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, 1998

      ( )   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: $11,556,000

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 3,627,151 as of November 30, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE

None


                                       -1-
<PAGE>


                                     PART I

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

Micropac Industries,  Inc. (the "Company")  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 and computers and medical devices.

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  accounted  for  approximately  50% of the Company's
sales for the fiscal years ended November 30, 1998 and 1997; standard components
accounted  for  approximately  50% of the  Company's  sales for the fiscal years
ended November 30, 1998 and 1997.

In 1998,  the  Company's  investment  in  technology,  which was  expensed,  was
approximately  $713,000 ($755,000 in 1997). The Company's research & 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 Micropac's
space level and other high reliability programs.

The Company's products are marketed  throughout the United States and in Western
Europe.  Approximately  10% of the sales for fiscal year 1998 (10% in 1997) 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.  Domestic sales are made both by the Company's sales personnel
and by independent manufacturers' representatives.

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 80% of the Company's fiscal net sales in 1998 compared to 67.5% in
1997.

During 1998, no customer  accounted for more than 10% of the Company's sales. In
1997 two customers accounted for 14.9% and 10.3%,  respectively of the Company's
total sales.

At November  30,  1998,  the Company had a backlog of unfilled  orders  totaling
approximately  $5,212,000  compared to approximately  $7,062,000 at November 30,
1997. Of the November 30, 1998, backlog, approximately 88% of the orders are for
defense or space related programs. The Company expects to complete and ship most
of its November 30, 1998 backlog during fiscal 1999.

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.   However,   management  believes  the  Company's
competitive position to be favorable.

The Company's  sales are not seasonal and operations are not adversely  affected
by federal, state, or local environmental protection regulations.

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.  Except for
certain  optoelectronic  products,  the Company does not  manufacture  the basic
parts or materials  used in its  products.  The parts and raw  materials for the
Company's  products are available from numerous  suppliers.  The Company has not
experienced,  and does not expect to experience,  any  significant  shortages in
parts or raw materials.



                                      -2-


<PAGE>


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, and the stock is publicly
held by 608 shareholders as of November 30, 1998.

At November 30, 1998, the Company had 128 full-time  employees  (compared to 165
at November 30, 1997), of which 28 were executive and managerial  employees,  29
were   engineers   and   quality-control   personnel,   21  were   clerical  and
administrative  employees,  and  50  were  production  personnel.  None  of  the
Company's employees were covered by collective bargaining agreements.

The Year 2000 Issue  exists  because  many  computer  systems  and  applications
currently  use  two-digit  date fields to designate a year.  As the century date
occurs,  date-sensitive  systems will  recognize the Year 2000 as 1900 or not at
all. This  inability to recognize or properly  treat the Year 2000 may cause our
systems to process critical financial and operational  information  incorrectly.
The Company has assessed the impact of the Year 2000 Issue on its  reporting and
operations systems and has instituted corrective actions to correct the possible
problems.  The Company has updated its commercial  software to be Y2K compliant,
reprogrammed  internally generated programs used for job cost and operations and
is the process of updating  its  hardware  needs.  Testing of the  software  and
hardware  is in process.  All aspects  under the  Company's  direct  control are
anticipated  to be  completed by June 30,  1999.  It is  estimated  that the Y2K
problem will cost the Company  between  $30,000 to $40,000.  This estimated cost
includes  personnel  time,  materials,  hardware  and software  upgrades.  As of
November  30,  1998,  it is  estimated  that the  Company is  approximately  70%
complete  with the Y2K  compliance  and  expects  to be  finished  by June 1999.
Vendors have been contacted to assess their  capability to furnish raw materials
and/or  services to the Company in a timely manner.  A possible  exposure to the
Company is the ability to receive raw  materials in a timely  manner to keep our
production lines moving efficiently. This could cause some product to be delayed
in  shipment,  but the Company does not  anticipate  significant  exposure.  The
contingency  plan to address this exposure is to make sure that we have multipal
vendors for raw material  needed to finish the Company's  product.  This will be
managed by the responses  received from the vendors to the Y2K questionaire sent
out by the Company.

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

No material pending legal proceedings.

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

No matter was  submitted  for a vote by the  Company's  shareholders  during the
quarter ended November 30, 1998.

                                     PART II

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

On November 30, 1998, there were approximately 608 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 Company has never paid dividends on its common stock and does not anticipate
paying dividends in the foreseeable  future.  The Company  presently  intends to
reinvest  any  earnings  for  use  in  the   development  of  new  products  and
technologies for future growth and in order to remain competitive.




                                      -3-

<PAGE>


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

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

Although  the  Company  has  an  established  line  of  credit  with  a  banking
institution  in the amount of $3,000,000 for operating  activities,  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 .

Accounts receivable net, decreased by approximately ($890,000) during 1998. Days
sales in receivables  were  approximately 53 days in 1998 compared to 56 days in
1997.

The Company,  as of November 30, 1998, has approximately  $1.900,000 invested in
short-term and long-term (one year or less) certificates of deposit, compared to
$1,543,000 on November 30, 1997.

The  Company's  management  believes it will meet its 1999 capital  requirements
through  existing  cash and  short-term  and long-term  investments,  internally
generated funds, and the renewal of the line of credit in 1999 if needed.  There
were  no  significant   outstanding   commitments  for  equipment  purchases  or
improvements at November 30, 1998.

Results of Operations 1998 vs. 1997
-----------------------------------

Sales in 1998 were approximately  $11,556,000, a decrease of (21.5%) compared to
1997 sales.  Sales were affected by the downturn in the Asian economy and by the
government's "commercial off the shelf " initiative. Sales are anticipated to be
relatively stable for 1999.

Cost of sales, as a percentage of net sales, was 74.6% in 1998 compared to 72.9%
in 1997.  The increase is due to changes in product mix and  increased  research
and development as a percentage of net sales.  Research and development  expense
totaled  $713,000 in 1998 compared to $755,000 in 1997. Most of the research and
development  expense was concentrated on Solid State Thermostat  Controllers,  a
Quad Relay and development of the new 2N2222 and 2N2907 Small Signal Transistors
and certain process improvements.

Selling,  general, and administrative  expenses decreased approximately $294,000
due primarily to (1) reduced  commissions  related to lower revenues,  (2) lower
general  and   administrative   and  inside  sales   expenses  and  (3)  reduced
international travel expense. Selling, general, and administrative expenses were
20.1% of net sales in 1998 compared to 17.8% in 1997.

Earnings before taxes for fiscal 1998 were  approximately  $698,000,  or 6.0% of
net sales, compared to $1,405,000, or 9.5% of net sales in fiscal 1997.

Net earnings were approximately  $445,000 or $.12 per share, in 1998 versus 1997
net earnings of $917,000,  or $.25 per share. Net earnings were affected largely
by reduced  sales for the year and the timing in the  reduction  of overheads to
match the reduction in sales.

The Company's backlog at the end of 1998 was approximately  $5,212,000  compared
to approximately  $7,062,000 at November 30, 1997. The backlog  decreased due to
completion  of certain major  contracts  received in prior years and lack of new
orders.  The lack of new  orders  is  attributed  to the down  turn in the Asian
economy and reduced demand for some of the Company's  standard military products
and high temperature industrial products.

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.



                                      -4-

<PAGE>


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

The  financial  statements  listed  below  appear  on pages 6  through 9 of this
Report.  The Company is not required to furnish the Supplementary  Data required
by Item 302 of Regulation S-K.

       Page No.
       --------

           6               Report of Independent Public Accountants

           7               Balance Sheets as of
                           November 30, 1998 and 1997

           8               Statements of Income for the years ended November 30,
                           1998 and 1997

           9               Statements  of  Shareholders'  Equity  for the  years
                           ended November 30, 1998 and 1997

          10               Statements of Cash Flows for the years ended November
                           30, 1998 and 1997

        11 - 14            Notes to Financial Statements for the years ended
                           November 30, 1998 and 1997

          19               Signatures



















                                      -5-



<PAGE>




                               ARTHUR ANDERSEN LLP









                    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,  1998  and  1997,  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  generally   accepted  auditing
standards.  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, 1998 and 1997, and the results of its operations and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.




                                             ARTHUR ANDERSEN LLP




Dallas, Texas,
December 23, 1998






                                      -6-



<PAGE>

<TABLE>

                            MICROPAC INDUSTRIES, INC.

                                 BALANCE SHEETS

                        AS OF NOVEMBER 30, 1998 AND 1997
                        --------------------------------
                 (Dollars in thousands except per share amounts)

                         ASSETS                                     1998       1997  
                         ------                                   -------    -------
<S>                                                               <C>        <C>

CURRENT ASSETS:
    Cash and cash equivalents                                     $   420    $   106
    Short-term investments                                          1,934      1,543
    Receivables, net of allowance for doubtful accounts
        of $104 in 1998 and $94 in 1997                             1,522      2,412
    Inventories, net:
        Raw materials and supplies                                  1,795      1,560
        Work-in-process                                             1,090      1,148
                                                                  -------    -------

                  Total inventories                                 2,885      2,708

    Deferred income taxes                                             301        302
    Prepaid expenses and other current assets                          75         63
                                                                  -------    -------

                  Total current assets                              7,137      7,134

PROPERTY, PLANT, AND EQUIPMENT, at cost:
    Land                                                               80         80
    Buildings                                                         498        498
    Facility improvements                                             690        695
    Machinery and equipment                                         4,434      4,335
    Furniture and fixtures                                            349        380
                                                                  -------    -------

                  Total property, plant, and equipment              6,051      5,988

    Less- Accumulated depreciation                                 (4,812)    (4,664)
                                                                  -------    -------

    Net property, plant, and equipment                              1,239      1,324
                                                                  -------    -------

                  Total assets                                    $ 8,376    $ 8,458
                                                                  =======    =======

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

CURRENT LIABILITIES:
    Accounts payable                                              $   316    $   807
    Accrued payroll                                                   332
                                                                                 342
    Accrued professional fees                                          54         65
    Income tax payable                                                185        110
    Other accrued liabilities                                         184        226
                                                                  -------    -------

                  Total current liabilities                         1,071      1,550
                                                                  -------    -------

DEFERRED INCOME TAXES                                                  43         91

COMMITMENTS AND CONTINGENCIES (Note 4)

SHAREHOLDERS' EQUITY:
    Common stock, $.10 par value, authorized 10,000,000 shares,
        3,627,151 outstanding at November 30, 1998 and 1997           363        363
    Paid-in capital                                                   885
                                                                                 885
    Retained earnings                                               6,014      5,569
                                                                  -------    -------

                  Total shareholders' equity                        7,262      6,817
                                                                  -------    -------

                  Total liabilities and shareholders' equity      $ 8,376    $ 8,458
                                                                  =======    =======
</TABLE>

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

                                      -7-
<PAGE>

<TABLE>

<CAPTION>

                            MICROPAC INDUSTRIES, INC.


                              STATEMENTS OF INCOME

                 FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997
                 ----------------------------------------------
                 (Dollars in thousands except per share amounts)



                                                                        1998           1997     
                                                                   -----------    -----------
<S>                                                                <C>            <C>   

NET SALES                                                          $    11,556    $    14,722

COSTS AND EXPENSES:
    Cost of sales                                                        8,619         10,736
    Selling, general, and administrative expenses                        2,327          2,621
    Interest income                                                        (88)           (40)
                                                                   -----------    -----------

                  Total costs and expenses                              10,858         13,317
                                                                   -----------    -----------

INCOME BEFORE INCOME TAXES                                                 698          1,405

PROVISION (BENEFIT) FOR INCOME TAXES:
    Current                                                                300            525
    Deferred                                                               (47)           (37)
                                                                   -----------    -----------

                  Total provision for current and deferred taxes           253            488
                                                                   -----------    -----------

NET INCOME                                                         $       445    $       917
                                                                   ===========    ===========

EARNINGS PER SHARE                                                 $       .12    $       .25
                                                                   ===========    ===========

WEIGHTED AVERAGE NUMBER OF SHARES                                    3,627,151      3,627,151
                                                                   ===========    ===========



</TABLE>












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



                                      -8-

<PAGE>


                            MICROPAC INDUSTRIES, INC.
                            -------------------------

                       STATEMENTS OF SHAREHOLDERS' EQUITY
                       ----------------------------------

                 FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997
                 ----------------------------------------------
                             (Dollars in thousands)



                                              Common  Paid-in  Retained
                                              Stock   Capital  Earnings  Total  
                                             -------  -------  -------- ------


BALANCE, November 30, 1996                   $  363   $  885   $4,652   $5,900

    Net income for 1997                          --       --      917      917
                                             ------   ------   ------   ------
BALANCE, November 30, 1997                      363      885    5,569    6,817

    Net income for 1998                          --       --      445      445
                                             ------   ------   ------   ------

BALANCE, November 30, 1998                   $  363   $  885   $6,014   $7,262
                                             ======   ======   ======   ======


















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




                                      -9-

<PAGE>

<TABLE>

<CAPTION>

                            MICROPAC INDUSTRIES, INC.
                            -------------------------

                            STATEMENTS OF CASH FLOWS
                            ------------------------

                 FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997
                 ----------------------------------------------
                             (Dollars in thousands)

                                                                          1998       1997  
                                                                        -------    -------
<S>                                                                     <C>        <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                          $   445    $   917
    Adjustments to reconcile net income to
        net cash provided by operating activities:
           Depreciation and amortization                                    148        150
           Deferred tax benefit                                             (47)       (37)
           Changes in certain current assets and current liabilities:
              Decrease (increase) in receivables, net                       890        (39)
              Decrease (increase) in inventories, net                      (177)     1,063
              Increase in prepaid expenses and other assets                 (12)       (27)
              Decrease in accounts payable and accrued liabilities         (479)      (464)
                                                                        -------    -------

                  Total adjustments                                         323        646
                                                                        -------    -------

                  Net cash provided by operating activities                 768      1,563
                                                                        -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Changes in short-term investments                                      (391)    (1,239)
    Additions to property, plant, and equipment, net                        (63)      (218)
                                                                        -------    -------

                  Net cash used in investing activities                    (454)    (1,457)
                                                                        -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES                                       --         --   
                                                                        -------    -------

NET INCREASE IN CASH                                                        314        106
                                                                        -------    -------

CASH AND CASH EQUIVALENTS, beginning of year                                106       --   
                                                                        -------    -------

CASH AND CASH EQUIVALENTS, end of year                                  $   420    $   106
                                                                        =======    =======

SUPPLEMENTAL CASH FLOW DISCLOSURES:
    Cash paid for interest                                              $  --      $  --   
                                                                        =======    =======
    Cash paid for income taxes, net of refunds received                 $   230    $   654
                                                                        =======    =======

</TABLE>







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



                                      -10-



<PAGE>


                            MICROPAC INDUSTRIES, INC.
                            -------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                 FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997
                 ----------------------------------------------


1.   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 original
       maturities  greater  than 90 days.  These  investments  are  reported  at
       historical cost which  approximates  fair market value as of November 30,
       1998 and 1997.

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
                  Furniture and fixtures..............................5-8
                  Machinery and equipment............................5-10

        During the year ended November 30, 1997, the Company  adopted  Statement
        of Financial  Accounting Standards No. 121 ("SFAS 121") -"Accounting for
        the  Impairment  of Long Lived  Assets and for  Long-Lived  Assets to be
        Disposed Of." This pronouncement is effective for fiscal years beginning
        after  December  15,  1995,  and  requires  the Company to evaluate  its
        long-term assets against certain impairment indicators.

        Adoption of this  statement  had no material  impact on the current year
        financial statements.

Basic Earnings Per Share -
        Basic  Earnings per share are computed  based upon the weighted  average
        number of shares outstanding during the year.




                                      -11-

<PAGE>


The Company was required to adopt  Statement of Financial  Accounting  Standards
No. 128 ("SFAS  No.  128")  "Earnings  Per Share" in fiscal  1998.  SFAS No. 128
established  standards for computing and presenting earnings per share (EPS) and
applies to entities with  publicly held common stock or potential  common stock.
SFAS NO. 128 replaces the  presentation  of primary EPS with a  presentation  of
basic EPS. It also  requires dual  presentation  of basic and diluted EPS on the
face of the income  statement for all entities with complex  capital  structures
and requires a reconciliation  of the numerator and denominator of the basic EPS
computation  to the numerator and  denominator  of the diluted EPS  computation.
Adoption of this statement had no impact on the Company's  fiscal 1998 financial
statements.

Use of Estimates -
        The  preparation  of financial  statements  in  conformity  with general
        accepted accounting principles 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.

2.   NOTES PAYABLE TO BANKS:
     ----------------------

During fiscal 1998 the Company entered into a new line of credit  agreement with
a bank which provides a $3 million line of credit. The interest rate is equal to
the prime rate less 1/4%,  which at November  30, 1998,  was 7.75%.  The line of
credit expires  September 6, 1999. As of November 30, 1998,  there were no loans
outstanding under the line of credit  agreement.  During fiscal 1997 the Company
had a line of credit  agreement  with a bank which provided a $2 million line of
credit.  The  interest  rate was equal to the prime rate,  which at November 30,
1997,  was 8.5%.  The line of credit  expired March 31, 1998. As of November 30,
1997, there were no loans outstanding under the line of credit agreement.

3.   RELATED PARTIES:
     ---------------

The Company leases a building from the Company's  President;  such lease expires
on  December  31,  1999,  at which time it is  anticipated  to be renewed  under
similar terms and conditions.  Amounts paid under this lease were  approximately
$34,000 in 1998 and in 1997.

4.   LEASE COMMITMENTS:
     -----------------

Rent expense for the years ended November 30, 1998 and 1997,  was  approximately
$39,000 for both years.

Future minimum lease payments under  noncancelable  operating  leases for office
and  manufacturing  space  with  remaining  terms  in  excess  of one  year  are
approximately:

                  1999                                       $35,000
                  2000                                       $ 2,900

5.   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  $43,000  in  1998  and
$139,000  in 1997.  Employees  become  vested at 20% after  three years and 100%
after seven years.  The Company  matches 100% of the  employee  contribution  in
anticipation that the employee will be with the Company the full 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.

6.   INCOME TAXES:
     ------------



                                      -12-


<PAGE>


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, 1998 and 1997:

                                                       1998             1997    
                                                     --------         --------
         Current Provision-

             Federal                                 $238,000         $443,000
             State                                     62,000           82,000
                                                     --------         --------
                                                      300,000          525,000
         Deferred Benefit-

             Federal                                  (47,000)         (37,000)
                                                     --------         --------

                      Total                          $253,000         $488,000
                                                     ========         ========


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

                                                       1998             1997    
                                                     --------         --------

         Tax at 34% statutory rate                   $238,000         $478,000
         State income taxes, net of federal benefit    41,000           54,000
         Other                                        (26,000)         (44,000)
                                                     --------         --------

                  Income tax provision               $253,000         $488,000
                                                     ========         ========












                                      -13-


<PAGE>


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

<TABLE>

                                                          Deferred
                                                         (Provision)
                                       November 30, 1997  Benefit      November 30, 1998
                                       -----------------  ----------   -----------------
<S>                                        <C>            <C>             <C>

         Current Deferred Tax Assets-

     Allowance for doubtful accounts       $ 35,000       $  4,000        $ 39,000
     Inventory                              148,000         22,000         170,000
     Accrued liabilities and other          119,000        (27,000)         92,000
                                           --------       --------        --------

         Net current deferred tax          $302,000       $ (1,000)       $301,000
                                           ========       ========        ========

Noncurrent Deferred Tax Liabilities-

     Depreciation and other                $ 91,000         48,000        $ 43,000
                                           --------       --------        --------

     Net noncurrent deferred tax           $ 91,000                       $ 43,000
                                           ========                       ========

      Deferred tax benefit                                $ 47,000
                                                          ========

</TABLE>

7.   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 these primary contractors for
defense and space related contracts accounted for 80% of total sales in 1998 and
67.5% of total sales in 1997. Customer credit is granted and maintained for both
United States and European customers by the Corporate  Accounting  Department in
Garland,  Texas.  During 1998,  the Company had no customers  that accounted for
more than 10% of the Company's annual sales.















                                      -14-


<PAGE>


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

None
                                    PART III

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

The following table contains  information  regarding the Company's directors who
are currently serving one-year terms:

<TABLE>

                                                         Position(s)            
Name                               Age                With the Company                   Director Since
----                               ---                ----------------                   --------------
<S>                                <C>              <C>                                  <C>    

Nicholas Nadolsky                  65                Chairman of the                     May 1974
                                                     Board, Chief Executive
                                                     Officer and Director

H. Kent Hearn                      63                Director                            February 1983


James K. Murphey                   55                Director                            March 1990


Heinz Werner-Hempel                70                Director                            February 1996


NICHOLAS  NADOLSKY  has  served as  Chairman  of the  Board and Chief  Executive
Officer of the Company since 1974.

H. KENT HEARN is employed as a  stockbroker  by Milkie  Ferguson.  Mr. Hearn was
formerly employed as a stockbroker by Harris Securities.

JAMES K.  MURPHEY is an  attorney  with the firm of Secore & Waller,  L.L.P.  in
Dallas,  Texas.  Prior to November 1996, Mr. Murphey was an attorney with Glast,
Phillips  & Murray,  P.C.  in Dallas  and prior to May 1993 Mr.  Murphey  was in
private practice of law in Dallas, Texas, and a member of the law firm McCauley,
Macdonald, Love & Devin.

Heinz-Werner   Hempel  is  Chief  Operating   Officer  of   Hanseatische   Waren
Handels-Gesellschaft MBH & CO. KG, Bremen, Germany.

The Board of Directors held 5 meetings during the year ended November 30, 1998.

The Board of Directors  functions as a committee as a whole,  and therefore does
not have a separate audit, nominating or compensation committees.

The following  table  contains  information  regarding  the Company's  executive
officers:

                                                         Position(s)                     Date of
Name                               Age                With the Company                  Employment
----                               ---                ----------------                  ---------- 

Nicholas Nadolsky                  65                 Chairman of the Board             May 1974
                                                      Chief Executive Officer

Connie Wood                        59                 Vice President                    February 1969

</TABLE>







                                      -15-

<PAGE>


None of the  individuals  named in the table other than Nicholas  Nadolsky holds
any  position  with the Company  pursuant to any  contractual  or other  special
arrangement.  There are no family  relationships  between  any of the  Company's
executive officers.

Mr.  Nadolsky has been employed as the Chairman of the Board and Chief Executive
Officer  since May 1974,  pursuant  to  employment  agreements  which  have been
periodically  amended and renewed.  The present  agreement  provides that if the
Company elects to terminate the employment agreement prior to March 1, 1999, for
reasons  other than Mr.  Nadolsky's  inability or  unwillingness  to perform his
obligations,  the  Company  is  obligated  to pay Mr.  Nadolsky  his  salary for
eighteen (18) months after the date of termination.

Connie J. Wood joined the Company in February 1969 as Secretary to the President
and  Manager of  Personnel.  Mrs.  Wood  became  Product  Line  Manager  for the
Company's  Optoelectronics  Product Line in August 1981 and was promoted to Vice
President in August 1984.

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

In July 1984,  the Company  adopted an Employees  Profit  Sharing Plan and Trust
(the "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, or up to the maximum allowed by
the Internal Revenue Code Section 401(k).  The Company  currently  matches their
contributions up to a maximum of 6% of their total compensation. A participant's
benefits  vest to the extent of 20% after three  years of  eligible  service and
become fully vested at the end of seven years.

During the fiscal year ended November 30, 1998,  the Company made  contributions
to the Plan for Mr.  Nadolsky  in the  amount of $9,600  and to Ms.  Wood in the
amount of $6,613.


The following table shows all cash  compensation  paid to, or accrued and vested
for,  the  account of Mr.  Nicholas  Nadolsky,  Chairman  of the Board and Chief
Executive Officer, and Connie Wood, Vice President.

<TABLE>

     Name                           Capacities in                                                      Insurance and
of Individual                       Which Served                Year               Salaries              401(k) Plan
--------------                      ------------               -----          ----------------          -----------
<S>                                 <C>                          <C>              <C>                     <C>

Nicholas Nadolsky (1) (2)           Chairman of the
                                    Board/CEO                    1998             $312,026                $9,600
                                                                 1997              305,936                 9,500
                                                                 1996              299,924                 9,069
                                                                 1995              290,639                 9,470

Connie Wood                         Vice President               1998             $113,654                $6,613
                                                                 1997              109,000                 6,540
                                                                 1996              102,427                 5,748

</TABLE>


(1)    In accordance  with the terms of the  employment  agreement,  the Company
       paid Mr. Nadolsky a salary of $312,026 during the fiscal year ended 1998.

(2)    Directors receive a fee of $500 for each board meeting they attend.  Five
       (5) board meetings were held in the 1998 fiscal year.




                                      -16-


<PAGE>


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

The following  table shows the number and  percentage of shares of the Company's
common stock  beneficially  owned as of November  30,  1998:  (a) by each person
known by the Company to own 5% or more of the outstanding  common stock,  (b) by
each director, and (c) by all officers and directors as a group.

<TABLE>

          Name and Address                  Number of Shares    
            of Beneficial                     Beneficially               Percent of
                Owner                          Owned (1)                  Class (2)     
        ---------------------------       --------------------       -------------------
<S>     <C>                                       <C>                    <C>     

        Heinz-Werner Hempel (3)                   1,952,577                      53.8%
        Hanseatische Waren-
        Gesellschaft MBH & Co., KG
        AM Wall 127
        28195 Bremen
        Federal Republic of Germany

        Nicholas Nadolsky (3)                     1,048,836                      28.9%
        1322 Briar Hollow
        Garland, Texas  75042

        H. Kent Hearn (3)                             3,500              Less than .1%
        1907 Briar Hollow
        Garland, Texas  75043

        All officers and                          3,010,913                      83.0%
        directors as a group
        (5 persons)

</TABLE>

(1)      Except as indicated in Item 12, all shares are owned directly,  and the
         Company's  management  believes  that each record owner has sole voting
         and investment power.

(2)      Calculated on the basis of the 3,627,151  outstanding shares. There are
         no options, warrants or convertible securities outstanding.

(3)      A director of the Company.  Nicholas Nadolsky,  Heinz-Werner Hempel, H.
         Kent Hearn and James K. Murphey are  existing  directors of the Company
         and each has been nominated for re-election at the annual  shareholders
         meeting to be held February 25, 1999.

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

Since  1980,  the  Company  has  leased a 4,800  square-foot  building  from Mr.
Nadolsky which is used primarily for  manufacturing.  Effective January 1, 1995,
the Company elected to extend the term of this lease for a five-year period. The
renewal  option  allows for an increase  based on changes in the consumer  price
index  using 1994 as a base year.  The rental paid to Mr.  Nadolsky  pursuant to
this lease was  approximately  $34,875  for the fiscal year ended  November  30,
1998.











                                      -17-


<PAGE>


Effective June 26, 1989, Mr. Nadolsky and the majority  stockholder entered into
a shareholders' agreement whereby they agreed that their shares of the Company's
common stock would be jointly  voted.  This agreement  further  provides that if
either party  receives an offer to purchase his shares of stock,  neither  party
will sell such stock unless both agree that such sale is in the best interest of
the Company; if they do not agree, neither of them shall sell such stock. Either
party  also has the  right to give  each  other  the  option  to  terminate  the
agreement by offering to purchase the other's shares.

The  shares  owned  by Mr.  Nadolsky  and Mr.  Hempel  constitute  82.7%  of the
Company's stock as of November 30, 1998.

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

(a) The following financial statements of the Company are included in Item 7.

                Report of Independent Public Accountants

                Balance Sheets as of November 30, 1998 and 1997.

                Statements  of Income for the years ended  November 30, 1998 and
                1997.

                Statements of Shareholders'  Equity for the years ended November
                30, 1998 and 1997.

                Statements  of Cash Flows for the years ended  November 30, 1998
                and 1997.

                Notes to Financial  Statements  for the years ended November 30,
                1998 and 1997.

(b) The Company did not file any current  reports on Form 8-K during the quarter
ended November 30, 1998.
















                                      -18-


<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, President
                                                 and Chairman of the Board
                                                 (Principal Executive Officer)



                                           By:   /S/ Dave E. Hendon
                                                 ----------------------------- 
                                                 Dave Hendon, Controller and
                                                 Principal Accounting Officer
Dated:  01/11/99






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 ______________, 1999.


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







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













                                      -19-