U. S. Securities and Exchange Commission
                             Washington, D. C. 20549

                                   Form 10-KSB


(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, 2001

   ( )       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
                                                             ---   ---

There  is no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  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: $13,423,000

The aggregate market value of the voting stock held by  non-affiliates  computed
by the average bid and asked prices of such stock, as of a specified date within
the past 60 days, is not determined due to  non-activity  on the market over the
last 5 years.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

The  number of shares  outstanding  of each of the  issuer's  classes  of common
equity, as of the latest practicable date was 3,127,151 as of November 30, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

None


<PAGE>

                                     PART I

Item 1. Business
----------------


INTRODUCTION
------------

Micropac Industries, Inc. (the "Company"), a Delaware corporation,  manufactures
and  distributes  various  types  of  hybrid  microcircuits  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 and medical devices.

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.  Present  control  succeeded in 1974.  The stock was publicly
held by 585 shareholders on November 30, 2001.


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 58% of the
Company's  sales for the fiscal year ended  November 30, 2001,  and 64% in 2000;
standard  components  are  estimated  to account  for  approximately  42% of the
Company's  sales for the fiscal year ended November 30, 2001, and 36% for fiscal
2000.

In 2001, the Company's investment in technology, which was expensed, totaled
approximately $357,000 ($503,000 in 2000). 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.


SALES, MARKETING AND DISTRIBUTION
---------------------------------

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  13% of the sales for fiscal
year  2001 (8% in  2000)  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.


CUSTOMERS
---------

The  Company's  major  customers  include   contractors  to  the  United  States
government.  Sales to these  customers  for  Department  of  Defense  (DOD)  and
National  Aeronautics and Space  Administration  (NASA) contracts  accounted for
approximately  66% of the Company's  fiscal net sales in 2001 compared to 62% in
2000.

During 2001,  two customers  accounted  for 10% or more of the Company's  sales.
Sales to these customers were 14% and 10% respectively of net sales for the year
ended November 30, 2001. In comparison,  two customers accounted for 28% and 15%
of sales respectively in 2000.


BACKLOG
-------

At November  30,  2001,  the Company had a backlog of unfilled  orders  totaling
approximately  $5,512,000  compared to approximately  $5,492,000 at November 30,
2000.  The Company  expects to complete  and ship most of its  November 30, 2001
backlog during fiscal 2002.


                                       2
<PAGE>

EMPLOYEES
---------

At November 30, 2001, the Company had 134 full-time  employees  (compared to 138
at November 30, 2000), of which 24 were executive and managerial  employees,  33
were   engineers   and   quality-control   personnel,   20  were   clerical  and
administrative  employees,  and  57  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.


RISK FACTORS
------------

Pricing  Pressures.  Pricing pressures continue to be experienced by the Company
from some of its original equipment manufacturer (OEM) customers. In some cases,
the Company sells product under  agreements  with OEMs that require the Company,
at regular intervals,  to review the pricing structure for possible reduction in
selling  price for future  orders.  This  requires  the  Company to improve  its
productivity  and to approach  its supplier  chain  requesting  similar  pricing
reductions.  If one or both of the  approaches  by the Company does not succeed,
product gross margins will decrease affecting the Company's net earnings.

Limited Insurance  Coverage.  The Company operates  manufacturing  facilities in
Garland,  Texas and 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  maintains
worker's  compensation  insurance and general liability insurance for protection
of its employees and for protection of the Company's  assets. In addition to the
basic policies  mentioned,  the Company  maintains an umbrella  policy  covering
claims up to $10 million  dollars.  The Company's  financial  position  could be
materially  affected  by claims not  covered  or  exceeding  coverage  currently
carried by the Company.

Environmental  Regulations.  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.

Product Liability. 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.  The Company relies on suppliers to deliver
quality raw materials in a timely and cost effective  manner.  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.

Technological  Changes.  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.

Changes in Government Policy. 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.


                                       3
<PAGE>

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

The Company  competes  with two or more  companies  with  respect to each of its
major  products.  Some of these  competitors are larger and have greater capital
resources  than the  Company.  Management  believes  the  Company's  competitive
position to be  favorable;  however,  no assurance can be given that the Company
can compete successfully in the future.


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.

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.


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

The  Company  is  not  involved  in  any  material   current  or  pending  legal
proceedings, other than ordinary routine litigation incidental to its business.


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, 2001.


                                       4
<PAGE>

                                    PART II


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

On November 30, 2001, there were approximately 585 shareholders of record of the
Company's  common  stock.  No  prices  have  been  presented  since  there is no
established  public trading market for the Company's  common stock. The stock of
the Company is closely  held;  and,  therefore,  certain  shareholders  have the
ability to significantly influence decisions.

On January  10,  2001,  the  Company's  board of  directors  approved a dividend
declaration  of $0.10 per share for  shareholders  of record as of  February  1,
2001. The dividend was paid to shareholders on February 20, 2001.

On January 15, 2001, the Company's board of directors approved the repurchase of
500,000 shares of common stock from a major  shareholder  and senior  management
person  within  the  Company.  The  repurchase  price was based  primarily  on a
valuation of the Company by an outside  consulting  firm. The agreed to price of
$2.50 per share was paid on February 5, 2001.

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 Company has not, to date,
used any of the  available  line of credit.  The  Company  expects  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  $588,000 in cash flows from operations in 2001,  primarily
from  the  combination  of  net  income,  $665,000;  recovery  of  depreciation,
$272,000;  and collections of accounts  receivable  generated  another $161,000.
Cash was used to decrease accounts  payable,  ($211,000),  accrued  liabilities,
($191,000)  and other  various  liabilities  by ($99,000).  Accounts  receivable
decreased due to the decreased  revenues for the comparable  fourth  quarters of
2001 versus 2000,  accounts  payable  decreased due to faster payment of debt to
vendors,  and accrued  liabilities  decreased due primarily to the resolution of
one or more product  warranty  issues for which  accruals had been  established.
Day's  sales in  accounts  receivables  totaled  approximately  51.9  days as of
November 30, 2001 compared to 51.5 days at November 30, 2000.

The Company used $162,000 in cash for  investment  in  additional  manufacturing
equipment, computers and facility improvements.

As of November 30, 2000, the Company had $1,249,000 in cash and investments with
a  maturity  date less than 90 days and  $3,418,000  in short  term  investments
maturing in the next 91 to 360 days. On January 15, 2001, the Company's board of
directors  approved the  repurchase of  approximately  500,000  shares of common
stock at $2.50 per share from a significant individual shareholder who is also a
member of  management.  The  repurchase  was completed  using  available cash on
February  5, 2001 and totaled  $1,250,000.  On January  10,  2001,  the Board of
Directors voted to give shareholders of record on February 1, 2001 a dividend of
$0.10 per share.  This  dividend  was paid with  available  cash on February 20,
2001.  The Company was able to pay the above cash  commitment  without having to
use short-term  investments  before their normal maturity date thus avoiding any
penalty for early redemption.

The Company had at  November  30,  2001,  approximately  $1,294,000  in cash and
investments  with a maturity date less than 90 days and $2,186,000 in short term
investments maturing in the next 91 to 360 days.

Company management believes it will meet its 2002 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, 2001.


                                       5
<PAGE>

Results of Operations 2001 vs. 2000
-----------------------------------

Sales in 2001 were  approximately  $13,423,000,  an increase of 3.5% or $448,000
compared  to 2000  sales.  The  increase  in  sales  is  attributed  to a strong
beginning  backlog and  additional  new orders  received in 2001. New orders for
fiscal year 2001 totaled  $13,511,000  compared to $14,200,000  for fiscal 2000.
The  Company's  backlog as of November  30, 2001 was  approximately  $5,512,000,
compared to approximately $5,492,000 on November 30, 2000.

Cost of sales, as a percentage of net sales, was 70.2% in 2001 compared to 67.9%
in 2000.  The increase as a percentage of net sales is due to changes in product
mix to a larger  percentage  of more complex  military and space level  products
which have a higher cost factor and less to  commercial  products.  Expenses for
research and development  totaled $357,000 in 2001 compared to $503,000 in 2000.
Most of the research and development expenses were concentrated on expanding the
company's  line  of  solid  state  relays,  power  operational   amplifiers  and
optocouplers to include radiation hardened products, and improving manufacturing
processes.

Selling,  general,  and  administrative  expenses  totaled 20.3% of net sales in
2001,  compared to 19.3% in 2000.  The increase was  attributable  to legal fees
associated with the stock acquisition,  dividend declaration and the institution
of a stock option plan during the year.

Interest income for fiscal 2001 totaled $163,000 compared to $227,000 for fiscal
2000.  The  decrease  is  related  to  lower  interest  rates  on the  Company's
investments and decreased investments due to financing transactions early in the
year.

Income before taxes for fiscal 2001 was approximately  $1,085,000 or 8.1% of net
sales,  compared to $1,394,000 or 10.7% of net sales in fiscal 2000.  Net income
totaled  approximately  $665,000  or $.21 per  share,  in 2001  versus  2000 net
earnings of $852,000 or $.23 per share.  Net income in 2001  decreased  $187,000
due to increased cost of sales due to changes in product mix,  increased cost of
selling,  general and  administrative  expenses and  decreased  interest  income
generated by the Company's short term investments.

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


                                       6
<PAGE>

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

The  financial  statements  listed  below  appear on pages 10 through 18 of this
Report.  The Company is not required to furnish the Supplementary  Data required
by Item 302 of Regulation S-K.

       Page No.
       --------

          10               Report of Independent Public Accountants

          11               Balance Sheets as of
                           November 30, 2001 and 2000

          12               Statements of Income for the years ended
                           November 30, 2001 and 2000

          13               Statements of Shareholders' Equity for the years
                           ended November 30, 2001 and 2000

          14               Statements of Cash Flows for the years ended
                           November 30, 2001 and 2000

         15-18             Notes to Financial Statements for the years ended
                           November 30, 2001 and 2000


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

None


                                       7
<PAGE>

                                    PART III


Item 9. Directors & Executive Officers of The Registrant
--------------------------------------------------------

Information  relating to the Company's  Directors and Executive  Officers is set
forth in the  Company's  definitive  proxy  statement  relating to the Company's
Annual  Meeting of  Stockholders  to be held on or about  February 28, 2002. The
information  in the proxy is set forth under the heading  "Election of Directors
and  Information  as to Directors,  Nominees and Executive  Officers." The proxy
statement will be filed with the Securities and Exchange  Commission on or about
January 28, 2002, and such information is incorporated by reference.


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

Information  relating to executive  compensation  is set forth in the  Company's
definitive  proxy  statement   relating  to  the  Company's  Annual  Meeting  of
Stockholders  to be held on or about February 28, 2002.  The  information in the
proxy is set  forth  under  the  heading  "Executive  Compensation."  The  proxy
statement will be filed with the Securities and Exchange  Commission on or about
January 28, 2002, and such information is incorporated by reference.


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

Information   relating  to  the  ownership  of  certain  beneficial  owners  and
management  of the  Company's  Common  Stock  is  set  forth  in  the  Company's
definitive  proxy  statement   relating  to  the  Company's  Annual  Meeting  of
Stockholders  to be held on or about February 28, 2002.  The  information in the
proxy is set forth under the heading "Securities Ownership of Certain Beneficial
Owners and  Management."  The proxy  statement will be filed with the Securities
and Exchange  Commission on or about January 28, 2002,  and such  information is
incorporated by reference.


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

Information relating to the business relationships and related transactions with
respect to the Company and certain Directors,  executive officers,  nominees for
election as Directors and  beneficial  owners of its  securities is set forth in
the  Company's  definitive  proxy  statement  relating to the  Company's  Annual
Meeting of  Stockholders  to be held on or about  February 28,  2002.  The proxy
statement will be filed with the Securities and Exchange  Commission on or about
January 28, 2002, and such information is incorporated by reference.


Item 13. Exhibits and Reports on Form 8-K
-----------------------------------------

None


                                       8
<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/ Nicholas Nadolsky
                                                   -----------------------------
                                                   Nicholas Nadolsky, CEO
                                                   and Chairman of the Board
                                                   (Principal Executive Officer)


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





Dated:  01/15/2002



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 01/23/2002

/s/ Nicholas Nadolsky                                /s/ H. Kent Hearn
---------------------------                          ---------------------------
Nicholas Nadolsky, Director                          H. Kent Hearn, Director

/s/ James K. Murphey
---------------------------
James K. Murphey, Director


                                       9
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders' of
Micropac Industries, Inc.:

We have audited the accompanying balance sheets of Micropac Industries,  Inc. (a
Delaware  corporation)  as of  November  30,  2001  and  2000,  and the  related
statements of income,  shareholders'  equity,  and cash flows for the years then
ended.  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 auditing standards generally accepted
in the 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, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States.


                                                             ARTHUR ANDERSEN LLP

Dallas, Texas,
December 20, 2001


                                       10
<PAGE>


<PAGE>
<TABLE>
<CAPTION>



                            MICROPAC INDUSTRIES, INC.
                                 BALANCE SHEETS
                         AS OF NOVEMBER 30, 2001AND 2000
                         -------------------------------
                    (Dollars in thousands except share data)

                                 ASSETS                                              2001        2000
                                 ------                                             --------    --------
<S>                                                                                 <C>         <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                       $  1,294    $  1,249
    Short-term investments                                                             2,186       3,418
    Receivables, net of allowance for doubtful accounts
        of  $89 and $88 respectively                                                   1,740       1,901
    Inventories
        Raw materials and supplies                                                     1,045       1,123
        Work-in-process                                                                1,142       1,031
                                                                                    --------    --------
                  Total inventories                                                    2,187       2,154

    Deferred income taxes                                                                273         200
      Prepaid expenses and other assets                                                   83          37
                                                                                    --------    --------
                  Total current assets                                                 7,763       8,959

PROPERTY, PLANT, AND EQUIPMENT, at cost:
    Land                                                                                  80          80
    Buildings                                                                            498         498
    Facility improvements                                                                733         718
    Machinery and equipment                                                            4,884       4,738
    Furniture and fixtures                                                               389         380
    Construction in progress                                                            --             8
                                                                                    --------    --------
           Total property, plant, and equipment                                        6,584       6,422
    Less- accumulated depreciation                                                    (5,472)     (5,200)
                                                                                    --------    --------
        Net property, plant, and equipment                                             1,112       1,222
                                                                                    --------    --------

                  Total assets                                                      $  8,875    $ 10,181
                                                                                    ========    ========

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

CURRENT LIABILITIES:
    Accounts payable                                                                $    471    $    682
    Accrued compensation                                                                 271         246
    Accrued professional fees                                                             52          72
    Income taxes payable                                                                 129         101
        Property taxes                                                                  --            69
           Commissions payable                                                            46          42
        Other accrued liabilities                                                         72         178
                                                                                    --------    --------
                  Total current liabilities                                            1,041       1,390

DEFERRED INCOME TAXES                                                                     25          34
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY:
    Common stock, $.10 par value, authorized 10,000,000 shares, 3,627,151 issued,
        And 3,127,151 and 3,627,151 outstanding respectively                             363         363
    Paid-in capital                                                                      885         885
    Treasury stock, at cost, 500,000 and 0 shares outstanding, respectively           (1,250)       --
    Retained earnings                                                                  7,811       7,509
                                                                                    --------    --------
                  Total shareholders' equity                                           7,809       8,757
                                                                                    --------    --------

                  Total liabilities and shareholders' equity                        $  8,875    $ 10,181
                                                                                    ========    ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       11
<PAGE>
<TABLE>
<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                              STATEMENTS OF INCOME
                 FOR THE YEARS ENDED NOVEMBER 30, 2001 AND 2000
                    (Dollars in thousands except share data)



                                                               2001           2000
                                                           -----------    -----------
<S>                                                        <C>            <C>
NET SALES                                                  $    13,423    $    12,975

COSTS AND EXPENSES:
Cost of sales                                                    9,421          8,813
Research and development                                           357            503
Selling, general, and administrative expenses                    2,723
                                                           -----------    -----------
                                                                                2,502

                  Total costs and expenses                      12,501         11,818
                                                           -----------    -----------

OPERATING INCOME BEFORE INTEREST AND INCOME TAXES                  922          1,157

Interest income                                                    163            237
                                                           -----------    -----------

INCOME BEFORE INCOME TAXES                                       1,085          1,394

PROVISION (BENEFIT) FOR INCOME TAXES:
    Current                                                        502            502
    Deferred                                                       (82)            40
                                                           -----------    -----------

          Total provision for current and deferred taxes           420            542
                                                           -----------    -----------

NET INCOME                                                 $       665            852
                                                           ===========    ===========

BASIC AND DILUTED EARNINGS PER SHARE                       $       .21            .23
                                                           ===========    ===========

WEIGHTED AVERAGE NUMBER OF SHARES, basic and diluted         3,216,437      3,627,151
                                                           ===========    ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       12
<PAGE>
<TABLE>
<CAPTION>


                            MICROPAC INDUSTRIES, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED NOVEMBER 30, 2001 AND 2000
                             (Dollars in thousands)



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

BALANCE, November 30, 1999    $    363   $    885   $   --      $  6,657    $  7,905

    Net income                    --         --         --           852         852
                              --------   --------   --------    --------    --------

BALANCE, November 30, 2000         363        885       --         7,509       8,757

    Common stock repurchase       --         --         --        (1,250)     (1,250)
      Dividend                    --         --         --          (363)       (363)
    Net income                    --         --         --           665         665
                              --------   --------   --------    --------    --------

BALANCE, November 30, 2001    $    363   $    885   $ (1,250)   $  7,811    $  7,809
                              ========   ========   ========    ========    ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       13
<PAGE>
<TABLE>
<CAPTION>


                            MICROPAC INDUSTRIES, INC.
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED NOVEMBER 30, 2001 AND 2000
                             (Dollars in thousands)

                                                                         2001       2000
                                                                         -------    -------
<S>                                                                      <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                           $   665    $   852
    Adjustments to reconcile net income to
        net cash provided by operating activities-
           Depreciation and amortization                                     272        255
           Deferred tax provision (benefit)                                  (82)        40
           Changes in certain current assets and liabilities-
              Decrease (increase) in receivables, net                        161       (322)
              Increase in inventories                                        (33)      --
              Increase (decrease) in prepaid income taxes                   --          166
              (Increase) decrease in prepaid expenses and other assets       (46)        20
              (Decrease) increase in accounts payable                       (211)       317
              Increase in accrued compensation                                25         32
              Increase in income taxes payable                                28        101
              (Decrease) increase in all other accrued liabilities          (191)       104
                                                                         -------    -------

                  Net cash provided by operating activities                  588      1,565

CASH FLOWS FROM INVESTING ACTIVITIES:
    Changes in short-term investments                                      1,232       (485)
    Additions to property, plant, and equipment                             (162)      (333)
                                                                         -------    -------

                  Net cash provided by investing activities                1,070       (818)


CASH FLOWS FROM FINANCING ACTIVITIES:
    Common stock repurchase                                               (1,250)      --
     Dividends paid                                                         (363)      --
                                                                         -------    -------

           Net cash used in financing activities                          (1,613)      --


NET INCREASE IN CASH                                                          45        747

CASH AND CASH EQUIVALENTS, beginning of year                               1,249        502
                                                                         -------    -------

CASH AND CASH EQUIVALENTS, end of year                                   $ 1,294    $ 1,249
                                                                         =======    =======

SUPPLEMENTAL CASH FLOW DISCLOSURES:
        Cash paid for income taxes, net of refunds received              $   437    $   222
                                                                         =======    =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       14
<PAGE>


                            MICROPAC INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

                           NOVEMBER 30, 2001 AND 2000



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

Micropac Industries, Inc. (the "Company"), a Delaware corporation,  manufactures
and  distributes  various  types  of  hybrid  microcircuits  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 and medical devices.

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.

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, 2001 and 2000.  All highly
liquid  investments  with  maturities of 90 days or less are  classified as cash
equivalents.

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.

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

Deferred income taxes are recorded for temporary  differences  between financial
and tax reporting.

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  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. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed
of: "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."

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

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


                                       15
<PAGE>


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 2001 and 2000, 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.

Reclassifications
-----------------

Certain amounts have been reclassified to conform to current year presentation.

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

During fiscal 2001 the Company obtained an  uncollateralized  $3,000,000 line of
credit  agreement with a bank. The interest rate is equal to the prime rate less
1/4%.  The line of credit  expires on June 7, 2002. The Company has not utilized
any portion of the  available  facility.  The line of credit  requires  that the
Company maintain certain  financial  ratios.  The Company was in compliance with
these  covenants  during the 2001 fiscal year. On November 30, 2000, the Company
did not have a line of credit agreement with any banking institution.

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

The Company  leases a building from the Company's  chairman of the board.  A new
lease was signed on July 1, 1999, for a term of five (5) years, which expires on
June 30, 2004.  The lease was renewed under similar terms and  conditions as the
prior lease. Amounts paid under the lease agreement in 2001 approximated $37,000
and $36,000 in 2000.  Management believes that fees charged under this agreement
were negotiated at arms length and represent market rates.

5.   LEASE COMMITMENTS:
     ------------------

Rent  expenses in total for the years  ended  November  30, 2001 and 2000,  were
approximately  $42,000  for each  year.  Future  minimum  lease  payments  under
non-cancelable  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:

     2002                                                  $38,000
     2003                                                  $38,000
     2004                                                  $19,000
                                                           -------
                                          Total            $95,000

6.   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  $140,000  in 2001  and
$131,000 in 2000. Employees become vested in Company  contributions at 20% after
three years, 40% after four years, 60% after five years, 80% after six years and
100% after seven 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.


                                       16
<PAGE>
<TABLE>
<CAPTION>


7.   INCOME TAXES:
     -------------

The Company  accounts for its income  taxes  according to Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes."

The income tax provision consisted of the following for the years ended November
30:

                                                   2001         2000
                                                  --------    --------
     Current Provision -
         Federal                                  $442,000    $406,000
         State                                      60,000      96,000
                                                  --------    --------
                                                   502,000     502,000
     Deferred (Benefit) Provision -

         Federal                                   (82,000)     40,000
                                                  --------    --------

                  Total                           $420,000    $542,000
                                                  ========    ========


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

                                                   2001        2000
                                                  --------    --------
     Tax at 34% statutory rate                    $369,000    $474,000
     State income taxes, net of federal benefit     39,600      63,000
     Other                                          11,400       5,000
                                                  --------    --------

              Income tax provision                $420,000    $542,000
                                                  ========    ========


The  components  and  changes in  deferred  tax assets and  liabilities  were as
follows:

                                                          November 30,      Deferred      November 30,
                                                              2001          (Benefit)          2000
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
        Current Deferred Taxes
             Allowance for doubtful accounts              $     33,000    $       --      $     33,000
             Inventory                                         179,000         (42,000)        137,000
             Accrued liabilities and other                      61,000         (31,000)         30,000
                                                          ------------    ------------    ------------

                 Net current deferred tax asset           $    273,000    $    (73,000)   $    200,000
                                                                          =   ========    =   ========

        Non-current Deferred Taxes

             Depreciation and other                       $     25,000    $     (9,000)   $     34,000
                                                          ------------    ------------    ------------

                 Net non-current deferred tax liability   $     25,000    $     (9,000)   $     34,000
                                                          ============    ------------    ============

     Deferred tax benefit                                                 $    (82,000)
                                                                          ============
</TABLE>


                                       17
<PAGE>


8.   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 66% of total sales in 2001and
62% of total sales in 2000.  During  2001,  the Company had two  customers  that
accounted  for  14% and 10%  respectively  of the  Company's  annual  sales.  In
comparison,   the  Company  had  two  customers  in  2000  that   accounted  for
approximately 28% and 15% respectively of the Company's annual sales.

9.   SHAREHOLDERS' EQUITY:
     ---------------------

On November 30, 2001, there were approximately 585 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.

On January  10,  2001,  the  Company's  board of  directors  approved a dividend
declaration  of $0.10 per share for  shareholders  of record as of  February  1,
2001. The dividend was paid to shareholders on February 20, 2001.

On January 15, 2001, the Company's board of directors approved the repurchase of
500,000 shares of common stock from a major  shareholder  and senior  management
person  within  the  Company.  The  repurchase  price was based  primarily  on a
valuation of the Company by an outside  consulting  firm. The agreed to price of
$2.50 per share was paid on February 5, 2001.

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


                                       18
<PAGE>


                             DIRECTORS AND OFFICERS
                                NOVEMBER 30, 2001






                                NICHOLAS NADOLSKY
                           Chief Executive Officer and
                              Chairman of the Board


                               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.


                                   CONNIE WOOD
                      President and Chief Operating Officer






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



                                       19