SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

DENSE-PAC MICROSYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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

(2) Aggregate number of securities to which transaction applies:

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

---------------------------------------------------------------------
(5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

---------------------------------------------------------------------
(3) Filing Party:

---------------------------------------------------------------------
(4) Date Filed:

---------------------------------------------------------------------
2

DENSE-PAC MICROSYSTEMS, INC.

7321 LINCOLN WAY
GARDEN GROVE, CALIFORNIA 92841

JUNE 26, 2001

TO THE SHAREHOLDERS OF DENSE-PAC MICROSYSTEMS, INC.

The Annual Meeting of Shareholders of Dense-Pac Microsystems, Inc. (the
"Company") will be held at the Company's offices located at 7321 Lincoln Way,
Garden Grove, California on August 10, 2001 at 10:00 a.m., California time.

The Annual Report for the Fiscal Year ended February 28, 2001 is enclosed.
At the stockholders' meeting, we will discuss in more detail the subjects
covered in the Annual Report as well as other matters of interest to
stockholders.

The enclosed proxy statement explains the items of business to come
formally before the Annual Meeting. As a stockholder, it is in your best
interest to express your views regarding these matters by signing and returning
your proxy. This will ensure the voting of your shares if you do not attend the
Annual Meeting.

Your vote is important regardless of the number of shares of the Company's
Stock you own, and all stockholders are cordially invited to attend the Annual
Meeting. To ensure your representation at the Annual Meeting, please mark, sign,
date and mail the enclosed proxy card promptly in the return envelope provided,
which requires no postage if mailed in the United States. The giving of a proxy
will not affect your right to vote in person if you attend the Annual Meeting.
Please note, however, that if a broker, bank or other nominee holds your shares
of record and you wish to vote at the Annual Meeting, you must obtain from the
record holder a proxy issued in your name.

Sincerely yours,

/s/ RICHARD J. DADAMO

Richard J. Dadamo
Chairman of the Board

DENSE-PAC MICROSYSTEMS, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON AUGUST 10, 2001

To The Shareholders of Dense-Pac Microsystems:

Notice is hereby given that the Annual Meeting of Shareholders of Dense-Pac
Microsystems, Inc. will be held on Friday, August 10, 2001 at 10:00 a.m. at the
Company's offices located at 7321 Lincoln Way, Garden Grove, California for the
following purposes:

1. To elect five directors for the ensuing year to serve until the next
annual meeting of shareholders and until their successors are chosen.

2. To consider and act upon a proposal to approve amendments to the
Company's 1996 Stock Option Plan to increase the number of shares of
Common Stock which may be issued subject to the plan by 2,000,000
shares and increase the number of options in the plan by 4% of the
total number of outstanding shares of Common Stock each year until the
end of the option plan.

3. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to change the corporate name of the Company to DPAC
Technologies Corp. from Dense-Pac Microsystems, Inc.

4. Other business may properly come before the Meeting and any
adjournments thereof: however, we know of no such other matters at
this time.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

The Board of Directors has fixed the close of business, June 13, 2001, as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting.

EVEN THOUGH YOU MAY EXPECT TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE BE
SURE THAT THE ENCLOSED PROXY CARD IS PROPERLY COMPLETED, DATED, SIGNED AND
RETURNED WITHOUT DELAY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES.

WILLIAM M. STOWELL
Secretary

2
4

DENSE-PAC MICROSYSTEMS, INC.
7321 Lincoln Way
Garden Grove, California 92841

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 10, 2001

GENERAL INFORMATION

SOLICITATION, REVOCATION AND VOTING OF PROXIES

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Dense-Pac Microsystems, Inc. (the
"Company"), for use at the Annual Meeting of Shareholders to be held at 10:00
a.m. local time on August 10, 2001, at the Company's offices located at 7321
Lincoln Way, Garden Grove, California, and at any and all adjournments thereof
(the "Annual Meeting"). It is anticipated that this Proxy Statement and
accompanying proxy will first be mailed to shareholders on or about June 25,
2001. Such proxies will be used for the following purposes:

To consider and vote upon the following matters described in this Proxy
Statement:

1. To elect five directors for the ensuing year to serve until the next
annual meeting of shareholders and until their successors are chosen.

3. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to change the corporate name of the Company to DPAC
Technologies Corp. from Dense-Pac Microsystems, Inc.

Other business may properly come before the Meeting and any adjournments
thereof. As to any other matters or business which may be brought before the
Meeting, a vote may be cast pursuant to the accompanying proxy in accordance
with judgment of the persons voting the shares, but management does not know of
any such other matter or business to come before the meeting. A shareholder may
revoke his or her proxy at any time prior to the voting of shares by voting in
person at the Meeting or by filing with the Secretary of the Company a duly
executed proxy bearing a later date or an instrument revoking the proxy.

The Company will pay the costs of solicitation of proxies. In addition to
soliciting proxies by mail, the Company's officers, directors and other regular
employees, without additional compensation, may solicit proxies personally or by
other appropriate means. Banks, brokers, fiduciaries and other custodians and
nominees who forward proxy soliciting material to their principals will be
reimbursed their customary and reasonable out-of-pocket expenses.

3
5

RECORD DATE AND VOTING RIGHTS

Only shareholders of record of the Company's Common Stock as of the close
of business on June 13, 2001 will be entitled to vote at the Annual Meeting. On
June 13, 2001, there were outstanding 20,950,589 shares of Common Stock, which
constituted all of the outstanding voting securities of the Company, each of
which is entitled to one vote per share. A majority of the shares entitled to
vote, represented in person or by proxy, constitutes a quorum at the Annual
Meeting. Abstentions and broker non-votes are counted as present for purposes of
determining the existence of a quorum.

In the election of directors only, each shareholder has the right to
cumulate his or her votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares he or she
is entitled to vote, or to distribute his or her votes on the same principle
among as many candidates as he or she sees fit. No shareholder is entitled to
cumulate votes unless the name of every candidate for whom such votes would be
cast has been placed in nomination prior to the voting and any shareholder has
given notice at the meeting prior to the voting of such shareholder's intention
to cumulate his or her votes.

If voting for directors is conducted by cumulative voting, the persons
named on the enclosed proxy will have discretionary authority to cumulate votes
among the nominees with respect to which authority was not withheld or, if the
proxy either was not marked or was marked for all nominees, among all nominees.
In any case, the proxies may be voted for less than the entire number of
nominees if any situation arises which, in the opinion of the proxy holders,
makes such action necessary or desirable.

REQUIRED VOTES

As to Proposal 1, the election of directors, the candidates receiving the
highest number of votes, up to the number of directors to be elected, will be
elected directors. Abstentions, broker non-votes and votes withheld have no
legal effect.

As to Proposal 2, the amendment of the 1996 Plan, approval by the
shareholders requires approval by holders of a majority of the shares present
and voting. Abstentions, broker non-votes and votes withheld are treated as
present but not voting; and therefore they have no effect on the number of votes
required. In addition, such approval must be by holders of more than 25% of the
number of shares outstanding because California law requires generally that
shareholder approval be by a majority of the requisite quorum for the meeting;
and therefore, this requires a number of votes greater than 50% (majority)
multiplied by 50% (the quorum requirement).

As to Proposal 3, the amendment of the Articles of Incorporation, approval
by the shareholders requires approval by holders of a majority of the shares
outstanding. Abstentions, broker non-votes and votes withheld are treated as
present but not voting; and therefore they have no effect on the number of votes
required.

NO DISSENTERS' RIGHTS

Under California law, stockholders are not entitled to dissenters' rights
of appraisal with respect to the proposed amendment of the Company's Articles of
Incorporation to change the Company's name.

4
6

ELECTION OF DIRECTORS

(PROPOSAL 1)

The five directors to be elected at the Annual Meeting will hold office
until the next Annual Meeting of Shareholders and until the election and
qualification of their respective successors. All proxies received by the Board
of Directors will be voted for the nominees listed below if no direction to the
contrary is given. In the event that any nominee is unable or declines to serve,
an event that is not anticipated, the proxies will be voted for the election of
any replacement nominee who may be designated by the Board of Directors.

THE BOARD RECOMMENDS VOTING "FOR" THE FIVE NOMINEES LISTED BELOW.

Set forth below is information concerning the nominees for director:

NAME AND YEAR FIRST PRINCIPAL OCCUPATION
BECAME A DIRECTOR AGE DURING THE PAST FIVE YEARS
----------------- --- --------------------------

Richard J. Dadamo 73 Mr. Dadamo has been the principal of RJD
1999 Associates, Inc., amanagement-consulting
firm, since 1981. Mr. Dadamo served as
interim CEO of the Company from August 11,
1998 to January 29, 1999 and is currently
Chairman of the Board. He had previously
held top-level positions at The Earth
Technology Corporation, American
International Devices, TRW, Inc. and
Electronic Memories and Magnetics. He has
written three books on management, holds
management seminars, has a monthly
newsletter and is currently on the board of
directors of three private companies.

Ted Bruce 43 Mr. Bruce joined the Company as its
1999 president in 1999 and was elected its CEO
a month later. Prior to joining Dense-Pac,
Mr. Bruce was with Toshiba America
Electronic Components from 1989, where he
served as Senior Manager of North America.
He also served as its Manager for the Card,
SRAM and Nonvolatile departments and as a
Product Marketing Engineer of the standard
speed SRAM. He is a 15-year veteran of
manufacturing, engineering, sales and
marketing within the semiconductor industry,
in both commercial and military markets.

Samuel W. Tishler 63 Mr. Tishler is currently vice president of
2000 corporate development for Acterna
Corporation, a manufacturer of
telecommunications communications test
equipment, and is an experienced strategic
planning and venture investment
professional. He was a vice president of
Arthur D. Little Enterprises, Inc., and a
founder of Arthur D. Little Ventures. He
also was a vice president of Raytheon
Ventures, and in that capacity was
responsible for its venture capital
portfolio. Mr. Tishler has also served on
many of the Boards of the venture-backed
companies, including Viewlogic Systems and
Kloss Video Corporation. Mr. Tishler's broad
strategic planning background includes the
early development of technology concepts
from planning to development and execution.

5
7

Gordon M. Watson 62 Mr. Watson is the founder of Watson
2000 Consulting, LLC, a management consultantfirm
to small technology companies, based in
California. Mr. Watson most recently served
as Western Regional Director for Lotus
Development Corp. He was also vice president
of business development for Platinum
Technology, Inc., from 1988 until 1996.
Prior to joining Platinum Technology, he
served in various senior management
positions overseeing operations and sales
for technology equipment manufacturing
concerns. Mr. Watson also taught engineering
at the University of California, Irvine and
spent one year conducting national lectures
for Data Tech Institute. He holds a Bachelor
of Science degree in engineering from UCLA.

Richard H. Wheaton 65 Mr. Wheaton, a certified management
2000 consultant, spent the greater part of his
career with Price Waterhouse, LLP where he
also consulted to the Japanese, Asian and
European markets. Previously he worked for
TRW and IBM. He currently teaches classes as
an adjunct professor at the University of
California, Irvine, Graduate School of
Business. He was awarded a Bachelor of
Science degree in business administration
from UCLA and an MBA in industrial
management from the University of Southern
California.

DIRECTORS' COMPENSATION

The Company pays its non-employee directors $1,500 for each Board meeting
attended and $500 for the Committee Chairman, for a meeting held which is not
held on the same day as a Board meeting, and reimburses out-of-pocket expenses
for attending such meetings. New directors are awarded 40,000 stock options,
vesting over a three year period. Once the original options are vested, an
additional 30,000 options, with a three year vesting period are awarded. In
Fiscal Year 2001, the Company awarded stock options to a non-employee director
as follows:

Number of Securities Exercise Expiration
Name Underlying Options Granted Date of Grant Price/Share Date
- ----- -------------------------- ------------- ----------- ----------

Roger Claes 30,000 3-29-00 $7.16 3-28-10
Gordon Watson 20,000 3-29-00 $7.16 3-28-10
Samuel Tishler 40,000 4-14-00 $5.50 4-13-10
Richard Wheaton 40,000 5-08-00 $5.63 5-07-10

INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS

The Company's Board of Directors held four meetings during the fiscal year
ended February 28, 2001. Each director attended or participated in at least 75%
of the aggregate number of Board meetings and committee meetings (held during
the period when he was a member thereof).

6
8

AUDIT COMMITTEE REPORT

The following report will not be deemed to be incorporated by reference
into any of Dense-Pac's previous or future filings under the Securities Act or
the Exchange Act, notwithstanding anything to the contrary in any filing.

The members of the Audit Committee in Fiscal Year 2001 were Richard
Wheaton, Sam Tishler and Gordon Watson, each of whom is a member of our Board of
Directors and qualifies as "independent" as defined under Rule 4200(a)(15) of
the National Associations of Securities Dealers' listing standards. The Audit
Committee is responsible for, among other things, periodically reviewing the
financial condition and the results of audit examinations of the Company with
its independent accountants. The Audit Committee met four times during the last
Fiscal Year.

The Board has adopted a charter for the Audit Committee, a copy of which is
attached to this proxy statement as Appendix A.

The primary function of the Audit Committee is to provide advice with
respect to Dense-Pac's financial matters and to assist our Board of Directors in
fulfilling its oversight responsibilities regarding finance, accounting, tax and
legal compliance. The Audit Committee's primary duties and responsibilities are
to:

- serve as an independent and objective party to monitor Dense-Pac's
financial reporting process and internal system;
- review and appraise the audit efforts of Dense-Pac's independent
accountants;
- evaluate Dense-Pac's quarterly financial performance as well as its
compliance with laws and regulations;
- oversee management's establishment and enforcement of financial
policies and business practices; and
- provide an open avenue of communications among the independent
accountants, financial and senior management, counsel, and our board
of Directors.

REVIEW OF DENSE-PAC'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
FEBRUARY 28, 2001

The audit committee has reviewed and discussed Dense-Pac's audited
financial statements for the fiscal year ended February 28, 2001 with
Dense-Pac's management. The Audit Committee has discussed with Deloitte &
Touche, LLP, Dense-Pac's independent public accountants, the matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Audit Committee has also received the written disclosures and
the letter from Deloitte & Touche, LLP required by Independence Standards Board
Standard #1 (Independence Discussion with Audit Committee) and the audit
committee has discussed the independence of Deloitte & Touche with them.

Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to our Board of Directors that Dense-Pac's audited
financial statements be included in our Annual report on Form 10-KSB for the
fiscal year ended February 28, 2001 for filing with the SEC.

AUDIT COMMITTEE

Richard H. Wheaton
Samuel W. Tishler
Gordon M. Watson

7
9

COMPENSATION COMMITTEE REPORT

The Compensation Committee reviews general programs of compensation and
benefits for all employees and makes recommendations to our Board of Directors
concerning compensation paid to our executive officers, directors and certain
key employees. The Compensation Committee also administers our stock-based
compensation plans, including our 1996 Stock Option Plan, which allows the
Compensation Committee to grant incentive stock options to eligible key
employees, officers, directors and consultants. The members of the Compensation
Committee were Richard Wheaton and Gordon Watson. The Compensation Committee met
twice during the last Fiscal Year.

COMPENSATION PHILOSOPHY AND OBJECTIVES. The overall philosophy underlying
the decisions and recommendations of the Compensation Committee is to recognize
and reward results and achievements at both the individual and company level by
linking compensation to such achievement. Consistent with this philosophy, the
Compensation Committee has the following objectives for our executive
compensation program:

- Encourage the achievement of desired individual and company
performance goals by rewarding such achievements.
- Provide a program of compensation that is competitive with comparable
companies to enable us to attract and retain key executive talent.
- Align the interests of our executives with the interests of our
shareholders by linking compensation to company opportunities for
long-term ownership.

In making recommendations to our Board of Directors, the Compensation
Committee considers factors such as company performance, both in isolation and
in comparison to companies of comparable profitability, complexity and size; the
individual performance of each executive officer; our historical compensation
levels; the overall competitive environment for executives and the level of
compensation necessary to attract and retain the level of key executive talent
that we desire. In analyzing these factors, the Compensation Committee may from
time to time review competitive compensation data gathered in comparative
surveys or collected by independent consultants.

SECTION 162 (m). Section 162 (m) of the Internal Revenue Code of the 1986
limits our ability to deduct certain compensation in excess of one million
dollars paid to our chief executive officer and each of our four most highly
compensated executives. In fiscal year 2001, we did not pay "compensation"
within the meaning of Section 162 (m) in excess of one million dollars to our
executive officers, and we do not believe that we will do so in the near future.
As a result, we have not established a policy for qualifying compensation paid
to our executive officers for deductibility under Section 162 (m), but will
formulate such a policy if compensation levels ever approach one million
dollars.

COMPENSATION COMMITTEE

Richard Wheaton
Gordon Watson

OTHER COMMITTEES

The Company currently does not have a nominating committee or any committee
performing a similar function.

8
10

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No interlocking relationship exists between any of our executive officers
or any member of our compensation committee and any member of any other
company's board of directors or compensation committee.

EXECUTIVE OFFICERS

The following information is provided with respect to the Company's current
executive officers.

TED BRUCE, age 43, was elected Chief Executive Officer in February 1999.
See "Election of Directors" for his background.

JOHN P. SPRINT, age 39, has served as Chief Operating Officer since March
2000. Mr. Sprint joined the Company in 1990, where he has served in several
management positions; including Vice President of Manufacturing, Vice President
of Operations from January 1998 until June 1999 and Executive Vice President of
Operations from June 1999 until March 2000. From 1986 until joining the Company,
Mr. Sprint was a manager in the test, manufacturing and thick film departments
at Northrop Electronics Division.

WILLIAM M. STOWELL, age 45, has served as Vice President, Finance and Chief
Financial Officer of the Company since 1987. Mr. Stowell is a CPA with a
Bachelor of Science degree in accounting from the University of Southern
California and has a teaching credential in accounting and management
information systems. Prior to joining the Company, he served as Chief Financial
Officer for Hughes Enterprises and prior to that he served as an audit manager
at Price Waterhouse & Co.

Officers serve at the discretion of the Board of Directors.

9
11

PROPOSAL TO AMEND THE 1996 STOCK OPTION PLAN
TO INCREASE NUMBER OF SHARES
(PROPOSAL 2)

At the Annual Meeting, the shareholders will be asked to consider and act
upon a proposal to approve an amendment to the Company's 1996 Stock Option Plan
(the "Plan") to increase the number of shares of Common Stock reserved for
issuance under the Plan from 4,000,000 shares to 6,000,000 shares initially and
to increase annually the number of options in the option plan by 4% of the total
number of outstanding shares of Common Stock each year for the balance of the
option plan life. The Board of Directors approved the proposed amendment on
March 15, 2001, subject to shareholder approval.

Management believes that this amendment is in the best interests of the
Company because of the need to provide options to attract, motivate and retain
quality employees, directors, consultants and advisors to remain competitive in
the industry. Additionally, the Company feels that as it absorbs its previous
acquisitions, stock options have become critical to the success of the retention
of the employees of the acquired company. As of June 1, 2001, of the 4,000,000
shares of Common Stock then authorized for issuance under the Plan, the
respective amounts of 2,840,350 shares had been issued upon the exercise of
options granted under the Plan, 1,928,950 shares were subject to outstanding
options, and 607,005 shares were available for future option grants. At March
17, 2001, the Company also had outstanding options to purchase 116,250 shares of
Common Stock pursuant to options granted under the Company's prior option plan
(the "1985 Dense-Pac Stock Option Plan"). No further options will be granted
under the 1985 Dense-Pac Stock Option Plan, however.

If this proposal to increase the number of shares of Common Stock reserved
for issuance under the Plan is approved by the shareholders, the Company intends
to cause the additional shares of Common Stock that will become available for
issuance under the Plan to be registered on a Form S-8 Registration Statement to
be filed with the Securities and Exchange Commission at the Company's expense.
The registration statement will make the additional shares available under the
Plan available for future sale in the public trading market as and when options
are granted, vested and subsequently exercised.

The following summary of the principal provisions of the Plan is subject to
the full text thereof. A copy of the Plan will be delivered to any shareholder
upon any written or oral request by first class mail or other equally prompt
means within one business day of receipt of such request. Request should be
directed to William M. Stowell, Chief Financial Officer, Dense-Pac Microsystems,
Inc. 7321 Lincoln Way, Garden Grove, California 92841, (714) 898-0007.

BACKGROUND AND PURPOSE OF THE PLAN

The Company's shareholders approved the Plan at the Annual Meeting of
Shareholders held in 1996. The underlying objective of the Plan is to further
the interests of the Company by strengthening the desire of employees,
directors, consultants, and advisors to continue their employment with or
service to the Company and by inducing individuals to become employees,
directors, consultants or advisors of the Company through the grant of stock
options, and to enable such persons to acquire an equity interest in the
Company. Options issued under the Plan may be either incentive stock options
("Incentive Stock Options") under Section 422 of the Internal Revenue Code of
1986 (the "Code"), or non-qualified stock options ("Non-Qualified Options").

10
12

SECURITIES SUBJECT TO THE PLAN

Currently, the Plan authorizes the issuance thereunder of up to 4,000,000
shares of the Company's Common Stock.

In the event of any change in the number of outstanding shares of Common
Stock by reason of reorganization, merger, recapitalization, reclassification,
stock dividend, stock split, exchange or combination of shares or other similar
transactions, appropriate and proportionate adjustment will be made in the
number of shares to which outstanding options relate and the exercise price per
share.

If the proposed amendment to the Plan is approved, the number of shares of
Common Stock reserved for issuance under the Plan would increase immediately
from 4,000,000 shares to 6,000,000 shares. Also, annually the number of shares
available would increase by 4% of the total number of shares outstanding. For
instance, 4% of 20,000,000 outstanding shares would result in an increase by
800,000 shares. The first such annual increase will be at the beginning of
fiscal year 2003. The Plan is scheduled to expire in fiscal year 2006.

NEW PLAN BENEFITS

If this proposal is adopted, the amount of options that would be granted in
the Company's current fiscal year, or which would have been granted in the prior
fiscal year, to directors and named executive officers is not determinable.

ADMINISTRATION

The Plan may be administered either by a Committee consisting of at least
two directors appointed by the Board of Directors or by the Board of Directors.
The Committee has full authority, subject to the provisions of the Plan, to
grant options, to designate the optionees and terms of the options, to establish
rules and regulations which the Committee deems appropriate for the proper
administration of the Plan, and to interpret and make determinations under the
Plan. Members of the Committee serve at the discretion of the Board and are
eligible to receive options under the Plan, in which event such option grants
are approved by the disinterested members of the Board. At the present time, the
Compensation Committee administers the Plan.

ELIGIBILITY

Options may be granted to persons who are employees, directors,
consultants, and advisors of the Company or any subsidiary or parent company of
the Company. Incentive Options may be granted only to employees of the Company
or any subsidiary or parent of the Company.

At June 1, 2001, the Company had 130 employees and four non-employee
directors and advisors who were eligible to receive options under the Plan. At
June 1, 2001, executive officers as a group held options (granted under the Plan
or otherwise) to purchase 809,250 shares, non-employees, directors and advisors
as a group held options to purchase 395,000 shares, and all employees as a group
(other than executive officers) held options to purchase 1,511,800 shares of
Common Stock. As of June 1, 2001, the following executive officers named in the
Summary Compensation Table and director nominees have outstanding options as
indicated: Ted Bruce, 480,000 options; William M. Stowell, 248,000 options; John
P. Sprint, 181,250 options; Richard J. Dadamo, 165,000 options; Gordon Watson,
60,000 options; Richard Wheaton, 60,000 options; and Sam Tishler, 60,000
options.

During Fiscal Year 2001, options to purchase 975,000 shares were granted to
85 individuals. Exercise prices for the options granted range from $1.91 to
$7.16 per share. The fair market value of the Company's common stock on June 1,
2001 was $1.85 per share.

11
13

TERMS AND CONDITIONS

Options granted under the Plan expire no later than ten years after the
grant date (five years with respect to Incentive Options granted to an optionee
who owns, or would be considered to own by reason of Section 424 (d) of the
Internal Revenue Code, more than 10% of the outstanding Common Stock of the
Company or any subsidiary on the grant date). An option is exercisable in such
amounts and at such times as are determined by the Committee. The purchase price
for shares to be issued upon exercise of an option is determined by the
Committee at the time of grant, but with respect to an Incentive Option such
price may not be less than 100% of the fair market value of the Common Stock on
the grant date (110% of the fair market value in the case of Incentive Options
granted to a person who on the grant date owns or is considered to own more than
10% of the outstanding Common Stock).

If the aggregate fair market value of Common Stock (determined based on the
value at the time each Incentive Option is granted) underlying all Incentive
Options held by an optionee (whether granted under the Plan or any other plan of
the Company) that become exercisable for the first time during any calendar year
exceeds $100,000, then the amount of such excess will be treated as a
Non-Qualified Option.

The exercise price of an option is payable in cash or, with the approval of
the Committee, in shares of the Company's Common Stock owned by the optionee, by
full recourse promissory note secured by the shares purchased, by cancellation
of indebtedness of the Company to the optionee, by waiver of compensation due or
accrued for services rendered, or through a same-day-sale arranged through a
broker.

Options granted under the Plan are not transferable or assignable other
than by will or by the laws of descent and distribution. If an optionee ceases
to be employed or retained by the Company for any reason other than death or
permanent disability (as defined in the Plan), the option expires on the earlier
of three months from the date of such termination or expiration of the term of
the option. During the period between the optionee's termination and expiration
of the option, the option may only be exercised to the extent that it was
exercisable on the date of such termination. Upon the death or permanent
disability of an optionee while an employee, director, consultant or advisor,
the option expires on the earlier of one year from the date of death or
permanent disability or expiration of the term of the option, but can be
exercised only to the extent that it could have been exercised on the date of
death or permanent disability. The foregoing provisions regarding termination of
options upon termination of employment, permanent disability or death may be
varied by the Committee with respect to Non-Qualified Options.

An option agreement is entered into between the Company and the optionee at
the time at which an option is granted. Such agreement is on terms determined,
consistent with the Plan, by the Committee.

DURATION AND MODIFICATION OF THE PLAN AND OPTION

The Plan will remain in effect until all shares covered by options granted
under the Plan have been purchased or all rights to acquire the shares have
lapsed. No options may be granted under the Plan after February 13, 2007,
although the Board of Directors may terminate the granting of options under the
Plan at an earlier date or amend or otherwise modify or extend the Plan. Except
for adjustments made necessary by changes in the Company's Common Stock, the
Board of Directors may not, without shareholder approval such as that solicited
by this Proxy Statement, increase the total number of shares to be offered under
the Plan or materially modify the eligible class of optionees.

The Committee may modify or amend the terms of outstanding options,
including to change or accelerate the vesting of an option or to change the
exercise price, with the consent of the optionee. The

12
14

Committee approved option re-pricings in September 1998, in August and September
1996 and in August 1994.

In the event of a proposed dissolution or liquidation of the Company, the
Committee shall notify the Optionee at least thirty(30) days prior to such
proposed action. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed action. In
the event of a merger, sale of assets or change of control, the Committee shall
provide for the Optionee to have the right to exercise the Option as to all of
the Optioned Stock, including Shares as to which it would not otherwise be
exercisable. In such event, the Committee shall notify the Optionee that the
Option shall be exercisable for a period of not less than thirty (30) days form
the date of such notice.

FEDERAL INCOME TAX CONSEQUENCE

The following discussion is a summary of certain significant federal income
tax consequences of the Plan based on currently applicable provisions of the
Code and the regulations promulgated thereon.

GRANT OF STOCK OPTIONS. The grant of an Incentive Option or a Non-Qualified
Option under the Plan is not a taxable event to the optionee.

EXERCISE OF NON-QUALIFIED STOCK OPTIONS. An optionee will recognize
ordinary income for federal income tax purposes on the date a Non-Qualified
Option is exercised. The amount of income recognized is equal to the excess of
the fair market value of the shares acquired on the date of exercise over the
exercise price of such shares.

The optionee's tax basis in the shares acquired upon the exercise of a
Non-Qualified Option is equal to the fair market value of the shares on the
exercise date.

Different rules apply if an optionee exercises a stock option by
surrendering previously owned shares of Common Stock.

The optionee will recognize capital gain or loss upon a sale or exchange of
the option shares to the extent of any difference between the amount realized
and the optionee's tax basis in the shares.

EXERCISE OF INCENTIVE STOCK OPTIONS. An optionee will not recognize income
upon the exercise of an Incentive Option. However, the "spread" between the fair
market value of the shares at the time of exercise and the exercise price is
includible in the calculation of alternative minimum taxable income for purposes
of the alternative minimum tax.

If the optionee does not dispose of the shares received upon exercise of
the option within the two-year period after the Incentive Option was granted and
the one-year period after the exercise of the Incentive Option (the "ISO holding
periods"), the optionee will recognize capital gain or loss when he disposes of
the shares. Such gain or loss will be measured by the difference between the
exercise price and the amount received for the shares at the time of
disposition.

Different rules apply if an optionee exercises a stock option by
surrendering previously owned shares of Common Stock.

If the shares acquired upon exercise of an Incentive Option are disposed of
before the end of the ISO holding periods, the disposition is a "disqualifying
disposition" which results in the optionee recognizing ordinary income in an
amount generally equal to the lesser of (i) the excess of the value of the
shares on the option exercise date over the exercise price or (ii) the excess of
the amount received upon disposition of the shares over the exercise price. Any
excess of the amount received upon

13
15

disposition of the shares over the value of the shares on the exercise date will
be taxed to the optionee as capital gain.

Different rules apply if an optionee exercises an option by surrendering
shares of Common Stock which were previously acquired upon the exercise of an
incentive stock option and with respect to which the optionee has not satisfied
the ISO holding periods

COMPANY DEDUCTIONS. The Company generally must collect and pay withholding
taxes upon the exercise by an employee of a Non-Qualified Option. The Company
(or its subsidiary) generally is entitled to a deduction for federal income tax
purposes at the same time and in the same amount that the optionee recognizes
ordinary income, to the extent that such income is considered reasonable
compensation under the Code. Deductions may be limited by Section 162 (m) of the
Code with respect to options granted to certain executive officers if the
options do not qualify as "performance-based compensation" under that section.
Ordinary income recognized by an optionee under the exercise of a Non-Qualified
Option or due to a disqualifying disposition of an Incentive Option does not
qualify as "performance-based compensation" except in certain circumstances. The
Company believes that adopting some or all of the income recognized under the
Plan would be treated as "performance-based compensation." Also, neither the
Company nor any subsidiary is entitled to a deduction with respect to payments
that constitute "excess parachute payments" pursuant to Section 280G of the code
and that do not qualify as reasonable compensation pursuant to that section.
Such payments also subject the recipients to a 20% excise tax.

VOTE REQUIRED

Under California corporate law, the affirmative vote of a majority of the
shares represented and voting at the Meeting, which shares voting affirmatively
also constitute at least a majority of the required quorum, is necessary for the
approval of the proposed amendment to the Plan. Abstentions and broker non-votes
are not counted in determining the shares voted.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE PLAN.

14
16

PROPOSAL TO CHANGE THE NAME OF THE
CORPORATION
TO DPAC TECHNOLOGIES CORP.
(PROPOSAL 3)

The Board of Directors believes that the proposed change of the Company's
name to "DPAC Technologies Corp." is desirable for the purpose of public
relations and investor relations. We would like our customers, shareholders and
others to share our understanding that our business extends beyond
"microcircuits." The Company is aligned into three operational business units.

Upon shareholder approval of the change in the Company name, the Company
will apply to NASDAQ for a change in the corporate name, but maintain the
existing trading symbol of "DPAC". Stock certificates representing the Company's
common stock issue prior to the effective date of the change will continue to
represent the same number of shares, remain authentic and will not be required
to be returned to the Company or its transfer agent for reissuance. New stock
certificates issued upon transfer of shares of common stock after the name
change will bear the name "DPAC Technologies Corp." Delivery of existing stock
certificates will continue to be accepted in a sale transaction made by a
shareholder after the Company's name is changed.

The Company's costs of effecting the name change should not be material,
although in the ordinary course of the business we expect to incur marketing,
advertising and similar costs that may promote the Company's name. The initial
public announcements of the change of the Company's name will consist
principally of announcements placed in business and financial press. Thereafter,
the Company intends to use the name "DPAC Technologies Corp." in its
communications with shareholders and the investment community in the ordinary
course.

VOTE REQUIRED

The adoption of the proposed amendment to the Articles of Incorporation
requires the affirmative vote of the holders of a majority of the outstanding
shares of Dense-Pac Microsystems. If there are not enough votes returned to
effectively change the Articles of Incorporation of the corporation due to
broker non-votes, management will effect the use of "DPAC Technologies" as a
"doing business as" name, while continuing the use of the legal corporate name
in our contracts and the like.

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO
"DPAC TECHNOLOGIES CORP."

15
17

FEES PAID TO THE INDEPENDENT ACCOUNTANTS

The Company's independent auditor is the firm of Deloitte & Touche, LLP. A
representative of Deloitte & Touche is expected to be present at the Annual
Meeting and to be available to respond to appropriate questions, and will have
the opportunity to make a statement.

Audit Fees

Deloitte & Touche, LLP, the member firm of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, "Deloitte") billed Dense-Pac
aggregate fees of $62,000 for professional services rendered for the audit of
the Company's annual financial statements for fiscal year 2001 and for the
reviews of the financial statements included in the Company's Quarterly reports
on Form 10-QSB for the first three quarters for fiscal year 2001.

Financial Information Systems Design and Implementation

Deloitte did not bill Dense-Pac for financial information systems design
and implementation fees for fiscal year 2001.

All Other Fees

Deloitte billed Dense-Pac aggregate fees of $ 131,000 for other
professional services rendered in fiscal year 2001., including professional fees
in connection with the acquisition of Productivity Enhancement Products, Inc.,
tax preparation, tax consultation, statutory filings and other consulting
services.

16
18

EXECUTIVE COMPENSATION

The following tables provide information concerning the compensation of each
person who served as chief executive officer during the last Fiscal Year and
other executive officers whose total salary and bonus exceeded $100,000 in
Fiscal Year 2001 (the "Named Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Name and Securities Underlying All Other
Principal Position Fiscal Year Salary Bonus Options (#) Compensation (1)
------------------ ----------- ------ ----- --------------------- ----------------

Ted Bruce 2001 $200,000 $ 57,000 -0- $ 3,000
Chief Executive Officer, 2000 $150,000 $253,500 240,000 $ 3,000
President 1999 $ 12,500 $ 9,500 270,000

Richard J. Dadamo 2001 $ 72,000 $110,000 -0- $ 3,000
Chairman of the Board 2000 $ 72,000 $ 50,000 75,000 $ 3,000
1999 $ 79,800 -0- 100,000

John P. Sprint 2001 $154,750 $ 31,000 60,000 $ 3,000
Chief Operating Officer 2000 $136,500 $127,000 80,000 $ 3,000
1999 $125,500 $ 27,500 213,600(2) $ 2,000

William M. Stowell 2001 $153,500 $ 23,250 50,000 $ 3,000
Chief Financial Officer 2000 $147,000 $113,000 48,000 $ 3,000
1999 $145,000 $ 26,125 194,200(2) $ 2,000

- --------
(1) In Fiscal Year 2001, includes Company contributions to the 401(k) Plan for
each named officer with a maximum contribution of $ 3,000. Other
perquisites for each of the employees listed in the table were less than
$50,000 and 10% of the total of annual salary and bonus for such
individual.
(2) During Fiscal Year 1999, the Company repriced options issued during Fiscal
Year 1999 and in the previous two fiscal years. Pursuant to rules of the
Securities and Exchange Commission, such repriced options are included in
the number of options granted in Fiscal Year 1999 (the year in which they
were repriced) and in the previous fiscal years (the years that they were
issued). Of the total options issued to these individuals, 188,600 and
169,200 represents repriced options for Mr. Sprint and Mr. Stowell,
respectively.

The Company is party to an employment agreement with Mr. Bruce. The
principal features of the agreement are described below:

Mr. Bruce was employed in January 1999 as president and chief executive
officer of the Company. An employment agreement was renewed in January 2001 and
provides for an annual base salary of $220,000. Included is a bonus program of
50% of the base salary, based on performance at target levels, and with a
maximum payment of 200% of annual base salary based on performance at
established levels above target levels. The bonuses are earned quarterly and
measured to target goals each quarter. If the Company terminates this agreement
at any time without cause, or if Mr. Bruce elects to terminate his employment
for good reason, the Company will pay Mr. Bruce severance pay equal to twelve
months of his then base monthly salary. Additionally, his options will continue
to vest for 12 months after termination and he will have the same 12 months to
exercise vested options.

17
19

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers in fiscal year 2001,
including the potential realizable value over the ten-year term of the options,
based on assumed rates of stock appreciation of 5% and 10%, compounded annually.
These assumed rates of appreciation comply with the rules of the SEC and do not
represent our estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of our common
Stock.

Potential realizable
value at assumed
Number of annual rates of stock
Securities % of Total price appreciation for
Underlying Options Granted Exercise option term
Options to Employees in Price Per Expiration ------------------------
Name Granted (1) Fiscal Year Share (2) Date 5% 10%
---- ----------- --------------- ----------- ---------- ----------- ----------

John P. Sprint 50,000 5.1% 7.13 3/02/10 $224,200 $568,169
10,000 1.0% 1.91 12/29/10 12,000 30,400

William M. Stowell 40,000 4.1% 6.00 6/01/10 151,000 382,000
10,000 1.0% 1.91 12/29/10 12,000 30,400

(1) Unless otherwise indicated, the options vest in 25% installments beginning
one year after the grant date and are subject to earlier termination in the
event of termination of employment, death and certain corporate events.
Under the terms of the Company's Stock Option Plans, the Stock Option
Committee may modify the terms of outstanding options, including the
exercise price and vesting schedule.
(2) Fair market value of the Common Stock on the grant date.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

Number of Securities
Underlying Value of Unexercised
Options at In-the-Money Options
Shares Fiscal Year-End at Fiscal Year-End (2)
Acquired on Value ------------------------------- -----------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------

Richard J. Dadamo -0- -0- 115,000 50,000 $90,000 -0-
Ted Bruce 105,000 $409,000 150,000 229,999 $56,700 $56,700
John P. Sprint 99,125 $473,000 11,250 170,000 $6,250 $63,400
William M Stowell 104,500 $411,000 118,250 129,750 $45,400 $57,000

(1) Represents the difference between the aggregate market value on the date of
exercise and the aggregate exercise price.

(2) Represents the difference between the aggregate market value on February
28, 2001 ($2.00 share) and the aggregate exercise price.

18
20

REPORT OF THE STOCK OPTION COMMITTEE ON OPTION RE-PRICING

On September 23, 1998, the Stock Option Committee approved the re-pricing
of a total of 973,700 stock options held by all employees under the 1996 Stock
Option Plan. The stock options had been granted from November 1995 to June 1998
and at prices from $1.89 to $3.78, vested at 25% per year beginning one year
after the grant date, and expired after 10 years. The exercise price of the
options was changed to $1.00, representing 160% of the fair market value of the
Common Stock, which was $ .625 on September 23, 1998. No other terms of the
options were changed.

The Committee approved the option re-pricing because it believes that
providing an equity interest in the Company is an important factor in the
Company's ability to attract and retain key employees that are critical to the
Company's long-term success. In determining to approve the option repricing, the
committee also considered that the market price of the Common Stock had declined
significantly since the options had been awarded and that the Company's then
chief executive officer had resigned in July 1998. The committee also wanted to
provide an incentive in order to retain the key employees during a tough period
and maintain a good morale with the employees in order to reverse the trend of
the revenues at the Company. Based on the foregoing factors, the Committee
decided that the option re-pricing was appropriate to provide the employees with
a meaningful equity incentive in the Company.

CERTAIN TRANSACTIONS

Prior the amendment described below, the Company had outstanding loans in
the principal amount of $1.8 million payable to Euroventures Benelux II B.V., a
Netherlands corporation ("Euroventures"), and $100,000 payable to Trude C.
Taylor, a director of the Company. The principal amounts of the loans were due
in October/November 1999 and bore interest at the rate of 5% per annum with
respect to $1.8 million and 8% per annum with respect to $100,000.

On April 8, 1999, the Company amended the terms of the loan agreement.
Under the terms of the amendment, $1,200,000 of the outstanding principal was
converted into 662,069 shares of common stock at $1.8125, representing the
current market price on the date of the amendment. The remaining outstanding
principal would accrue interest at 8.75% per annum, with interest payments due
quarterly and the principal due on December 31, 2000. On April 8, 1999 the
balance of the outstanding loans was converted into common stock at $1.8125.

In connection with certain amendments to the terms of its loan in October
1995, the Company issued Euroventures four-year warrants to purchase 375,000
shares of Common Stock at $7.00 per share. The warrants were redeemable by the
Company if the Company's stock price reached $9.00 per share for 20 consecutive
trading days. The warrant exercise price was subject to downward adjustment if
the Company sells Common Stock at a price less than $7.00 per share, excluding
issuances pursuant to warrants outstanding at April 1, 1996 and any issuance's
pursuant to the Company's stock option plans. In addition, Euroventures had the
right to require the Company to register the shares underlying the warrants
under the Securities Act of 1933, as amended. The warrants, none of which were
exercised, expired on November 14, 1999.

Euroventures is a major shareholder of the Company. See "Ownership of
Common Stock." Roger G. Claes, a director of the Company, is a partner and
managing director of Euroventures Benelux Team B.V., which manages Euroventures.

19
21

Mr. Dadamo served as Chief Executive Officer of Productivity Enhancement
Products, Inc. (PEP) from Sept. 1998 to Oct. 2000. PEP was acquired by Dense-Pac
in October 2000. Mr. Dadamo did not receive any compensation or payment in the
transaction.

OWNERSHIP OF COMMON STOCK

The following table sets forth certain information as of June 1, 2001, with
respect to ownership of the Company's Common Stock by each person who is known
by the Company to own beneficially 5% or more of the Common Stock, each Named
Officer, each director of the Company, each nominee for director, and all
executive officers and directors of the Company as a group.

Shares
Beneficially Percentage
Name* Owned Ownership
----- ------------ ---------

EBTB II B.V. 3,851,949(1&2) 18.4%
Euroventures Benelux Team B.V.
Julianaplein 10
NL-5211 BC's Hertogenbosch
The Netherlands
Ownership in the separate funds:
--------------------------------
- Euroventures Benelux I B.V.
(2,035,018 - 9.7%)

- Euroventures Benelux II B.V.
(1,816,931 - 8.7%)

Current directors, director nominees, and executive officers:
- -------------------------------------------------------------

Roger Claes 50,000 (2) **
Richard J. Dadamo 213,000 (3) 1.0%
Ted Bruce 480,000 (4) 2.3%
John P. Sprint 217,500 (5) 1.0%
William M. Stowell 274,000 (6) 1.3%
Samuel Tishler 60,000 (7) **
Gordon Watson 60,000 (8) **
Richard Wheaton 60,000 (9) **

All executive officers and directors as a
group (eight) 1,414,500 (10) 6.8%

* Includes address of 5% or more shareholders.
** Less than 1%.

20
22

1) Includes the shares owned by Euroventures Benelux I B.V. and Euroventures
Benelux II B.V., which are widely held venture capital funds. According to
filings made with the Securities and Exchange Commission pursuant to
Section 13(d) of the Securities Exchange Act of 1934, Euroventures Benelux
Team B.V. is the investment manager of both such funds and has voting and
dispositive power over their shares of the Company's Common Stock, and EBTB
II B.V. is an indirect beneficial owner of such shares. Under the rules set
forth pursuant to the Securities Exchange Act of 1934, more than one person
may be deemed to be a beneficial owner of the same securities.

2) Mr. Claes is managing director of Euroventures Benelux I B.V. and a partner
and managing director of Euroventures Benelux Team B.V. and EBTB II B.V.
Mr. Claes has been a member of the Board of Directors of Dense-Pac and his
term will expire as of the election of his successor at the Meeting. See
Note (1).

3) Includes 141,000 shares subject to options that are exercisable within 60
days.

4) Includes 280,000 shares subject to options that are exercisable within 60
days.

5) Includes 129,250 shares subject to options that are exercisable within 60
days.

6) Represents 183,750 shares subject to options that are exercisable within 60
days.

7) Includes 30,000 shares subject to options that are exercisable within 60
days.

8) Includes 30,000 shares subject to options that are exercisable within 60
days.

9) Includes 30,000 shares subject to options that are exercisable within 60
days.

10) See Notes (2) through (9) above.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

During Fiscal Year 2001, to the Company's knowledge, except as set forth
immediately below, no persons filed late reports under Section 16(a) of the
Securities Exchange Act of 1934.

Euroventures Benelux BV, a 10% shareholder, filed a Form 5 late to report a
transaction reportable on an earlier Form 4.

In making these disclosures, the Company has relied solely on written
representations of its directors, executive officers and 10% shareholders and
copies of the reports that they have filed with the Securities and Exchange
Commission.

21
23

SHAREHOLDER PROPOSALS

Any shareholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and proxy for the 2002 Annual Meeting must
submit such proposal so that the Company receives it no later than March 12,
2002.

ANNUAL REPORT

A copy of the Annual Report on Form 10-KSB for the 2001 Fiscal Year,
including the financial statements and the financial statements schedules
required to be filed with the U.S. Securities and Exchange Commission, may be
obtained by each stockholder of record and each beneficial holder on the record
date, without charge. Copies of exhibits to the Form 10-KSB are available for a
reasonable fee. All such requests should be made in writing to the Company at
7321 Lincoln Way, Garden Grove, California 92841, attention William M. Stowell,
Chief Financial Officer.

22
24

DISCRETIONARY AUTHORITY

While the Notice of Annual Meeting of Shareholders calls for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented for action by
the shareholders other than as set forth above. The enclosed proxy gives
discretionary authority, however, to vote such proxy as the proxy holder
determines in the event any additional matters should be presented.

WILLIAM M. STOWELL
Secretary

Date June 10, 2001

23
25

APPENDIX A

DENSE-PAC MICROSYSTEMS, INC.
AUDIT COMMITTEE CHARTER

AUDIT COMMITTEE CHARTER-FISCAL YEAR 2/28/2001
---------------------------------------------

This charter shall be reviewed, updated and approved annually by the board of
directors.

ROLE AND INDEPENDENCE
---------------------

The audit committee of the board of directors assists the board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and reporting practices of the corporation and other such duties as
directed by the board. The membership of the committee shall consist of at least
three directors who are generally knowledgeable in financial and auditing
matters, including at least one member with accounting or related financial
management expertise. Each member shall be free of any relationship that, in the
opinion of the board, would interfere with his or her individual exercise of
independent judgment, and shall meet the director independence requirements for
serving on audit committees as set forth in the corporate governance standards
of the (New York Stock Exchange, NASDAQ, American Stock Exchange). The committee
is expected to maintain free and open communication (including private executive
sessions at least annually) with the external audit firm and the management of
the corporation. In discharging this oversight role, the committee is empowered
to investigate any matter brought to its attention, with full power to retain
outside counsel or other experts for this purpose.

The board of directors shall appoint one member of the audit committee as
chairperson. He or she shall be responsible for leadership of the committee,
including preparing the agenda, presiding over the meetings, making committee
assignments and reporting to the board of directors. The chairperson will also
maintain regular liaison with the CEO, CFO, and the lead partner from the
external audit firm.

RESPONSIBILITIES
----------------

The audit committee's primary responsibilities include:

o Recommending to the board the external audit firm to be selected or
retained to audit the financial statements of the corporation. In so
doing, the committee will request from the external audit firm a
written affirmation that the auditor is in fact independent, discuss
with the external audit firm any relationships that may impact the
auditor's independence, and recommend to the board any actions
necessary to oversee the external auditor's independence.

o Overseeing the external audit firm's relationship by discussing with
the external auditor the nature and rigor of the audit process,
receiving and reviewing audit reports, and providing the external
auditor full access to the committee (and the board) to report on any
and all appropriate matters.

24
26

o Reviewing and advising the full board regarding any management letters
or internal control memorandum prepared by the external audit firm.
Monitor implementation of recommendations submitted by the external
audit firm.

o Reviewing the audited financial statements and discussing them with
management and the external audit firm. These discussions shall
include consideration of the quality of the Company's accounting
principles as applied in its financial reporting, including review of
estimates, reserves and accruals, review of judgmental areas, review
of audit adjustments whether or not recorded and such other inquiries
as may be appropriate. Based on the review, the committee shall make
its recommendation to the board as to the inclusion of the company's
audited financial statements in the company's annual report on Form
10-K.

o Reviewing with management and the external audit firm the quarterly
financial information prior to the company's filing of Form 10-Q. This
review may be performed by the committee or its chairperson.

o Discussing with management, the quality and adequacy of the company's
internal controls as reported by the external audit firm.

o Discussing with management the status of pending litigation, taxation
matters and other areas of oversight to the legal and compliance area
as may be appropriate.

o Reporting audit committee activities to the full board and issuing
annually a report to be included in the proxy statement (including ___
appropriate oversight conclusions) for submission to the shareholders.

End of Audit Committee Charter- June 15, 2000

DENSE-PAC MICROSYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE SHAREHOLDERS
AUGUST 10, 2001

The undersigned hereby nominates, constitutes and appoints Richard J.
Dadamo, Ted Bruce and William Stowell, and each of them individually, the
attorney, agent and proxy of the undersigned, with full power of substitution,
to vote all stock of DENSE-PAC MICROSYSTEMS, INC. which the undersigned is
entitled to represent and vote at the Annual Meeting of Shareholders for the
Company to be held at 7321 Lincoln Way, Garden Grove, California on August 10,
2001 at 10:00 a.m., California time, and at any and all adjournments or
postponements thereof, as fully as if the undersigned were present and voting at
the meeting, as follows:

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME
PRIOR TO ITS USE.

IMPORTANT -- PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY

Please mark
your votes as [X]

THE DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, PROPOSAL 2, PROPOSAL 3

1. PROPOSAL 1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated to the contrary below) to vote for all nominees listed below

Richard J. Dadamo, Ted Bruce, Samuel W. Tishler, Gordon M. Watson,
Richard H. Wheaton

(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in space provided below.)

- --------------------------------------------------------------------------------
28

2. PROPOSAL 2. AMENDMENTS TO THE COMPANY'S 1996 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK SUBJECT TO THE PLAN BY 2,000,000 SHARES
INITIALLY AND THEREAFTER BY 4% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY EACH FISCAL YEAR UNTIL THE TERMINATION OF THE
OPTION PLAN.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. PROPOSAL 3. AMEND THE ARTICLES OF INCORPORATION TO CHANGE THE CORPORATE NAME
OF THE COMPANY TO DPAC TECHNOLOGIES CORP. FROM DENSE-PAC MICROSYSTEMS, INC.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER ON THIS PROXY. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE
VOTED FOR THE PROPOSALS DESCRIBED ABOVE IN THIS PROXY. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.

Date:________________

________________
Signature(s)

Please sign your name
exactly as it appears
hereon. Executors,
administrators,
guardians, officers of
corporations, and others
signing in a fiduciary
capacity should state
their full titles as
such.