributions  up to a maximum of 6% of
their total  compensation.  A  participant's  benefits vest to the extent of 20%
after two years of eligible  service and become  fully  vested at the end of six
years.

During the fiscal year ended November 30, 2005,  the Company made  contributions
to the Plan for Mrs.  Wood in the amount of  $11,817.83  and for Mr. King in the
amount of $10,727.38, which amounts are included in the "All Other Compensation"
column shown in the preceding remuneration table.

Employment  agreements of the Company's officers provides that they may elect to
carry over any unused  vacation time to  subsequent  periods or elect to be paid
for such unused  vacation  time. In 2005,  Mr. Cefalu elected to be paid for all
prior unused vacation time in the amount of $2,885.62,  which is included in the
"All Other Compensation" column shown in the preceding remuneration table.

On January 15,  2001,  the Board of Directors  adopted the Micropac  Industries,
Inc.  2001  Employee  Stock Option Plan.  To date,  no options have been granted
under the Plan.


Item 11. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

The  information  set  forth in the  2006  Proxy  Statement  under  the  heading
"Principal  Stockholders and Stockholdings of Management" is incorporated herein
by reference.



















<PAGE>

The following  table shows the number and  percentage of shares of the Company's
common stock  beneficially  owned (a) by each person known by the Company to own
5% or more of the  outstanding  common stock,  (b) by each director and nominee,
and (c) by all present officers and directors as a group.

Name and Address                         Number of Shares          Percent
of Beneficial Owner                     Beneficially Owned        of Class(1)
-------------------                     ------------------        -----------

Heinz-Werner Hempel (2)(3)                  1,952,577                75.7%
Hanseatische Waren-Gesellschaft
    MBH & Co., KG
Am Wall 127
28195 Bremen 1 Germany

H. Kent Hearn (3)                               3,500              Less than .2
1409 Briar Hollow
Garland, Texas 75043

James K. Murphey (3)                              -0-                   -
2290 One Galleria Tower
13355 Noel Road, L.B.75
Dallas, Texas 75240

Nicholas Nadolsky (3)                             -0-                   -
1322 Briar Hollow
Garland, Texas 75043

Connie Wood (3)                                   6,000            Less than .2%
106 Cedarview
Rockwall, Texas 75087

Mark King(3)                                        -0-                 -
2905 Wyndham Lane
Richardson, Texas 75082

Patrick Cefalu                                      -0-                 -
8706 Arborside
Rowlett, Texas 75089

All officers and directors                    1,962,077              76.1%
  as a group (7 Persons)
-----------------------

(1)  Calculated on the basis of the 2,578,315  outstanding shares.  There are no
     options, warrants, or convertible securities outstanding.

(2)  The  Company  and Mr.  Heinz-Werner  Hempel  are  parties  to an  Ancillary
     Agreement  entered into in March 1987.  The Ancillary  Agreement  primarily
     obligates the Company to register Mr.  Hempel's stock and allows Mr. Hempel
     to participate in any sale of stock by the Company.

(3)  A director of the Company.  Each incumbent  director has been nominated for
     re-election at the Annual Meeting.


Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

The  information  set  forth in the  2006  Proxy  Statement  under  the  heading
"Management Remuneration and Transactions" is incorporated herein by reference.

Since  1980,  the  Company  has  leased a 4,800  square-foot  building  from Mr.
Nadolsky  which  is used  primarily  for  manufacturing.  The  lease  originally
provided for a monthly  rental of $1,900 (an amount  based upon a January  1984,
independent  appraisal  of the  building's  value)  and was to have  expired  on
January 1, 1987.  Since 1987,  the Company has  extended  the term of this lease
from time to time.  The rental paid to Mr.  Nadolsky  pursuant to this lease was
$40,000 for the fiscal year ended  November 30, 2005.  In April 2004,  the lease
was  renewed for three (3) years at the same  rental  rate  provided  for in the
previous  lease subject to increase  based upon  increases in the Consumer Price
Index.


<PAGE>

Item 13.  Principal Accountant Fees and Services
------------------------------------------------

The  information  set  forth in the  2006  Proxy  Statement  under  the  heading
"Independent  Public  Accountants"  and "Audit Fees" is  incorporated  herein by
reference.

KPMG  LLP was  selected  as the  independent  accountants  in 2002  and has been
responsible  for the  Company's  financial  audit  for the  fiscal  years  ended
November 30, 2002 through November 30, 2005.

Management  anticipates that a  representative  from KPMG LLP will be present at
the Annual  Meeting and will be given the  opportunity to make a statement if he
or she desires to do so. It is also anticipated that such representative will be
available to respond to appropriate questions from stockholders.

KPMG LLP fees for professional services for the audit of the Company's financial
statements for 2005 and the review of the interim financial  statements included
in the Quarterly Reports is $96,700.

In  addition  to the audit  fees,  KPMG LLP fees for tax  advisory  and 2005 tax
return preparation services will be $24,500.


Item 14.  Exhibits and Reports on Form 8-K
------------------------------------------

         (a)      Exhibits

                  10.1     Supplier  Contract - incorporated by reference to the
                           Registrant's 10KSB/A filed on August 23, 2005

                  10.2     Loan  Agreement -  incorporated  by  reference to the
                           Registrant's 10KSB/A filed on August 23, 2005

                  10.3     Employment  Contract  Of Chief  Executive  Officer  -
                           incorporated by reference to the Registrant's 10KSB/A
                           filed on August 23, 2005

                  10.4     Employment  Contract  of Chief  Financial  Officer  -
                           incorporated by reference to the Registrant's 10KSB/A
                           filed on August 23, 2005

                  10.5     Employment  Contract  of Chief  Operating  Officer  -
                           incorporated by reference to the Registrant's 10KSB/A
                           filed on August 23, 2005

                  10.6     Code  of  Conduct  for  Officers  -  incorporated  by
                           reference to the Registrant's 10KSB/A filed on August
                           23, 2005

                  10.7     Agreement with Mr.  Nicholas  Nodalsky - incorporated
                           by reference  to the  Registrant's  10KSB/A  filed on
                           August 23, 2005

                  10.8     Agreement with Mr. Hempel - incorporated by reference
                           to the  Registrant's  10KSB/A  filed on November  22,
                           2005

                  10.9     Micropac Industries,  Inc. 2001 Employee Stock Option
                           Plan  -incorporated  by reference to the Registrant's
                           Form S-8 (File No. 333-67560), filed August 16, 2001

                  10.10    Consent of Independent  Third Party on Stock Purchase
                           -  incorporated  by  reference  to  the  Registrant's
                           10KSB/A filed on November 22, 2005

                  10.11    Employment Contract Of Chief Executive Officer

                  31.1     Certification of Chief Executive  Officer pursuant to
                           Section 302 of the Sarbanes- Oxley Act of 2004

                  31.2     Certification of Chief Accounting Officer pursuant to
                           Section 302 of the Sarbanes- Oxley Act of 2004

                  32.1     Certification of Chief Executive  Officer pursuant to
                           18  U.S.C.  section  1350,  as  adopted  pursuant  to
                           section 906 of the Sarbanes-Oxley act of 2004.

                  32.2     Certification of Chief Accounting Officer pursuant to
                           U. S. C. section 1350, as adopted pursuant to section
                           906 of the Sarbanes-Oxley act of 2004.

<PAGE>

         (b)      Form 8K -

                  On  December  29,  2004,  the Board of  Directors  of Micropac
                  Industries,  Inc.  approved  the  payment  of a $.12 per share
                  dividend to all  shareholders  of record on January 25,  2005.
                  The dividend  payment was paid to  shareholders on February 8,
                  2005.

                  On  January  8,  2004,  the  Board of  Directors  of  Micropac
                  Industries, Inc. approved the payment of a special dividend of
                  $.05 per share to all  shareholders  of record on January  30,
                  2004.  The  dividend  payment  was  paid  to  shareholders  on
                  February 13, 2004.

                  At a Board of  Directors  meeting  held on May 11,  2004,  the
                  Board of Directors  unanimously  elected Mr. Nicholas Nadolsky
                  as a  Member  and  Chairman  of the  Board,  to  serve in such
                  positions  until the next annual  meeting of  shareholders  or
                  until his earlier  death,  resignation or removal from office.
                  There is no employment  agreement between Mr. Nadolsky and the
                  Company. Since 1980, the Company has leased a 4800 square foot
                  building  from Mr.  Nadolsky,  at a current  annual  rental of
                  $40,000.

                  Departure  of Directors  or  Principal  Officers;  Election of
                  Directors; Appointment of Principal Officers. Ms. Connie Wood,
                  Chief  Executive  Officer of Micropac  Industries,  Inc.,  has
                  retired effective October 12, 2005 after more than 36 years of
                  service.  Ms.  Wood,  66,  remained  with  the  Company  on  a
                  consulting  basis  through  the  end of  the  year,  and  will
                  continue  to serve on the  Board of  Directors.  The  Board of
                  Directors  elected Mr. Mark King,  51, as President  and Chief
                  Executive  Officer to succeed Mrs. Wood effective  October 12,
                  2005. In,  addition,  Mr. King was elected as a director and a
                  member of the audit committee.  Mr. King has been an Executive
                  Vice  President  and  Chief  Operating   Officer  of  Micropac
                  Industries, Inc. since November 2002.









<PAGE>

                                   SIGNATURES


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


                                                MICROPAC INDUSTRIES, INC.




                                                By: /s/ Mark King
                                                   -----------------------------
                                                   Mark King, President
                                                   and Chief Executive Officer
                                                   (Principal Executive Officer)

                                                By: /s/ Patrick Cefalu
                                                   -----------------------------
                                                   Patrick Cefalu, CFO and
                                                   Principal Accounting Officer

Dated:  02/08/2006

Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated on 02/10/2006

 /s/ Connie Wood                                    /s/ H. Kent Hearn
-----------------------------                      -----------------------------
Connie Wood, Director                              H. Kent Hearn, Director

 /s/ James K. Murphey                              /s/ Heinz-Werner Hempel
-----------------------------                      -----------------------------
James K. Murphey, Director                         Heinz-Werner Hempel, Director

 /s/ Nicholas Nadolsky                              /s/ Mark King
-----------------------------                      -----------------------------
Nicholas Nadolsky, Director                        Mark King, Director















<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders
Micropac Industries, Inc.:

We have audited the accompanying balance sheets of Micropac Industries,  Inc. as
of  November  30,  2005  and  2004,  and  the  related   statements  of  income,
shareholders'  equity,  and cash  flows  for each of the  years in the  two-year
period  ending   November  30,  2005.   These   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Micropac Industries, Inc. as of
November 30, 2005 and 2004, and the results of its operations and its cash flows
for  each of the  years in the  two-year  period  ending  November  30,  2005 in
conformity with U.S. generally accepted accounting principles.




                                                  KPMG LLP

Dallas, Texas,
January 27, 2006














<PAGE>
<TABLE>
<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------
                                 BALANCE SHEETS
                           NOVEMBER 30, 2005 AND 2004
                    (Dollars in thousands except share data)

                                     ASSETS
                                     ------

                                                                 2005        2004
                                                               --------    --------
<S>                                                            <C>         <C>
CURRENT ASSETS:
    Cash and cash equivalents                                  $  1,722    $  1,239
    Short-term investments                                        2,527       2,507
    Receivables, net of allowance for doubtful accounts
      of  $89 for 2005 and $121 for 2004                          3,057       2,326
    Inventories
      Raw materials and supplies                                  1,825       1,354
      Work-in-process                                             1,718       1,346
                                                               --------    --------
                  Total inventories                               3,543       2,700

    Deferred income taxes                                           614         528
      Prepaid expenses and other assets                              76          90
                                                               --------    --------
                  Total current assets                           11,539       9,390

PROPERTY, PLANT, AND EQUIPMENT, at cost:
    Land                                                             80          80
    Buildings                                                       498         498
    Facility improvements                                           796         796
    Machinery and equipment                                       5,689       5,200
    Furniture and fixtures                                          487         479
                                                               --------    --------
        Total property, plant, and equipment                      7,550       7,053
    Less- accumulated depreciation                               (6,338)     (6,091)
                                                               --------    --------
        Net property, plant, and equipment                        1,212         962
                                                               --------    --------


                  Total assets                                 $ 12,751    $ 10,352
                                                               ========    ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                           $    768    $    387
    Accrued compensation                                            690         488
    Accrued professional fees                                        28          11
    Income taxes payable                                            147         306
    Property taxes                                                   54          66
    Commissions payable                                              52          46
    Deferred revenue                                                499         404
    Other accrued liabilities                                        17          17
                                                               --------    --------
                  Total current liabilities                       2,255       1,725

DEFERRED INCOME TAXES                                                74          72
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY:
    Common stock, $.10 par value, authorized 10,000,000
      shares 3,078,315 issued 2,578,315 outstanding
      at November 30, 2005 and November 30, 2004                    308         308
    Paid-in capital                                                 885         885
    Treasury stock, at cost, 500,000 shares                      (1,250)     (1,250)
    Retained earnings                                            10,479       8,612
                                                               --------    --------
                  Total shareholders' equity                     10,422       8,555
                                                               --------    --------

                  Total liabilities and shareholders' equity   $ 12,751    $ 10,352
                                                               ========    ========
</TABLE>



                See accompanying notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------
                              STATEMENTS OF INCOME
                        FOR THE YEARS ENDED NOVEMBER 30,
                            2005 AND 2004 (Dollars in
                          thousands except share data)



                                                               2005           2004
                                                           -----------    -----------
<S>                                                        <C>            <C>
NET SALES                                                  $    19,030    $    15,356

COSTS AND EXPENSES:
Cost of sales                                                   11,874          9,976
Research and development                                           531            438
Selling, general, and administrative expenses                    3,237          2,709
                                                           -----------    -----------

                  Total costs and expenses                      15,642         13,123
                                                           -----------    -----------

OPERATING INCOME BEFORE INTEREST AND INCOME TAXES                3,388          2,233

Other income                                                        10           --
Interest income                                                     87             32
                                                           -----------    -----------

INCOME BEFORE INCOME TAXES                                       3,485          2,265

PROVISION (BENEFIT) FOR INCOME TAXES:
    Current                                                      1,393            996
    Deferred                                                       (84)          (139)
                                                           -----------    -----------

          Total provision for current and deferred taxes         1,309            857
                                                           -----------    -----------

NET INCOME                                                 $     2,176    $     1,408
                                                           ===========    ===========

BASIC AND DILUTED EARNINGS PER SHARE                       $       .84    $       .55
                                                           ===========    ===========

WEIGHTED AVERAGE NUMBER OF SHARES, basic and diluted         2,578,315      2,578,315
                                                           ===========    ===========
</TABLE>







                See accompanying notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED NOVEMBER 30, 2005 AND 2004
                             (Dollars in thousands)



                              Common      Paid-in    Treasury    Retained
                               Stock      Capital      Stock     Earnings      Total
                             --------    --------    --------    --------    --------
<S>                          <C>         <C>         <C>         <C>         <C>

BALANCE, November 30, 2003   $    308    $    885    $ (1,250)   $  7,333    $  7,276

    Dividend                     (129)       (129)
    Net income                   --          --          --         1,408       1,408
                             --------    --------    --------    --------    --------

BALANCE, November 30, 2004        308         885      (1,250)      8,612       8,555
                             --------    --------    --------    --------    --------

    Dividend                     --          --          --          (309)       (309)
    Net income                   --          --          --         2,176       2,176
                             --------    --------    --------    --------    --------

BALANCE, November 30, 2005   $    308    $    885    $ (1,250)   $ 10,479    $ 10,422
                             ========    ========    ========    ========    ========
</TABLE>
















                See accompanying notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED NOVEMBER 30, 2005 AND 2004
                             (Dollars in thousands)

                                                                            2005       2004
                                                                          -------    -------
<S>                                                                       <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                            $ 2,176    $ 1,408
    Adjustments to reconcile net income to
        net cash provided by operating activities-
           Depreciation and amortization                                      247        222
           Deferred tax benefit                                               (84)      (139)
    Changes in certain current assets and liabilities-
               Increase in receivables, net                                  (731)      (449)
               Increase in inventories                                       (843)      (911)
               Decrease (increase) in prepaid expenses and other assets        14        (19)
               Increase in accounts payable                                   381         79
               Increase in accrued compensation                               202        249
               (Decrease) increase in income taxes payable                   (159)       196
               Increase in all other accrued liabilities                      106        272
                                                                          -------    -------

                  Net cash provided by operating activities                 1,309        908
                                                                          -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
           Purchase of investments                                            (20)    (1,695)
Additions to property, plant, and equipment                                  (497)      (182)
                                                                          -------    -------

                  Net cash used in investing activities                      (517)    (1,877)
                                                                          -------    -------


CASH FLOWS FROM FINANCING ACTIVITIES:
           Dividends paid                                                    (309)      (129)
                                                                          -------    -------

                  Net cash used in financing activities                      (309)      (129)
                                                                          -------    -------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          483     (1,098)

CASH AND CASH EQUIVALENTS, beginning of year                                1,239      2,337
                                                                          -------    -------

CASH AND CASH EQUIVALENTS, end of year                                    $ 1,722    $ 1,239
                                                                          =======    =======

SUPPLEMENTAL CASH FLOW DISCLOSURES:
        Cash paid for income taxes, net of refunds received               $ 1,552    $   803
                                                                          =======    =======
</TABLE>




                See accompanying notes to financial statements.


<PAGE>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------
                          NOTES TO FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004



1.       BUSINESS DESCRIPTION:
         ---------------------

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


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

Revenue Recognition
-------------------

Revenues are recorded as  deliveries  are made based upon contract  prices.  Any
losses  anticipated on fixed price  contracts are provided for currently.  Sales
are recorded net of sales returns, allowances and discounts.

Short-Term Investments
----------------------

Short-term  investments include certificates of deposits with maturities greater
than  90  days.  These  investments  are  reported  at  historical  cost,  which
approximates  fair  market  value as of November  30, 2005 and 2004.  All highly
liquid  investments  with  maturities of 90 days or less are  classified as cash
equivalents. All short-term investments are securities which the Company has the
ability and positive intent to hold to maturity. All held-to maturity securities
mature within one year.

Inventories
-----------

Inventories  are stated at lower of cost or market  value and include  material,
labor and  manufacturing  overhead.  All  inventories  are valued using the FIFO
(first-in,  first-out)  method of inventory  valuation.  The Company provides an
allowance for obsolete and overstocked inventory.

Income Taxes
------------

The Company  accounts  for income  taxes using the asset and  liability  method.
Under this method the Company  records  deferred  income taxes for the temporary
differences  between the financial  reporting  basis and the tax basis of assets
and  liabilities at enacted tax rates expected to be in effect when such amounts
are realized or settled.  The resulting  deferred tax liabilities and assets are
adjusted to reflect  changes in tax law or rates in the period that includes the
enactment date.

Property, Plant, and Equipment
------------------------------

Property, plant, and equipment are carried at cost, and depreciation is provided
using the  straight-line  method at rates  based  upon the  following  estimated
useful lives (in years) of the assets:

     Buildings................................................................15
     Facility improvements..................................................8-15
     Machinery and equipment................................................5-10
     Furniture and fixtures..................................................5-8

The Company assesses long-lived assets for impairment under Financial Accounting
Standards Board Statement of Financial  Accounting Standards No. 144, Accounting
for  the   Impairment  or  Disposal  of  Long-Lived   Assets.   When  events  or
circumstances  indicate  that  an  asset  may  be  impaired,  an  assessment  is
performed.  The estimated  future  undiscounted  cash flows  associated with the
asset are compared to the asset's net book value to determine if a write down to
market value or discounted cash flow value is required. The Company adopted SFAS
144 on December 1, 2004.  The adoption of SFAS 144 did not affect the  Company's
financial statements.

Repairs and maintenance are charged against income when incurred.  Improvements,
which extend the useful life of property, plant, and equipment are capitalized.

<PAGE>

Research and Development Costs
------------------------------

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

Comprehensive Income
--------------------

Comprehensive income includes net income and other comprehensive income which is
generally  comprised  of  changes  in  the  fair  value  of   available-for-sale
marketable securities,  foreign currency translation adjustments and adjustments
to recognise additional minimum pension  liabilities.  For each period presented
in the accompanying statement of income, comprehensive income and net income are
the same amount.

Basic and Diluted Earnings Per Share
------------------------------------

Basic and  diluted  earnings  per share are  computed  based  upon the  weighted
average number of shares outstanding during the year. Diluted earnings per share
gives effect to all dilutive potential common shares.  During 2005 and 2004, the
Company had no dilutive potential common stock.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.


3.       NOTES PAYABLE TO BANKS:
         -----------------------

The  Company  currently  has an  existing  line of credit  with a Texas  banking
institution.  The line of  credit  agreement  provides  the  Company  with up to
$3,000,000  for  normal  operation  of the  Company.  The  interest  rate on any
borrowings  against this credit  agreement is equal to the prime rate less 1/4%.
The line of credit requires the Company to maintain  certain  financial  ratios,
including  quick  ratio  of at least  1:1,  maintain  a  tangible  net  worth of
$6,250,000   plus   75%  of   future   net   income,   and   maintain   a  total
liabilities-to-tangible-net-worth  of  less  than  1.25:1.  The  Company  is  in
compliance with these  covenants.  The Company has not, to date, used any of the
available line of credit.

4.       RELATED PARTIES:
         ----------------

The  Company  leases a  building  from the  Company's  Chairman  of the Board of
Directors.  A lease was signed on July 1, 1999, for a term of five (5) years and
renewed in April 2004 for three (3) years under similar terms and  conditions as
the prior lease. Amounts paid under the lease agreement  approximated $40,000 in
2005 and $39,000 in 2004.

Glast,  Phillips & Murray, P.C. serves as the Company's legal counsel. Mr. James
K. Murphey, a director and member of the Company's audit committee,  is a member
of Glast, Phillips & Murray, P.C.

Effective May 13, 2003, the Company's Board of Directors  approved the formation
of an audit committee  composed of the members of the Board. It is possible that
the  members of the audit  committee  may resign  from the  committee  if future
Securities  and  Exchange  Commission  rules  establish  a  criteria  that  such
individuals must be independent,  due to their  relationships  with the Company.
The Board of  Directors  held  nine (9) board  meetings  during  the year  ended
November  30, 2005.  Directors  receive a fee of $500.00 for each  meeting.  The
Audit  Committee held four (4) meetings during the year ended November 30, 2005.
Members of the Audit Committee received a fee of $500.00 for each meeting.


5.       PRODUCT WARRANTIES:
         ------------------

In November 2002, the FASB issued  Interpretation No. 45 (FIN 45),  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness of Others."  Currently,  the only applicable item of
FIN  45  relates  to the  impact  of  paragraph  14,  which  refers  to  product
warranties.

Because the Company does not have extended  warranties,  the exposure is limited
to product returns for defective products. In general, the Company warrants that
the products, when delivered,  will be free from defects in material workmanship
under  normal  use and  service.  The  obligations  are  limited  to  replacing,
repairing or giving credit for, at the option of the Company,  any products that
are returned within one year after the date of shipment.


<PAGE>

The Company reserves for potential warranty expense based on historical warranty
experience  claims.  While  management  considers  the process to be adequate to
effectively  quantify  its  exposure  to  warranty  claims  based on  historical
performance,  changes in warranty  claims on a specific or cumulative  basis may
require management to adjust its reserve for potential warranty costs.

Warranty expense to repair or replace products in 2005 and 2004, was $38,600 and
$33,600 respectively.


6.       LEASE COMMITMENTS:
         -----------------

Rent expenses for the years ended November 30, 2005 and 2004, was  approximately
$44,000 and $45,000  respectively  per year. The Company's  future minimum lease
payments under  non-cancellable  operating  leases  (including the related party
lease  described in note 4) for office and  manufacturing  space with  remaining
terms in excess of one year are approximately:

     2006                                                  $  40,000
     2007                                                  $  20,000
                                                           ---------
                                          Total            $  60,000
                                                           ---------


7.       EMPLOYEE BENEFITS:
         ------------------

The Company  sponsors an Employees'  Profit Sharing Plan and Trust (the "Plan").
Pursuant to section  401(k) of the Internal  Revenue Code, the Plan is available
to  substantially  all employees of the Company.  Employee  contributions to the
Plan are matched by the Company at amounts up to 6% of the participant's salary.
Contributions  made by the  Company  were  approximately  $178,000  in 2005  and
$131,000 in 2004. Employees become vested in Company  contributions at 20% after
two years, 40% after three years, 60% after four years, 80% after five years and
100% after six years.  If the employee  leaves the Company  prior to being fully
vested,  the unvested portion of the Company's  contributions  are forfeited and
such  forfeitures  are used to lower future Company  contributions.  The Company
does not offer other post retirement benefits to its employees at this time.

8.       NEW ACCOUNTING STANDARDS
         ------------------------

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS")  No. 153,  "Exchanges  of
Non-monetary assets - an amendment of APB Opinion No. 29". This Statement amends
APB Opinion 29 to eliminate the exception for non-monetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
non-monetary  assets  that do not  have  commercial  substance.  A  non-monetary
exchange  has  commercial  substance  if the future cash flows of the entity are
expected to change significantly as a result of the exchange. We anticipate that
this pronouncement will not have a material effect on the financial statements.

In December 2004,  the FASB issued SFAS No. 123R,  "Share Based  Payment".  This
Statement is a revision of FASB Statement No. 123,  "Accounting  for Stock-Based
Compensation".  This Statement  supersedes APB Opinion No. 25,  "Accounting  for
Stock  Issued  to  Employees"  and its  related  implementation  guidance.  This
Statement  establishes standards for the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. It also addresses
transactions  in which an entity  incurs  liabilities  in exchange  for goods or
services that are based on the fair value of the entity's equity  instruments or
that may be settled by the issuance of those equity  instruments.  The Statement
focuses  primarily on accounting  for  transactions  in which an entity  obtains
employee services in share-based payment  transactions.  This Statement does not
change the accounting guidance for share-based payment transactions with parties
other than  employees  provided in Statement 123 as  originally  issued and EITF
Issue No. 96-18,  "Accounting  for Equity  Instruments  That Are Issued to Other
Than  Employees  for  Acquiring,  or  in  Conjunction  with  Selling,  Goods  or
Services."  This  Statement  does not address the  accounting for employee share
ownership  plans,  which  are  subject  to AICPA  Statement  of  Position  93-6,
"Employers'  Accounting for Employee Stock Ownership Plans".  The Securities and
Exchange Commission has delayed the adoption  requirement of SFAS No. 123R until
January 1, 2006.  We expect to adopt SFAS No. 123R as  required.  We  anticipate
that  adoption  of this  Standard  may have a material  effect on the  financial
statements  if the  Company  decided to  utilize  stock  options  to  compensate
employees and members of the Board of Directors.

In May 2005 the FASB issued SFAS 154 "Accounting Changes and Error Corrections".
This  Statement  replaces  APB Opinion No. 20,  "Accounting  Changes",  and FASB
Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements",
and changes the requirements for the accounting for and reporting of a change in
accounting  principle  and  also  corrections  of  error  in  previously  issued
financial  statements.  This Statement  harmonizes US accounting  standards with
existing  international  accounting  standards by requiring  companies to report
voluntary  changes in accounting  principles  via a  retrospective  application,
unless  impracticable.  Also,  the  reporting  of an error  correction  involves
adjustments to previously issued financial statements similar to those generally
applicable to reporting an accounting change retrospectively. This pronouncement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years beginning after December 15, 2005


<PAGE>
<TABLE>
<CAPTION>

9.       INCOME TAXES:
         ------------
The income tax provision consisted of the following for the years ended November
30:


                                                         2005           2004
                                                     -----------    -----------
         Current Provision:
             Federal                                 $ 1,200,000    $   854,000
             State                                       193,000        142,000
                                                     -----------    -----------
                                                       1,393,000        996,000
         Deferred Benefit:
             Federal                                     (84,000)      (139,000)
                                                     -----------    -----------

                      Total                          $ 1,309,000    $   857,000
                                                     ===========    ===========


The  provision  for income  taxes  differs  from that  computed  at the  federal
statutory corporate tax rate as follows:

                                                         2005           2004
                                                     -----------    -----------
     Tax at 34% statutory rate                       $ 1,185,000    $   770,000
     State income taxes, net of federal benefit          119,000         82,000
     Permanent differences and other                       5,000          5,000
                                                     -----------    -----------

              Income tax provision                   $ 1,309,000    $   857,000
                                                     ===========    ===========


The components of deferred tax assets and liabilities were as follows:

                                               November 30, 2005   November 30, 2004
                                               -----------------   -----------------
     <S>                                       <C>                 <C>
     Current Deferred Taxes -
          Allowance for doubtful accounts      $          33,000   $          45,000
          Inventory                                      319,000             280,000
          Accrued liabilities and other                  262,000             203,000
                                               -----------------   -----------------
              Net current deferred tax asset   $         614,000   $         528,000
                                               -----------------   -----------------

     Non-current Deferred Taxes Liability
          Depreciation and other               $          74,000   $          72,000
                                               -----------------   -----------------

              Net deferred taxes               $         540,000   $         456,000
                                               =================   =================
</TABLE>

10.      SIGNIFICANT CUSTOMER INFORMATION:
         ---------------------------------

The Company's primary line of business relates to the design,  manufacture,  and
sale of hybrid microcircuits and optoelectronic components and assemblies. Sales
result primarily from  subcontracts  with customers for ultimate  production and
delivery  to the United  States  government.  Sales to primary  contractors  for
defense and space related contracts accounted for 70% of total sales in 2005 and
64% of total sales in 2004. During 2005 one customer, Newport, accounted for 15%
of  the  Company's  sales,  compared  to  two  customers,  Advanced  Energy  and
Celestica,  that  accounted for 9% and 10% of the  Company's  sales for the year
ended November 30, 2004.  During 2005,  Advanced Energy and Celestica  accounted
for 2% and 2% of the  Company's  total sales.  Advanced  Energy has been a major
customer since 1996 and averaged 15% of the Company's  sales during this 10 year
period from a high of 20% to a low of 2%.

11.      SHAREHOLDERS' EQUITY:
         --------------------

On November 30, 2005, there were approximately 540 shareholders of record of the
Company's  common  stock.  The  stock  of the  Company  is  closely  held;  and,
therefore,  certain shareholders/board members have the ability to significantly
influence decisions.



<PAGE>

On January 8, 2004, the Board of Directors of Micropac Industries, Inc. approved
the payment of a special  dividend of $0.05 per share for shareholders of record
as of January 30, 2004. This dividend was paid to the Company's  shareholders on
February 13, 2004.

On December  29,  2004,  the Board of  Directors  of Micropac  Industries,  Inc.
approved the payment of a $.12 per share dividend to all  shareholders of record
on January 25, 2005. The dividend  payment was paid to  shareholders on February
8, 2005.

On March 1, 2001,  the Company's  shareholders  approved the 2001 Employee Stock
Option Plan (the "Stock  Plan").  As of November  30,  2005,  there were 500,000
options  available  to be  granted;  however,  no  options  had been  granted at
year-end.

12.      SUBSEQUENT EVENTS
         -----------------

On December  22,  2005,  the Board of  Directors  of Micropac  Industries,  Inc.
approved the payment of a $.15 per share dividend to all  shareholders of record
on February 3, 2006.  The dividend  payment will be paid to  shareholders  on or
about February 10, 2006.





















<PAGE>

                             DIRECTORS AND OFFICERS
                             ----------------------
                                NOVEMBER 30, 2005


                                NICHOLAS NADOLSKY
                              Chairman of the Board
                            Micropac Industries, Inc

                                   CONNIE WOOD
                         Retired Chief Executive Officer
                            Micropac Industries, Inc.

                               HEINZ-WERNER HEMPEL
                             Chief Operating Officer
       Hanseatishe Waren Handelsgesellschaft MBH & Co. KG, Bremen, Germany


                                  H. KENT HEARN
                                   Stockbroker
                          Milkie-Ferguson, Dallas, Tx.


                                JAMES K. MURPHEY
                               Corporate Attorney
                     Glast, Phillips and Murray, Dallas, Tx.

                                    MARK KING
                             Chief Executive Officer
                            Micropac Industries, Inc.

                                 PATRICK CEFALU
                             Chief Financial Officer
                            Micropac Industries, Inc.











LEGAL COUNSEL                                         TRANSFER AGENT & REGISTRAR
Glast, Phillips and Murray                            Securities Transfer
Dallas, Tx                                            Frisco, Texas