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 United States Securities and Exchange Commission

 WASHINGTON, D.C.20549

 FORM 10-K

 x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 For the fiscal year ended November 30, 2023

 Or

 Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 For the transition period from ___________to ___________

 Commission file number 000-5109

 Micropac Industries, Inc.

 (Exact name of registrant as specified in charter)

 Delaware

 75-1225149

 (State or other jurisdiction of incorporation or organization)

 (I.R.S. Employer Identification No.)

 1655 State Highway 66, Garland, TX

 75040

 972 / 272-3571

 (Address of principal executive offices)

 (Zip Code)

 (Telephone No.)

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, $0.10 par value per share

 MPAD

 NONE

 Securities registered pursuant to Section 12(g)
of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No x

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No x

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 No

 Indicate by
check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and
"emerging growth company" in Rule 12b-2 of the Exchange Act. and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller
 reporting company x

 Emerging
growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No x

 If securities
are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the fi ling reflect the correction of an error to previously issued financial statements.

 Indicate by
check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant as of May 27, 2023, representing the last business day of the registrant's most recently
completed second fiscal quarter, was approximately $ 7,304,856, The number of shares of the registrant's common stock, $0.10 par
value, outstanding as of February 7, 2024, was 2,578,315.

 DOCUMENTS INCORPORATED BY REFERENCE

 The definitive proxy statement to be filed with
the Securities and Exchange Commission relating to the registrant's Annual Meeting of Shareholders, to be held March 8, 2024, is
incorporated by reference in Part III to the extent described therein.

 Page

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosure

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits, Financial Statement Schedules

 Item 16.

 Form 10K Summary

 Signatures

 Item 1.
 Business

 GENERAL

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

 The Company's facilities are certified and
qualified by the Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level) and MIL-PRF-19500 JANS (space level) and are certified
to ISO 9001:2015 and AS 9100D. Micropac is a National Aeronautics and Space Administration (NASA) core supplier and is registered to AS9100-Aerospace
Industry standard for supplier certification. The Company has Underwriters Laboratories (UL) approval on our industrial power controllers.

 The Company's core technologies are microelectronic
and optoelectronic designs to include the packaging and interconnecting of multi-chip microelectronics modules. Other technologies include
light emitting and light sensitive materials and products, including light emitting diodes and silicon phototransistors, and electronic
integration used in the Company's optoelectronic components and assemblies.

 The Company was started in 1963 as a sole proprietorship.
On March 3, 1969, the Company was incorporated under the name of "Micropac Industries, Inc." in the state of Delaware. The
stock was publicly held by 434 shareholders on November 30, 2023.

 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. Custom-designed components and assemblies accounted for approximately 25% of the Company's sales for the fiscal year
ended November 30, 2023, and were 29% for fiscal 2022. Standard components and assemblies accounted for approximately 75% of the Company's
sales for the fiscal year ended November 30, 2023, and were 71% for fiscal 2022.

 The Company provides microelectronics, sensors
and displays, and optoelectronics products, to include components and assemblies that offer a wide range of products sold to the industrial,
medical, military, aerospace and space markets.

 The microelectronic technologies, including custom
microcircuits, solid state relays, power operational amplifiers, and regulators accounted for 29% of the Company's business in 2023
compared to 29% in 2022. Sensors and displays accounted for 44% of the Company's business and the optocouplers product accounted
for 27% of the Company's business in 2023, compared to 43% and 28% in 2022, respectively.

 The Company's basic products and technologies
include:

 Custom design hybrid microelectronic circuits

 Solid state relays and power controllers

 Custom optoelectronic assemblies and components

 Optocouplers

 Light-emitting diodes

 Hall-Effect sensors

 Displays

 Fiber optic components and assemblies

 Power distribution electronics

 Radiation tolerant electronics

 Micropac's products are primarily sold to original equipment
manufacturers (OEM's) who serve the following major markets:

 Military/Aerospace – aircraft instrumentation, guidance and navigation
systems, control circuitry, power supplies, laser positioning

 Medical – optoelectronic sensors and electronics

 Space – control circuitry, power monitoring and sensing

 Industrial – power control equipment and robotics

 The Company has two patents.
 On July 11, 2017, the Company received its patent for the "Power Controller", which
expires on July 10, 2031. On January 6, 2018, the Company received its patent for the "Voltage bus protection and isolation devices",
which expires on January 5, 2032.

 The Company has no licenses, franchises, or labor
contracts. The Company's has two trademarks registered with the U.S. Patent and Trademark Office.

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

 Five of the Company's principal product
families require government approval. Further, a significant portion of our business is military and is dependent on maintaining our facility
certifications to MIL-PRF-38534 and MIL-PRF-19500. In addition, several customers require the Company maintain AS 9100 certifications.
We expect to maintain these certifications and qualifications; however, the loss of any of these certifications would have a significant
negative impact on our business.

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

 In 2023, the Company's investment in technology
through research and development, which was expensed, totaled approximately $2,224,000 ($2,191,000 in 2022). The Company's research
and development expenditures were directed primarily toward standard proprietary microelectronic products, including industrial power
controllers and DC-DC converters, fiber optic transceivers, high voltage optocouplers and continued product development and improvement
associated with the Company's space level and other high reliability products.

 In addition to the Company's investment
in research and development, various customers paid the Company approximately $3,687,000 in non-recurring engineering revenue with $2,522,000
recorded within cost of goods sold associated with the development of custom products for specific applications.

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

 CUSTOMERS

 The Company's products are marketed throughout
the United States and in Western Europe, through a direct technical sales staff, independent representatives, and independent stocking
distributors. Approximately 6% of the sales for fiscal year 2023 (4% in 2022) 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.

 Sales through the Company's distribution
channels were $10,070,000 in 2023 compared to $10,330,000 in 2022, or 33% and 37% of sales, respectively.

 The Company's major customers include contractors
to the United States government. Sales to these customers for the Department of Defense (DOD) and NASA contracts accounted for approximately
74% of the Company's revenues in 2023 compared to 77% in 2022.

 The Company's major customers are Lockheed
Martin, Northrop Grumman, United Technologies, BAE, and Boeing. Two customers accounted for 14% and 10% of the Company's sales during
2023 and two customers accounted for 18% and 10% of the Company's sales during 2022.

 BACKLOG

 At November 30, 2023, the Company had a backlog
of unfilled orders totaling approximately $36,370,000 compared to approximately $32,686,000 at November 30, 2022.

 New orders for 2023 totaled $34,015,000 compared
to $27,961,000 for 2022.

 The backlog represents a good mix of the company's
products and technologies with 6% in the commercial market, 4% in the medical market, 83% in the military market, and 7% in the space
market on November 30, 2023.

 2023 Current Backlog by Major Market

 Military

 Space

 Medical

 Commercial

 Total

 Domestic Direct

 $
 17,059

 $

 $
 1,522

 $
 1,130

 $
 20,006

 Domestic Distribution

 12,709

 1,956

 -

 15,337

 International

 -

 1,027

 $
 30,037

 $
 2,717

 $
 1,522

 $
 2,094

 $
 36,370

 2023 Current Backlog by Product Line

 Microelectronics

 $
 19,831

 Optoelectronics

 4,954

 Sensors and Displays

 11,585

 $
 36,370

 HUMAN CAPITAL

 Micropac Industries,
Inc., is committed to attracting and retaining the brightest and best talent. Therefore, investing, developing, and maintaining human
capital is critical to our success.

 We are committed to advancing
Diversity, Equity, and Inclusion (DE&I) across the entire Company and the future success of the Company relies on our ability to attract
and retain a diverse workforce. DE&I are and have long been, critical to our culture and our Company's success and our performance
depends on attracting, developing, motivating, and retaining a highly skilled workforce, including engineering, manufacturing, business
development and strategy and management.

 At November 30, 2023, the Company had 143 full-time
employees (compared to 147 at November 30, 2022), of which 14 were executive and managerial employees, 37 were engineers and quality-control
personnel, 17 were clerical and administrative employees, and 75 were production personnel. None of the Company's employees
are 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, veterans,
and handicapped individuals.

 Our values
are also integral to our commitment to long-term sustainability, with environmental, social and governance (ESG) across our Company. With
the construction of our new manufacturing center, discussed below, the Company has included in the design and construction significant
improvements in support of our commitment to ESG.

 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 is favorable with regard to our product reliability and integrity, past performance,
customer service and responsiveness, timely delivery and pricing; however, no assurance can be given that the Company can compete successfully
in the future.

 There are approximately 35 independent manufacturing
companies who are certified to supply microcircuits to MIL-PRF-38534 or supply semiconductors to MIL-PRF-19500, in addition to OEM's,
who manufacture hybrid microcircuits for their internal needs. Micropac may compete with all of these for hybrid microcircuit, power management
and optoelectronics business. Some of the Company's primary competitors are TTM Technologies, Cobham Advanced Electronic Solutions,
TT Electronics, and Infineon Technologies.

 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 and could result in loss of customers or sales. However, the Company has not been materially
affected by such shortages. 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. The Company's
delivery commitments to customers allow for adequate lead times for production of the products including lead time for order and receipt
from the supply chain.

 Some of the Company's primary suppliers
are NTK Technologies, W. L Gore, Hughes Circuits, Semi-Dice and TTI.

 Item 1A.
 Material Risk Factors

 This annual report on Form 10-K 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: our expectations regarding the potential impacts on our operations of the COVID-19 pandemic; our expectations regarding the potential
impacts on our supply chain and on our customers of the COVID-19 pandemic; overall changes in governmental spending for military and space
programs; 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.

 Concentration Related Risk Factors

 The Company is heavily dependent on a few major
customers

 The Company's major customers include contractors
to the United States government. Sales to these customers for DOD and NASA contracts accounted for approximately 74% of the Company's
revenues in 2023 compared to 77% in 2022. The Company's major customers are Lockheed Martin, Northrop Grumman, United Technologies,
BAE, and Boeing. Two customers accounted for 14% and 10% of the Company's sales during 2023 and two customers accounted for 18%
and 10% during 2022. The contracts of our customers with the United States government may be subject to renegotiation of profits or termination
of contracts or subcontracts at the election of the government, which in turn might materially affect the Company's sales. The loss
of any one of these customers or a significant reduction in their purchases would be likely to adversely affect our business.

 Financing Related Risk Factors

 We experience pricing pressures from customers
for reduction in selling prices

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

 The Company has potential warranty obligations

 The Company provides a one-year warranty from
the date of shipment to the original purchaser. The Company is obligated under this warranty to either replace or repair defective goods
or refund the purchase price paid by the buyer. An unexpected number of warranty claims could negatively impact the profitability of
the Company.

 Inflation and rising costs

 The cost to manufacture the Company's products
is influenced by the cost of raw materials and labor. The Company has recently experienced higher costs with increasing cost of labor
and cost of raw materials with inflation. The Company may, from time to time, offset these cost increases by increasing the prices of
its products on new contracts.

 Operations Related Risk Factors

 Fabrication efforts may not be successful

 The Company produces silicon phototransistors
and light-emitting diode die for use in certain military, standard and custom products. Fabrication efforts sometimes may not result in
successful results, limiting the availability of these components. Competitors offer commercial level alternatives, and our customers
may purchase our competitors' products if the Company is not able to manufacture the products using these technologies to meet the
customer demands.

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

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

 We must maintain the ability to enhance our
products and develop new products for the military, space or aerospace markets

 The Company's base products and technologies
generally have long life cycles. The Company's products are primarily used in military, space or aerospace applications, which also
have long life cycles. Our future success may, however, depend in part on our ability to enhance the functionality of our existing products
in a timely and cost-effective manner, our ability to continue close working relationships with major customers for the design of their
new products, and our ability to develop new products and technologies for existing and emerging markets. We must also continue to make
significant investments in research and development efforts in order to meet customer specifications for specially fabricated products.
We may not be able to retain or obtain engineers, or other technical support staff, to conduct our research and development efforts as
needed. There can be no assurance that the Company will be able to design, develop and market new products and technologies on a timely
and cost-effective basis. Failure to respond to our customers' requirements and to our competitors' progress in technological
changes could have a material adverse effect on the Company's business.

 Regulatory Related Risk Factors

 We are significantly affected by 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 in trade agreements
or taxes on imports or exports could adversely affect our operations or financial condition.

 Sales of our products internationally are subject
to government regulations, including export control regulations of the U.S. Department of State and Department of Commerce. Changes in
these regulations could adversely affect our business. Violation of these regulations by the Company could result in monetary penalties
and denial of export privileges.

 The Company is subject to the Foreign Corrupt
Practices Act (FCPA), which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials
for the purpose of obtaining or retaining business. Any violation of the FCPA or similar laws and regulations could result in significant
expenses, divert management attention, have a material adverse effect on our business, our financial condition and our results of operations
and otherwise have a negative impact on the Company and its reputation.

 Reductions or changes in U.S. government spending

 The loss or significant reduction of a U.S. government
or NASA program in which our major customers participate could adversely affect our business. U.S. government contracts generally are
conditioned on the continuing availability of Congressional appropriations. Congress usually appropriates funds for on-going programs
on a fiscal year basis even though contract performance may extend over many years. At the beginning of a major program, the contract
is often only partially funded, and additional monies are committed only as Congress makes appropriations in future fiscal years. In addition,
most U.S. government contracts are subject to modification if funding is changed. Key programs in which our customers participate must
compete with other programs for consideration during the federal budgeting and appropriation process, and support and funding for any
U.S. government program may be influenced by general economic conditions, political considerations, and other factors. A decline in support
and funding for programs in which our customers participate could result in contract terminations, delays in contract awards, failure
to extend contracts, cancellation of planned procurements and fewer new business opportunities for our customers. Our business may be
adversely affected as a result of changes or reductions in U.S. government or NASA spending.

 Market Related Risk Factors

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

 Micropac Industries, Inc. Vermoegensverwaltungsgesellschaft
buergerlichen Rechts, a partnership organized under the laws of Germany in 2007 owns 1,952,577 shares or 75.7% of the Company's
outstanding voting shares. Mr. Robert Hempel, through the partnership, has the ability to control the election of the Company's
Board of Directors and elect individuals who may be more attuned to such majority shareholder's vision for the Company and not necessarily
to those of minority shareholders as to the policies and directions of the Company. However, the ability to control the election of the
Board of Directors does not modify the fiduciary duties of the Board of Directors to represent the interests of all shareholders.

 There are limited shares for purchase and sale

 A small number of shares are available for public
purchase and sale. The Company's reported share price may be subject to extreme fluctuations, or one or a few trades may determine
the reported market price, due in part to the small number of shares traded at any time.

 General Risk Factors

 Impact of COVID-19 on our Business

 In March 2020 the World Health Organization declared
the spread of the COVID-19 virus a pandemic.

 The Company continues to monitor our supply chain
and orders from customers for COVID-19 pandemic related changes. We are continuing to serve our customers while taking precautions to
provide a safe work environment for our employees and customers. We have been staggering some shifts and otherwise adjusting work schedules
to maximize our capacity while adhering to recommended precautions. We have established and implemented a work from home provision where
possible.

 To date, we have not experienced significant raw
material shortages; however, supply-chain disruptions could potentially delay or prevent us from fulfilling customer orders.

 We are subject to cybersecurity risks

 Cybersecurity risks and attacks continue to grow.
Cybersecurity attacks are evolving and not always predictable. Attacks include malicious software, threats to information technology infrastructure,
denial-of-service attacks on websites, attempts to gain unauthorized access to data, ransomware attacks, and other breaches. Data breaches
can originate with authorized or unauthorized persons. Authorized persons could inadvertently or intentionally release confidential or
proprietary information, and recipients could misuse data. Such events could lead to interruption of our operations or business, unauthorized
release or use of information, compromise of data, damage to our reputation, damage to our customers or vendors, and increased costs to
prevent, respond to or mitigate any events.

 Insurance coverage and exposure to substantial
claims or liabilities

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

 Environmental regulations

 The Company is subject to increasingly stringent
environmental laws and regulations, including those relating to air emissions, wastewater discharges, chemical and hazardous waste management
and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners'
or operators' releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require that we obtain
and comply with environmental permits. To date, costs of complying with environmental requirements have not been material. Future events,
including those relating to climate change or greenhouse gas emissions, could require the Company to incur expenses related to installation
of pollution control equipment, or investigation and cleanup of contaminated sites. If the Company fails to comply with environmental
laws and regulations, the Company could be subject to significant liabilities or be required to curtail or cease its manufacturing activities.
Changes in environmental laws or regulations could affect the cost of the Company's products and make it hard for the Company to
be competitive with larger companies.

 We may default on our line of credit or construction
loan

 The Company currently has an existing line of
credit and a construction loan with a Texas banking institution. In connection therewith, the Company is obligated to maintain certain
minimum financial requirements in order to receive advances therefrom. The Company is currently in compliance with such financial requirements,
but there is no guarantee that the Company will remain in compliance. If the Company does not maintain compliance with each of the requirements,
its ability to receive advances from the line of credit or construction loan will be impaired.

 We may incur product liability claims

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

 Our products may have errors or defects that
we find only after deployment

 Our products are complex, designed to be incorporated
in sophisticated applications, and may contain undetected defects, errors, or failures. Although our products are tested during manufacturing,
prior to shipping, they may contain defects that are discovered only after the products are incorporated in customer applications. The
occurrence of any defects, errors, or failures could result in installation delays, product returns, termination of contracts with our
customers, diversion of our resources, increased service and warranty costs, and other losses to our customers, their end users, or to
us. Any of these occurrences could also result in the loss of customers, and could damage our reputation, which could reduce our sales.
In addition to the risk of unanticipated warranty or recall expenses, our customer contracts may contain provisions that could cause us
to incur penalties, be liable for damages, or incur other expenses, if we experience difficulties with respect to the functionality, deployment,
operation, and availability of our products and services.

 Item 1B.
 Unresolved Staff Comments

 None.

 Item 2.
 Properties

 The Company purchased 9.2 acres of land in Garland,
Texas in 2017. The Company completed construction of the new 76,000 square feet manufacturing center and corporate office on this property.
Additionally, the Company still owns two buildings with approximately 32,200 square feet of office and manufacturing space and is currently
in the process of selling one building. The Company considers its facilities adequate for its current level of operations.

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

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

 Item 3.
 Legal Proceedings

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

 Item 4.
 Mine Safety Disclosure

 None.

 Item 5.
 Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

 Market Information, Holders and Dividends

 On February 7, 2024 there were 434 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. The Company's common stock is quoted on the OTC Market Pink Sheets under the symbol
"MPAD.OB". The following sets forth the high and low sell price for each quarter during the last two fiscal years:

 HIGH

 LOW

 Fiscal Year Ended November 30, 2023

 PRICE

 PRICE

 Fourth Quarter

 $
 11.98

 $
 10.00

 Third Quarter

 $
 12.50

 $
 9.77

 Second Quarter

 $
 13.45

 $
 11.50

 First Quarter

 $
 14.50

 $
 12.81

 Fiscal Year Ended November 30, 2022

 Fourth Quarter

 $
 14.95

 $
 12.25

 Third Quarter

 $
 16.40

 $
 14.19

 Second Quarter

 $
 17.50

 $
 15.00

 First Quarter

 $
 17.00

 $
 14.30

 The market price of a share of the common stock
as of February 1, 2024, the latest practical date, was $12.50.

 During the three month period ended November 30,
2023, approximately 15,700 shares of the Company's common stock were traded in the over-the-counter market at a price range of $10.00
to $11.98 per share. For the two year period ending November 30, 2022, approximately 434,000 shares of the Company's common stock
were traded in the over-the-counter market at prices ranging from a low of $9.77 to a high of $17.50. The Company's reported share
price may be subject to extreme fluctuations, or one or a few trades may determine the reported market price, due in part to the small
number of shares traded at any time.

 On December 7, 2022, the Board of Directors of
Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 11, 2023.
The dividend was paid to shareholders on February 10, 2023.

 On December 5, 2023, the Board of Directors of
Micropac Industries, Inc. approved the payment of a $0.10 per share special dividend to all shareholders of record as of January 10, 2024.
The dividend will be paid to shareholders on or about February 9, 2024.

 Securities Issued under Equity Compensation
Plan

 Micropac Industries Inc.'s 2023 Equity Incentive
Plan (" Plan ") aims to promote Micropac's long-term financial success and increase shareholder value by motivating
performance through incentive compensation. The Plan provides for discretionary grants of Restricted Stock Units (" RSUs ")
to participating employees, consultants, and directors of Micropac and its Related Companies, subject to the terms in the Plan, the RSU
Agreement, and Participant's obligations and restrictions.

 Common Stock delivered under the Plan will be
issued as Common Stock held in Micropac's treasury and will not exceed 500,000 shares at all times, there will be reserves for Awards
under the Plan an amount of Common Stock equal to the maximum number of Shares, reduced by the number of Shares earlier issued or delivered
as a result of this Plan.

 The complete
text of the Plan was included as an Exhibit A to SCHEDULE 14A filed February 9, 2023.

 Purchases of equity securities by the issuer
and affiliated purchasers.

 None

 Item 6.
 [Reserved]

 Item 7.
 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Twelve Months Ended

 November 30, 2023

 November 30, 2022

 Net Sales

 100.0
 %

 100.0
 %

 Cost of goods sold

 64.5
 %

 55.7
 %

 Research and Development

 7.3
 %

 7.9
 %

 Selling, General, and Administrative

 26.4
 %

 27.8
 %

 Cost & Expenses

 98.2
 %

 91.4
 %

 Operating Income

 1.8
 %

 8.6
 %

 Other income, net

 0.9
 %

 4.0
 %

 Income before Income Taxes

 2.7
 %

 12.6
 %

 Provision for taxes

 0.6
 %

 2.6
 %

 Net Income

 2.1
 %

 10.0
 %

 The Company designs, manufactures and distributes
various types of microelectronic circuits including solid state relays and power controllers, optoelectronic components, and sensor and
display components and assemblies. The Company's products are used as components and assemblies in a broad range of military, space,
medical and industrial systems, including aircraft instrumentation and navigation systems, satellite systems, power supplies, electronic
controls, computers, and medical devices.

 The Company's facilities are certified and
qualified by the Defense Logistics Agency (DLA) to MIL-PRF-38534 (class K-space level) and MIL-PRF-19500 JANS (space level) and are certified
to ISO 9001:2008 and AS 9100D. Micropac is a National Aeronautics and Space Administration (NASA) core supplier and is registered to AS9100-Aerospace
Industry standard for supplier certification. The Company has Underwriters Laboratories (UL) approval on our industrial power controllers.

 The Company's core technology is microelectronic
and optoelectronic designs to include the packaging and interconnecting of multi-chip microelectronics modules. Other technologies include
light emitting and light sensitive materials and products, including light-emitting diodes and silicon phototransistors, and electronic
integration used in the Company's optoelectronic components and assemblies.

 Company sales totaled $30,639,000 resulting in
an increase of $2,854,000 from 2022. The majority of the increase in sales were due to an increase in shipments of various custom products
compared to 2022.

 At November 30, 2023, the Company had a backlog
of unfilled orders totaling approximately $36,370,000 compared to approximately $32,686,000 at November 30, 2022.

 New orders for 2023 totaled $34,015,000 compared
to $27,961,000 for 2022.

 Approximately $10,142,000 of the new orders received
in 2023 were delivered to customers in 2023, along with approximately $20,497,000 of the Company's 2022 backlog of orders at November
30, 2022, resulting in revenue of $30,639,000.

 The backlog represents a good mix of the company's
products and technologies with 6% in the commercial market, 4% in the medical market, 83% in the military market, and 7% in the space
market on November 30, 2023.

 2023 Current Backlog by Major Market

 Military

 Space

 Medical

 Commercial

 Total

 Domestic Direct

 $
 17,059

 $

 $
 1,522

 $
 1,130

 $
 20,006

 Domestic Distribution

 12,709

 1,956

 -

 15,337

 International

 -

 1,027

 $
 30,037

 $
 2,717

 $
 1,522

 $
 2,094

 $
 36,370

 2023 Current Backlog by Product Line

 Microelectronics

 $
 19,831

 Optoelectronics

 4,954

 Sensors and Displays

 11,585

 $
 36,370

 Cost of goods sold, as a percentage of net sales,
was 64.5% in 2023 and 55.7% in 2022. In actual dollars, cost of sales increased $4,281,000 which was $19,754,000 in 2023 versus $15,473,000
in 2022. Most of the increase in cost of goods sold was an increase in material cost on a custom product for a customer during the engineering
and first production builds resulting in lower gross margins. The contract with the customer on the custom product has been completed.
In addition, depreciation expense increased associated with the new facility being placed into service.

 In 2023, the Company's investment in technology
through research and development, which was expensed, totaled approximately $2,224,000 ($2,191,000 in 2022). The research and development
expenditures were associated with continued development of several power management products and fiber optic transceivers. The Company
will continue to invest in research and development of these products and other new opportunities.

 In addition to the Company's investment
in research and development, various customers paid the Company approximately $3,687,000 in non-recurring engineering revenue with $2,522,000
recorded within cost of goods sold associated with the development of custom products for specific applications.

 Selling, general, and administrative expenses
totaled 26.4% of net sales in 2023 compared to 27.8% in 2022. In dollars expensed, selling, general and administrative expenses totaled
$8,105,000 in 2023 as compared to $7,734,000 in 2022, an increase of $371,000.The majority of the increase was an increase in property
tax on the new building and increase in consulting fees.

 Other income and net interest income for fiscal
2023 totaled $270,000 compared to $1,112,000 for fiscal 2022.The overall decrease in other income (expense) was attributable to a one-time
credit of $920,000 in employee retention credits, which the Company recognized as other income in the third quarter of 2022.

 Income before taxes for fiscal 2023 was approximately
$826,000, or 2.7% of net sales, compared to $3,499,000, or 12.6% of net sales in fiscal 2022.

 Provisions for income tax for fiscal 2023 totaled
$194,000 compared $712,000 for fiscal 2022. The Company's effective income tax rate was 23.5% for the year ended November 30, 2023,
and 20.3% for the year ended November 30, 2022.

 Net income totaled approximately $632,000 or $0.24
per share in 2023 versus 2022 net income of $2,787,000 or $1.08 per share.

 Impact of COVID-19 on our Business

 In March 2020 the World Health Organization declared
the spread of the COVID-19 virus a pandemic.

 The Company continues to monitor our supply chain
and orders from customers for COVID-19 pandemic related changes. We are continuing to serve our customers while taking precautions to
provide a safe work environment for our employees and customers. We have been staggering some shifts and otherwise adjusting work schedules
to maximize our capacity while adhering to recommended precautions. We have established and implemented a work from home provision where
possible.

 To date, we have not experienced significant raw
material shortages; however, supply-chain disruptions could potentially delay or prevent us from fulfilling customer orders.

 Liquidity and Capital Resources

 The Company obtained
a commercial real estate construction loan for the construction of a new 76,000 square foot manufacturing center on the 9.2 acres of land
in Garland, Texas that the Company has purchased. On March 26, 2021, the Company (acting as borrower) entered into a Construction Loan
Agreement (the "loan agreement") with Frost Bank ("Frost") (acting as lender). The Construction Loan Agreement
provides for a construction loan, in amounts not to exceed a total principal balance of $16,160,000 with an interest rate of (3.40%) per
annum.

 On May 16, 2023, the
Company renewed the Revolving Loan Agreement with Frost through the "Seventh Amendment to Loan Agreement." (See Exhibit 10.15).
The Revolving Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $6,000,000 with
a rate equal to prime rate with a floor of 3.25%. The Revolving Loan Agreement was originally entered into on January 23, 2013, between
the "Company" as borrower and Frost as lender.

 Construction Loans. Subject
to the terms of the Loan Agreement, Frost will lend to the Company an aggregate amount not to exceed $16,160,000.

 Principal and interest
shall be due and payable monthly in an amounts determined by Lender required to fully amortize the outstanding principal balance of this
Note over a period of twenty-five (25) years, payable on the twenty-sixth (26th) day of each and every calendar month, beginning April
26, 2023, and continuing regularly thereafter until March 26, 2031, when the entire amount hereof, principal and accrued interest then
remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal each day principal is outstanding and
all payments made credited to any collection costs and late charges, to the discharge of the interest accrued and to the reduction of
the principal, in such order as Lender shall determine.

 The interest rate of
(3.40%) per annum includes an Interest-Only Period. Interest only shall be due and payable monthly as it accrues on the twenty-sixth (26th)
day of each and every calendar month, beginning April 26, 2021, and continuing regularly and monthly thereafter until March 26, 2023;
interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited to any collection costs
and late charges, to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall determine.

 The loan shall be secured
by a "Deed of Trust, Security Agreement – Financing Statement" covering the 9.2-acre tract in Garland, Texas and the
improvements made on it.

 Revolving Credit Loans. Subject
to the terms of the Revolving Loan Agreement, Frost will lend to the Company, on a revolving basis, amounts not to exceed a total principal
balance of $6,000,000, minus amounts available and amounts previously disbursed under outstanding revolving letters of credit. Subject
to certain terms and conditions, the Company may borrow, repay and reborrow under the Loan Agreement. The loan has a maturity date of
April 23, 2025. The loan shall be secured by a Security Agreement dated as of January 23, 2013, and is given by Borrower in favor of Lender
with collateral of all personal property.

 The interest on the outstanding
and unpaid principal balance shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate per annum;
provided, however, in no event shall the resulting rate be less than three and one-quarter percent (3.25%).

 In addition, the Company continues on-going investigations
for the use of cumulative cash for business expansion and improvements, such as operational improvements and new product expansion.

 Cash and cash equivalents totaled $10,299,000 as of November 30, 2023
compared to $15,375,000 on November 30, 2022, a decrease of $5,076,000. The decrease in cash and cash equivalents is attributable to $3,196,000
cash used by operations, payment of a cash dividend of $258,000, $275,000 in long term debt, $404,000 in cash for additional manufacturing
equipment and $2,156,000 on the new facility, offset by the $1,213,000 proceeds from the construction loan.

 In addition to cash on hand, the Company also
has the ability to borrow under a loan agreement as discussed above.

 Per the loan covenant, the Company must maintain
a ratio of Free Cash Flow to Debt Service of not less than 1.20 to 1.00. As of November 30, 2023, the Company is in compliance.

 Company management believes it will meet its 2024
capital requirements through the use of cash derived from operations for the year and/or usage of the Company's cash and cash equivalents.
There were no significant outstanding commitments for equipment purchases or improvements at November 30, 2023.

 The Company has no significant off-balance sheet
arrangements.

 Critical Accounting Policies

 The preparation
of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires
management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our
estimates on historical experience and on various other assumptions and factors that are believed to be reasonable under the circumstances.
Note 2 to the Financial Statements in the Annual Report on Form 10-K for the year ended November 30, 2023,
describes the significant accounting policies and methods used in the preparation of the Financial Statements. liabilities. Actual results
could differ from these estimates.

 The core principle of revenue recognition under
accounting principles generally accepted in the Unites States of America (GAAP) is that the Company should recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The Company's revenue on the majority of its customer contracts
is recognized at a point in time, generally upon shipment of products. The application of GAAP related to the measurement and recognition
of revenue requires us to make judgments and estimates. Specifically, the determination of whether revenues related to our revenue contracts
should be recognized over time or at a point in time, as these determinations impact the timing and amount of our reported revenues and
net income. Other significant judgments include the estimation of the point in the manufacturing process at which we are entitled to receive
payment, as well as the progress of the job order to completion to determine the amount of consideration earned for contractual revenue
recognized over time.

 The allowance for doubtful accounts is based on
our assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If there is a deterioration
of a major customer's credit worthiness or actual defaults are higher than our historical experience, our estimates of the recoverability
of amounts due us could be adversely affected.

 Inventory purchases and commitments are based
upon future demand. If there is a sudden and significant decrease in demand for our products or there is a higher risk of inventory obsolescence
because of changing customer requirements, we may be required to increase our inventory allowances and our gross margin could be adversely
affected.

 The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and
laws that are expected to be in effect when the differences are expected to be recovered. If we were to determine we would not be able
to realize all or part of the deferred tax asset in the future, an adjustment to the deferred tax asset would be necessary which would
reduce our net income for that period.

 Depreciable and useful lives estimated for property
and equipment are based on initial expectations of the period of time these assets will provide benefit. Changes in circumstances related
to a change in our business or other factors could result in these assets becoming impaired, which could adversely affect the value of
these assets.

 New Accounting Pronouncements

 In June 2016, the FASB issued ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment
model for most financial assets. The ASU requires the use of an "expected loss" model for instruments measured at amortized
cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized
cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective
for fiscal years beginning after December 15, 2022, for Smaller Reporting Companies, including interim periods within those fiscal years
and requires a modified-retrospective approach to adoption. The Company believes that adopting ASU 2016-13 will have no material impact
on the financial statements and related disclosures.

 Item 7A.
 Quantitative and Qualitative Disclosures About Market Risk

 Not applicable.

 Item 8.
 Financial Statements and Supplementary Data

 Page No.

 Report of Independent Registered Public Accounting Firm - Whitley Penn LLP (PCAOB ID 726)

 Balance Sheets as of November 30, 2023, and 2022

 Statements of Income for the years ended November 30, 2023, and 2022

 Statements of Shareholders' Equity for the
 years ended November 30, 2023, and 2022

 Statements of Cash Flows for the years ended November 30, 2023, and 2022

 22-29

 Notes to Financial Statements as of and for the years
 ended November 30, 2023, and 2022

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Shareholders and Board of Directors of

 Micropac Industries, Inc.

 Opinion on the Financial Statements

 We have audited
the accompanying balance sheets of Micropac Industries, Inc. (the "Company") as of November 30, 2023 and 2022, and the related
statements of income, shareholders' equity, and cash flows for the years then ended, and the related notes (collectively referred
to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of November 30, 2023 and 2022, 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 of America.

 Basis for Opinion

 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 are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matter

 The critical audit matter communicated below is
a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

 Margin Estimates for Long-Term Contracts
and Related Revenue Recognition

 Critical Audit Matter Description

 As disclosed in Note 2 to the financial statements,
the Company produces certain products with no alternative use and for which the Company has an enforceable right to payment during the
production cycle. For these contracts, the Company recognizes revenue over time as control over these products transfers to the customer.
Thus, the Company records contract assets for work in process contracts at the end of each reporting period. The Company uses costs incurred
to date as the method for determining progress, and revenue is recognized based on costs incurred to date plus an estimate of margin at
completion. The process of estimating final margin involves estimating the costs to complete production of goods and comparing those costs
to the total transaction price. These contracts are inherently uncertain in that revenue is fixed while the estimates of costs required
to complete these contracts are subject to variability. Due to the technical performance requirements in many of these contracts, changes
to cost estimates could occur, resulting in higher or lower margins when the contracts are completed.

 We identified revenue associated with work in
process contracts recognized over time as a critical audit matter. The process of estimating final margin is subjective in nature that
and resulted in a higher degree of audit effort and judgment. Changes in estimates of final margin could have a significant impact on
the timing of revenue recognition.

 How We Addressed the Matter

 We obtained an understanding of the design of
internal controls that address the risks of material misstatement relating to recording revenue from contracts with customers where revenue
is recognized over time. We evaluated the reasonableness of judgements made and assumptions used by management relating to key estimates
which include estimated total costs to complete and estimated final margins. We reviewed executed contracts to understand the contract
terms, reperformed management's process of assigning the appropriate timing of revenue recognition and tested the mathematical accuracy
of revenue recognized over time based on costs incurred to date relative to total estimated margin. We tested the accuracy and completeness
of the data used in developing key estimates, including materials, labor, and overhead costs. We performed a review of audit evidence
from transactions completed after the measurement date related to the final gross margins for comparison to the Company's initial
gross margin estimates.

 We evaluated management's ability to estimate
total inputs accurately by comparing actual inputs to management's historical estimates for contracts that have been fulfilled.

 /s/ Whitley Penn LLP

 We have served as the Company's auditor since
2016.

 Plano, Texas

 February 7, 2024

 BALANCE SHEETS

 NOVEMBER 30, 2023 AND 2022

 (Dollars in thousands except share and per share
data)

 CURRENT ASSETS

 2023

 2022

 Cash and cash equivalents

 $
 10,299

 $
 15,375

 Receivables, net of allowance for doubtful accounts of $ 0 at November 30, 2023 and 2022

 8,021

 3,644

 Other receivable

 Contract assets

 Inventories:

 Raw materials and supplies

 7,367

 6,715

 Work in process

 4,113

 3,573

 Total inventories

 11,480

 10,288

 Prepaid expenses and other assets

 Total current assets

 30,733

 31,199

 PROPERTY, PLANT AND EQUIPMENT, at cost:

 Land

 1,518

 1,518

 Buildings

 21,013

 Facility improvements

 1,126

 1,126

 Furniture and fixtures

 2,068

 1,036

 Construction in process

 19,415

 Machinery and equipment

 10,175

 9,952

 Total property, plant, and equipment

 36,081

 33,545

 Less accumulated depreciation

 ( 11,982
)

 ( 11,082
)

 Net property, plant, and equipment

 24,099

 22,463

 Operating lease right to use asset

 -

 Deferred income taxes, net

 Total assets

 $
 55,307

 $
 53,762

 LIABILITIES AND SHAREHOLDERS' EQUITY

 CURRENT LIABILITIES:

 Accounts payable

 $
 1,491

 $
 1,173

 Accrued compensation

 1,086

 Deferred revenue

 1,192

 Property taxes

 Income tax

 Short term debt

 Other accrued liabilities

 Total current liabilities

 4,723

 4,431

 Long term debt, net of debt issuance costs

 15,316

 14,535

 Total liabilities

 20,039

 18,966

 Commitments and contingencies

 SHAREHOLDERS' EQUITY

 Common stock, $.10 par value, authorized 10,000,000 shares, 3,078,315 issued and 2,578,315 outstanding
 at November 30, 2023 and 2022

 Additional paid-in-capital

 Treasury stock, 500,000 shares, at cost

)

)

 Retained earnings

 35,227

 34,853

 Total shareholders' equity

 35,268

 34,796

 Total liabilities and shareholders' equity

 $
 55,307

 $
 53,762

 See accompanying notes to financial statements.

 STATEMENTS OF INCOME

 FOR THE YEARS ENDED NOVEMBER 30, 2023 AND
2022

 (Dollars in thousands except share and per share
data)

 2023

 2022

 NET SALES

 $
 30,639

 $
 27,785

 COST AND EXPENSES:

 Cost of goods sold

 19,754

 15,473

 Research and development

 2,224

 2,191

 Selling, general and administrative expenses

 8,105

 7,734

 Total cost and expenses

 30,083

 25,398

 OPERATING INCOME

 2,387

 Interest income

 Interest expense

 ( 386
)

 ( 1
)

 Other income, net

 INCOME BEFORE INCOME TAXES

 3,499

 PROVISION FOR INCOME TAXES

 Current

 Deferred

 ( 389
)

 ( 102
)

 Total tax expense provision

 NET INCOME

 $

 $
 2,787

 NET INCOME PER SHARE, BASIC

 $
 0.24

 $
 1.08

 WEIGHTED AVERAGE OF SHARES, BASIC

 NET INCOME PER SHARE, DILUTED

 $
 0.24

 $
 1.08

 WEIGHTED AVERAGE OF SHARES, DILUTED

 2,609,509

 DIVIDENDS PER SHARE

 $
 0.10

 $
 0.10

 See accompanying notes to financial statements.

 STATEMENTS OF SHAREHOLDERS' EQUITY

 FOR THE YEARS ENDED NOVEMBER 30, 2023 AND
2022

 (Dollars in thousands)

 Common

 Additional

 Treasury

 Retained

 Stock

 paid-in-capital

 Stock

 Earnings

 Total

 BALANCE, November 30, 2021

 $

 $

 $
)

 $
 32,324

 $
 32,267

 Dividend

 -

 -

 -

 ( 258
)

 ( 258
)

 Net income

 -

 -

 -

 2,787

 2,787

 BALANCE, November 30, 2022

)

 34,853

 34,796

 Stock-based compensation

 -

 -

 -

 Dividend

 -

 -

 -

 ( 258
)

 ( 258
)

 Net income

 -

 -

 -

 BALANCE, November 30, 2023

 $

 $

 $
)

 $
 35,227

 $
 35,268

 See accompanying notes to financial statements.

 STATEMENTS OF CASH FLOWS

 FOR THE YEARS ENDED NOVEMBER 30, 2023 AND
2022

 (Dollars in thousands)

 CASH FLOWS FROM OPERATING ACTIVITIES:

 2023

 2022

 Net income

 $

 $
 2,787

 Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 Depreciation

 Stock based compensation

 -

 Deferred income tax benefit

 ( 389
)

 ( 102
)

 Amortization of debt issuance cost

 -

 Change in right of use of asset

 Changes in certain current assets and liabilities:

 (Increase) decrease in accounts receivable

 ( 4,377
)

 1,330

 Increase in other receivable

 ( 920
)

 (Increase) decrease in contract assets

 Decrease (increase) in inventories

 ( 1,192
)

 ( 1,604
)

 Decrease (increase) in prepaid expenses and other assets

 ( 223
)

 Increase (decrease) in accounts payable

 Increase (decrease) in accrued compensation

 ( 128)

 ( 209)

 Increase (decrease) deferred revenue

 ( 574
)

 ( 66
)

 Increase (decrease) in income taxes payable

 ( 30
)

 Decrease in lease liabilities

 ( 14
)

 ( 53
)

 Increase in all other accrued liabilities

 Net cash (used in) provided by operating activities

 ( 3,196
)

 2,204

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Additions to property, plant and equipment

 ( 2,560
)

 ( 13,213
)

 Net cash used in investing activities

 ( 2,560
)

 ( 13,213
)

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Cash dividend

 ( 258
)

 ( 258
)

 Proceeds from long term debt

 1,213

 11,390

 Payments on long term debt

 ( 275
)

 -

 Net cash provided by financing activities

 11,132

 Net (decrease) increase in cash and cash equivalents

 ( 5,076
)

 Cash and cash equivalents at beginning of period

 15,375

 15,252

 Cash and cash equivalents at end of period

 $
 10,299

 $
 15,375

 Supplemental Cash Flow Disclosure:

 Cash paid for income taxes

 $

 $

 Cash paid for interest expense

 $

 $

 Supplemental Non-Cash Flow Disclosure:

 Accrued additions to property, plant and equipment

 $

 $

 See accompanying notes to financial statements.

 NOTES TO FINANCIAL STATEMENTS

 NOVEMBER 30, 2023 AND 2022

 1.
 BUSINESS DESCRIPTION:

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

 2.
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 Revenue Recognition

 The core principle of revenue recognition
under accounting principles generally accepted in the Unites States of America (GAAP) is that the Company should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services.

 The Company's revenue on the majority
of its customer contracts is recognized at a point in time, generally upon shipment of products.

 To achieve that core principle, the
Company applies the following steps:

 1.
 Identify the contract(s) with a customer.

 The Company designs, manufactures and
distributes various types of microelectronic circuits, optoelectronics, and sensors and displays. The Company's products are used
as components and assemblies in a broad range of military, space, medical and industrial systems, including aircraft instrumentation and
navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200 o
C) products.

 The Company's revenues are from
purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval
and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial
substance and collectability of consideration is probable.

 2.
 Identify the performance obligations in the contract.

 The majority of the Company's
purchase orders or contracts with customers contain a single performance obligation, the shipment of products.

 3.
 Determine the transaction price.

 The transaction price reflects the
Company's expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped
based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that
was negotiated, we will generate more or less profit or could incur a loss.

 4.
 Allocate the transaction price to the performance obligations in the contract.

 The Company's transaction price
is the fixed price per unit per each delivery upon shipment.

 5.
 Recognize revenue when (or as) the Company satisfies a performance obligation.

 This performance obligation is satisfied
when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders
for products to be delivered over multiple dates that may extend across reporting periods. The Company accounting policy treats shipping
and handling activities as a fulfillment cost. The Company invoices for each delivery upon shipment and recognizes revenues at the fixed
price for each distinct product delivered when transfer of control has occurred, which is generally upon shipment.

 For certain contracts under which the
Company produces products with no alternative use and for which the Company has an enforceable right to payment during the production
cycle, the Company recognizes revenue for the cost incurred of work in process plus a margin at the end of each period and records a contract
asset (unbilled receivable). The majority of these products are shipped weekly and monthly to the customers and the contracts require
us to manage and limit the level of work in process to meet the scheduled delivery dates.

 In addition, the Company may have
a contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed, and performance
obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied.

 Disaggregation of Revenue

 The following table summarizes the Company's net sales by product
line.

 Schedule of net sales by product line

 Nov. 30, 2023

 Nov. 30, 2022

 Microelectronics

 $
 8,855

 $
 7,998

 Optoelectronics

 8,265

 7,913

 Sensors and Displays

 13,519

 11,874

 $
 30,639

 $
 27,785

 Timing of revenue recognition

 Recognized at a point in time

 $
 27,069

 $
 23,678

 Recognized over time

 3,570

 4,107

 Total Revenue

 $
 30,639

 $
 27,785

 The following table summarizes the Company's net sales by major
market.

 Schedule of net sales by major market

 2023 Sales by Major Market

 Military

 Space

 Medical

 Commercial

 Total

 Domestic Direct

 $
 11,937

 $
 1,525

 $
 3,179

 $
 2,099

 $
 18,740

 Domestic Distribution

 7,580

 1,357

 -

 1,133

 10,070

 International

 -

 1,829

 $
 19,879

 $
 3,482

 $
 3,179

 $
 4,099

 $
 30,639

 2022 Sales by Major Market

 Military

 Space

 Medical

 Commercial

 Total

 Domestic Direct

 $
 10,699

 $
 1,148

 $
 3,213

 $
 1,403

 $
 16,433

 Domestic Distribution

 7,993

 1,508

 -

 10,330

 International

 -

 1,022

 $
 18,895

 $
 3,007

 $
 3,213

 $
 2,670

 $
 27,785

 Receivables, net, Contract
Assets and Contract Liabilities

 The timing of revenue recognition, billings and cash collections results
in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the Consolidated
Balance Sheet.

 Receivables, net, contract assets
and contract liabilities were as follows:

 Schedule of receivables, net, contract assets and contract liabilities

 November 30, 2023

 November 30, 2022

 December 1, 2021

 Receivables, net

 $
 8,021

 $
 3,644

 $
 4,974

 Contract assets

 $

 $

 $

 Deferred revenue

 $

 $
 1,192

 $
 1,258

 Revenue recognized in 2023 that was included in the deferred
revenue liability balance at the beginning of the year was $ 1,169,000.

 Contract costs

 The Company does not have material incremental costs to obtain a contract in
the form of sales commissions or bonuses. The Company incurs other immaterial costs to obtain and fulfill a contract; however, the Company
has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred
if the amortization period is one year or less.

 Inventories

 Inventories are stated at lower of cost or net
realizable value and include material, labor and manufacturing overhead. All inventories are valued using the FIFO (first-in, first-out)
method of inventory valuation. The Company determines the need to write inventory down to the lower of cost or net realizable value via
an analysis based on the usage of inventory over a three year period and projected usage based on current backlog.

 Income Taxes

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

 The Company records a liability for an unrecognized
tax benefit for a tax position that is not "more-likely-than-not" to be sustained. The Company did no t record any liability
for uncertain tax positions as of November 30, 2023, or November 30, 2022.

 Property, Plant, and Equipment

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

 Schedule of property,plant and equipment useful lives

 Buildings

 15 - 40

 Facility improvements

 8 - 15

 Machinery and equipment

 5 - 10

 Furniture
and fixtures

 5 - 8

 The Company assesses long-lived assets for impairment
in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) ASC 360-10-35, Property, Plant
and Equipment – Subsequent Measurement. 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 less cost to sell is required.

 Construction in progress relates to multiple capital
projects ongoing during the years ended November 30, 2023, and 2022, including the construction of the new manufacturing facility. Construction
in progress also includes interest and fees on debt that are directly related to the financing of the Company's capital projects.

 Repairs and maintenance are expensed as incurred.
Improvements which extend the useful lives of property, plant, and equipment are capitalized.

 Research and Development Costs

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

 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.

 The following is a reconciliation of the number
of shares used in the calculation of the basic and diluted earnings per share for the years ended November 30, 2023 and 2022:

 Schedule of the basic and diluted earnings per share

 Twelve Months Ended

 November 30,

 2023

 November 30,

 2022

 Weighted average of shares, basic

 Restricted stock units

 31,194

 -

 Weighted average of shares, diluted

 2,609,509

 Use of Estimates

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

 3.
 NEW ACCOUNTING PRONOUNCEMENTS:

 In June 2016, the FASB issued ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment
model for most financial assets. The ASU requires the use of an "expected loss" model for instruments measured at amortized
cost, in which companies will be required to estimate the lifetime expected credit loss and record an allowance to offset the amortized
cost basis, resulting in a net presentation of the amount expected to be collected on the financial asset. The new guidance is effective
for fiscal years beginning after December 15, 2022, for Smaller Reporting Companies, including interim periods within those fiscal years
and requires a modified-retrospective approach to adoption. The Company believes that adopting ASU 2016-13 will have no material impact
on the financial statements and related disclosures.

 4.
 FAIR VALUE MEASUREMENT:

 The Company had no financial assets and liabilities
measured at fair value on a recurring basis as of November 30, 2023, and 2022. The fair value of financial instruments such as cash
and cash equivalents, accounts receivable, and accounts payable approximate their carrying amount based on the short maturity of these
instruments.

 The Company measures its long-term debt at fair
value which approximates book value as the long-term debt bears market rates of interest.

 There were no nonfinancial assets measured at
fair value on a nonrecurring basis at November 30, 2023, or 2022.

 5.
 NOTES PAYABLE TO BANKS:

 The Company obtained
a commercial real estate construction loan for the construction of a new 76,000 square foot manufacturing center on the 9.2 acres of land
in Garland, Texas that the Company has purchased. On March 26, 2021, the Company (acting as borrower) entered into a Construction Loan
Agreement (the "loan agreement") with Frost Bank ("Frost") (acting as lender). The Construction Loan Agreement
provides for a construction loan, in amounts not to exceed a total principal balance of $ 16,160,000 with an interest rate of ( 3.40 %) per
annum.

 On May 16, 2023, the
Company renewed the Revolving Loan Agreement with Frost through the "Sixth Amendment to Loan Agreement." (See Exhibit 10.13).
The Revolving Loan Agreement provides for revolving credit loans, in amounts not to exceed a total principal balance of $ 6,000,000 with
a rate equal to prime rate with a floor of 3.25 %. The Revolving Loan Agreement was originally entered into on January 23, 2013, between
the Company as borrower and Frost as lender.

 Construction Loans. Subject
to the terms of the Loan Agreement, Frost will lend to the Company an aggregate amount not to exceed $ 16,160,000.

 Principal and interest
shall be due and payable monthly in an amounts determined by Lender required to fully amortize the outstanding principal balance of this
Note over a period of twenty-five (25) years, payable on the twenty-sixth (26th) day of each and every calendar month, beginning April
26, 2023, and continuing regularly thereafter until March 26, 2031, when the entire amount hereof, principal and accrued interest then
remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal each day principal is outstanding and
all payments made credited to any collection costs and late charges, to the discharge of the interest accrued and to the reduction of
the principal, in such order as Lender shall determine.

 The interest rate of
(3.40%) per annum including an Interest-Only Period. Interest only shall be due and payable monthly as it accrues on the twenty-sixth
(26th) day of each and every calendar month, beginning April 26, 2021, and continuing regularly and monthly thereafter until March 26,
2023; interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited to any collection
costs and late charges, to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall
determine.

 The loan shall be secured
by a "Deed of Trust, Security Agreement – Financing Statement" covering the 9.2-acre tract in Garland, Texas and the
improvements made on it.

 Revolving Credit Loans. Subject
to the terms of the Loan Agreement, Frost will lend to the Company, on a revolving basis, amounts not to exceed a total principal balance
of $6,000,000, minus amounts available and amounts previously disbursed under outstanding Frost letters of credit. Subject to certain
terms and conditions, the Company may borrow, repay and reborrow under the Loan Agreement. The loan has a maturity date of April 23, 2025.

 The interest on the outstanding
and unpaid principal balance shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate per annum;
provided, however, in no event shall the resulting rate be less than three and one-quarter percent (3.25%).

 The Company has borrowed
$ 16,160,000 against the construction loan as of November 30, 2023.

 Schedule of long-term debt

 Debt

 2023

 2022

 Notes payable

 $
 15,884

 $
 14,938

 Less unamortized debt issuance costs

 Net Debt

 15,748

 14,759

 Less—Current portion

 Total long-term debt

 $
 15,316

 $
 14,535

 Estimated maturities of our long-term debt over
the next 5 years are as follows:

 Estimated maturities of long-term debt

 2024

 2025

 2026

 2027

 2028

 Thereafter

 Total

 Frost Bank

 $

 $

 $

 $

 $

 $
 13,569

 $
 15,884

 6.
 PRODUCT WARRANTIES:

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

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

 Warranty expense was approximately $ 56,000 and
$ 114,000 in 2023 and 2022, respectively.

 The following table summarizes product warranty
activity recorded during the years ended November 30, 2023, and 2022 recorded in other accrued liabilities.

 Schedule of product warranty activity

 2023

 2022

 Beginning balance

 $

 $

 Additions for current year provision

 Payments for current year

 ( 56
)

 ( 114
)

 Ending balance

 $

 $

 7.
 LEASE COMMITMENTS:

 In the first quarter of 2020, the Company entered into a three (3)
year lease extension on the property that has been leased on a year to year basis. As a result, we recognized $ 165,000 for operating
lease liabilities and right-of-use assets in accordance with ASC 842. The Company had an operating lease expense of $ 14,000 for 2023 and
$ 55,000 for 2022. The Company used an estimated incremental borrowing rate of 3.25 % representative of the rate of interest that the company
would have to pay to borrow on the Company's line of credit. The lease expired in March 2023 and was not renewed.

 8.
 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 expensed and totaled approximately $ 500,000 in 2023 and $ 476,000 in 2022. Employees become
vested in Company contributions in 20 % increments in years two through six of employment. If the employee leaves the Company prior to
being fully vested, the unvested portion of the Company 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.

 9.
 INCOME TAXES:

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

 Schedule of income tax provision

 2023

 2022

 Current Provision:

 Federal

 $

 $

 State

 Deferred federal tax benefit

 ( 389
)

 ( 102
)

 Total

 $

 $

 The provision for income taxes differs from that computed at the federal
statutory corporate tax rate as follows for the years ended November 30,

 Schedule of effective income tax rate reconciliation

 2023

 2022

 Tax at statutory rate

 $

 $

 State income taxes, net of federal benefit

 Research and Development Tax Credit

 ( 116
)

 ( 156
)

 Permanent differences and other

 Income tax provision

 $

 $

 The components of deferred tax assets and liabilities were as follows
at November 30,

 Schedule of components of deferred tax assets and liabilities

 2023

 2022

 Deferred tax assets (liabilities)

 Inventory

 $

 $

 Capitalized research and development

 -

 Deferred revenue, sales returns and warranty

 Other accrued liabilities

 Depreciation

 ( 380
)

 ( 267
)

 Net deferred tax assets

 $

 $

 In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the scheduled reversal of deferred tax assets, projected future
taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections
for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than
not that the Company will realize the benefits of these deductible differences.

 The Company records
a liability for an unrecognized tax benefit for a tax position that is not "more-likely-than-not" to be sustained. The
Company did no t record any liability for uncertain tax positions as of November 30, 2023 or November
30, 2022.

 10.
 SIGNIFICANT CUSTOMER INFORMATION:

 The Company's major customers include contractors
to the United States government. Sales to these customers for DOD and NASA contracts accounted for approximately 74 % of the Company's
revenues in 2023 compared to 77 % in 2022. The Company's major customers are Lockheed Martin, Northrop Grumman, United Technologies,
BAE, and Boeing. Two customers accounted for 14 % and 10 % of the Company's sales during 2023 and two customers accounted for 18 %
and 10 % of the Company's sales during 2022. The contracts of our customers with the United States government may be subject to renegotiation
of profits or termination of contracts or subcontracts at the election of the government, which would in turn might materially affect
the Company's sales. The loss of any one of these customers or a significant reduction in their purchases would be likely to adversely
affect our business.

 11.
 SHAREHOLDERS' EQUITY:

 On December 7, 2022, the Board of Directors of
Micropac Industries, Inc. approved the payment of a $ 0.10 per share special dividend to all shareholders of record as of January 11, 2023.
The dividend was paid to shareholders on February 10, 2023.

 On December 7, 2021, the Board of Directors of
Micropac Industries, Inc. approved the payment of a $ 0.10 per share special dividend to all shareholders of record as of January 11, 2022.
The dividend was paid to shareholders on February 10, 2022.

 12.
 STOCK-BASED COMPENSATION:

 We have issued restricted stock units ("RSUs") stock-based
compensation awards as part of Micropac Industries Inc.'s 2023 Equity Incentive Plan. Our 2023 annual grant of RSUs occurred in
the second quarter. The weighted -average grant-date fair value of each unit granted in 2023 was $13.13. All the RSUs granted in 2023
vest over a three-year period.

 The following is a summary of our RSUs activity for the years ended
November 30, 2023, and November 30, 2022:

 Schedule of restricted stock units activity

 2023

 2022

 (shares in thousands)

 Number

 Weighted-

 Number

 Weighted-

 of

 Average

 of

 Average

 Shares

 Grant Date Fair

Value

 Shares

 Grant Date Fair

 Value

 Unvested at beginning of the year

 -

 -

 -

 -

 Granted

 35.7

 $
 13.13

 -

 -

 Vested

 -

 -

 -

 -

 Cancelled

 4.5

 $
 13.13

 -

 -

 Unvested at end of the year

 31.2

 $
 13.13

 -

 -

 The following table sets forth the stock-based compensation expense
recorded in selling, general and administrative ("SG&A") expense (in thousands):

 Schedule of stock-based compensation

 For the years ended

 November 30, 2023 and November 30, 2022

 2023

 2022

 Stock-based compensation expense

 $

 -

 The following table sets forth the stock-based unvested compensation
expense by year to be recognized (in thousands):

 Schedule of stock-based unvested compensation expense

 2024

 2025

 Total

 Stock-based unvested compensation expense

 $

 $

 $

 13.
 EMPLOYEE RETENTION CREDIT UNDER THE CARES ACT

 The CARES Act, passed by Congress on March 27,
2020, contained the employee retention credit (ERC), a refundable payroll tax credit to employers that have experienced hardship in their
operations due to COVID-19. The CARES Act was amended and extended on December 27, 2020, by the Consolidated Appropriations Act, 2021
(the "CAA") and in March 2021, the Internal Revenue Code was amended by the American Rescue Plan Act of 2021 to provide new
employee retention credit provisions designed to promote employee retention and hiring.

 This ERC is a fully refundable tax credit for
employers equal to 70 percent of qualified wages that eligible employers pay their employees. This ERC applies to qualified wages paid
after December 2020 and before January 1, 2022.

 As a result, the Company has determined that it
qualified for an approximately $ 920,000 in employee retention credits during the first quarter of 2021, which the Company recognized as
other income and recorded in other receivable for the refund claimed in the third quarter of 2022. The ERC impact was included in the
Company's fiscal year 2021 tax return.

 14.
 SUBSEQUENT EVENTS:

 On December 5, 2023, the Board of Directors of
Micropac Industries, Inc. approved the payment of a $ 0.10 per share special dividend to all shareholders of record as of January 10, 2024.
The dividend will be paid to shareholders on or about February 9, 2024.

 Item 9.
 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure

 None.

 Item 9A.
 Controls and Procedures

 Evaluation of Disclosure Controls and Procedures

 The Company's Chief Executive Officer and
Chief Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures
for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is
made known to them, particularly during the period in which this report was prepared. The Certifying Officers have evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) (the Rules)
under the Securities Exchange Act of 1934 (or Exchange Act)) and determined that as of November 30, 2023, the Company's disclosure controls
and procedures were effective.

 Management's Annual Report on Internal
Control Over Financial Reporting

 Management of Micropac is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of the Company's management, including the Chief Executive Officer (principal executive
officer) and the Chief Financial Officer (principal financial officer), the Company's management conducted an evaluation of the
effectiveness of its internal control over financial reporting as of November 30, 2023, as required by the Securities Exchange Act of
1934 Rule13a-15(c). In making this assessment, the Company's management used the criteria set forth in the framework in "Internal
Control – Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on the evaluation conducted under the framework in "Internal Control – Integrated Framework" (2013), management concluded
that the Company's internal control over financial reporting was effective as of November 30, 2023.

 During our most recent
fiscal quarter, there has not occurred any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

 This annual report does
not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered independent public accounting firm pursuant to rules of the
Securities and Exchange Commission that permit us to provide only management's report in this annual report.

 Item 9B.
 Other Information

 None.

 In accordance with General Instruction G(3) of
Form 10-K, the information required by this Part III is incorporated by reference to Micropac Industries, Inc.'s definitive proxy
statement relating to its 2024 Annual Meeting of Stockholders, as set forth below. The 2024 Proxy Statement will be filed with the Securities
and Exchange Commission on or about February 7, 2024.

 Item 10.
 Directors, Executive Officers and Corporate
Governance

 Name

 Age

 Position with the Company

 Director Since

 Mark King

 CEO, President and

 and Chairman of the Board

 October 2005

 Christine B. Dittrich

 October 2015

 Gerald Tobey

 June 2017

 Donald Robinson

 December 2019

 Shaunna Black

 December 2019

 Robert Hempel

 September 2023

 Patrick S. Cefalu

 CFO, Executive Vice President

 N/A

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

 Ms. Dittrich was an Executive Vice President of
Raytheon Systems Company and the General Manager of the Sensor and Electronic Systems segment. Before working for Raytheon, Ms. Dittrich
was a Senior Vice President of Texas Instruments (TI) Systems Group, a Malcolm Baldrige Quality Award winner, and the General Manager
of the Electronic Systems Division. Her prior assignments include TI Systems Group Vice President and Engineering Manager, Software Engineering
Director for the defense business, and Senior Member of Technical Staff. She has had senior executive responsibility for product engineering
efforts that involve large scale software and hardware development and integration. Ms. Dittrich provided consulting services with a focus
on business strategy and operational performance to various technology companies after leaving Raytheon. She became a Visiting Scientist
at the Carnegie Mellon University Software Engineering Institute (SEI), a Federally Funded Research and Development Center and chaired
the SEI Board of Advisors for over 10 years. She was a Fellow of the Cutter Business Technical Council and a senior consultant for Cutter
Consortium. In addition, she has held membership positions on the Army Science Board, the Department of Defense Software Best Practices
- Airlie Software Council and other advisory boards.

 Mr. Tobey was a Vice President of Business Development
at Raytheon Missile Systems Company retiring in 2016 following a 38-year career in the defense, aerospace, and civil security sectors.
He also served as Vice President of International Business Development for both Raytheon's Missile Systems and Network Centric Systems
businesses. Until 1997, when Texas Instruments' Defense Systems and Electronics Group was acquired by Raytheon, Mr. Tobey served as that
company's Vice President of International Business Development and Managing Director of Texas Instruments UK, Ltd. (a wholly owned TI
subsidiary). During Mr. Tobey's career, he has served in various business creation and capture, strategy, program and manufacturing management
positions both in the U.S. and abroad. Mr. Tobey holds a Bachelor of Science and a Master of Business Administration degree from Utah
State University. He is a graduate of the U.S. Defense Department's Defense Acquisition University and has completed Executive Study at
the Anderson School of Management at UCLA.

 Mr. Robinson is an executive leader and investor
with deep experience in corporate strategy, structuring and executing successful complex corporate initiatives, manufacturing, and mergers
and acquisitions. As a partner-level consultant, Mr. Robinson has led engagements in strategy development and M&A integration on transactions
ranging from $100M to over $1B in value. His industry experience includes time as an Industrial Engineer with Texas Instruments'
Defense Systems Group and as an executive over industrial engineering, safety and quality systems with Decibel Products, a telecom and
electronics manufacturer which grew into Allen Telecom. He served on the Chicago and North Texas chapter boards of the National
Association of Corporate Directors (NACD), a national organization focused on providing information and education to corporate directors.
Mr. Robinson served as a Business Leadership Center Instructor at the SMU Cox School of Business in Dallas, TX and is a two-time recipient
of the Teaching Excellence Award. He holds an MBA from the University of Dallas and a B.S. in Industrial Engineering from Texas
A&M University.

 Ms. Shaunna Black is President of Shaunna Black
and Associates. Ms. Black advises companies on global operations, provides experienced executive talent, and coaches leadership teams.
The focus of her company is start-ups, business turnarounds and growth, strategy, organization and systems design, and leadership development.
Ms. Black is an innovative and highly accomplished operations/manufacturing executive, who enables leaders to rapidly solve complicated
problems. She has managed operations internationally in 25 countries. Ms. Black's methodology delivers extraordinary performance
utilizing the power of diverse, multi-generational teams, creating high performance cultures and metrics-driven systems. She has expertise
in leadership and team development, technical and systems design, and production methodology in the technology, industrial, manufacturing
and hospitality sectors. Her executive career has provided significant experience in strategy, global operations, technology, risk management
and sustainability. Ms. Black has served on Audit, Governance, Safety/Risk and M&A Committees. Her industry experience includes Texas
Instruments Vice President, (24 years) Dallas/Fort Worth Area including Vice President, Worldwide Facilities - responsible for the design,
construction and operation of TI facilities, environmental, safety and health programs, global real estate, worldwide security, and TI's
sustainability strategy; Vice President, Dallas Fabrication - Manager for semiconductor manufacturing in one of TI's premier analog wafer
fabrication facilities; and Vice President, Worldwide Facilities and Worldwide Environmental, Safety and Health.

 Mr. Robert Hempel has served as the (Managing
Director) of Hanseatische Waren-Gesellschaft MBH & Co., KG, Bremen, Germany since 1994.

 Mr. Cefalu has over 44 years of experience in
management, manufacturing and financial operations in a variety of industries. Mr. Cefalu has been the Chief Financial Officer and Executive
Vice President of the Company since September 2001.

 Board Meetings and Committees

 The Board of Directors held five (5) board meetings
during the year ended November 2023. Directors received a fee of $1,500 (other than Mr. King) for each meeting attended during the year
ended November 2023. In addition, the Board agreed to pay an annual retainer of $10,000 to Mr. Donald Robinson, Ms. Christine Dittrich,
Ms. Shaunna Black and Mr. Gerald Tobey.

 The Audit Committee held four (4) meetings during
the year ended November 30, 2023. Members of the Audit Committee received a fee of $750 for each meeting attended during the year ended
November 2023. Mr. King did not receive any payments for attending meetings of the Audit Committee.

 Director Compensation 2023

 Director

 Audit Committee

 Other fees

 Total Fees

 Shaunna Black

 $
 17,500

 $
 3,000

 -

 $
 20,500

 Donald Robinson

 $
 17,500

 $
 3,000

 -

 $
 20,500

 Christine Dittrich

 $
 17,500

 $
 3,000

 -

 $
 20,500

 Gerald Tobey

 $
 17,500

 $
 3,000

 -

 $
 20,500

 Mr. King does not receive any additional compensation
for serving as a Director and as a member of the Audit Committee.

 Audit Committee

 The Board of Directors
formed an Audit Committee on May 13, 2002. The members of the Audit Committee operate pursuant to a charter developed by the Board of
Directors. The Board has determined that all Audit Committee members qualify as an "audit committee financial expert" for
purposes of the rules and regulations of the SEC and that each of these members is sufficiently proficient in reading and understanding
our financial statements to serve on the Audit Committee.

 With the exception of Mr. King and Mr. Robert
Hempel, members of the Audit Committee are considered independent members under the Securities and Exchange Act rules and regulations.

 The Audit Committee has reviewed with management
and the independent auditors the quality and adequacy of the Company's significant accounting policies. The Audit Committee has considered
and reviewed with the independent auditors their audit plans, the scope of the audit, and the identification of audit risks. The Audit
Committee has reviewed and discussed the audited financial statements with management and has discussed such financial statements with
the independent auditors.

 The Audit Committee has received the written disclosures
and the report from the independent accountant required by the applicable requirements of the Public Company Accounting Oversight Board
(United States) regarding the independent accountant's communications with the Audit Committee concerning independence and has discussed
with the independent accountants the independent accountant's independence. Based upon the review and discussions referred to above,
the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's annual
report on Form 10-K for the fiscal year ended November 30, 2023, for filing with the Securities and Exchange Commission.

 Management has the responsibility
for the preparation and integrity of the Company's financial statements and the independent registered public accounting firm have the
responsibility for the audit of those statements. It is not the duty of the Audit Committee to conduct audits to determine that the Company's
financial statements are complete and accurate and are in accordance with accounting principles generally accepted in the United States.
In giving its recommendations, the Audit Committee considered (a) management's representation that such financial statements have been
prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America,
and (b) the report of the Company's independent auditors with respect to such financial

 statements.

 Nominating, Compensation
and Corporate Governance

 The Board of Directors does not have a nominating,
compensation committee or corporate governance committee or committees performing similar functions.

 The Directors of the Company are responsible for
developing and recommending corporate governance guidelines, identifying qualified individuals to become directors, recommending selected
nominees to serve on the Board, and overseeing the evaluation of the Board.

 In addition, the independent Directors are responsible
for considering and recommending the compensation arrangements for senior management. As part of its other responsibilities, they provide
general oversight of our compensation structure, and, if deemed, necessary, retains and approves compensation consultants and other compensation
experts. Other specific duties and responsibilities of reviewing the performance of executive officers; reviewing and approving objectives
relevant to executive officer compensation; recommending incentive compensation plans; and recommending compensation policies and practices
for service on our Board of Directors.

 Board Leadership Structure

 Our Board of Directors does
not have a policy on whether the roles of Chief Executive Officer and Chairman of the Board of Directors should be separate and, if they
are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee. Our Board
of Directors believes that it should be free to make a choice from time to time in any manner that is in the best interest of us and our
stockholders.

 The Board of Directors believes that Mr. King's
service as both Chief Executive Officer and Chairman of the Board is in the best interest of us and our stockholders. Mr. King possesses
detailed and in-depth knowledge of the issues, opportunities and challenges we face and is thus best positioned to develop agendas, to
ensure that the Board's time and attention are focused on the most critical matters. His combined role enables decisive leadership,
ensures clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to our stockholders,
employees, and customers and suppliers.

 Our Board of Directors believes that the independent
directors provide effective oversight of management.

 Board of Directors' Role in the Oversight
of Risk Management

 The Board of Directors has designated the Audit
Committee to take the lead in overseeing risk management at the Board of Directors level. Accordingly, the Audit Committee schedules time
for periodic review of risk management, in addition to its other duties. In this role, the Audit Committee receives reports from management,
independent registered public accounting firm, outside legal counsel, and other advisors, and strives to generate serious and thoughtful
attention to our risk management process and system, the nature of the material risks we face, and the adequacy of our policies and procedures
designed to respond to and mitigate these risks.

 In addition to the formal compliance program,
our Board of Directors encourage management to promote a corporate culture that understands risk management and incorporates it into our
overall corporate strategy and day-to-day business operations.

 Employee, Officer and
Director Hedging

 None

 Section 16(a) Beneficial Owner Reporting
Compliance

 Section 16(a) of the Exchange Act requires the
Company's directors, executive officers, and 10% stockholders to file reports of ownership and reports of change in ownership of the Company's
equity securities with the Securities and Exchange Commission. Directors, executive officers, and 10% stockholders are required to furnish
the Company with copies of all Section16(a) forms they file. Based on information provided by such persons and a review of the copies
of such reports furnished, the Company believes that during the fiscal year ended November 30, 2023, the Company's directors, executive
officers, and 10% stockholders filed on a timely basis all reports required by Section 16(a) of the Exchange Act.

 Code of Ethics

 The Company has adopted a code of ethics that
applies to the Company's principal executive officer and principal financial officer. In addition, the Company has a code of conduct
for all employees, officers and directors of the Company.

 Item 11.
 Executive Compensation

 The information set forth in the 2024 Proxy Statement
under the heading "Management Remuneration and Transactions" is incorporated herein.

 The following table shows as of November 30, 2023,
all cash compensation paid to, or accrued and vested for the account of Mr. Mark King, President and Chief Executive Officer and Mr. Patrick
Cefalu, Vice President and Chief Financial Officer. Mr. King and Mr. Cefalu received no non-cash compensation during 2023.

 Annual Compensation

 All Other

 Name and

Principal Position

 Year

 Annual

Salary

 Bonus

 Stock

Grant

(a)

 Total

 Mark King,

 2023

 $
 322,032

 $
 23,981

 $
 28,328

 $
 44,950

 $
 419,291

 President and

 2022

 $
 309,936

 $
 39,500

 $

 $
 42,696

 $
 392,132

 Chief Executive Officer (1)

 2021

 $
 301,924

 $
 13,400

 $

 $
 42,672

 $
 357,996

 Patrick Cefalu,

 2023

 $
 200,397

 $
 23,981

 $
 18,374

 $
 39,579

 $
 284,354

 Vice President and

 2022

 $
 192,856

 $
 39,500

 $

 $
 34,809

 $
 267,165

 Chief Financial Officer (2)

 2021

 $
 187,873

 $
 13,400

 $

 $
 32,918

 $
 234,191

 (a)
 Reflects amounts contributed by Micropac Industries, Inc., under Micropac's 401(k) profit sharing
plan; unused vacation pays; life insurance premiums paid; and reimbursement for medical expenses under Micropac's Family Medical
Reimbursement Plan.

 (1) Effective November 2005, Mr. King's
existing employment agreement was revised to provide that Mr. King would serve as the Company's President and Chief Executive Officer,
and a member on the Board of Directors and Audit Committee at a base salary of $186,400 for a term of three (3) years. In December 2005,
the Company and Mr. King amended his employment agreement to increase his annual base salary to $225,000. In June 2009, the Company and
Mr. King amended his employment agreement to increase his annual base salary to $247,104 for renewable terms of three (3) years with annual
increases based on consumer price index with additional increases to be determined by the Board of Directors. The June 2009 amendment
also provides under certain events, either the Company or Mr. King can terminate the agreement upon a payment to Mr. King of 18- or 36-months'
salary as severance payments.

 (2) Effective February 2004, Mr. Cefalu entered
into an employment agreement that Mr. Cefalu would serve as Executive Vice President and Chief Financial Officer for a term of two (2)
years. On April 6, 2023, the employment agreement was amended to extend the term for three (3) years and the remaining terms and conditions
of the Employment Agreement shall remain if full force and effect.

 The Board of Directors reviews and approves the
Company's annual bonus payment's structure. In 2023 Mr. King and Mr. Cefalu received a bonus payment of $23,981 in December
2022.

 Amount included in all other compensation relating
to employee benefit plans

 The Company maintains a Family Medical Reimbursement
Plan for the benefit of its executive officers and their dependents. The Plan is funded through a group insurance policy issued by an
independent carrier and provides for reimbursement of 100% of all bona fide medical and dental expenses that are not covered by other
medical insurance plans capped at an annual family maximum. During the fiscal year ended November 30, 2023, the Company paid $15,682 in
premiums each for Mr. King and Mr. Cefalu which amounts are included in the "All Other Compensation" column shown in the preceding
remuneration table.

 In July 1984, the Company adopted a Salary Reduction
Plan pursuant to Section 401(k) of the Internal Revenue Code. The Plan's benefits are available to all Company employees who are at least
18 years of age and have completed at least six months of service to the Company as of the beginning of a Plan year. Plan participants
may elect to defer up to 15% of their total compensation as their contributions, subject to the maximum allowed by the Internal Revenue
code 401(k), and the Company matches their contributions up to a maximum of 6% of their total compensation. A participant's benefits vest
to the extent of 20% after two years of eligible service and become fully vested at the end of six years. During the fiscal year ended
November 30, 2023, the Company made contributions to the Plan for Mr. King in the amount of $18,300 and for Mr. Cefalu in the amount of
$13,457 which amount is included in the "All Other Compensation" column shown in the preceding remuneration table.

 Employment agreements of the Company's officers
provide that they may elect to carry over any unused vacation time to subsequent periods or elect to be paid for such unused vacation
time. Mr. King and Mr. Cefalu did not receive any unused vacation pay in 2023.

 During the fiscal year ended November 30, 2023,
the Company paid life insurance premiums for the benefit of Mr. King and Mr. Cefalu valued at $10,968 and $10,440, respectively.

 PAY VERSUS PERFORMANCE

 The following table shows information about the relationship between
compensation actually paid for our principal executive officer (PEO) and our non-PEO named executive officers (NEO) and certain financial performance of
the Company for the fiscal years ending November 30, 2023 and November 30, 2022.

 Year

 Summary

Table

Total for

PEO

Actually

Paid to

PEO

 Average

Summary

Table Total for

non-PEO

Named

Executive

Officers

 Average

Actually

Paid to non-

PEO Named

Executive

Officers

 Value of

Initial Fixed

$100

Investment

Based On

Total

Shareholder

Return

 Net

Income

(Loss)

 a

 b

 c

 d

 e

 2023

 419,291

 390,963

 284,354

 265,980

 (24.4)

 632,000

 2022

 392,132

 392,132

 267,165

 267,165

 (14.0)

 2,787,000

 a
 The dollar amounts reported are the amounts of total compensation reported for our PEO, Mark King, in
the Summary Compensation Table for fiscal years 2023 and 2022.

 b
 The dollar amounts reported represent the amount of "compensation actually paid", as computed
in accordance with SEC rules. The dollar amounts reported are the amounts of total compensation reported for Mr. King

 c
 The dollar amounts reported are the average of the total compensation reported for our NEO, other than
our PEO, Patrick Cefalu who served as Chief Financial Officer for fiscal years 2023 and 2022.

 d
 The dollar amounts reported represent the amount of "compensation actually paid", as computed
in accordance with SEC rules. The dollar amounts reported are the amounts of total compensation reported for Mr. Cefalu.

 e
 Total shareholder return is calculated as the difference between the price of the Company's common
stock at the end of each fiscal year, represented by the closing trading price as of that date, compared to the price of the Company's
common stock at the beginning of the measurement period, represented by the closing trading price as of the last day of the Company's
2021 fiscal year plus dividends that were declared or paid during either of the fiscal years presented.

 Grant Awards at Fiscal Year-End

 Micropac Industries Inc.'s 2023 Equity Incentive Plan

 Grant

 Number

 Number of

 Actual

 Actual

 Projected

 Projected

 Date

 of Shares

 Vested Shares

 Fiscal 2022

 Fiscal 2023

 Fiscal

2024

 Fiscal

2025

 RSUs

 Mark King

 12/1/2022

 10,355

 2,158

 -

 28,328

 45,325

 45,312

 Patrick Cefalu

 12/1/2022

 6,718

 1,399

 -

 18,374

 29,398

 29,411

 Item 12.
 Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

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

 Name and Address

 Number of Shares

 Percent

 of Beneficial Owner (1)

 Beneficially Owned

 of Class (1)

 Robert Hempel (2) (3)

 1,952,577

 75.7%

 Shaunna Black (3)

 0%

 Patrick Cefalu

 0%

 Christine Dittrich (3)

 0%

 Mark King (3)

 17,000

 Less than 0.7%

 Donald Robinson (3)

 0%

 Gerald Tobey (3)

 0%

 All officers and directors

 1,969,577

 76.4%

 as a group (7 Persons)

 _______________________

 (1)
 Calculated on the basis of the 2,578,315 outstanding shares. There are no options,
warrants, or convertible securities outstanding. The address of each person listed is 1655 State Hwy 66, Garland, Texas 75040.

 (2)
 Mr. Hempel controls Micropac Industries, Inc. Vermoegensverwaltungsgesellschaft
buergerlichen Rechts, which owns the enumerated shares. Micropac Industries, Inc. Vermoegensverwaltungsgesellschaft buergerlichen Rechts
is a beneficiary of an Ancillary Agreement entered into in March 1987. The Ancillary Agreement primarily obligates the Company to register
Micropac Industries, Inc. Vermoegensverwaltungsgesellschaft buergerlichen Rechts's stock and allows Micropac Industries, Inc. Vermoegensverwaltungsgesellschaft
buergerlichen Rechts to participate in any sale of stock by the Company.

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

 Item 13.
 Certain Relationships and Related Transactions, and Director Independence

 None.

 Item 14.
 Principal Accountant Fees and Services

 Whitley Penn LLP was selected as the Company's
independent registered public accounting firm in 2016 and has been responsible for the Company's financial audit for the fiscal years
ended November 30, 2016, through November 30, 2023.

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

 AUDIT FEES

 The fees for professional services rendered for
the audit of our annual financial statements for each of the fiscal years ended November 30, 2023, and November 30, 2022, and the reviews
of the financial statements included in our Quarterly Reports on Form 10-Q during those periods were $154,000 and $145,000, respectively.

 TAX FEES

 Whitley Penn LLP fees for tax return preparation
services were $29,500 in 2023, and $29,500 in 2022, respectively.

 ALL OTHER FEES

 Whitley Penn LLP fees for audit of the Company's
401K plan was $12,360 in 2023 and $11,000 2022, respectively.

 The Audit Committee requests that the Principal
Accounting Firm provide the committee with the anticipated charges of all accounting and tax related services to be performed in advance
of performing such services. The Audit Committee approves all services in advance of the performance of such services.

 Item 15.
 Exhibits, Financial Statement Schedules

 (a)

 Exhibits

 31.1

 Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2

 Certification of Chief Accounting Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 32.1

 Certification of Chief Executive Officer
pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.

 32.2

 Certification of Chief Accounting Officer
pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.

 3.1

 Bylaws – In the form of Exhibit 3.1 to the Form 8-K filed March 3, 2011 which is incorporated herein.

 4.1

 Certificate of Incorporation – In the form of Exhibit 4.1 to the Form S-8 filed August 15, 2001, which is incorporated herein.

 10.1

 Loan Agreement dated as of January 23, 2013,
by and among Frost Bank and Micropac Industries, Inc. which is filed as Exhibit 10.1 to the Form 8K filed January 29, 2013, which
is incorporated by reference herein.

 10.4

 Employment Agreement with Patrick Cefalu dated April 6, 2020 – In the form attached as Exhibit 10.4 to the Form 10KSB filed August 23, 2004, which is incorporated herein.

 10.7

 Code of Ethics – In the form attached as Exhibit 10.7 to the Form 10KSB filed August 23, 2005 which is incorporated herein.

 10.11

 Restated and Amended Employment Agreement with Mark W. King dated June 1, 2009 – In the form attached as Exhibit 10.11 to the Form 10K filed February 10, 2021, which is incorporated herein.

 10.13

 "Sixth Amendment to Loan Agreement"
dated March 26, 2021, between Micropac Industries, Inc. as borrower and Frost Bank attached as Exhibit 10.13 to Form 8K filed March 30,
2021, which is incorporated herein.

 10.14

 "Construction Loan Agreement dated
March 26, 2021, between Micropac Industries, Inc. as borrower and Frost Bank attached as Exhibit 10.14 to Form 8K filed March 30, 2021
which is incorporated herein.

 10.15

 Amended Employment Agreement with Patrick Cefalu dated April 6,
2023 - In the form attached as Exhibit 10.15 to the Form 10Q filed May 27, 2023, which is incorporated herein.

 10.16

 "Seventh Amendment to Loan Agreement" dated May 16, 2023, between Micropac Industries, Inc. as borrower and Frost Bank- In the form attached as Exhibit 10.15 to the Form 10Q filed May 27, 2023, which is incorporated herein.

 Item 16.

 None.

 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.

 By:

 /s/ Mark King

 Mark King

 President and Chief Executive Officer

 (Principal Executive Officer)

 By:

 /s/ Patrick Cefalu

 Patrick Cefalu

 Executive Vice President

 and Chief Financial Officer

 (Principal Accounting Officer)

 Dated: February 7, 2024

 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 February 7, 2024.

 /s/ Mark King

 /s/ Robert Hempel

 Mark King, Director

 Robert Hempel, Director

 /s/ Donald Robinson

 /s/ Gerald Tobey

 Donald Robinson, Director

 Gerald Tobey, Director

 /s/ Christine Dittrich

 /s/ Shaunna Black

 Christine Dittrich, Director

 Shaunna Black, Director

 DIRECTORS AND OFFICERS

 NOVEMBER 30, 2023

 MARK KING

 President and Chief Executive Officer

 Chairman of the Board

 Micropac Industries, Inc.

 ROBERT HEMPEL

 Managing Director

 Hanseatishe Waren Handelsgesellschaft MBH &
Co. KG, Bremen, Germany

 DONALD ROBINSON

 Managing Partner

 Metre22, Inc

 CHRISTINE DITTRICH

 Retired

 GERALD TOBEY

 Retired

 SHAUNNA BLACK

 Retired

 PATRICK CEFALU

 Executive Vice President

 Chief Financial Officer

 Micropac Industries, Inc.

 LEGAL COUNSEL

 TRANSFER AGENT & REGISTRAR

 Whitaker Chalk Swindle & Schwartz PLLC

 Securities Transfer

 Fort Worth, Texas

 Plano, Texas