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 June 30, 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
----                       -----                            ------------------

08/06/01                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
    June 30, 2001 (unaudited) and December 31, 2000                         1

   Condensed consolidated statements of operations (unaudited) for the
    Six months ended June 30, 2001 and 2000                                 2

   Condensed consolidated statements of cash flows (unaudited) for the
    Six months ended June 30, 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>
                                                             June 30,     December 31,
ASSETS                                                        2001           2000
                                                          ------------    -----------
                                                          (Unaudited)
<S>                                                        <C>            <C>
     Current Assets
       Cash                                                $    22,038    $    12,688
       Accounts receivable                                      26,281         77,937
       Inventory                                                 7,415          6,415
       Prepaid expenses and other current assets                 5,542          5,543
                                                           -----------    -----------
           Total Current Assets                                 61,276        102,583
                                                           -----------    -----------

     Property and Equipment - net                              107,969        137,969
                                                           -----------    -----------

     Other Assets
       Computer software development costs - net               433,020        545,863
       Security deposits                                         3,126          3,126
                                                           -----------    -----------
           Total Other Assets                                  436,146        548,989
                                                           -----------    -----------

           Total Assets                                    $   605,391    $   789,541
                                                           ===========    ===========

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities
      Account payable                                      $   175,917    $   175,917
      Accrued expenses and other current liabilities            94,385        121,341
                                                           -----------    -----------

           Total Current Liabilities                           270,302        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                                               (5,111,945)    (4,954,751)
                                                           -----------    -----------
                                                               697,589        854,783
      Notes receivable - stock purchase                       (362,500)      (362,500)
                                                           -----------    -----------
           Total Stockholders' Equity                          335,089        492,283
                                                           -----------    -----------

           Total Liabilities and Stockholders' Equity      $   605,391    $   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)


<TABLE>
<CAPTION>
                                       Three Months Ended        Six Months Ended
                                            June 30,                  June 30,
                                       -------------------       -----------------
                                       2001         2000         2001         2000
                                       ----         ----         ----         ----

<S>                                 <C>          <C>          <C>          <C>
Net sales                           $ 135,726    $ 158,888    $ 287,683    $ 401,214
                                    ---------    ---------    ---------    ---------

Cost and expenses:
  Cost of goods sold                    3,550       (4,186)       8,188        9,285
  Research and development costs       25,016       53,589       57,625      117,031
  Selling, shipping,
   general and administrative          48,384      162,467      131,803      324,891
  Interest income                          --       (4,120)          --       (8,558)
  Royalties                             5,000        6,200       10,000       22,566
  Promotion and advertising                --           --           --        3,941
  Depreciation and amortization       130,906      111,215      237,261      222,430
                                    ---------    ---------    ---------    ---------

                                      212,856      325,165      444,877      691,586
                                    ---------    ---------    ---------    ---------

Net loss                            $ (77,130)   $(166,277)   $(157,194)   $(290,372)
                                    =========    =========    =========    =========

Net loss per common share:

  Basic and fully diluted           $  (0.004)   $  (0.008)   $  (0.008)   $  (0.015)
                                    =========    =========    =========    =========

  Cash dividends per common share        None         None         None         None
                                    =========    =========    =========    =========
</TABLE>

See notes to condensed consolidated financial statements.


                                        2

<PAGE>


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


                                                           Six Months Ended
                                                               June 30,
                                                          -------------------
                                                          2001           2000
                                                          ----           ----


Net cash provided by operating activities              $ 103,768      $   6,228
                                                       ---------      ---------


Cash flows from investing activities:
  Purchase of property and equipment                          --         (3,624)
  Computer software development costs                    (94,418)      (186,812)
                                                       ---------      ---------


        Net cash used in investing activities            (94,418)      (190,436)
                                                       ---------      ---------


Net increase (decrease) in cash                            9,350       (184,208)

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


Cash - end of period                                   $  22,038      $ 265,782
                                                       =========      =========


Supplemental cash flows information:

Taxes paid                                             $     730      $   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 June 30, 2001 and the results of their
operations and cash flows for the six months ended June 30, 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 19,233,575 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  19,718,652  and  19,423,575  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 six  months  ended  June 30,  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 six months ended June 30, 2001 and 2000,  accumulated  amortization amounted
to  approximately  $2,006,000  and  $1,363,000,  and  amortization  of  computer
software development costs charged to operations was approximately  $207,000 and
$195,000, 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 six  months  ended  June  30,  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 - SIX MONTHS ENDED JUNE 30, 2001 AND 2000:

NET SALES:

For the six months  ended June 30,  2001 and 2000,  total  revenue  approximated
$288,000  and  $401,000,  respectively.  Revenue has declined for the six months
ended June 30,  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 six  months  ended  June  30,  2001  and 2000  were
approximately $8,000 and $9,000 and gross profit percents were approximately 97%
and 98%,  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  $58,000 and $117,000 for the
six months  ended June 30, 2001 and 2000,  respectively.  The decrease is due to
the reduction of employees and expenditures  related to research and development
in 2001 in conjunction with the reduction in revenues.  The Company continues to
expend funds  developing new software and to remain  competitive in its specific
field of expertise.  The Company has engaged  outside  consultants  in the third
quarter of 2001 to continue these research and development projects.

Selling,  shipping and general and  administrative  expenses  (SG&A) for the six
months  ended June 30, 2001 and 2000 were  approximately  $132,000  and $325,000
respectively.  The capitalization of computer software development costs for the
six months ended June 30, 2001 and 2000 reduced SG&A  expenses by  approximately
$94,000 and $187,000 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  six  months  ended  June  30,  2001  and  2000,  was
approximately $-0- and $8,600, respectively, and was related to cash invested by
the Company in short-term financial instruments.


DEPRECIATION AND AMORTIZATION:

Depreciation and amortization expense for the six months ended June 30, 2001 and
2000 was  approximately  $237,000  and  $222,000,  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 - SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (Cont'd):

LIQUIDITY:

As of June  30,  2001,  the  Company's  net  cash  provided  by  operations  was
approximately $104,000 and is substantially comprised of net loss of $(157,000),
a reduction of accounts receivable of $52,000, a decrease in accrued expenses of
$(29,000) and depreciation  and  amortization of $237,000.  This compares to the
six  months  ended June 30,  2000  where net cash  provided  by  operations  was
approximately  $6,000  and  was  substantially   comprised  of  a  net  loss  of
$(290,000),  depreciation  and  amortization  of  $222,000  and a  reduction  in
accounts receivable of $64,000.

Net cash used in investing  activities during the six months ended June 30, 2001
and 2000 was  approximately  ($94,000) and  ($190,000),  respectively.  This was
attributed to purchases of new computer  hardware and software of  approximately
$0 and  $(4,000) to support  the  Company's  ongoing  research  and  development
activities and to the  capitalization of computer software  development costs of
$(94,000)  and  $(186,000)  for the six  months  ended  June 30,  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 June 30, 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)



Date: 08/06/01
      ----------------


                                       9