SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                        QUARTERLY OR TRANSITIONAL REPORT

    [X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For The Quarterly Period Ended March 31, 2001

    [_]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT




Commission file number 2-95836-NY

                               Egan Systems, Inc.
             (Exact name of registrant as specified in its charter)


         Delaware                                              13-3250816
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                            Identification No.)


1501 Lincoln Ave., Holbrook, New York                             11741
(Address of principal executive offices)

(516) 588 - 8000
Registrant's telephone number


--------------------------------------------------------------------------------
(Former name, former address and former fiscal year if changed since last
report)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_   No ___.

The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock, as of the latest practicable date is as follows:


Date                                Class                  Shares Outstanding
----                                -----                  ------------------
05/23/01                         Common Stock                  19,646,652





<PAGE>



                        EGAN SYSTEMS, INC. AND SUBSIDIARY


                                TABLE OF CONTENTS


                                                                        Page No.




PART I. FINANCIAL INFORMATION


  Item 1.  Financial statements

   Condensed consolidated balance sheets as of
    March 31, 2001 (unaudited) and December 31, 2000                        1

   Condensed consolidated statements of operations (unaudited) for the
    three months ended March 31, 2001 and 2000                              2

   Condensed consolidated statements of cash flows (unaudited) for the
    three months ended March 31, 2001 and 2000                              3

   Notes to condensed consolidated financial statements (unaudited)       4 - 5


  Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                            6 - 7


PART II - OTHER INFORMATION


  Item 6.  Exhibits and reports on Form 8-K                                 8


SIGNATURES                                                                  9


EXHIBITS                                                                   10



<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        EGAN SYSTEMS, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           March 31,     December 31,
ASSETS                                                       2001           2000
                                                          -----------    -----------
                                                          (Unaudited)
<S>                                                       <C>            <C>
Current Assets
  Cash                                                    $     9,923    $    12,688
  Accounts receivable                                          31,902         77,937
  Inventory                                                     4,110          6,415
  Prepaid expenses and other current assets                     5,542          5,543
                                                          -----------    -----------
      Total Current Assets                                     51,477        102,583
                                                          -----------    -----------

Property and Equipment - net                                  122,969        137,969
                                                          -----------    -----------

Other Assets
  Computer software development costs - net                   508,218        545,863
  Security deposits                                             3,126          3,126
                                                          -----------    -----------
      Total Other Assets                                      511,344        548,989
                                                          -----------    -----------

      Total Assets                                        $   685,790    $   789,541
                                                          ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
 Account payable                                          $   175,917    $   175,917
 Accrued expenses and other current liabilities                97,654        121,341
                                                          -----------    -----------

      Total Current Liabilities                               273,571        297,258
                                                          -----------    -----------

Stockholders' Equity
 Common stock - $.05 par value, shares authorized -
  30,000,000 shares, issued and outstanding, 19,646,652
  in 2000 and 2001                                            982,333        982,333
 Additional paid-in capital                                 4,827,201      4,827,201
 Deficit                                                   (5,034,815)    (4,954,751)
                                                          -----------    -----------
                                                              774,719        854,783
 Notes receivable - stock purchase                           (362,500)      (362,500)
                                                          -----------    -----------
      Total Stockholders' Equity                              412,219        492,283
                                                          -----------    -----------

      Total Liabilities and Stockholders' Equity          $   685,790    $   789,541
                                                          ===========    ===========
</TABLE>

The condensed  consolidated  balance sheet at December 31, 2000 has been derived
from the audited financial statements at that date.


See notes to condensed consolidated financial statements.

                                        1

<PAGE>


                        EGAN SYSTEMS, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                         Three Months Ended
                                                              March 31,
                                                     --------------------------
                                                       2001             2000
                                                     ---------        ---------


Net sales                                            $ 151,957        $ 242,326
                                                     ---------        ---------



Cost and expenses:
  Cost of goods sold                                     4,638           13,471
  Research and development costs                        32,609           63,442
  Selling, shipping,
   general and administrative                           83,419          162,423
  Interest income                                         --             (4,438)
  Royalties                                              5,000           16,366
  Promotion and advertising                               --              3,941
  Depreciation and amortization                        106,355          111,215
                                                     ---------        ---------

                                                       232,021          366,420
                                                     ---------        ---------


Net loss                                             $ (80,064)       $(124,094)
                                                     =========        =========

Net loss per common share:

  Basic and fully diluted                            $  (0.004)       $  (0.007)
                                                     =========        =========

  Cash dividends per common share                       None             None
                                                     =========        =========







See notes to condensed consolidated financial statements.

                                        2

<PAGE>


                        EGAN SYSTEMS, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                          Three Months Ended
                                                              March 31,
                                                       ------------------------
                                                          2001          2000
                                                       ----------    ----------


Net cash provided by operating activities              $   50,944    $    4,755
                                                       ----------    ----------



Cash flows from investing activities:
  Purchase of property and equipment                         --          (2,065)
  Computer software development costs                     (53,709)      (93,395)
                                                       ----------    ----------


        Net cash used in investing activities             (53,709)      (95,460)
                                                       ----------    ----------


Net decrease in cash                                       (2,765)      (90,705)


Cash - beginning of period                                 12,688       449,990
                                                       ----------    ----------


Cash - end of period                                   $    9,923    $  359,285
                                                       ==========    ==========


Supplemental cash flows information:

Taxes paid                                             $      629    $    2,047
                                                       ==========    ==========





See notes to condensed consolidated financial statements.

                                        3

<PAGE>



                        EGAN SYSTEMS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  STATEMENT PRESENTATION:

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  contain  all  adjustments   (consisting  of  only  normal
recurring  adjustments)  necessary to present  fairly the financial  position of
Egan Systems,  Inc. and Subsidiary as of March 31, 2001 and the results of their
operations and cash flows for the three months ended March 31, 2001 and 2000.

Primary net income per common share is computed  based on the  weighted  average
number  of  outstanding  common  shares.  The  number  of  shares  used  in  the
computation were 19,646,652 and 18,813,319 in 2001 and 2000, respectively. Fully
diluted net income per common share is computed  based on the  weighted  average
number of  outstanding  common shares plus the shares that would be  outstanding
assuming conversion of the outstanding options and warrants. For purposes of the
fully diluted  computations,  the number of shares that would be issued from the
exercise of stock  options and warrants has been reduced by the number of shares
that could have been  purchased from the proceeds at the average market price of
the  Company's  stock.  The number of shares  used in the  computation  of fully
diluted  earnings per share were  19,746,652  and  19,013,319  in 2001 and 2000,
respectively.  Fully  diluted  earnings  per share  amounts do not  include  the
effects  of  dilutive  securities  for  2001  and 2000  because  they are  anti-
dilutive.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
for interim  reporting  under Form 10-QSB have been condensed or omitted.  It is
suggested  that these  condensed  consolidated  financial  statements be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's annual report on Form 10-KSB for the year ended December 31, 2000.

The  results of  operations  for the three  months  ended March 31, 2001 are not
necessarily indicative of the operating results for the full year.

NOTE 2.  COMPUTER SOFTWARE DEVELOPMENT COSTS:

Computer software  development costs for products are capitalized  subsequent to
the establishment of technological  feasibility.  Capitalization ceases when the
products  are  available  for  general   release  to  customers  at  which  time
amortization of the capitalized  costs begins on a straight-line  basis over the
estimated life of the product,  which is estimated at three years. As of and for
the three  months  ended  March  31,  2001 and  2000,  accumulated  amortization
amounted  to  approximately  $1,890,000  and  $1,265,000,  and  amortization  of
computer  software  development  costs charged to operations  was  approximately
$91,000 and $97,000, respectively.

NOTE 3.  INVENTORY:

Inventory,  which consists primarily of miscellaneous  computer peripherals,  is
stated at the  lower of cost or  market.  Cost is  determined  by the  first-in,
first-out method.



                                        4

<PAGE>



                        EGAN SYSTEMS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 4.  401(K) SAVINGS PLAN:

In March  1999,  the  Company  adopted a 401(k)  savings  plan that  covers  all
employees of the Company. The plan is effective March 1, 1999.  Contributions to
the plan may be made by all eligible  employees  up to fifteen  percent of their
salary.   The  Company  will  match   twenty-five   percent  of  the  employee's
contributions up to four percent of each employees base salary.

For the three  months  ended  March  31,  2001 and 2000,  the  Company  incurred
contribution expense of approximately $1,000 related to this plan.

NOTE 5.  ISSUANCE OF COMMON STOCK:

In 1993,  in order to assist the  Company in raising  additional  capital by the
sale of the Company's common stock, a director voluntarily surrendered 1,000,000
of his shares of the  Company's  $.05 par value  common stock to the treasury in
order to comply with certain financial requirements imposed on the Company under
the terms of the new stock sale  agreement.  In March 2000,  since the financial
terms and conditions  imposed on the Company had expired,  the Company  reissued
the 1,000,000  shares  previously  surrendered  by the  director.  The 1,000,000
shares of the  Company's  $.05 par value common stock issued to this director in
2000 was not previously  disclosed in the calculation of fully diluted  earnings
per share.  The Company has  determined  that had this  disclosure  been made it
would  have had no  material  affect  upon the  calculation  of basic  and fully
diluted earnings per share.

NOTE 6.  ACQUIRED TECHNOLOGY:

In 1999 and 1998, the Company  purchased  rights for the use of certain software
to be utilized in the Company's year 2000 assessment and  remediation  services.
Certain of these  software  costs were charged in 1999 and 1998 to cost of goods
sold based on revenues from customers  contracting  with the Company for the use
of the technology.

At December 31, 1999,  the Company wrote off the remaining  costs  approximating
$1,107,000  based on its assessment of the  software's  net realizable  value at
that time.  However,  the Company is  currently  negotiating  with the  software
vendor to apply these costs to other software with  application to the Company's
products and services. As of the date of this financial statement the outcome of
these  negotiations  is  uncertain.  However,  the  Company  believes it will be
successful  in its  negotiations  and that the software  vendor will  ultimately
allow these costs to be applied to other software for future use by the Company.
If the Company is successful in its  negotiations and is able to apply the costs
to new software,  the Company will recognize  income in the future period to the
extent of the applicable credits.




                                        5

<PAGE>



Item 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2001 AND 2000:

NET SALES:

For the three months ended March 31, 2001 and 2000,  total revenue  approximated
$152,000 and $242,000,  respectively.  Revenue has declined for the three months
ended March 31, 2001 versus the same period in the prior year due to the current
poor climate in the economy for  technology  spending by customers.  The Company
expects  increases  in  technology  spending in future  periods by  customers to
benefit the Company.

The Company is continually  evaluating new  opportunities  that management hopes
will substantially  contribute to revenue.  However,  the Company is quite small
and  remains  subject  to  technological  obsolescence  and  competitive  market
conditions.

COST AND EXPENSES:

Cost of goods  sold for the three  months  ended  March  31,  2001 and 2000 were
approximately  $5,000 and $13,000 and gross profit  percents were  approximately
97% and 95%, respectively. The high gross profit margins in 2001 and 2000 result
from sales of the Company's  software  products  which have limited direct costs
attributed to them.

Research and development  costs were  approximately  $33,000 and $63,000 for the
three months ended March 31, 2001 and 2000, respectively. The decrease is due to
the  Company  reducing  the  number of  employees  and  expenditures  related to
research and development in 2001 in conjunction  with the reduction in revenues.
The Company continues to expend significant  amounts of its funds developing new
software and to remain competitive in its specific field of expertise.

Selling,  shipping and general and administrative  expenses (SG&A) for the three
months  ended March 31, 2001 and 2000 were  approximately  $83,000 and  $162,000
respectively.  The capitalization of computer software development costs for the
three  months   ended  March  31,  2001  and  2000  reduced  SG&A   expenses  by
approximately  $54,000 and $93,000  respectively.  The decrease in SG&A expenses
was attributed  primarily to the reduction in employees and  expenditures in the
Company's  software  development  facility in conjunction  with the reduction in
revenues.

INTEREST INCOME:

Interest  income  for the  three  months  ended  March 31,  2001 and  2000,  was
approximately $0 and $4,000,  respectively,  and was related to cash invested by
the Company in short-term financial instruments.

DEPRECIATION AND AMORTIZATION:

Depreciation and amortization  expense for the three months ended March 31, 2001
and 2000 was approximately  $106,000 and $111,000,  respectively.  Management is
currently amortizing capitalized computer software costs over a two year period.





                                        6

<PAGE>

Item 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (Cont'd):


LIQUIDITY:

As of March  31,  2001,  the  Company's  net cash  provided  by  operations  was
approximately $51,000 and is substantially comprised of net loss of $(80,000), a
reduction of accounts  receivable of $46,000,  a decrease in accrued expenses of
$(25,000) and  depreciation  and  amortization of $91,000.  This compares to the
three months ended  December 31, 2000 where net cash provided by operations  was
approximately  $5,000  and  was  substantially   comprised  of  a  net  loss  of
$(124,000),  depreciation  and  amortization  of  $111,000  and a  reduction  in
accounts receivable of $24,000.

Net cash used in  investing  activities  during the three months ended March 31,
2001 and 2000 was approximately ($54,000) and ($95,000),  respectively. This was
attributed to purchases of new computer  hardware and software of  approximately
$0 and  $(2,000) to support  the  Company's  ongoing  research  and  development
activities and to the  capitalization of computer software  development costs of
$(54,000)  and  $(93,000)  for the three  months  ended March 31, 2001 and 2000,
respectively.

Management  believes that the Company has sufficient  cash resources to meet its
expected cash needs in the present fiscal year.  Management  does not anticipate
additional  large capital  expenditures  in the current year except as discussed
above. At present the Company does not maintain a line of credit facility with a
lending institution.

INFLATION AND SEASONALITY:

The Company  does not  anticipate  inflation  will be  significantly  impact its
business.  The Company does not believe its business is subject to  fluctuations
due to seasonality.








                                        7

<PAGE>


                           PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits - Required by Item 601 of Regulation S-B.

               (11) Statement regarding computation of per share earnings.

               (27) Financial data schedule

(b)  Reports on Form 8-K - The  Company  filed no reports on Form 8-K during the
     quarter ended March 31, 2001.












                                        8

<PAGE>



                               S I G N A T U R E S




In accordance with the  requirements of the Exchange Act of 1934, the registrant
caused this report to be signed on its behalf of the undersigned, thereunto duly
authorized.



                                                EGAN SYSTEMS, INC.
                                                ----------------------------
                                                (Registrant)






                                                /s/Edward J. Egan
                                                ----------------------------
                                                Edward J. Egan (President
                                                And Chief Financial Officer)
                                                And Chief Financial Officer)



Date: 05/23/01





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