SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                         ----------------------
                              FORM 10-K
                     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE 
                      SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998. Commission file number 2-67918

                      MIKROS SYSTEMS CORPORATION
                      --------------------------
         (Exact name of Registrant as specified in charter)

            Delaware                        14-1598200
            --------                        -----------
 (State or other jurisdiction of          (I.R.S. Employer
  incorporation or organization)           Identification No.)

   707 Alexander Road, Suite 208, Princeton, New Jersey 08540   
  (Address of principal executive offices, Including Zip Code)

Registrant's Telephone Number, including area code: 609-987-1513
                                                    ------------

Securities Registered Pursuant to Section 12(b) of the Act:  None
Securities Registered Pursuant to Section 12(g) of the Act:  

                   Common Stock, $.01 par value
            
Indicate 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.  [X] Yes   [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of Form 10-K or any amendment to this
Form 10-K. [ X ]
<PAGE>
The aggregate market value of the voting stock held by nonaffiliates of
Registrant as of April 9, 1999, was approximately $ 3,149,563 based on the 
average of the bid and asked price quoted by National Quotation Bureau, Inc. 
The number of shares outstanding of the Registrant's $.01 par value common 
stock as of April 9, 1999 was 28,588,963.

PART I                             

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

Introduction
------------

Mikros Systems Corporation was founded in 1978 in Albany, New York to exploit
microprocessor technology developed at the General Electric Research and
Development Center. The Company was incorporated under the laws of the State of
Delaware in 1978 and acquired all rights of General Electric Venture Capital
Corp., a subsidiary of General Electric Company, to certain microcomputer
technology. The Company's headquarters are located at 707 Alexander Road, Suite
208, Princeton, New Jersey; telephone (609)987-1513.

Mikros Systems Corporation became an established US Navy defense contractor in
1987 and continued to supply advanced technology and equipment for ten years to
the US Navy and Air Force.  The Company was capitalized with more than $15
million to engage in engineering and manufacturing for these customers supplying
advanced communication equipment using cutting edge technology.

The knowledge base and proprietary technology developed was recognized by the
Company as applicable to the rapidly expanding wireless business in the
commercial sector.  The rigorous radio transmission environment as well as the
challenges of underwater signal processing required Mikros employees to invent
new methods to optimize the bandwidth for a higher data throughput.

In 1995, the Company decided to also pursue commercial contracts which would
employ these advanced techniques to enhance the data transmission rates in the
AM and FM radio spectrum. 

In 1996, Safeguard Scientifics (Delaware), Inc., invested $1 million in Mikros
in exchange for 10% ownership in the Company.  At the same time, Mobile
Broadcasting Corporation (MBC) was created to exploit the AM radio technology,
particularly in mobile or portable platforms such as automobiles.  Initially,
Safeguard invested $1 million in MBC for 75% ownership whereas Mikros owned the
remaining 25%.  Mikros  share in MBC was subsequently diluted to 18%, as a 
result of an additional capital investment of $1,200,000 by Safeguard.  In 1998,
Mikros'share increased to 50% as a result of the Company's investment arising 
from the use of its engineering credits.(see Note B of Notes to Financial 
Statements).

Data Design and Development Corporation (3D) was also founded in 1996 as part of
the Safeguard Scientific agreement and retains ownership of the AM and FM
technology.  3D has licensed the FM technology rights in North America to Mikros
and the AM technology rights in North America to MBC. Mikros owns 1/3 of 3D,
certain Mikros shareholders own another 1/3, and Safeguard owns the remaining
1/3.

The Common Shipboard Data Terminal System contract consumed most of the 
technical resources of the Company in 1997. The contract with the US Navy 
provided for the purchase of units periodically over the life of the contract. 
The delivery of the initial units under the contract resulted in a severe 
negative cash flow. 

As a result, the Company s Board of Directors determined that it would be in the
best interest of the shareholders to sell the government contracts and use the
proceeds to focus exclusively on the commercial contracts, particularly the AM
radio data casting.    

Mikros entered negotiations in late 1997 for the sale of the military contracts
to General Atronics Corporation (GAC). The resulting transaction included a
$600,000 cash payment and a 2% royalty to be paid to Mikros over four years on
all data terminal set sales. Royalties of $5,540 were paid in 1998.  In 
addition, GAC is obligated to supply $1 million in engineering services to 
Mikros which will be expended on the AM data program with MBC. In 1998, the 
total amount of engineering services utilized was $765,278.

Mikros commercial business assets now consist of both the original FM technology
and the AM Radio technology. Continued development of the FM technology has been
postponed in order to direct all of the Company s resources to the AM Radio
technology. 

The initial customer for the AM technology is MBC. MBC has the North American
rights and will be the first customer to apply the Mikros technology. 3D
Corporation owns the rights for other parts  of the world and will license the
rights to MBC, Mikros or others. 

Digital radio has been under development for a number of years by some
corporations. The Mikros approach has the prospect of delivery of the data in a
robust manner that will have the same signal strength as the basic radio signal.
The business model to utilize this technology in the commercial sector is being
developed.

The digital system Mikros is developing for AM radio data transmission will 
allow simultaneous broadcasting of the present radio signal with a digital 
channel to be used for additional voice channels. This will be accomplished with
minimal disturbance to the existing radio channel. In effect the radio 
broadcaster will be able to provide more channels or equivalent  stations  from 
the same radio transmitters. This system will require a minor modification to 
the radio station transmitter which will not require new FCC approval if the 
adjacent channel interference is avoided.

The Company has successfully completed the Alpha Phase of its development 
program for AM data broadcasting.  Live on the air tests have demonstrated the 
Company's ability to simultaneously broadcast a data signal along with regular 
audio programming.  The data is received using a custom data radio that has been
developed by the Company.

While the new technology can be made available to all modified or newly designed
AM receivers, initially, the automotive market will be addressed due to its size
and its dependence on wireless transmissions. A car radio equipped with the
proposed AM technology will be able to receive a variety of additional
information such as traffic alerts, weather, sports and financial information,
and books on tape.  

Other companies are pursuing compact disk quality sound for car radios by using
a constellation of satellites to relay the data to the car. However, there are
5500 AM radio stations in the United States. Therefore, management believes its
technology is a low cost solution for the broadcasters using the existing AM
radio infrastructure.

Marketing  
---------

The Company is focused on developing interest in its AM technology. Other than
its relationship with MBC, there are no other programs being pursued. It is
indicated that Robert M. Lansey, President of Mobile Broadcasting Corporation
(MBC), will be marketing the AM data broadcasting technology currently being
developed by the Company. MBC is jointly owned by Safeguard Scientifics
(Delaware), Inc. of Wayne, PA and Mikros Systems Corporation.

Backlog
-------

As of December 31, 1998, the Company had no backlog compared to a backlog of
approximately  $380,000 and $3,800,000 at December 31, 1997 and December 31, 
1996 respectively.

Engineering; Research and Development
-------------------------------------

In 1994, the Company began research on a method of optimizing spectrum 
efficiency for wireless communications in radio data broadcasting and Personal
Communications Services (PCS) markets and has continued this effort.

Engineering is a critical factor in the development of the Company's present and
future products. The Company is presently subcontracting its development work to
General Atronics Corporation, a high technology company mainly involved in
communications and radar equipment for the US Department of Defense and allied
countries. GAC hired key Mikros engineers to continue the AM project when Mikros
downsized. GAC is obligated to supply $1 million in engineering services to
Mikros which will be expended on the AM data program with MBC. In 1998, the 
total amount of engineering services utilized was $765,278.







Patents
-------

In addition to an already existing patent, the Company in 1994 filed a patent
application on certain digital signal processing technology. The patent was
issued in the third quarter of 1998.

Competition
-----------

High technology products such as wireless technology often require large
investments of both money and talent.  Many large companies with greater
financial and human resources than the Company are currently investing heavily
in products that compete directly with the Company's products.  There is no
assurance that the Company's products can be successfully marketed against such
competition.

Being first in the market with new high technology is a critical factor in a
company's success in the market.  There is no assurance that the Company will be
able to introduce new products to the market before any of its competitors.

Employees
---------

As of March 31, 1999, the Company had three executive employees. The Company
believes its relations with its employees are satisfactory. 

Warranty
--------

The Company warrants that the equipment made by it will be free from defects of
material and workmanship.  The Company normally provides a limited warranty of
90 days from the date of shipment.  If during the warranty period any component
part of the equipment becomes defective by reason of material or workmanship and
the purchaser immediately notifies the Company of such defect, the Company is
obliged, at its option, either to supply a replacement part, to request that 
such part be returned to the plant for repair or to perform necessary repair at 
the purchaser's location. The Company's warranty expense has been minimal over 
the past three years. In addition, there are no warranties outstanding as of 
December 31, 1998.

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

The Company's inventory at December 31, 1997 had an aggregate value of
approximately $5,000 and consisted of work-in-process. The Company maintained no
inventories as of December 31, 1998.





Source of Supply
----------------

The Company purchases all components and supplies for the manufacture of its
products from a variety of sources, domestic and foreign.

Year 2000 Compliance
--------------------

Assessment.  The Company believes that its exposure to Year 2000 problems lies
primarily in three areas:  (i) its internal operating systems; (ii) Year 2000
compliance of any products sold to customers; and (iii) non-compliance of third
parties with whom the Company has material relationships.  The Company has
completed its assessment with respect to its internal operating systems.  The
Company continues to evaluate its exposure with respect to its products sold to
customers and its relationships with third parties.

Internal Operating Systems.  The Company believes its internal accounting system
are not currently Year 2000 compliant,  The Company does not believe that there
will be future significant costs related to upgrading or replacing such
accounting system.

Products Sold to Customers.  The Company is continuing to analyze the extent to
which any products sold to customers are not Year 2000 compliant.  The Company
does not believe any required remediation will be significant or will materially
adversely affect the Company's financial condition and results of operations.

Third Party Relationships.  The Company is dependent on third party service
providers and partners such as telephone companies, banks, insurance carriers,
auditors and marketing partners.  The failure of such third parties to deliver
Year 2000 compliant products or to remediate their internal systems could
jeopardize the Company's ability to meet its obligations to its customers.  As
a result, the Company is presently conducting inquiries of its outside vendors,
suppliers, service providers and marketing partners to identify and resolve Year
2000 exposure from third parties.  Upon completion of the foregoing, the Company
will be able to assess such exposure and financial impact, if any, should such
parties fail to be Year 2000 compliant.

Risks of Year 2000 Issues.  The Company expects to identify and resolve all Year
2000 problems that could materially adversely affect its business, financial
condition or results of operations. However, the Company believes that it is not
possible to determine with complete certainty that all Year 2000 problems
affecting the Company have been identified or corrected.  Further, the Company
cannot accurately predict how many failures related to the Year 2000 Problem 
will occur or the severity, duration or financial consequences of such failures.

Additionally, the Company cannot guarantee that its products will not be
integrated by customers or interact with non-compliant software or other 
products which may expose the Company to claims from its customers.



Costs.  Other than time spent by the Company's personnel, the costs associated
with remediating non-compliant products and assessing Year 2000 compliance 
issues have not been significant to date.  The Company believes that the 
continued analysis of compliance of products and evaluation of potential Year 
2000 problems will not result in material expenditures.

Contingency Plans.  The Company believes its plans for addressing the Year 2000
Problem are adequate. The Company does not believe it will incur a material
financial impact from system failures, or from the costs associated with
assessing the risks of failure, arising from the Year 2000 Problem. 
Consequently, the Company does not intend to create a detailed contingency 
plan. In the event that the Company does not adequately identify and resolve 
its Year 2000 issues, the absence of a detailed contingency plan may materially 
adversely affect the Company's business, financial condition and results of 
operations.

Risk Factors
------------

History of Losses, Lack of Liquidity; Working Capital Deficit.  The Company
incurred a net loss before extraordinary items of $1,223,890, $604,500, and
$1,447,641 for the years ended December 31, 1998, 1997 and 1996 respectively. 
As of December 31, 1998, the Company had an accumulated deficit of $11,489,354
and had negative working capital of $231,734. In addition, the Company expects
to incur substantial expenditures to expand its commercial wireless
communications business.  The Company s working capital, plus revenue from its
royalty agreement with GAC will not be sufficient to meet such objectives as
presently structured.  There can be no assurance that the Company will achieve
a profitable level of operations in the future.

Additional Financing Requirement; Merger and Partnering Opportunities.  In May
1996, the Company completed a series of debt financings that raised an aggregate
of $641,500. Approximately 83.6% of this debt was subsequently converted to
common stock in 1998. In November 1996, the Company consummated an equity
financing that raised an aggregate of $1,000,000.  In addition, the Company will
consider the issuance of additional debt and equity securities under appropriate
market conditions, alliances or other partnership agreements with entities
interested in supporting the Company s commercial programs, or other business
transactions which would generate resources sufficient to assure continuation of
the Company s operations and research programs.  There can be no assurance,
assuming the Company successfully raises additional funds or enters into 
business alliances, that the Company will achieve profitability or positive cash
flow. If the Company is unable to obtain additional adequate financing or enter
into such business alliances, management will be required to further curtail its
operations.  Failure to obtain such additional financing on terms acceptable to
the Company, if coupled with a material shortfall from the Company s current
operating plan could negatively impact the Company's ability to continue
operations.

Uncertainty of Market Acceptance.  In 1995, the Company expanded its initiatives
in commercial wireless communications in the current and emerging radio data
broadcasting and the personal communications service markets.  Market acceptance
of the Company s products in the commercial sector will be determined in large
part by the Company s ability to develop commercial products based on advanced
wireless communications technology originally developed for the military and its
ability to demonstrate the cost-effectiveness and performance features of such
products.  To date, the Company has limited evidence with which to evaluate the
market reaction to its products in the commercial sector because there has been
limited commercial experience with these products.  There can be no assurance
that the Company s products will achieve market acceptance.

Limited Marketing Experience.  The Company will be required to develop a
marketing and sales network that will effectively demonstrate the advantages of
its commercial sector products over competing products.  The Company s marketing
experience with its new commercial products is limited, and the Company has not
yet sold any of these products.  The Company currently performs all its 
marketing through its own employees and through MBC.  There can be no assurance 
that the Company will be successful in its marketing efforts, that it will be 
able to establish adequate sales and distribution capabilities, or that it will
be able to enter into marketing agreements or relationships with third 
parties on financially acceptable terms.

Government Regulation. Under current Federal Communications Commission ( FCC )
regulations, designated portions of the FM radio broadcast spectrum, known as
subcarriers, may be used to transmit information in addition to normal station
programming.  Listeners with specially equipped FM radios can decode the
subcarrier information, while standard FM radios continue to receive normal 
radio station programs.  FM subcarrier broadcasting currently represents a $100 
million industry operating within well-established and stable FCC regulatory 
guidelines. Any significant change in these regulatory requirements or the 
enforcement thereof could adversely affect the Company s prospects.

Rapid Technological Change; Potential Infringement.The market for the Company's
products and planned products is characterized by rapid changes in technology
including the potential introduction of new types of wireless communications and
digital signal processor technologies which could have a material adverse impact
on the Company s business.  The Company s future success will depend in part on
its ability to continually enhance its current products and to develop or 
acquire new products that address the needs of its customers.  There can be no 
assurance that the Company will be successful in developing such new products 
that respond to technological changes. There can be no assurance that research 
and development by competitors will not render the Company s technology 
obsolete or uncompetitive.  In addition, in a technology-based industry, there 
can be no
assurance that a claim of patent or other infringement will not be made against
the Company.  While the Company is not aware of any such claims, no infringement
studies have been conducted on behalf of the Company.

Competition. High technology products such as the products made and being
developed by the Company often require large investments of both money and
talent.  Many large entities with greater financial, technical and human
resources than the Company are currently investing heavily in products that
compete directly with the Company s products.  There is no assurance that the
Company s products can be successfully marketed against such competition.  In
addition being first in the market with new high technology is a critical factor
in a company s success in the market.  There is no assurance that the Company
will be able to introduce new products to the market before any of its
competitors.  As the markets in which the Company competes mature and new and
existing companies compete for customers, price competition is likely to
intensify, and such price competition could adversely affect the Company's
results of operations.

Potential Dilutive Effect of Preferred Stock, Warrants and Options; Possible
Adverse Effect on the Company s Ability to Obtain Additional Financing.  The
outstanding securities of the Company include shares of convertible preferred
stock, options and warrants.  During the respective terms of the options and
warrants, and when the preferred stock is outstanding, the holders thereof are
given an opportunity to profit from a rise in the market price of the Common
Stock, causing a dilution of the interests of existing stockholders.  Thus, the
terms on which the Company may obtain additional financing during that period 
may be adversely affected.  The holders of preferred stock, options, and 
warrants might be expected to exercise their respective rights to acquire Common
Stock at a time when the Company would, in all likelihood, obtain needed 
capital through a new offering of securities on terms more favorable than those 
provided by these outstanding securities.  In the event that such holders 
exercise their rights to acquire shares of Common Stock at such time, the net 
tangible book value per share of the Common Stock might be subject to dilution.

Potential Future Sales.  Future sales of shares by existing stockholders under
Rule 144 of the Securities Act or through the exercise of outstanding options or
otherwise could have a negative impact on the market price of the Common Stock. 
The Company is unable to estimate the number of shares that may be sold under
Rule 144 because such sales depend on the market price for the Common Stock of
the Company, the personal circumstances of the sellers and a variety of other
factors.  Any sale of substantial amounts of Common Stock or other securities of
the Company in the open market may adversely affect the market price of the
securities offered hereby and may adversely affect the Company s ability to
obtain future financing in the capital markets as well as create a potential
market overhang.

No Dividends.  The Company has never paid cash dividends on its Common Stock. 
Any payment of cash dividends in the future will depend upon the Company s
earnings (if any), financial condition and capital requirements.  In addition,
the Company has executed certain loan agreements, which prohibit the payment of
a dividend on the Common Stock as long as such agreements are in place. 
Accordingly, any potential investor who anticipates the need for current
dividends from its investment should not purchase any of the securities offered
hereby.

Public Market; Possible Volatility of Stock Price.  The Company s Common Stock
currently is traded over-the-counter on the NASD Bulletin Board.  There can be
no assurance that an active market in any of the Company s securities will be
sustained.  Absent a public trading market, an investor may be unable to
liquidate its investment.  The Company believes that factors such as the
Company s and its competitors  announcements of the availability of new services
and new contracts, quarterly fluctuations in the Company s financial results and
general conditions in the communications industry could cause the price of the
Common Stock to fluctuate substantially.   In addition, stock markets have
experienced extreme price volatility in recent years.  This volatility has had
a substantial effect on the market prices of securities issued by many companies
for reasons unrelated to the operating performance of the specific companies.

Concentration of Share Ownership.  The Company s directors, officers and
principal stockholders, and certain of their affiliates, beneficially own
approximately 70.8% (without giving effect to any outstanding options, warrants
or other convertible securities) of the outstanding Common Stock and will have
significant influence over the outcome of all matters submitted to the
stockholders for approval, including the election of directors of the Company. 
In addition, such influence by management could have the effect of discouraging
others from attempting to take-over the Company, thereby increasing the
likelihood that the market price of the Common Stock will not reflect a premium
for control.

Anti-Takeover Provisions.  The Company has authorized 4,040,000 shares of
preferred stock, which may be issued by the Board of Directors on such terms, 
and with such rights, preferences and designations as the Board may determine. 
Issuance of such preferred stock, depending upon the rights, preferences and
designations thereof, may have the effect of delaying, deterring or preventing
a change in control of the company.  The 2,081,663 shares of issued and
outstanding preferred stock have certain rights and preferences, including
dividend and liquidation preferences, which also may have the effect of 
delaying, deterring or preventing a change in control of the Company.  In 
addition, certain  anti-takeover  provisions of the Delaware General 
Corporation Law (the  DGCL ), among other things, restrict the ability of 
stockholders to effect a merger or business combination or obtain control of 
the Company, and may be considered disadvantageous by a stockholder.

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

The Company owns no real property.  The Company is currently leasing office 
space from Daily Plan It. 


Item 3.  Legal Proceedings
---------------------------
                             
The Company was notified during 1998 of one currently pending lawsuit. The total
amount of the claim equals $26,023. The amount is included in obligations under
capital leases on the balance sheet and relates to leased equipment.    

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

The Annual Meeting of Stockholders was held on December 21, 1998. The purpose
was to elect seven directors until the next Annual Meeting of Stockholders or
until their respective successors are elected. The proxy vote elected each of 
the nominees and there was no solicitation in opposition to the management 
nominees. In addition, there was a vote to amend the Certificate of 
Incorporation to increase the number of authorized shares from 35,000,000 to 
60,000,000 shares. 

The following represents the directors nominated and duly elected with the
corresponding number of votes cast for, against or withheld:

        Director                    For         Against      Withheld
    -----------------           ----------    ---------    -----------
     Joseph R. Burns            11,724,348       7,108         4,233
     F. Joseph Loeper           11,723,948       7,508         4,233
     Thomas C. Lynch            11,724,348       7,108         4,233
     Thomas J. Meaney           11,724,348       7,108         4,233
     Wayne E. Meyer             11,724,348       7,108         4,233
     Frederick C. Tecce         11,703,448      28,808         4,233
     John B. Torkelsen          11,724,348       7,108         4,233

The results of the voting to amend the Certificate of Incorporation was as
follows:
                          For       Against    Withheld
                       ----------  ---------  -----------
                       11,434,428    87,180     209,848            

































PART II

Item 5.   Market for the Registrants' Common Equity and Related Shareholder
          Matters
--------------------------------------------------------------

The following table sets forth the range of high and low closing bid prices of
the Common Stock for the periods indicated as determined by the National
Quotation Bureau, Inc.  The quoted prices represent only prices between dealers
on each trading day as submitted from time to time by certain of the securities
dealers wishing to trade in the Company's Common Stock, do not reflect retail
mark-ups, mark-downs or commissions, and may differ substantially from prices in
actual transactions.  

                                               Bid     
                                        High          Low
1998
  First Quarter                      $ .375         $ .09
  Second Quarter                       .13            .06 
  Third Quarter                        .13            .08
  Fourth Quarter                       .13            .05

1997
  First Quarte    r                  $2.9375        $1.375
  Second Quarter                      1.5625          .59375 
  Third Quarter                        .8125          .3125
  Fourth Quarter                       .5625          .1875

1996
  First Quarter                      $ 1.50         $ .3125
  Second Quarter                       1.00           .50  
  Third Quarter                        2.75           .625 
  Fourth Quarter                       3.375         1.875

                                                  
The Company has never paid cash dividends on its Common Stock.  Any payment of
cash dividends in the future will depend upon the Company's earnings (if any),
financial condition, and capital requirements.

In addition, the Company has executed certain loan agreements which  prohibit 
the payment of a dividend on the Common Stock as long as such agreements are in
place. (see "Item 7. Management's Discussion and Analysis of Financial 
Conditions and Results of Operations - 1992-1993 Financing" and "1996 Financing"
below).

As of  April 9, 1999, the Company had 371 holders of record of its Common 
Stock. 

The following information relates to all securities of the Company sold by the
Company within the year ended December 31, 1998 which were not registered under
the securities laws at the time of grant, issuance and/or sale:



           1.  The Company has, during the year ended December 31, 1998,
               issued 13,970,844 shares of Common Stock which at the time of
               issuance, had not yet been registered under the securities
               laws. These shares  were issued as follows: (i) 800,000 shares
               issued to related parties and (ii)13,170,844 shares issued in
               conversion of notes payable to common stock.

The Company did not employ an underwriter in connection with the issuance of the
securities described above.  The Company believes that the issuance of the
foregoing securities was exempt from registration under Section 4 (2) of the
Securities Act of 1933, as amended (the  Act ), as transactions not involving 
any public offering and such securities having been acquired for investment and 
not with a view to distribution.


Item 6.  Selected Financial Data (1)
------------------------------------

                                         YEARS ENDED DECEMBER 31,
                          1998       1997         1996       1995       1994
                      --------------------------------------------------------
INCOME STATEMENT
 Total Revenue         $ 408,029   $5,097,432  $  859,100  $3,379,897 $4,446,468
 Net Income (Loss)   393,839     (604,550) (1,447,641)   (647,673)   151,635  
 
 Income (Loss) per
 common share-Basic      .03        (.05)      (.17)        (.10)       .01 
Fully Diluted            .03       (.05)       (.17)        (.10)       .01
 Weighted average
 number of common
 shares outstanding-
 Basic                14,013,941   12,688,327   8,382,383   7,285,441  8,415,576

BALANCE SHEET
 Current Assets          364,786      555,430   1,209,944     283,309  1,405,554
 Current Liabilities     596,610    2,074,391   1,339,601     604,527  1,118,537
 Total Assets            429,614      676,023   1,497,294     546,995  1,641,001
 Long-Term Liabilities         -          716   1,080,052     423,319    368,142
 Total Liabilities       677,060    2,155,557   2,410,652   1,027,846  1,486,679
 Shareholders' Equity
  (Deficiency)          (247,446)  (1,479,534)   (913,359)   (480,851)   154,322


(1)       The above data should be read in conjunction with the financial
          statements of the Company included elsewhere herein.

<PAGE>
Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations
----------------------------------------------------------

Results of Operations, General: Historically, the Company derived a large
percentage of its revenues from government contracts. In the last three years,
the Company has been developing commercial applications. While the financial 
data presented reflects the Company s financial history, it cannot predict 
future results as the Company divested its government contracts early in 1998. 
The Company s current focus is solely on the development of its AM data casting
program.   

The statements contained in this Annual Report on Form 10-K that are not
historical facts are forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995).  Such forward-looking
statements may be identified by, among other things, the use of forward-looking
terminology such as  believes,   expects,  may,  will,  should or  anticipates 
or the negative thereof or other variations thereon or comparable terminology,
or by discussions of strategy that involve risks and uncertainties.  These
forward-looking statements, such as statements regarding anticipated future
revenues,  Year 2000 compliance, products under development, size of markets for
products under development and other statements regarding matters that are not
historical facts, involve predictions.  The Company s actual results, 
performance or achievements could differ materially from the results expressed 
in, or implied by, these forward-looking statements contained in this Annual 
Report on Form 10-K.  Factors that could cause actual results, performance or 
achievements to vary materially include, but are not limited to: changes in 
business conditions, Year 2000 Compliance of the Company s and other vendors  
products and related issues, changes in Mikros  sales strategy and product 
development plans, changes in the radio digital data marketplace, competition 
between Mikros and other companies that may be entering the radio digital data 
marketplace, competitive pricing pressures, market acceptance of Mikros  
products under development, and delays in the development of products.

1998 vs. 1997:
--------------

Total revenues in 1998 were approximately $408,000 compared to $5,097,000 in
1997, a decrease of 92%.

In 1998, revenues from research and development contracts were approximately
$47,000 or 11.5% of total revenues as compared to $1,856,000 or 36.4% of total
revenues in 1997. Revenues from equipment sales in 1998 were approximately
$334,000 or 81.9% of total revenues compared to $3,241,000 or 63.6% of total
revenues in 1997. The decrease in revenues in the equipment sales category were
primarily the result of final revenues from a U.S. Navy contract. The decrease
in Research & Development revenues is due primarily to the Company's final
revenues on commercial contracts including revenues of approximately $29,755 
from MBC. In 1998, revenues from a royalty agreement pursuant to the Company's
divestiture of its military contracts were approximately $27,000 or 6.6% of
revenues. There were no royalties in 1997.  


Total cost of sales in 1998 was approximately $376,000 or 92.2% of total 
revenues as compared to $3,601,000 or 70.6% of total revenues in 1997.  
Contract R & D cost of sales in 1998 was approximately $55,000 or 117.5% of 
Contract R & D revenues compared to $1,336,000 or 72% in 1997.

General and Administrative expenses were approximately $341,000 in 1998 compared
to $1,088,000 in 1997. Interest expense in 1998 amounted to approximately 
$51,000 versus $135,000 in 1997. This decrease is due to the reduction in notes 
payable resulting from the conversion of debt to common stock and the 
corresponding interest payments (see  1996 Financing ).

In 1998, the Company incurred approximately $864,000 or 211.7% of total revenues
on research and development costs related to the development of AM wireless
technology. This is compared to $719,000 or 14.1% of total revenues for the
development of a military communication system application in 1997. 

The Company attained net income for 1998 of approximately $394,000 compared to
a net loss for 1997 of approximately $605,000. The net income in 1998 is 
attributable to extraordinary gains arising from the Company's divestiture of 
its military contracts and the settlement of its accounts payable obligations. 
The loss in 1997 is due to the significant level of research and development 
cost born by the Company. 

1997 vs. 1996:
--------------

Total revenues in 1997 were approximately $5,097,000 compared to $859,000 in
1996, an increase of 493.4%.

In 1997, revenues from research and development contracts were approximately
$1,856,000 or 36.4% of total revenues as compared to $702,000 or 81.7% of total
revenues in 1996. Revenues from equipment sales in 1997 were approximately
$3,241,000 or 63.6% of total revenues compared to $157,000 or 18.3% of total
revenues in 1996. The increase in revenues in the equipment sales category were
primarily from a U.S. Navy contract. The increase in Research & Development
revenues is due primarily to commercial contracts including a related party.

Total cost of sales in 1997 was approximately $3,601,000 or 70.6% of total
revenues as compared to $826,000 or 96.1% of total revenues in 1996.  Contract
R & D cost of sales in 1997 was approximately $1,336,000 or 72% of Contract R &
D revenues compared to $713,000 or 101.6% in 1996. In both 1997 and 1996 the 
high cost of sales percentages for Contract R & D sales are due in part to 
certain contracts on which revenues exactly matched the costs. Except for such 
contracts, the cost of sales percentages for Contract R & D sales would be 
70.4% and 83.1% for 1997 and 1996, respectively.

General and Administrative expenses were approximately $1,088,000 in 1997
compared to $896,000 in 1996. Interest expense in 1997 amounted to approximately
$135,000 versus $126,000 in 1996. This increase is due to the higher level of
debt during 1997 and corresponding interest payments (see  1996 Financing ).


In 1997, the Company incurred approximately $719,000 or 14.1% of total revenues
on research and development costs related to the development of a military
communication system application and 159,000 or 3.1% of total revenues, for
research and development costs for commercial applications of its FM technology.
This is compared to $457,000 or 53% of total revenues for the FM commercial
application in 1996. 

The Company recorded a net loss for 1997 of approximately $605,000 compared to
a net loss for 1996 of approximately $1,448,000.  The loss in 1997 is due to the
significant level of research and development cost born by the company. The 1996
loss was high due to delays in government contracts and  commercial research and
development costs.

1996 vs. 1995:
--------------

Total revenues in 1996 were approximately $859,000 compared to $3,380,000 in
1995, a decrease of 74.5%. In 1996, revenues from research and development
contracts was approximately $702,000 or 81.7% of total revenues as compared to
$1,990,000 or 58.9% of total revenues in 1995.  Revenues from equipment sales in
1996 were approximately $157,000 or 18.3% of total revenues compared to
$1,390,000 or 41.1% of total revenues in 1995.  The decrease in revenues in both
categories in 1996 was due to delays in U.S. Navy funding for development and
equipment contracts.

Total cost of sales in 1996 was approximately $826,000 or 96.1% of total 
revenues as compared to $2,876,000 or 85.1% of total revenues in 1995.  
Contract R & D cost of sales in 1996 was approximately $713,000 or 101.6% of 
Contract R & D revenues compared to $1,796,000 or 90.2% in 1995.  In both 1996 
and 1995 the high cost of sales percentages for Contract R & D sales are due to 
a contract on which revenues exactly matched the costs. Except for such 
contract, the cost of sales percentages for Contract R & D sales would be 83.1% 
and 88.8% for 1996 and 1995, respectively.

General and Administrative expenses were approximately $896,000 in 1996 compared
to $856,000 in 1995.  Interest expense in 1996 amounted to approximately 
$126,000 versus $57,000 in 1995.  This increase is due to the higher level of 
debt during 1996 and corresponding interest payments (see  1996 Financing ).

In 1996, the Company incurred $457,000, or 53% of total revenues, for research
and development expenditures on commercial application of its FM technology
compared to $238,000 or 7% of total revenues in 1995.

The Company recorded a net loss for 1996 of approximately $1,448,000 compared to
a net loss for 1995 of approximately $648,000.  The greater loss in 1996 is due
to the significantly lower level of revenues and to higher spending on research
and development in 1996.





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

Since its inception, the Company has financed its operations through debt,
private and public offerings of equity securities and cash generated by
operations. 

In 1998, the Company had negative cash flow from operations of approximately
$547,000 compared to negative cash flow from operations of approximately 
$185,000 in 1997 and negative cash flow from operations of $1,090,000 in 1996. 
There was negative working capital of $232,000 as of December 31, 1998 as 
compared to negative working capital of $1,519,000 and $126,000 and December 
31, 1997 and 1996, respectively.

As of December 31, 1998, the Company could not meet its remaining principal
repayment obligations under the 1996 Financing and the 1992-93 Financing. The
Company has ceased accruing interest on its notes payable as of May 15, 1998.
Management is attempting to finalize the restructuring of its remaining note
obligations with one related party and other note holders.

A substantial portion of the Company s costs and expenses is represented by
labor, related benefits and subcontractors.  In 1998, the Company decreased its
number of employees from 19 to 3. 

Commencing April 10, 1998, for a period of four years, the Company is receiving 
a royalty of 2% of all data terminal sales by General Atronics Corporation. The
royalty agreement provides for quarterly reports and payments based on the GAC
shipments and receipts during the quarter.

The Company intends to continue the development and marketing of its commercial
applications of its wireless communications technology both directly and through
its relationship with MBC. In order to continue such development and marketing,
the Company will be required to raise additional funds. The Company intends to
consider the sale of additional debt and equity securities under appropriate
market conditions, alliances or other partnership agreements with entities
interested in supporting the Company s commercial programs, or other business
transactions which would generate resources sufficient to assure continuation of
the Company s operations and research programs.  There can be no assurance,
assuming the Company successfully raises additional funds or enters into 
business alliances, that the Company will achieve profitability or positive 
cash flow. 

If the Company is unable to obtain additional adequate financing or enter into
such business alliances, management will be required to sharply curtail its
operations.  Failure to obtain such additional financing on terms acceptable to
the Company may materially adversely affect the Company s ability to continue as
a going concern.

<PAGE>
1996 Financing
--------------

In a series of events from February through May 1996, the Company raised an
aggregate of $641,500 in debt financing pursuant to the issuance of secured
promissory notes.

The promissory notes are for a term of approximately eighteen months and include
an interest rate of 12% on the unpaid balance.  The notes are convertible into
Common Stock at a rate of one Common Share for each dollar of debt. The first
interest payment was due on June 15, 1996 and quarterly thereafter. The 
principal payments had been deferred until March 31, June 15, and September 15, 
1998. The notes are secured by the assets of the Corporation. As additional 
consideration, warrants for the purchase of common stock were granted (the 
number of shares were based on the amount of the promissory note and equal to 
five shares to each dollar). The warrant price is $.01 per share.

The following officers and directors participated in the 1996 financing:  Wayne
E. Meyer, Thomas J. Meaney, Frederick C. Tecce and Patricia A. Bird. 

In 1998, the terms of the agreement were modified such that the conversion price
was reduced to $0.06 from $1.00. Of the total notes of $641,500, all but 
$105,000 (three note holders) were converted to common stock in 1998. No 
interest was accrued after May 15, 1998.

Strategic Alliance with Safeguard Scientifics (Delaware) Inc.
------------------------------------------------------------

On November 18, 1996, the Company consummated a Common Stock and Warrant
Agreement (the "Purchase Agreement") with Safeguard Scientifics (Delaware),Inc.,
a Delaware corporation ("SSI"), pursuant to which SSI purchased for an aggregate
consideration of $1,000,000: (i) 1,912,000 shares (the "Shares") of common stock
of the Company, $0.01 par value ("Common Stock"); (ii) a warrant (the "First
Warrant") to purchase 2,388,000 shares of Common Stock at an exercise price of
$0.65 per share; and (iii) a warrant (the "Second Warrant") to purchase 
3,071,000 shares of Common Stock at an exercise price of $0.78 per share. 
The First Warrant and the Second Warrant are referred to hereinafter 
collectively as the "Warrants."  The exercise prices of the Warrants are 
subject to adjustment pursuant to customary anti-dilution provisions.

In connection with the sale of the Shares and the Warrants, the Company granted
to SSI certain piggyback and demand registration rights with respect to the
Shares and the Common Stock underlying the Warrants.  In addition, the Company
granted to SSI a right of first refusal pursuant to which, subject to certain
conditions, in the event the Company issues, sells or exchanges any securities,
it must first offer such securities to SSI and such offer must remain open and
irrevocable for 30 days.  Such right of first refusal may only be waived in
writing and terminates at such time as SSI owns less than ten percent (10%) of
the Shares.

Pursuant to the Purchase Agreement, as long as SSI owns one percent (1%) or more
of the Company's outstanding equity securities, on a fully-diluted basis, the
Company is obligated to, among other things: (i) permit SSI to inspect the
operations and business of the Company; and (ii) fix and maintain the number of
Directors on the Board of Directors at eight (8) members.  In addition, the
Purchase Agreement also provides that as long as SSI owns such one percent (1%),
the Company is subject to certain negative covenants, including, among other
things, restrictions on:  (i) transactions with affiliates of the Company; (ii)
certain indebtedness; and (iii) amendments to the Company's Certificate of
Incorporation and Bylaws.

In connection with the transaction, the Company entered into a voting agreement
pursuant to which Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick
C. Tecce and John B. Torkelsen, each a director of the Company (collectively, 
the "Management Shareholders"), agreed to vote an aggregate of approximately
6,659,214 votes for the election of two designees of SSI to the Board of
Directors of the Company.

Also in connection with the transaction, certain of the Company's AM and FM
technology was transferred to Data Design & Development Corporation, a Delaware
corporation ("3D"), pursuant to a contribution agreement. Under the contribution
agreement, each of the Company, SSI and certain debtholders of the Company
(including each of the Management Shareholders) owns one-third of the issued and
outstanding capital stock of 3D.  Pursuant to the License Agreement, 3D granted
to the Company an exclusive, royalty-free perpetual right and license in and to
the development and marketing of FM technology in the United States, Canada and
Mexico.  Pursuant to the Technology License Agreement, 3D granted to Mobile
Broadcasting Corporation ("MBC"), a Delaware corporation, a royalty-free,
exclusive, perpetual right and license in and to the marketing of the AM
technology in the  United States, Canada and Mexico. Initially, SSI owned 75% of
the issued and outstanding capital stock of MBC and the Company owned 25% of 
such capital stock.

Finally, the Company entered into a Consulting Services Agreement with MBC
pursuant to which the Company provided consulting services to MBC for the
development of the AM technology. 

1992-93 Financing
-----------------

In a series of transactions consummated on October 27, 1992 and April 27, 1993,
Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick C. Tecce, and John
B. Torkelsen, individually and not as a group, (collectively referred to herein
as the "Investors") acquired certain loan and equity interests in the
Company from other debt and equity holders.  

Pursuant to such transactions, each of the Investors acquired, in consideration
of an aggregate of $250,000 (each of the Investors individually paying $50,000
in cash), twenty percent of (i) 50,000 shares of Common Stock, $.01 par value
("Common Stock"), of the Company (ii) promissory notes of the Company in the
aggregate principal amount of $916,875 (collectively, the "Investor Notes"),
(iii) warrants ("Series C Warrants") to purchase 97,500 shares of Series C
Preferred Stock, $.01 par value, of the Company and (iv) certain loan and equity
rights in the Company, including without limitation, rights under loan
agreements, an investment agreement, a note purchase agreement, and all 
documents related to such agreements.

Pursuant to such loan documents, among other things, the Company is prohibited
from paying dividends on its Common Stock.  The Company has granted to the
Investors a security interest in all of the assets of the Company and the
Investors have the right to designate 2/7ths of the Board of Directors of the
Company, which right has not been exercised.  Each of the investors is a
director of the Company.

In December 1993, the Investors agreed to reduce the amounts owed by the Company
under the Investor Notes, including unpaid interest in exchange for shares of
Common Stock and Preferred Stock issued by the Company. In return for a 
reduction in debt of $416,875 and accrued interest of $273,125, the Company 
issued 2,750,000 shares of Common Stock and 690,000 shares of Series D 
Preferred Stock which provides for an annual cumulative dividend of $.10 per 
share. The Investor Notes were modified to provide for principal payment in 
sixteen quarterly payments beginning January 1, 1994 and ending on October 1, 
1997.  As additional consideration for the modification of such loans, the 
Company extended the exercise period for the Series C Warrants until April 25, 
1999.   

Interest on the unpaid principal balance was due in quarterly payments beginning
March 31, 1994. In 1998, the Company paid all of the Investors interest through
May 15, 1998. At that time, the Company offered to convert the notes at face
value at $0.06 per share in order to restructure its debt. As a result, 
4,166,668 shares were issued. One of the Investors chose not to convert. No 
interest has been accrued since May 15, 1998. 


Item 7A.  Quantitative and Qualitative Disclosure About Market Risk
-------------------------------------------------------------------

Not Applicable.


Item 8.   Financial Statements and Supplementary Data
-------------------------------------------------------

The financial statements required to be filed pursuant to this Item 8 are
appended to this report on Form 10-K.  A list of the financial statement
schedules filed herewith is found at "Item 14  Exhibits, Financial Statement
Schedules and Reports on Form 8-K".

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

Not Applicable.

<PAGE>
PART III

Item 10.  Directors and Executive Officers of the Company
---------------------------------------------------------

The current members of the Board of Directors of the Company are as follows:


                                Served as a       Positions with
Name                Age       Director Since      the Company 

Joseph R. Burns          61             1984           Director

F. Joseph Loeper         54             1997           Director

Thomas C. Lynch          55             1997           Director

Thomas J. Meaney         63             1986           President            
                                                      and Director

Wayne E. Meyer      73             1988        Chairman of the                  
                                               Board and
                                               Director

Frederick C. Tecce  63             1996                Director

John B. Torkelsen        53             1985           Director


     The principal occupation and business experience, for at least the past
five years, of each nominee is as follows:

     Joseph R. Burns was a Director and President of the Company from May 1984
until July 1986.  From July 1986 until December 1986, Dr. Burns was Chairman of
the Company.  From January 1987 until April 1988, Dr. Burns was a consultant to
the Company.  From April 1988 to March 1998,  Dr. Burns served has Senior Vice
President and Chief Scientist of the Company. From March 1998 to present Dr.
Burns serves as Executive Vice President of  Ocean Power  Technologies, Inc.  
Dr. Burns currently serves as a Director.

     F. Joseph Loeper has been a Director of the Company since February 1997. 
He was first elected to the Pennsylvania Senate in 1979 to represent the 26th
Senatorial District and continues to serve in this capacity.  He currently 
serves as Majority Leader of the State Senate.  Senator Loeper also serves as a 
member of the Board of Governors of the State System of Higher Education and 
is a Pennsylvania Commissioner on the Delaware River Port Authority.

     Thomas C. Lynch has been a Director of the Company since February 1997. 
He serves as Senior Vice President for Safeguard Scientifics, Inc. since 
retiring at the rank of Rear Admiral, U.S. Navy in November 1995.  Mr. Lynch 
serves on the Boards of OAO International, Sanchez Computer Associates, Eastern 
Technology Council, Safeguard Scientifics International and Enhanced Vision 
Systems Inc. 

     Thomas J. Meaney has been a Director of the Company since July 1986 and was
Chairman of the Board from June 1997 to February 1999. He was appointed 
President in June 1986 and continued to serve until February 1997.  On 
September 30, 1998, he was reappointed President of the Corporation.  From 
February 1983 to  June 1986, Mr. Meaney was Senior Vice President and Director 
of Robotic Vision Systems Incorporated ("RVSI"), a manufacturer of robotic 
vision systems.  Mr. Meaney served as a Director of RVSI until 1991 when he 
resigned from the post.  Prior to 1983 and for more than five years, he was 
Vice President - Business Development, International of Norden Systems and 
President - Norden Systems Canada, both divisions of United Technologies 
Corporation and developers of computer and electronic products and systems.

     Wayne E. Meyer has been a Director of the Company since April 1988 and
Chairman of the Board 1990 to 1997 and re-elected as Chairman in February 1999. 
From 1986 to present he has been the Founder and President of the W.E. Meyer
Corporation which engages in  consulting and advice to industry, government and
academic institutions in matters of system engineering, project management,
strategic planning and military and electronic designs.  He enlisted in the U.S.
Navy as an Apprentice Seaman in 1943 and retired in 1985 in the rank of Rear
Admiral.  As a national authority on Ballistic Missile Defense, he serves on
numerous boards, groups and panels.

     Frederick C. Tecce has been a Director of the Company since July 1996.  Mr.
Tecce is of Counsel to Klett Lieber Rooney & Schorling.  Previously, Mr. Tecce
was Counsel to Pepper, Hamilton and Scheetz.  Since 1995, he has served as
Co-Chairman of the Executive Committee of the Eastern Technology Council.  In
1996, Mr. Tecce was named Chairman of the Finance Committee of the Pennsylvania
Schools Employees Retirement Systems.  
     
     John B. Torkelsen has been a Director of the Company since June 1985 and
has served as Secretary of the Corporation from June 1985 until April 25, 1996. 
Mr. Torkelsen has been President of Princeton Venture Research, Inc., a 
financial research and consulting firm located in Princeton, New Jersey from 
November 1984 to the present.  He is also a Director of Voice Control Systems, 
Inc., a voice recognition technology company; Objective Communications,  Inc., 
a video communications company; and Princeton Video Image, Inc. a developer of 
video insertion systems for the television broadcast industry.

     None of the Company's Directors or executive officers is related to any
other Director or executive officer of the Company.  In connection with the
acquisition of certain debt and equity instruments of the Company from third
parties, Messrs. Burns, Meaney, Meyer, Torkelsen and Tecce (collectively, the
Investors") have the right to designate 2/7ths of the Board of Directors of the
Company.  See Certain Relationships and Related Transactions.  There are
currently seven members of the Board.

<PAGE>
     The following table identifies the current executive officers of the
Company:

                                                            
                              Capacities in       In Current
Name                Age       Which Served        Position Since


Thomas J. Meaney         63   President           September 1998
                              and Director     

Patricia A. Bird         32   Secretary and       September 1998
                              Treasurer


Item 11.  Executive Compensation
--------------------------------

     The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities awarded to, earned by or paid to the
Company's Chief Executive Officer and the four most highly compensated executive
officers of the Company whose aggregate cash compensation exceeded $100,000
(collectively, the "Named Executives") during the years ended December 31, 1996,
1997 and 1998.


                        SUMMARY COMPENSATION TABLE








                        Name and Principal Position
                                 (a)
Thomas J. Meaney, President

Year (b)       Annual Compensation (1)
                Salary ($)

                (c)       
     1998       35,830
     1997       145,466
     1996       140,263
    
   
   Joseph R. Burns, Senior Vice President (2)
   
     1998        24,709
     1997       113,200
     1996       108,012
    
         
                                   

(1)  The costs of certain benefits are not included because they did not
     exceed, in the case of each Named Executive, the lesser of $50,000 or 10%
     of the total of annual compensation reported in the above table.

(2)  Mr. Burns served as Senior Vice President until his resignation in March
     1998.
<PAGE>
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management
-------------------------------------------------------------
                                       
Common Stock

     The following table sets forth certain information, as of  March 31, 1999
with respect to holdings of the Company's Common Stock by (i) each person known
by the Company to be the beneficial owner of more than 5% of the total number of
shares of Common Stock outstanding as of such date, (ii) each of the nominees
(which includes all current directors and Named Executives), and (iii) all
current directors and officers as a group.


                                Amount and Nature           
                                   of Beneficial        Percent
     Name of Beneficial Owner      Ownership(1)        Of Class

(i)  Certain Beneficial Owners:         

     Safeguard Scientifics          7,371,000(2)        18.8
      (Delaware) Inc.                             
     800 The Safeguard Building
     435 Devon Park Drive
     Wayne, PA 19087-1945

     Transitions Two,               2,137,775(3)         5.5
       Limited Partnership
     920 Hopmeadow Street
     Simsbury, Connecticut 06070                                

(ii) Nominees:           

     Joseph R. Burns                1,113,081(4)         2.8

     F. Joseph Loeper                 177,000(5)          .5

     Thomas C. Lynch                       -               -

     Thomas J. Meaney               3,700,167(6)         9.4

     Wayne E. Meyer                 3,108,000(7)         7.9

     Frederick C. Tecce             3,216,668(8)         8.2  

     John B. Torkelsen              2,920,050(9)         7.5

(iii) All Current Directors and Officers as a Group                             
      (eight persons)       14,329,216(4)(5)(6)(7)(8)(9) 36.6
                                           
*    Less than 1%

(1)  Except as otherwise indicated, all shares are beneficially owned and the
     sole investment and voting power is held by the persons named.

(2)  Includes 5,459,000 shares issuable upon exercise of warrants, and 504,916
     shares of common stock granted by Safeguard to certain of its employees
     pursuant to a long-term incentive plan.  Safeguard will continue to
     exercise voting rights with respect to these shares until the occurrence
     of certain vesting requirements.

(3)  Includes 1,750,275 shares issuable upon conversion of Series B Stock.

(4)  Includes 14,748 shares issuable upon conversion of Series B Stock and
     100,000 shares issuable upon the exercise of warrants.

(5)  Includes 175,000 shares issuable upon the exercise of warrants.

(6)  Includes 50,000 shares issuable upon conversion of Convertible Preferred
     Stock, 199,500 shares issuable upon conversion of Series B Stock and
     275,000 shares issuable upon the exercise of warrants.

(7)  Includes 30,000 shares issuable upon conversion of Series B Stock, 100,000
     shares issuable upon the exercise of options and 318,750 shares issuable
     upon the exercise of warrants.

(8)  Includes 100,000 shares issuable upon the exercise of warrants.

(9)  Includes 130,000 shares held of record by Princeton Venture Research,
     Inc., a corporation wholly owned by Mr. Torkelsen. Also includes 202,500
     shares issuable upon conversion of Convertible Preferred Stock and 695,883
     shares issuable upon conversion of Series B Stock.  The Series B Stock is
     held of record by Princeton Venture Research, Inc.





















Convertible Preferred Stock

     The following table sets forth certain information, as  of March 31, 1999,
with respect to holdings of the Company's Convertible Preferred Stock by (i) 
each person known by the Company to be the beneficial owner of more than 5% of 
the total number of shares of Convertible Preferred Stock outstanding as of such
date, (ii) each of the nominees (which includes all current directors and Named
Executives), and (iii) all current directors and officers as a group.

                                Amount and Nature
                                   of Beneficial   Percent
     Name of Beneficial Owner      Ownership(1)         of Class

(I)  Certain Beneficial Owners:

(ii) Nominees:

     Joseph R. Burns                       --                  --

     F. Joseph Loeper                      --                  --

     Thomas C. Lynch                       --                  --

     Thomas J. Meaney                      50,000             19.6

     Wayne E. Meyer                        --                  --

     Frederick C. Tecce                    --                  --

     John B. Torkelsen                    202,500             79.4

(iii) All Current Directors and Officers as a Group
     (eight  persons)                     252,500             99.0

                                           

(1)  Except as otherwise indicated, all shares are beneficially owned and the
     sole investment and voting power is held by the persons named.
<PAGE>
Series B Stock

     The following table sets forth certain information, as March 31, 1999, 
with respect to holdings of the Company's Series B Stock by (i) each person 
known by the Company to be the beneficial owner of more than 5% of the total 
number of shares of Series B Stock outstanding as of such date, (ii) each of 
the nominees (which includes all current directors and Named Executives), and 
(iii) all current directors and officers as a group.

                                  Amount and Nature
                                     of Beneficial           Percent
     Name of Beneficial Owner         Ownership(1)           of Class
(I)  Certain Beneficial Owners:

     The Mercantile & General              91,342            8.1
        Reinsurance Company, PLC   
     Moorfields House
     Moorfields
     London EC2Y 9AL                    

     Transitions Two, Limited Partnership  583,425         51.6
     920 Hopmeadow Street
     Simsbury, Connecticut 06070           

(ii) Nominees:

     Joseph R. Burns                        4,916            *

     F. Joseph Loeper                       --               --

     Thomas C. Lynch                        --                --

     Thomas J. Meaney                      66,500            5.9

     Wayne E. Meyer                        10,000            *

     Frederick C. Tecce                      --               --

     John B. Torkelsen                    231,961(2)        20.5

(iii) All Current Directors and Officers as a Group
     (eight persons)                      313,377           27.7
                                           
*    Less than 1%

(1)  Except as otherwise indicated, all shares are beneficially owned and the
     sole investment and voting power is held by the persons named.

(2)  Held of record by Princeton Venture Research, Inc., a corporation wholly
     owned by Mr. Torkelsen.


Series C Stock

     The following table sets forth certain information, as of March 31, 1999,
with respect to holdings of the Company's Series C Stock by (i) each person 
known by the Company to be the beneficial owner of more than 5% of the total 
number of shares of Series C Stock outstanding as of such date, (ii) each of 
the nominees (which includes all current directors and Named Executives), and 
(iii) all current directors and officers as a group.

                                   Amount and Nature
                                     of Beneficial          Percent
     Name of Beneficial Owner         Ownership(1)           of Class

(I)  Certain Beneficial Owners:

     Transitions Two, Limited Partnership     5,000           100.0
     920 Hopmeadow Street
     Simsbury, Connecticut 06070             

(ii) Nominees:

     Joseph R. Burns                         19,500(2)          79.6

     F. Joseph Loeper                           --                --

     Thomas C. Lynch                            --                --

     Thomas J. Meaney                        19,500(2)          79.6

     Wayne E. Meyer                          19,500(2)          79.6

     Frederick C. Tecce                      19,500(2)          79.6

     John B. Torkelsen                       19,500(2)          79.6


(iii)     All Current Directors and Officers as a Group
     (eight persons)                         97,500(2)         95.1

                                           

(1)  Except as otherwise indicated, all shares are beneficially owned and the
     sole investment and voting power is held by the persons named.

(2)  Reflects warrants to purchase Series C Stock.


<PAGE>
Series D Stock

     The following table sets forth certain information, as of March 31, 1999,
with respect to holdings of the Company's Series D Stock by (i) each person 
known by the Company to be the beneficial owner of more than 5% of the total 
number of shares of Series D Stock outstanding as of such date, (ii) each of 
the nominees (which includes all current directors and Named Executives), and 
(iii) all current directors and officers as a group.


                                   Amount and Nature
                                      of Beneficial         Percent
     Name of Beneficial Owner         Ownership(1)          of Class

(I)  Certain Beneficial Owners:    

(ii) Nominees:

     Joseph R. Burns                         138,000        20.0

     F. Joseph Loeper                         --             --

     Thomas C. Lynch                          --             --

     Thomas J. Meaney                        138,000        20.0

     Wayne E. Meyer                          138,000        20.0

     Frederick C. Tecce                      138,000        20.0

     John B. Torkelsen                       138,000        20.0


(iii) All Current Directors and Officers as a Group
     (eight persons)                         690,000        100.0

                                             

(1)  Except as otherwise indicated, all shares are beneficially owned and the
     sole investment and voting power is held by the persons named.
<PAGE>
Item 13.  Certain Relationships and Related Transactions
-------------------------------------------------------

In a series of transactions consummated on October 27, 1992 and April 27, 1993,
Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer and John B. Torkelsen, each a
Director of the Company, and Frederick C. Tecce (collectively, the Investors")
acquired all of the loan and equity interests in the Company from certain third
parties.  Pursuant to such transactions, each of the Investors acquired, in
consideration of $50,000 each, 20% of (I) 50,000 shares of Common Stock, (ii)
promissory notes of the Company in the aggregate principal amount of $916,875
(collectively, the "Investor Notes"), (iii) warrants to purchase 97,500 shares
of Series C Stock (the "Series C Warrants"), and (iv) certain other loan and
equity rights in the Company, including the right to designate 2/7ths of the
Board of Directors of the Company.                              

In December 1993, the Investors agreed to reduce the amounts owed by the Company
under the Investor Notes, including unpaid interest, in exchange for shares of
capital stock issued by the Company.  In return for a reduction in principal of
$416,875 and accrued interest of $273,125, the Company issued 2,750,000 shares
of Common Stock and 690,000 shares of Series D Stock.  The Investor Notes were
modified to provide for 16 quarterly payments of principal beginning January 1,
1994 and ending October 1, 1997. The Investors authorized deferral of all
principal payments until 1998. Interest on the unpaid principal balance is
payable quarterly commencing March 31, 1994.  As additional consideration for 
the modification of such loans, the Company extended the exercise period for the
Series C Warrants until April 25, 1999.  

Interest on the unpaid principal balance was due in quarterly payments beginning
March 31, 1994. In 1998, the Company paid all of the Investors interest through
May 15, 1998. At that time, the Company offered to convert the notes at face
value at $0.06 per share in order to restructure its debt. As a result, 
4,166,668 shares were issued. One of the Investors chose not to convert. No 
interest has been accrued since May 15, 1998.          

In a series of events from February through May 1996, the Company raised an
aggregate of $641,500 in debt financing pursuant to the issuance of secured
promissory notes.

The promissory notes are for a term of approximately eighteen months and include
an interest rate of 12% on the unpaid balance.  The first interest payment was
paid on June 15, 1996 and interest is due quarterly thereafter.  The principal
payments were to be paid on the fifteenth of March, June and September 1998.  
The notes are secured by the assets of the Corporation.  As additional 
consideration, warrants for the purchase of common stock were granted (the 
number of shares were based on the amount of the promissory note and equal to 
five shares to each dollar).  The warrant price is $.01 per share.  As of 
December 31, 1997, the Company was in arrears for the December interest 
payment. During 1998, the Company was unable to meet its note obligations and 
is currently working to restructure its debt to related and other parties.

The following officers and directors participated in the 1996 financing:  Wayne
E. Meyer, Thomas J. Meaney and  Patricia A. Bird.  In 1998, the terms of the
agreement were modified such that the conversion price was reduced to $0.06 from
$1.00.  Of the total notes of $641,500, all but $105,000 were converted to 
common stock in 1998.  No interest was accrued after May 15, 1998.

The Company retained the services of a member of its board of directors to
provide engineering and management consulting services to the Company. No
payments were remitted in 1998. In 1997, the Company paid $1,000 for these
services. In 1996, the Company issued 30,750 shares of Common Stock and $2,619
of cash in payment for $17,994 of services rendered. In addition, in 1997, the
Company paid $1,400 to the director for office rent expenses.

The Company retained the services of another member of its board of directors to
provide operations management and technical consulting services until his death
in 1997. No payments were made in 1998.  In 1997, he received $5,000 for
services. In 1996, this director was issued 23,760 shares of Common Stock in
payment of $11,880 for services rendered.

As of December 31, 1998 and 1997, accounts payable owed to these two related
parties amounted to $19,573 and $18,874, respectively.

In 1998, another director provided consulting services and was paid $10,000
during the year.  There were no accounts payable to this director as of December
31, 1998 and no payments in 1997.

In 1998, another director provided services and was compensated with 600,000
shares of common stock valued at $36,000(see Note O).   There were no accounts
payable to this director as of December 31, 1998, and no cash payments in 1998
or 1997.

In addition, the Company retained the services of a management consultant in
1998. The consultant, who is a lawyer, was compensated as follows:(i) a grant of
200,000 shares of common stock valued at $12,000 and(ii) cash payments of 
$1,500 per quarter to  his affiliated law firm. As of December 31, 1998, there 
was no balance due. Total cash payments to the law firm were $4,531 in 1998.
     
<PAGE>
PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on
          Form 8-K
-----------------------------------------------------------------

(a)  1.   Reference is made to financial statements included under Item 8.

     2.   Reference is made to financial statements included under Item 14(c).

     3.   Description of Exhibits (Pursuant to Item 601 of  Regulation S-K).

Note:  All exhibits that were filed as exhibits (I) to the Company's 
Registration Statement on Form S-18, File No. 2-67918-NY, as amended, (ii) or, 
if so specified, to previously filed Annual Reports on Form 10-K or to 
previously filed Current Reports on Form 8-K, are indicated by a parenthesis 
setting forth the exhibit number by which the exhibits were identified in 
said Registration Statement and are hereby incorporated by reference.
 
     3.1       Certificate of Incorporation [Exhibit 2(I)]
     3.2       By-laws [Exhibit 2(ii)]
     3.3       Form of Certificate of Amendment to Certificate of
               Incorporation [Exhibit 2(iii)]
     3.4       Form of Certificate of Amendment of Incorporation with
               respect to increase of authorized shares [Exhibit iv)]
     4.1       Certificate of Designations of Series B Preferred Stock and 
               Series C Preferred Stock [Exhibit 4.1 to Form 8-K filed 
               September 12, 1988]
     4.2       Revised form of Series C Preferred Stock Purchase
               Warrant issued to Bishop Capital, L.P. as assigned to
               the Investors.
     4.3       Form of Series C Preferred Stock Purchase Warrant
               issued to Unicorn Ventures, Ltd., Renaissance Holdings
               PLC and Gartmore Information and Financial Trust PLC.
               [Exhibit 4.5 to Form 10-K for 1988 filed May 15, 1989]
     4.4       Form of Series C Preferred Stock Purchase Warrant
               assigned to the Investors. [Exhibit 4.10 to Form 10-K
               for 1990 filed April 12, 1991]
     4.5       Form of Series C Preferred Stock Purchase Warrant
               assigned to the Investors [Exhibit 4.11 to Form 10-K
               for 1990 filed April 12, 1991]
     4.6       Assignment and Sale Agreement dated October 27, 1992 by
               and among Renaissance Holdings PLC, acting by its
               Receivers, the Company, and each of the Investors and,
               as to Section 1.1 thereof only, the Chartfield Group,
               acting by its Receivers [Exhibit 4.1 to Form 8-K filed
               October 27, 1992]
     4.7       Loan Modification and Intercreditor Agreement dated
               October 27, 1992 by and among the Company and the
               Investors [Exhibit 4.2 to Form 8-K filed October 27,
               1992]
     4.8       Certificate of Designations of Serial Preferred Stock
               [Exhibit 4.16 to Form 10-K for 1993 filed March 30, 1994]
    10.1       Loan Agreement dated April 26, 1988 between the Company
               and Bishop Capital, L.P. as assigned to the Investors
               [Exhibit 10.1 to Form 8-K filed September 12, 1988].
    10.2       Security Agreement dated April 26, 1988 between the
               Company and Bishop Capital, L.P. as assigned to the
               Investors [Exhibit 10.2 to Form 8-K filed September 12,
               1988]
    10.3       Amendment to Loan Agreement and Promissory Note dated
               as of January 27, 1989 between Bishop Capital, L.P. as
               assigned to the Investors and the Company. [Exhibit
               10.4 to Form 10-K for 1988 filed May 15, 1989]
    10.4       Investment Agreement dated as of June 30, 1988 between
               Unicorn Ventures, Ltd., Unicorn Ventures II, L.P., as
               assigned to the Investors and the Company [Exhibit 10.6
               to Form 8-K filed September 12, 1988]
    10.5       Security Agreement dated June 30, 1988 from the Company
               to Unicorn Ventures, Ltd. and Unicorn Ventures II, L.P.
               as assigned to the Investors [Exhibit 10.9 to Form 8-K
               filed September 12, 1988]
    10.6       Registration Agreement dated as of June 30, 1988
               between Unicorn Ventures, Ltd., Unicorn Ventures II,
               L.P., as assigned to the Investors and the Company
               [Exhibit 10.10 to Form 8-K filed September 12, 1988]
    10.7       Consent and Amendment Agreement dated March 31,1989 as
               assigned to the Investors. [Exhibit 10.10 to Form 10-K
               for 1988 filed May 15, 1989]
    10.8       1988 Restricted Stock Award Plan. [Exhibit 10.20 to
               Form 10-K for 1988 filed May 15, 1989]
    10.9       Form of Restricted Stock Agreement. [Exhibit 10.21 to
               Form 10-K for 1988 filed May 15, 1989]
    10.10      Incentive Stock Option [Exhibit 10(c)(iii) to Form 10-K
               for the year ended December 13, 1981]
    10.11      Amended and Restated Stock Option Plan (1988)[Exhibit
               10.27 to Form 10-K for 1989 filed April 3, 1990]
    10.12      Security Agreement dated April 19, 1990 from Mikros
               to Bishop Capital, L.P. as assigned to the Investors
               [Exhibit 10.35 to Form 10-K for 1990 filed April 12,
               1991]
    10.13      Security Agreement dated April 19, 1990 from Mikros to
               Renaissance Holdings PLC as assigned to the Investors.
               [Exhibit 10.36 to Form 10-K for 1990 filed April 12,
               1991]
    10.14      Consent and Amendment Agreement dated as of April 19,
               1990 as assigned to the Investors. [Exhibit 10.37 to
               Form 10-K for 1990 filed April 12, 1991]
    10.15      Note Modification and Stock Purchase Agreement dated
               December 31, 1993. [Exhibit 10.47 to Form 10-K for
               1993 filed March 30, 1994]
    10.16      Promissory Notes dated December 31, 1993 in the amount
               of $100,000 to each of the Investors. [Exhibit 10.17 to
               Form 10-K for 1994 filed March 29, 1995]
    10.17      Authorizations for deferral of principal payments by
               each of the Investors [Exhibit 10.18 to Form 10-K for
               1995 filed May 16, 1996]
    10.18      Common Stock and Warrant Purchase Agreement dated
               November 15, 1996 by and between Mikros Systems
               Corporation and Safeguard Scientifics (Delaware), Inc.
               [Exhibit 10.1 to Form 8-K filed November 18, 1996]
    10.19      License Agreement dated November 15, 1996 by and
               between Mikros Systems Corporation and Data Design and
               Development Corporation.  [Exhibit 10.2 to Form 8-K
               filed November 18, 1996]
    10.20      Technology License Agreement dated November 15, 1996 by
               and among Data Design and Development Corporation, 
               Mikros Systems Corporation and Mobile Broadcasting 
               Corporation.  [Exhibit 10.3 to Form 8-K filed November
               18, 1996]
    10.21      Authorization for Deferral of principal payment by each
               of the investors together with Schedule of Deferrals.
               [Exhibit 10.22 to Form 10-K filed February 28, 1997]    
    10.22      Form of Promissory Note together with Schedule of
               Investors.[Exhibit 10.23 to Form 10-K filed February 28, 1997]
    10.23      Form of 1996 Warrant with Schedule of Warrants.         
               [Exhibit 10.24 to Form 10-K filed February 28,1997]
    10.24      Registration Statement of shares included in the                
               Incentive Stock Option Plan (1981)and the 1992
               Incentive Stock Option Plan [Form S-8/S-3 filed April 25,1997]
    10.25      Contract to sell defense contracts to General Atronics 
               Corporation dated April 10, 1998 [Exhibit 10.25 to Form 10-K 
               filed November 13, 1998]
    10.26      Non-Compete agreement with General Atronics Corporation dated 
               April 10, 1998 [Exhibit 10.26 to Form 10-K filed November 13, 
               1998]
    10.27      Lease agreement with the Daily Plan It for office space dated 
               July 29, 1998 [Exhibit 10.23 to Form 10-K filed February 28, 
               1997]

(b)  Not applicable
(c)  See (a) 3 above
(d)  Financial Statement Schedules

The following financial statements are incorporated herein:

Independent Auditors' Report
Balance Sheets at December 31, 1997 and 1998
Statements of Operations for the years ended December 31, 1996, 1997 and 1998
Statements of Shareholders' Deficiency for the years ended December 31, 1996,
1997 and 1998
Statements of Cash Flows for the years ended December 31, 1996, 1997 and 1998
Notes to Financial Statements



<PAGE>
                              SIGNATURE PAGE

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.

                              MIKROS SYSTEMS CORPORATION
                              --------------------------
                                     (Registrant)
Dated: April 14, 1999
                          By: /s/  
                          --------------------------------
                          Thomas J. Meaney, President 
                                                                        
         
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated and on the date indicated.


Signatures                                   Date


/s/                                     
------------------------------             April 14, 1999
Wayne E. Meyer, Chairman          
 
/s/                                        April 14, 1999
------------------------------
Joseph R. Burns, Director 

/s/                                        April 14, 1999
------------------------------
F. Joseph Loeper, Director 

/s/                                        April 14, 1999 
------------------------------
Thomas C. Lynch, Director

/s/
------------------------------             April 14, 1999
Thomas J. Meaney, Director

/s/                                        April 14, 1999  
------------------------------
Frederick C. Tecce, Director

/s/                                        April 14, 1999
------------------------------
John B. Torkelsen, Director


             
                          DRUKER, RAHL & FEIN
                          Business Consultants
                     Certified Public Accountants
                       200 Canal Pointe Boulevard
                       Princeton, NJ  08540-5998
                             (609) 243-9700
                           FAX (609) 243-9799

                     INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
MIKROS SYSTEMS CORPORATION

We have audited the accompanying balance sheets of Mikros Systems Corporation
(the "Company") as of December 31, 1998 and 1997, and the related statements of
operations, shareholders' deficiency and cash flows for each of the three years
in the period ended December 31, 1998. 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 audit. 

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

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Mikros Systems Corporation, 
as of December 31, 1998 and 1997, and the results of its operations, 
shareholders' deficiency and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted 
accounting principles. 

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the financial statements, the
Company incurred an operating loss before extraordinary items of $1,223,890 and
$604,550 for the year ended December 31, 1998 and 1997, respectively.  As of
December 31, 1998, current liabilities exceed current assets by $231,734 and
total liabilities exceed total assets by $247,446. These factors, and others
discussed in Note 2.1. raise substantial doubt about the Company s ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
or the amounts and classifications of liabilities that might be necessary in the
event the Company cannot continue in existence.

Druker Rahl & Fein
Princeton, New Jersey
March 5, 1999

                        MIKROS SYSTEMS CORPORATION
                              BALANCE SHEETS

                                             DECEMBER 31,
         ASSETS                           1998         1997
------------------------------       ------------  ------------

CURRENT ASSETS
  Cash                                $  100,983   $   85,592 

  Accounts Receivable
     Government                                -      342,726
     Trade                                22,023      112,258

  Inventories                                  -        5,293

  Prepaid Engineering Services          234,722            -

  Other Current Assets                     7,148        9,561 
                                     ------------  ------------

TOTAL CURRENT ASSETS                     364,876      555,430
 
                                     ------------  ------------
PROPERTY AND EQUIPMENT        
  Equipment                               71,170      135,530

  Furniture and Fixtures                       -       50,241
                                     ------------  ------------

                                           71,170    185,771

  Less:  Accumulated Depreciation          36,080    100,672  
                                     ------------  ------------

PROPERTY AND EQUIPMENT, NET               35,090       85,099 
                                      ------------  -----------                
     
OTHER ASSETS:        
 Unbilled Receivables                        -          3,837

 Patent Costs, Net                        29,648       14,609 

 Other Assets                                -         17,048
                                     ------------  ------------
TOTAL OTHER ASSETS                        29,648       35,494
                                     ------------  ------------

TOTAL ASSETS                         $   429,614   $  676,023
                                     ============  ============

                     See Notes to Financial Statements
                        MIKROS SYSTEMS CORPORATION
                           BALANCE SHEETS (continued)


         LIABILITIES AND                                   DECEMBER 31,
 SHAREHOLDERS'  DEFICIENCY                              1998         1997
----------------------------------                  -----------  ------------
CURRENT LIABILITIES
  Accounts Payable                                  $   69,173    $  685,139  
  Notes Payable
     Bank                                                    -         9,271
     Related Parties                                    72,500       547,500
     Other                                             105,000       446,500    
  Obligations under Capital Leases                      26,063        23,967 
  Accrued Payroll and Payroll Taxes                     25,932        35,391
  Accrued Expenses                                      48,220       203,774
  Deferred Contract Credits                            234,722             -
  Unliquidated Progress Payments and
   Other Customer Advances                              15,000       122,849
                                                   ------------  ------------
TOTAL CURRENT LIABILITIES                              596,610     2,074,391

NOTES PAYABLE - BANK                                         -           716
                                                   ------------  ------------
TOTAL LIABILITIES                                      596,610     2,075,107
                                                    -----------  ------------
COMMITMENTS AND CONTINGENCIES
MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
par value $.01 per share, authorized 150,000
shares, issued and outstanding 5,000 shares
in 1998 and 1997                                        80,450        80,450 
                                                   ------------  ------------
SHAREHOLDERS' DEFICIENCY
  Common Stock, par value $.01 per share,
  authorized 60,000,000 shares, issued and
  outstanding 27,422,296 shares in 1998 and
  13,451,452 in 1997                                274,223       134,515 

  Preferred Stock, convertible, par value $.01
  per share, authorized 2,000,000 shares, issued
  and outstanding 255,000 shares in 1998 and            
  1997                                                   2,550         2,550

  Preferred Stock, Series B convertible, par value
  $.01 per share, authorized 1,200,000 shares, issued
  and outstanding 1,131,663 shares in 1998 and 1997     11,316        11,316 

  Preferred Stock, Series D, par value $.01 per share
  690,000 shares authorized, issued and outstanding
  in 1998 and 1997                                       6,900         6,900 

  Capital in Excess of Par                          10,946,919    10,248,378

  Accumulated Deficit                              (11,489,354)  (11,883,193)
                                                   ------------  ------------
TOTAL SHAREHOLDERS' DEFICIENCY                     ( 247,446)   (1,479,534)
                                                   ------------  ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY    $    429,614   $   676,023
                                                   ============  ============

                     See Notes to Financial Statements






                        MIKROS SYSTEMS CORPORATION
                  STATEMENTS OF SHAREHOLDERS' DEFICIENCY
                       
                           
                        Common Stock     Preferred Stock Preferred Stock B      
                        0.01 Par Value    $0.01 Par Value   $0.01 Par Value     
                  ----------------------------------------------------------
                         Number      Par     Number     Par     Number     Par
                        of shares   Value   of shares  Value   of shares  Value
                  -----------------------------------------------------------
Balance-December 31,    7,352,108  $73,521  1,005,000 $10,050  1,131,663 $11,316
  1995
Year Ended December 31, 1996:
Issuance of Common Stock2,582,844   25,829
Sale of Common Stock    1,912,000   19,120
Net Loss
                        ----------  -------  --------- -------  --------- ------
Balance-December 31,    11,846,952  118,470  1,005,000  10,050  1,131,663 11,316
  1996
Year Ended December 31, 1997:
Issuance of Common Stock   854,500    8,545
Conversion of              750,000    7,500   (750,000) (7,500)           
  Preferred Stock
Net Loss
                        ----------  -------  --------- -------  --------- ------
Balance-December 31,    13,451,452  134,515    255,000   2,550  1,131,663 11,316
 1997
Year Ended December 31, 1998:
Issuance of Common Stock   800,000    8,000
Conversion of Secured   13,170,844  131,708                     
   Secured Debt
Net Income              
                        ----------  -------  --------- -------  --------- ------
Balance-December 31,    27,422,296 $274,223   255,000 $ 2,550  1,131,663 $11,316
   1998                 ==========  =======  ========= ======= ========= =======
          
                           
                                                  Capital in 
                             Preferred Stock D    excess of     Accumulated
                              $0.01 Par Value     Par Value       Deficit
                            ------------------------------------------------
                               Number      Par
                              of shares   Value
                            ----------------------
Balance-December 31, 1995      690,000    $6,900   $9,248,364   $( 9,831,002) 

Year ended December 31, 1996:
Issuance of Common Stock                               29,304
Sale of Common Stock                        940,880
Net Loss                                                         ( 1,447,641)
                              ---------   -------   ----------   ------------
Balance-December 31, 1996      690,000     6,900   10,218,548    (11,278,643) 

Year Ended December 31, 1997:
Issuance of Common Stock                               29,830      
Conversion of Preferred Stock
Net Loss                                                         (  604,550)    
                              ---------  -------   -----------   ------------
Balance-December 31, 1997      690,000     6,900   10,248,378    (11,883,193)

Year Ended December 31, 1998:
Issuance of Common Stock                               40,000    
Conversion of Secured Debt                            658,541
Net Income                                                           393,839  
                              ---------  -------   -----------   ------------
Balance-December 31, 1998      690,000    $6,900  $10,946,919   $(11,489,354)
                              =========   ======   =========== ============= 
                                  See Notes to Financial Statements


                         MIKROS SYSTEMS CORPORATION
                         STATEMENTS OF OPERATIONS
                                        
                                       For the Year Ended December 31,
                                        1998          1997         1996
                                    ------------   ----------   ----------
Revenues:
 Equipment Sales                     $   333,592   $3,240,980  $   157,364
 Contract Research and Development       46,874    1,856,452       701,736
 Royalties                               27,563          -         -
                                     ------------  -----------  -----------
Total Revenues                           408,029    5,097,432      859,100    
                                    ------------  -----------  -----------
Cost of Sales:
  Equipment Sales                        321,787    2,264,782      113,992    
  Contract Research and Development       54,615    1,336,223      712,836    
                                    ------------  -----------  -----------
Total Cost of Sales                      376,402    3,601,005      826,828    
                                    ------------  -----------  -----------
Gross Margin                              31,627    1,496,427       32,272    
                                    ------------  -----------  -----------
Expenses:
  Research and Development               863,825      878,095      456,991     
  General and Administrative             340,959    1,088,172      896,350     
  Interest                                50,733      134,710      126,572
                                    ------------  -----------  -----------
Total Operating Expenses               1,255,517    2,100,977    1,479,913     
                                    ------------  -----------  -----------
Net Loss before Extraordinary Items  (1,223,890)    (604,550)  (1,447,641)
                                    ------------  -----------  -----------
Extraordinary Items:
Gain on Sale of Government Contracts   1,299,814         -            -
Gain on Settlement of Accounts 
  Payable Obligations                    317,915         -            -
                                    ------------  -----------  -----------
Total Extraordinary Items              1,617,729         -            -
                                    ------------  -----------  -----------
Net Income (Loss)                    $   393,839   $ (604,550) $(1,447,641)  
                                    ============  ===========  ============

Basic Loss per share                 $     (0.09)  $    (0.05) $     (0.17)    

Basic Income per share-Extraordinary
  Items                              0.12            -            -
                                    ------------  ------------- ------------
Basic Income (Loss) per share        $      0.03   $    (0.05) $     (0.17)
                                    ============  ============= ============
Weighted Average Number of Shares 
 Outstanding                          14,013,941   12,688,327    8,382,383  
                                    ============   ============ ============

           
See Notes to Financial Statements



                            MIKROS SYSTEMS CORPORATION
                             STATEMENTS OF CASH FLOWS

                                                 For the Year Ended December 31,
                                                1998         1997        1996
                                             ----------   -----------  -------- 
Cash Flow From Operating Activities:
  Net Income (Loss)                          $ 393,839 $( 604,550)  $(1,447,641)
 Adjustments to reconcile Net Income (Loss)
 to Net Cash  Provided (Used) by
 Operating Activities:
   Gain from Sale of Defense Contracts, 
   net of Engineering  Credit 
      and Equipment sold                      (578,413)         -        -
  Settlement of Accounts Payable              (317,915)         -        -     
  Depreciation and Amortization                 26,421      86,050      72,730
  Asset Impairment                                 -       107,489       -     
  Common Stock Grant to Related Parties         48,000          -        -
  Loss from Fixed Asset Disposition                  -      36,482       -
Net Changes in Operating Assets and Liabilities
  Accounts Receivable                          432,961     185,140    (521,971)
  Unbilled Receivables                           3,837      48,775       6,069  
  Inventories                                    5,293     873,305    (977,748)
  Other Current Assets                           2,411       6,947      (4,949)
  Other Assets                                     425         778       (840) 
  Accounts Payable                            (298,050)    177,890     302,373 
  Accrued Payroll and Payroll Taxes             (9,459)    (15,531)     36,614 
  Unliquidated Progress Billings and
    Other Customer Advances                   (107,849) (1,110,028)  1,408,348
  Other Liabilities and Interest              (155,554)     22,558      37,282 
                                            -----------   ---------  -----------
 Net Cash Used in Operations                  (554,053)   (184,695) (1,089,733)
                                            -----------   ---------  -----------
Cash Flows Provided (Used) By Investing Activities:
   Sale of Government Contracts                600,000          -            -
   Proceeds from Sale of Equipment               3,585          -            -
   Equipment Purchases                               -    (107,818)    (56,052)
                                             -----------  ---------- ----------
Net Cash Provided (Used) by Investing 
  Activities                                    603,585   (107,818)    (56,052)
                                             -----------  ----------  ----------
Cash Flows Provided (Used) from Financing Activities:
  Proceeds from Loans                                -           -     651,500
  Proceeds from Sale of Common Stock                 -           -     960,000
  Proceeds from Exercise of Options and
   Warrants                                          -       38,375     27,877
  Repayment of Debt and Capital Leases           (34,141)   (55,390)  (175,748)
                                              -----------  ---------- ----------
Net Cash Provided (Used) by Financing
 Activities                                      (34,141)   (17,015) 1,463,629
                                              -----------  ---------- ----------
Net Increase (Decrease) in Cash                   15,391   (309,528)   317,844 
Cash at the Beginning of the Period               85,592    395,120      77,276 
                                              -----------  ---------- ----------
Cash at the End of the Period                $   100,983  $  85,592   $ 395,120 
                                             ===========  =========== ==========
Supplemental disclosure of cash flow
 information:
Cash paid during the year for interest       $    82,915 $ 105,770 $135,411   
Supplemental disclosure of non-cash activities:
  Acquisition of Equipment through
  Capital Lease Obligations                  $       -   $  11,449 $  50,571
  Credit for Engineering Services from 
    Sale of Government Contracts             $ 1,000,000 $     -   $    -   
  Engineering Services Utilized              $  (765,278)$     -   $    -
  Stock Issued from Conversion of Notes 
    Payable                                  $   790,250 $     -   $    -
Notes Issued in Settlement of Accounts
 Payable Obligations                         $       -   $     -   $    -      
Stock Issued in Settlement of Accounts
Payable Obligations                          $       -   $  27,255 $    -
  
                     See Notes to Financial Statements<PAGE>

                        MIKROS SYSTEMS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
   

A.   COMPANY OVERVIEW
---------------------
1.   THE COMPANY
----------------

Mikros Systems Corporation was founded in 1978 in Albany, New York to exploit
microprocessor technology developed at the General Electric Research and
Development Center. The Company was incorporated under the laws of the State of
Delaware in 1978 and acquired all rights of General Electric Venture Capital
Corp., a subsidiary of General Electric Company, to certain microcomputer
technology. The Company's headquarters are located at 707 Alexander Road,
Suite 208, Princeton, New Jersey telephone;(609)987-1513.

Mikros Systems Corporation became an established US Navy defense contractor in
1987 and continued to supply advanced technology and equipment for ten years to
the US Navy and Air Force.  The Company was capitalized with more than $15
million to engage in engineering and manufacturing for these customers supplying
advanced communication equipment using cutting edge technology.

The knowledge base and proprietary technology developed was recognized as
applicable to the rapidly expanding wireless business in the commercial sector. 
The rigorous radio transmission environment as well as the challenges of
underwater signal processing required Mikros employees to invent new methods to
optimize the bandwidth for a higher data throughput.

In 1995, the Company s Board of Directors decided the Company should also pursue
commercial contracts which would employ these advanced techniques to enhance the
data transmission rates in the AM and FM radio spectrum. Since the Company had
limited resources, it was decided to pursue the AM technology. 

In 1996, Safeguard Scientifics (Delaware), Inc., invested $1 million in Mikros
in exchange for 10% ownership in the Company.  At the same time, Mobile
Broadcasting Corporation (MBC) was created to exploit the AM radio technology,
particularly in mobile or portable platforms such as automobiles.  Initially,
Safeguard invested $1 million in MBC for 75% ownership whereas Mikros owned the
remaining 25%.  Mikros  share in MBC was subsequently increased to 50%, as a
result of the Company's investment in the development of this technology. (See
Notes B and I).

Data Design and Development Corporation (3D) was also founded in 1996 as part of
the Safeguard Scientific agreement and retains ownership of the AM and FM
technology.  3D has licensed the FM technology rights in North America to Mikros
and the AM technology rights in North America to MBC. Mikros owns 1/3 of 3D,
certain Mikros shareholders own another 1/3, and Safeguard owns the remaining
1/3.

The Common Shipboard Data Terminal System contract consumed most of the 
technical resources of the Company in 1997. The contract with the US Navy 
provided for the purchase of units periodically over the life of the contract. 
The delivery of the initial units under the contract resulted in a severe 
negative cash flow. 

As a result, the Company s Board of Directors determined that it would be in the
best interest of the shareholders to sell the government contracts and use the
proceeds to focus exclusively on the commercial contracts, particularly the AM
radio data casting.    

Mikros entered negotiations in late 1997 for the sale of the military contracts 
with prospective purchasers.

The resulting transaction was concluded in 1998 and included a $600,000 cash
payment and a 2% royalty to be paid to Mikros over four years on all data
terminal set sales. In addition, the purchaser is obligated to supply $1 million
in engineering services to Mikros which will continue to be expended on the AM
data program in cooperation with MBC. During 1998, the Company was provided with
$765,278 of engineering services by the purchaser pursuant to the agreement. 



2.   SIGNIFICANT ACCOUNTING POLICIES
------------------------------------

     1.   Basis of Presentation
     --------------------------
     The Company's financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplates the
     continuation of the Company as a going concern. The Company has sustained
     substantial operating losses in recent years. In addition, the Company has
     used substantial amounts of working capital in its operations. Further, at
     December 31, 1998, its current liabilities exceed its current assets by
     $231,734.
     
     As shown in the accompanying financial statements, although the Company  
     attained net income of $393,839 after extraordinary items, it incurred 
     an operating loss before extraordinary items of $1,223,890 for the year
     ended     December 31, 1998. As of December 31, 1998, the Company had an
     accumulated deficit of $11,489,354. 

     In order to continue as a going concern, the Company will incur substantial
     expenditures to develop and market its commercial wireless communications
     business.

     In view of these matters, realization of a major portion of the assets in 
     the accompanying balance sheet is dependent upon continued operations of
     the Company, which in turn is dependent on the Company being able to
     obtain financing to support further development for its commercial 
     wireless business and continuing operations. Management believes that 
     actions presently being taken to revise the Company s operating and 
     financial requirements provide the opportunity to continue as a going 
     concern.  

     With the sale of the government contracts, Mikros  business assets 
     consist of both commercial FM and AM Radio technology. Continued
     development of the FM technology has been postponed in order to direct all
     of the Company s resources to the AM radio technology. 

     The initial customer for this AM technology is MBC.  MBC has the North
     American rights and will be the first customer to apply the Mikros
     technology. 3D Corporation owns the rights for other parts  of the world
     and will license the rights to MBC, Mikros or others. 

     Digital radio has been under development for a number of years by some
     large corporations. The Mikros proposed approach has the prospect of
     delivery of the data in a robust manner that will have the same signal
     strength as the basic radio signal. The business model being considered to 
     utilize this technology in the commercial sector is being developed.

     The digital system Mikros is developing for AM radio data transmission 
     will allow  simultaneous broadcasting of the present radio  signal with a
     digital channel that can be used for additional voice channels. This will
     be accomplished with minimal disturbance to the existing radio channel.
     This system will require a minor modification to the radio station
     transmitter which probably will not require new FCC approval, if the
     adjacent channel interference is avoided.

     While the new technology can be made available to all modified and newly
     designed AM receivers,   initially, the automotive market, as a post
     production option, will be addressed due to the size and its dependence
     on wireless transmissions. The technology is a low cost solution for the
     broadcasters using the existing AM radio infrastructure.

     The Company completed the Alpha phase (first) of its development and live
     testing late in 1998 and early in 1999. 

     The Company intends to continue the development and marketing of its
     commercial applications of its wireless communications technology both
     directly and through its relationship with MBC. In order to continue such
     development and marketing, the Company will be required to raise additional
     funds. The Company intends to consider the sale of additional debt and
     equity securities under appropriate market conditions, alliances or other
     partnership agreements with entities interested in supporting the Company s
     commercial programs, or other business transactions which would generate
     resources sufficient to assure continuation of the Company s operations and
     research programs. 


     2.   Inventories
     ----------------

     In 1997, Inventories, other than inventoried costs relating to long-term 
     contracts and programs, were stated at the lower of cost (principally
     first in, first-out) or market. As of December 31, 1998 there were no
     inventories.
     
     <PAGE>
3.   Property and Equipment
     ----------------------------

     Property and Equipment is stated at cost. Depreciation is computed using
     the straight-line method based on estimated useful lives which range from
     2 to 5 years. Depreciation expense  amounted to $24,837, $84,872, and
     $71,552 for 1998, 1997 and 1996, respectively. 

     In 1997, certain property and equipment were deemed to be impaired and 
     were written down to their fair value. An impairment loss of $107,489 was
     charged to cost of sales in 1997. No further impairment loss recognition 
     was required in 1998.   

      4.   Accounts and Unbilled Receivables
     --------------------------------------
  
     In 1998 and 1997, Accounts Receivable is presented net of an allowance for 
     uncollectible accounts in the amount of $140,311 which pertains to two   
     contracts. Unbilled Receivables in 1997 represented residual amounts on
     specific contracts. As of December 31, 1998, there were no unbilled      
     receivables.

     5.   Earnings per Common Share 
     ------------------------------
     
     The Company adopted FAS #128, earnings per share, and in accordance with
     this provision has restated all prior periods. Basic earnings per common
     share is computed using the weighted average number of shares outstanding.
     The number of common shares that would be issued from the exercise of stock
     options and warrants, and the conversion of convertible preferred stock
     would be anti-dilutive. 

     6.   Revenue Recognition
     ------------------------

     Revenues pertaining to long-term fixed-price contracts, which principally
     provide for the manufacture and delivery of finished units, were
     recognized as shipments were made.  The  estimated profits applicable to
     such shipments were recorded  pro rata based upon estimated total profit
     at completion of the contracts.

     Revenues on contracts with significant engineering were measured by the
     costs incurred as compared to total contract costs based on time and
     materials. If milestones are included in the contract requirements, the
     revenue recognition was deferred until the milestone was completed.
     Adjustments to cost estimates are made periodically, and losses expected
     to be incurred on contracts in progress are charged to operations in the
     period such losses are determined.  

     Revenues on equipment sales were recognized as shipments were made.

     Royalty revenues are recorded when shipments are completed and reported to 
     Mikros. 

     7.   Prepaid Engineering Services and Deferred Contract Credit 
      ---------------------------------------------------------------
     The prepaid engineering services balance of $234,722 at December 31, 1998
     represents the unused portion of the engineering services credit received
     in connection with the sale of government contracts during 1998. The
     corresponding deferred contract credit represents the unrealized gain on
     the sale of such government contracts which is being recognized as other
     income when the engineering services are utilized by the Company (see note 
      N).

     8.    Patents
      -------------

     Patent costs are amortized over a 17-year life.  Amortization expense
     amounted to $1,584 for 1998, and $1,178 for each of 1997 and 1996. In
     August 1998, a patent was issued which is reflected in the net increase in
     the asset as well as the increase in the 1998 amortization. 

     9.   Warranty Costs
     -------------------
     
     The Company expects warranty costs to be minimal. 

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

     11.  Cash
     ---------
     
     The Company considers all highly liquid investments purchased with a
     maturity of three months or less to be cash equivalents.
     
     12.  Unliquidated Progress Payments and Other Customer Advances
     -----------------------------------------------------------------

     Unliquidated progress payments at December 31, 1997 represented partial
     billings to customers of costs incurred on contracts for future
     deliveries.  Other customer advances represent payments received from
     customers prior to costs being incurred on certain contracts.


<PAGE>
B.   FINANCING TRANSACTIONS
---------------------------

1996 Financing
--------------

In a series of transactions from February through May 1996, the Company issued
secured promissory notes and warrants to raise an aggregate of $641,500
(including $122,500 from officers and directors). The promissory notes were for
a term of approximately eighteen months, bearing interest at 12% on the unpaid
balance, and were secured by certain assets of the Company.  In addition, the
Company issued warrants to purchase five (5) shares of Common Stock at $0.01 per
share for each dollar of debt.  The value of the warrants was immaterial, and no
accounting recognition was given to their issuance.

In October 1996, all of the note holders of the 1996 and the 1992-93 financings
agreed to a deferral of principal payments in exchange for the right to convert
outstanding debt to Common Stock of the Company at a rate of one (1) share of
stock for $1.00 of debt.  The Company determined that the fair value of the
conversion feature was immaterial.  Accordingly, no accounting recognition has
been given to this modification of terms.

During 1998, the Company paid the investors all of the interest accrued on
promissory notes payable through May 15, 1998. No additional interest accrued
after that date. At that time, it offered to convert the notes at face value to
stock valued at $.06 per share in order to restructure its debt. Most of the
investors elected to convert. As a result, 8,504,177 shares of common stock were
issued. Three of its investors (not related parties) chose not to convert notes
totalling $105,000. These are included in the Notes Payable as of December 31,
1998(see Note D). In February 1999, two of the remaining three investors
converted their debt, totalling $70,000, under the same terms as debt exchanged
in 1998. 

Safeguard Scientifics (Delaware) Inc. (SSI)
-------------------------------------------

On November 15, 1996, the Company, all of its secured creditors from its 1996 
and 1992-93 financings and SSI entered into an agreement.  Under the agreement 
SSI paid $1,000,000 to the Company.  

-    SSI received:  1) 1,912,000 shares of Common Stock of the Company; 2) a
     warrant to purchase 2,388,000 shares of Common Stock at $0.65 per share;
     3) a warrant to purchase 3,071,000 shares at $0.78 per share; 4) a 75%
     interest in an exclusive, royalty-free, perpetual license of the AM
     technology in the United States, Canada and Mexico (through SSI's
     ownership in MBC); and 5) a 33 1/3% interest in the FM and AM technology
     (through SSI's ownership in 3D).  This transaction is more fully described
     below.

-    Two (2) new companies were formed, Data Design and Development Corporation
     (3D) and Mobile Broadcasting Corporation (MBC).  The Company received one-
     third of 3D in exchange for certain of its AM and FM technology.  SSI
     received one-third of 3D in exchange for a commitment to invest up to
     $1,000,000 in MBC.  The secured creditors received one-third of 3D and
     released their security interest in the technology transferred.  The
     Company received 25% of MBC for $50.  SSI received 75% of MBC for
     $200,000.

-    3D granted MBC an exclusive, royalty-free, perpetual license to the AM
     technology in the United States, Canada and Mexico.  3D granted the
     Company an exclusive, royalty-free, perpetual license to the FM technology
     in the United States, Canada and Mexico.  3D retained rights to the AM and
     FM technology in the rest of the world.  The Company and MBC entered into
     a consulting arrangement under which the Company was paid for the
     development of the AM technology.  3D owns the rights to such technology.

The Company is unable to assign fair values to these transactions.  No amount of
cash consideration was considered attributable to a sale of the AM or FM
technology or to the license thereto.  No gain was recognized on the transfer of
the technology.  The entire amount of the cash consideration received from SSI
was recorded as a sale of Common Stock.

In connection with the sale of the Common Stock and the Warrants, the Company
granted to SSI certain piggyback and demand registration rights with respect to
the Common Stock and the Common Stock underlying the Warrants.  In addition, the
Company granted to SSI a right of first refusal pursuant to which, subject to
certain conditions, in the event the Company issues, sells or exchanges any
securities, it must first offer such securities to SSI and such offer must 
remain open and irrevocable for 30 days.  Such right of first refusal may only 
be waived in writing and terminates at such time as SSI owns less than 10% of 
the Common Stock.

Pursuant to the Purchase Agreement, as long as SSI owns 1% or more of the
Company's outstanding equity securities, on a fully-diluted basis, the Company
is obligated to, among other things:(i) permit SSI to inspect the operations and
business of the Company; and (ii) fix and maintain the number of Directors on 
the Board of Directors at eight members.  In addition, the Purchase Agreement 
also provides that as long as SSI owns such 1%, the Company is subject to 
certain negative covenants, including, among other things, restrictions on:  (i)
transactions with affiliates of the Company; (ii) certain indebtedness; and 
(iii) amendments to the Company's Certificate of Incorporation and Bylaws.

In connection with the transaction, the Company entered into a voting agreement
pursuant to which Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick
C. Tecce and John B. Torkelsen, each a director of the Company (collectively, 
the "Management Shareholders"), agreed to vote an aggregate of approximately
6,659,214 votes for the election of two designees of SSI to the Board of
Directors of the Company.

1992-93 Financing
-----------------

In a series of transactions consummated on October 27, 1992 and April 27, 1993,
Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick C. Tecce, and John
B. Torkelsen, individually and not as a group, (collectively referred to herein
as the "Investors") acquired certain loan and equity interests in the Company
from other debt and equity holders. 

Pursuant to such transactions, each of the Investors acquired, in consideration
of an aggregate of $250,000 (each of the Investors individually paying $50,000
in cash), twenty percent of (i) 50,000 shares of Common Stock, $.01 par value
("Common Stock"), of the Company, (ii) promissory notes of the Company in the
aggregate principal amount of $916,875 (collectively, the "Investor Notes"),
(iii) warrants ("Series C Warrants") to purchase 97,500 shares of Series C
Preferred Stock, $.01 par value, of the Company and (iv) certain loan and equity
rights in the Company, including without limitation, rights under loan
agreements, an investment agreement, a note purchase agreement, and all 
documents related to such agreements.

Pursuant to such loan documents, among other things, the Company is prohibited
from paying dividends on its Common Stock, the Company has granted to the
Investors a security interest in all of the assets of the Company and the
Investors have the right to designate 2/7ths of the Board of Directors of the
Company, which right has not been exercised.  Each of Messrs. Burns, Meaney,
Meyer and Torkelsen is a Director of the Company.

In December 1993, the Investors agreed to reduce the amounts owed by the Company
under the Investor Notes, including unpaid interest,  in exchange for shares of
Common Stock and Preferred Stock issued by the Company. In return for a 
reduction in debt of $416,875 and accrued interest of $273,125, the Company 
issued 2,750,000 shares of Common Stock and 690,000 shares of Series D 
Preferred Stock which provides for an annual cumulative dividend of $.10 per 
share. The Investor Notes were modified to provide for principal payments in 
sixteen quarterly installments beginning January 1, 1994 and ending on 
October 1, 1997.

Interest at 14% per annum on the unpaid principal balance was due in quarterly
installments beginning on March 31, 1994. As additional consideration for the
modification of such loans, the Company extended the exercise period for the
Series C Warrants until April 25, 1999.  As of December 31, 1996, the Company 
was in arrears on six quarterly principal payments.  In October 1996, the 
Investors authorized deferral of the remaining $312,500 of principal payments 
until 1998. 
 
During 1998, the Company paid the investors all of the interest accrued on these
payable notes through May 15, 1998. At that time, it offered to convert the 
notes at face value to stock valued at $.06 per share in order to restructure 
its debt.
There were 4,166,668 shares issued as a result. One of the investors chose not
to convert his notes which totalled $62,500. This amount is included in Notes
Payable as of December 31, 1998(See Note D). The Company ceased accruing 
interest on the remaining debt as of May 15, 1998.  

C.   DIVIDENDS
--------------
As of December 31, 1998 and 1997, there were dividends in arrears on shares of
Series D Preferred Stock of $345,000 ($.10 per share) and $276,000, 
respectively.

<PAGE>
D. NOTES PAYABLE
-------------------                         As of December 31,
                                         1998                1997
                                      ---------           ---------
Bank Equipment Loan, repaid in 1998 $         -         $      9,987
Related Parties                          72,500              547,500
Others                                  105,000              446,500
                                      ---------           ----------  
Total Notes Payable                     177,500            1,003,987           
                                      ---------           ---------- 
Less Current Maturities:
  Banks                                       -                9,271
  Related Parties                         72,500(a)           547,500 (a)
  Others                                 105,000(b)           446,500 (b)       
                                      ---------           ----------
                                         177,500            1,003,271           
                                      ---------           ----------
Notes Payable-Noncurrent            $        -            $      716
                                      =========           ==========
(a) See Notes B & I
(b) See Note B

Concurrent with the conversion proposal cited in Note B, on May 15, 1998, the
Company ceased accrual and payment of interest on remaining notes payable.  It
is anticipated that all notes payable will either be converted to common stock
or paid by December 31, 1999. Prior to May 15, 1998, interest rates ranged from
12% to 14% per annum.

E.   INVENTORIES
---------------- 
                                             December 31,
                                          1998             1997  
                                      -----------       ---------
     Work-in-process                   $        -       $ 180,764  
                                      -----------       ---------
     Sub-Total                                  -         180,764
                                       
     Unliquidated Progress 
       Payments                              -        (175,471)             
                                      -----------       ----------
     Total                             $        -       $   5,293              
                                     ===========       ==========

F.   REVENUES     
-------------

Revenues from two federal government agencies amounted to 74.7% of total 
revenues in 1998, as compared to 63% in 1997 and 39.1% in 1996.  Revenues 
from commercial customers including a related party were 18.6% of total 
revenues in 1998. This compares to 34.1% in 1997 and 46.6% in 1996 of revenues 
from two commercial customers. Revenues from a related party amounted to 7.1%
of total revenues in 1998 and 24% of total revenues in 1997.

Royalty revenues in 1998 were 6.7% of total revenues.


G.  INCOME TAXES
----------------

Income taxes are recorded in accordance with FASB Statement 109 "Accounting for 
Income Taxes."

The Company paid minimal corporate taxes to the State of New Jersey in 1997 and
1998 and the States of New Jersey and Connecticut in 1996.  Because of the 
extent of the net operating loss carryforward, no provisions for federal 
income taxes were required in the years ending December 31, 1998, 1997 and 1996.

The 1998 Income tax provision is computed as follows:

                                         Increase           
                            Tax         (Decrease)In              
                         Provision       Valuation             Net   
                         (Benefit)       Allowance          Provision
Provision/Benefit For    ---------      ------------        ---------
---------------------

Net Loss before
 Extraordinary Items      (489,556)        489,556            - 0 -
Extraordinary Items        619,092        (619,092)           - 0 -
                         ---------       ---------           --------

Net Provision (Allowance)  129,536        (129,536)           - 0 -
                         =========        =========          ========

     
The deferred tax asset and deferred tax liability consist of the following:

                               1998         1997         1996
                             ---------    ---------    ---------
Deferred tax asset:
Income Taxes:   
  Net Operating Loss
  Carry Forward              2,524,460    $2,757,989   $2,966,608
  Valuation Allowance      ( 2,524,460)  ( 2,757,989) ( 2,966,608)
                            ----------   ----------   ----------
Net deferred tax asset     $        -   $        -   $        -
                            ==========   ===========  ===========
Deferred tax liability     $        -   $        -   $        -
                            ==========   ===========  ===========

Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and tax bases of assets and liabilities that 
will result in taxable or deductible amounts in the future based on enacted tax 
laws and rates applicable to the periods in which the differences are expected
to affect taxable income.  Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.  Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.

Total available Net Operating Loss Carry Forwards are reflected in the following
schedule:

                        YEAR         AVAILABLE FOR         AVAILABLE FOR
                         OF             FEDERAL                 STATE
                      EXPIRATION       TAX PURPOSES          TAX PURPOSES
                         1999           $  354,000            $        -
                         2000            1,143,000                     -
                         2001            1,441,000                     -
                         2002              923,000               227,000
                         2003              606,000             1,421,000
                         2004              147,000               340,000     
                         2005               81,000                     -
                         2010              602,000                     -
                         2011            1,422,000                     -
                         2012              339,000                     -
                                         -----------           ---------- 
                                        $7,058,000            $1,988,000
                                         -----------           ----------
 
H.   OBLIGATIONS UNDER CAPITAL LEASES
-------------------------------------

The Company is the lessee of equipment under capital leases which were to expire
in 1998. This equipment was recorded on the books at the present value of the
minimum lease payments. The Company is presently in arrears with one 
leaseholder on a capital lease which includes four pieces of equipment. The 
total amount in arrears is approximately $26,000 and is included in leases 
payable on the balance sheet.

With respect to the arrearage, the Company is a defendant in a lawsuit. The
amount of the liability is included as a liability in "Obligations Under Capital
Lease," and the Company has provided for anticipated legal expenses in 1998
related to this suit.

I.   RELATED PARTY TRANSACTIONS
-------------------------------

The Company retained the services of a member of its board of directors to
provide engineering and management consulting services to the Company. No
payments were remitted in 1998. In 1997, the Company paid $1,000 for these
services. In 1996, the Company issued 30,750 shares of Common Stock and $2,619
of cash in payment for $17,994 of services rendered. In addition, in 1997, the
Company paid $1,400 to the director for office rent expenses.

The Company retained the services of another member of its board of directors to
provide operations management and technical consulting services until his death
in 1997. No payments were made in 1998.  In 1997, he received $5,000 for
services. In 1996, this director was issued 23,760 shares of Common Stock in
payment of $11,880 for services rendered.

As of December 31, 1998 and 1997, accounts payable owed to these two related
parties amounted to $19,573 and $18,874, respectively.

In 1998, another director provided consulting services and was paid $10,000
during the year.  There were no accounts payable to this director as of December
31, 1998 and no payments in 1997.

In 1998, another director provided services and was compensated with 600,000
shares of common stock valued at $36,000(see Note O).   There were no accounts
payable to this director as of December 31, 1998, and no cash payments in 1998
or 1997.

In addition, the Company retained the services of a management consultant in
1998. The consultant, who is a lawyer, was compensated as follows:(i) a grant of
200,000 shares of common stock valued at $12,000 and(ii) cash payments of  
$1,500 per quarter to  his affiliated law firm. As of December 31, 1998, there 
was no balance due. Total cash payments to the law firm were $4,531 in 1998.

In 1998, 1997 and 1996, the Company had revenues of $29,755, $1,223,305 and
$30,409, respectively from Mobile Broadcasting Corporation (MBC), 25% of whose
outstanding capital stock was owned by the Company as of December 31, 1996.  In
1997, Mikros  share was diluted to 18%. In 1998, the Company s share grew to 50%
as a result of the Company s investment arising from the use of its engineering
credit with the purchaser of its defense contracts. Since there is no market for
MBC s common stock, and MBC has incurred a net loss in each of the years ended
December 31, 1998, 1997 and 1996, no asset has been recorded. As of December 31,
1998, there were no Accounts Receivable from MBC. As of December 31, 1997, the
accounts receivable from MBC were $90,221, which was subsequently fully paid.  

Certain directors and officers participated in the "1996 Financing" (see
Note B). As a result, the Company issued a total of $131,250 in promissory notes
payable to those directors and officers. 

In addition, in 1996 a director loaned $10,000 to the Company.  The note bears
interest at 14% per annum. Principal was to be repaid in four quarterly
installments beginning September 30, 1997.  In 1995, other directors  loaned a
total of $30,000 to the Company on identical terms. During 1998, three directors
converted their notes to common stock at $.06 per share. As a result, 500,001
shares were issued. One director did not convert his shares, and his note of
$10,000 is reflected in Notes Payable as of December 31, 1998.

Interest on the $10,000 note is paid through  May 15, 1998.  The Company is no
longer accruing interest on the remaining note.

J.   SERIES B CONVERTIBLE PREFERRED STOCK
-----------------------------------------

The Series B Preferred Stock, together with the Series C Preferred Stock, was
issued in 1988 in order to satisfy notes payable and other trade accounts 
payable pursuant to a debt restructuring.  Each share of Series B Preferred 
Stock is convertible into three shares of the Company's common stock at a price 
of $.33 per share of common stock to be received upon conversion and entitles 
the holder thereof to cast three votes on all matters to be voted on by the 
Company's Shareholders.  Upon any liquidation, dissolution, or winding up of 
the Company, each holder of Series B Preferred Stock will be entitled to be 
paid, after all distributions of payments are made upon the Series C Preferred 
Stock and before any payment is made upon the Company's Convertible Preferred 
Stock, an amount in cash equal to $1.00 for each share of Series B Preferred 
Stock held, and such holders will not be entitled to any further payment.

K.   MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
----------------------------------------------------

The Series C Preferred Stock, together with the Series B Preferred Stock, was
issued in 1988 in order to satisfy notes payable and other trade accounts 
payable pursuant to a debt restructuring. The Series C Preferred Stock is not 
convertible into any other class of the Company's stock and is subject to 
redemption at the Company's option at any time and redemption is mandatory if 
certain events occur, such as capital reorganizations, consolidations, mergers, 
or sale of all or substantially all of the Company's assets. Upon any 
liquidation, dissolution or winding up of the Company, each holder of Series C 
Preferred Stock will be entitled to be paid, before any distribution or payment 
is made upon any other class of stock of the Company, an amount in cash equal to
the redemption price for each share of Series C Preferred Stock held by such 
holder, and the holders of Series C Preferred Stock will not be entitled to any 
further payment. The redemption price per share is $16.09.


L.   SERIES D PREFERRED STOCK
-----------------------------

The Series D Preferred Stock was issued in 1993 in order to partially satisfy
notes payable and accrued interest thereon pursuant to a debt restructuring. The
Series D Preferred Stock provides for an annual cumulative dividend of $.10 per
share.  The shares are not convertible into any other class of stock and are
subject to redemption at the Company's option at any time at a redemption price
of $1.00 per share plus all unpaid cumulative dividends.  Upon liquidation,
dissolution or winding up of the Corporation, each holder of Series D Preferred
Stock will be entitled to be paid, after all distributions or payments are made
upon the Corporation's Convertible Preferred Stock, Series B Preferred Stock,and
Series C Preferred Stock, an amount in cash equal to the Redemption Price for
each share of Series D Preferred Stock held by such holder. The holders of 
Series D Preferred Stock will not be entitled to any further payment.

M.   STOCK OPTIONS AND WARRANTS
-------------------------------

In 1992, the Company adopted the Incentive Stock Option Plan, replacing the
previous plan.  The stock option plan, as amended provides for ten-year options
to purchase up to 2,000,000 shares of Common Stock at a price equal to the 
market price of the shares on date of grant, exercisable at the cumulative 
rate of 25% per annum.


The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies APB Opinion 25 and 
related interpretations in accounting for its various stock option plans.  
There was no compensation cost for the three years ended December 31, 1998. Had 
compensation cost been recognized consistent with the method prescribed by 
FASB 123, the Company's net loss and loss per share would have been changed to 
the pro forma amounts as follows:

                                   1998           1997           1996
                               -----------    -----------    -----------
Net Income (Loss):     
               As Reported      $  393,839      ($604,550)    ($1,447,641)
                                ==========     ===========   ============= 

               Proforma         $  393,839      $(667,000)    ($1,485,794)
                                ==========     ===========   =============
Basic earnings (loss) per share:

               As Reported      $     .03         ($0.05)          ($.17)
                                ==========    ===========   =============   
               Proforma         $     .03         ($0.05)          ($.18)  
                                ==========    ===========   ============= 

The fair value of the Company's stock options used to compute proforma net 
income (loss) and net income (loss) per share disclosures is the estimated 
present value at grant date using the Black-Scholes option-pricing model with 
the following weighted average assumptions:


     ASSUMPTION                 1998              1997             1996
                            -----------       ----------        ---------
     Dividend yield                0%              0%                0%
     Risk free interest rate    6.48%           6.48%             6.48%  
     Expected life              5 years         5 years           5 years      
     Expected volatility         235%            235%              235%


The per share weighted-average value of stock options issued by the Company
during 1998, 1996 and 1995 were $.06, $0.0625 and $0.1875 on the date of grant.
Accordingly, the stock option values presented herein are not necessarily
indicative of amounts that could be realized in a current market exchange.

Proforma net income (loss) reflects only options granted in 1996 and 1995.
Options which were granted in 1997 were subsequently forfeited. In addition,
85.7% of all outstanding options as of December 31, 1997 were forfeited in 1998.
Therefore, the full impact of calculating compensation cost for stock options
issued in 1997 under SFAS No. 123 is not reflected in the proforma net loss
amounts presented above because compensation cost is not material. Compensation
cost for options granted prior to January 1, 1995 is not considered. 
<PAGE>
Option activity under the Company's Plan is summarized below:


                                 Weighted              Weighted       Weighted
                                  Average              Average        Average   
                                 Exercise              Exercise       Exercise
Common Stock Options:    1998     Price       1997     Price    1996   Price
                      ----------  ------- ---------  -------- --------- -----   
Options outstanding   1,120,000 $0.1504 1,112,500  $ 0.0605 1,087,500 $ 0.0605
  beginning of year
Granted                 100,000  0.06     250,000    0.1875   485,500   0.1875
Exercised                     -  0.00    (135,000)   0.0625  (200,000)  0.0625  
Cancelled              (960,000) 0.3046  (297,500)  0.0529   (127,500)  0.0529 
                      -----------       ------------        ----------- 
Options outstanding,    260,000  0.1385 1,120,000    0.2879  1,112,500  0.273
   end of year       ===========       ============         ===========  
Options exercisable,    157,500  0.1276   410,000    0.1504     333,750 0.1056 
   end of year       ===========        ============        ===========

The following summarizes information about the Company's stock options
outstanding at December 31, 1998:

                               Options Outstanding           Options Exercisable
              ------------------------------------------------------------------
   Range of    Number       Weighted Avg.    Weighted       Number    Weighted
   Exercise    Outstanding   Remaining   Avg. Exercise Exercisable Avg. Exercise
    Prices     at 12/31/98  Contractual Life    Price     as 12/31/98    Price
   --------   -----------    ---------------- ------------ ------------  ----  
  $0.0625     100,000      3.9 years           $0.0625     100,000     $0.0625
  $0.1875      20,000      6.3 years           $0.1875      12,500     $0.1875
  $0.50        40,000      7.5 years           $0.50        20,000     $0.50
  $0.06       100,000      9.4 years           $0.06        25,000    $0.06     

                                As of December 31,
Common Stock Warrants:         1998         1997          1996
                              -------      -------       -------  
Warrants Outstanding at
 beginning of year          6,600,666     7,138,166       437,500 
Granted                       200,000       175,000     9,066,000 
Exercised                           -      (712,500)   (2,365,834)
Expired or Terminated               -            -             -
                            ----------    ---------     ---------
Warrants outstanding and
 exercisable, end of year   6,800,666     6,600,666     7,138,166 
                            ==========    =========     =========

Exercise price per warrant   $0.001,        $0.001,       $0.001,
                             $0.01,         $0.01,        $0.01,
                             $0.06,         $0.06,        $0.06,
                             $0.10, &       $0.10, &      $0.10, &
                             $0.26          $0.26         $0.26 

<PAGE>
                                    As of December 31,
Series C Preferred
Stock Warrants               1998          1997          1996
                           -------       -------       -------
Warrants Outstanding,
 at beginning of year       97,500        97,500        97,500
Granted                          -             -             -
Exercised                        -             -             -
Expired or Terminated            -             -             -
                           -------       --------      --------
Warrants outstanding and
 exercisable, end of year   97,500        97,500        97,500 
                           ========      ========      ========

Exercise price per warrant   $1.00         $1.00         $1.00
                           ========      ========      ========     

N. EXTRAORDINARY GAIN
---------------------

In April 1998, the Company sold substantially all of the tangible and intangible
assets related to its defense contracts.  The Company received cash of $600,000
and an engineering services credit from the purchaser.  The Company will also
receive a royalty of 2% of the total sales of all Link-11 Data Terminal sets for
a period of four years.  In connection with the sale of the defense contracts,
the Company entered into a non-compete agreement with the purchaser for a period
of 5 years.  The purchaser is not assuming the liabilities of the Company, 
except the Company's warranty obligation under one of the contracts.

The total net gain on the sale is approximately $1,535,000. Of the total, 
approximately $1,300,000  was realized in 1998.  As of December 31, 1998, the
unused credit of $234,722 has been deferred (see Note A.7.).

The Company also recognized a gain related to the settlement of accounts payable
of approximately $318,000 whereby the Company offered settlement of amounts due
at a percentage of face value. The total amount of accounts payable settled was
approximately $605,000.

O. COMMON STOCK ISSUANCE
------------------------

During the year, the Company reached agreement with note holders to convert 
notes payable with a face value of $816,500 to approximately 13.2 million 
shares of Common Stock at a value of $0.06 per share. This conversion is 
recognized as having occurred in December, 1998 when all conditions necessary 
for the issuance of the stock had been met.  Stock certificate were issued 
and dated in January, 1999.

<PAGE>
Also in 1998, the Company granted 800,000 shares of common stock to one 
director and a management consultant as compensation for their services in 
1998. The shares were valued at $0.06 per share. The recognition of the 
issuance is as of the grant date, however, the actual certificates were issued 
and dated in January, 1999 (see Note I).


P.   CONTINGENCY
-----------------  
                          
The Company entered into an agreement in 1998 to sell one of its defense
contracts to General Atronics Corporation (GAC). As yet, the United States
Government has not novated this contract with the Company. The Company
anticipates the novation will be completed shortly and will not negatively 
impact its agreement with GAC.  At this time, however, no determination can be 
made as to the impact on the transaction, and its recorded gain, should the 
novation continue to be delayed indefinitely. 

Q.   PROFIT SHARING PLAN 
------------------------

The Company maintained a 401(K) Profit Sharing Plan. The Plan allowed for a
Company match of employee contributions to the plan up to a limit of one and
one-half percent (1.5%) of annual compensation. The payment of the Company
matching contribution had been suspended since August, 1995, and the unpaid
amounts were included in accrued expenses as of December 31, 1997.

In 1998, the Company reversed the prior accruals and credited its General and
Administrative Expenses in the amount of $44,096.
 
In early 1999, the Company notified its present employees as well as former
employees who remained in the Plan of its intent to terminate the plan.


R.   CONCENTRATION OF RISK     
---------------------------

The Company maintains bank accounts which may exceed federally insured limits at
one financial institution.  Historically no losses related to these excess cash
balances have been experienced.

<PAGE>
S.   FAIR VALUE OF FINANCIAL INSTRUMENTS
----------------------------------------

The carrying amounts reflected in the financial statements for cash, loans and
notes payable approximate the respective fair values due to the short maturities
of those instruments.

                           December 31, 1998               December 31, 1997
                          -------------------------------  -------------------
                             Carrying                       Carrying
                              Amount    Fair Value         Amount  Fair Value
               
Assets
     Cash                 $  100,983  $100,983        $  85,592 $ 85,592        
     Unbilled receivables       -   See Note (A) Below  3,837 See Note (A) Below
Liabilities
     Notes payable - Current 177,500   177,500        1,003,271  1,003,271
     Long-term debt             -       -                716  See Note (A) Below
     Mandatorily redeemable
      preferred stock        80,450 See Note (A) Below 80,450 See Note (A) Below

 
     (A)  It is not practicable to estimate the fair value of               
          unbilled receivables, long-term debt and mandatorily
          redeemable preferred stock because of the inability to
          estimate fair value without incurring excessive costs.
<PAGE>
EXHIBIT 27

                          FINANCIAL DATA SCHEDULE


PERIOD-TYPE                                  YEAR

FISCAL-YEAR-END                          DEC-31-1998

PERIOD-END                               DEC-31-1998

CASH                                        $100,983
SECURITIES                                         0
RECEIVABLES                                  162,334
ALLOWANCES                                   140,311
INVENTORY                                          0
CURRENT-ASSETS                               364,876
PP&E                                          71,170
DEPRECIATION                                  36,080
TOTAL-ASSETS                                 429,614
CURRENT-LIABILITIES                          596,610
BONDS                                              0
PREFERRED-MANDATORY                           80,450
PREFERRED                                     20,766
COMMON                                       274,223
OTHER-SE                                    (542,435)
TOTAL-LIABILITY-AND-EQUITY                   429,614
SALES                                        408,029
TOTAL-REVENUES                               408,029
CGS                                          376,402
TOTAL-COSTS                                  376,402
OTHER-EXPENSES                             1,204,784
LOSS-PROVISION                                     0
INTEREST-EXPENSE                              50,733
LOSS-PRETAX                               (1,223,890)
LOSS-TAX                                           0
LOSS-CONTINUING                           (1,223,890)   
DISCONTINUED                                       0
EXTRAORDINARY                              1,617,729
CHANGES                                            0
NET-INCOME                                   393,839
EPS-BASIC                                        .03
EPS-DILUTED                                      .03