SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, DC 20549
                               FORM 10-Q
           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

FOR QUARTER ENDED:  March 31, 1998    COMMISSION FILE #: 2-67918-NY

                      MIKROS SYSTEMS CORPORATION
                      --------------------------   
          (Exact Name of Registrant as Specified in Charter)

          DELAWARE                             14-1598200
          --------                             ----------  
(State or Other Jurisdiction of    (I.R.S. Employer Identification#)
 Incorporation or Organization)

           707 Alexander Road, Suite 208, Princeton, NJ 08540
           -------------------------------------------------     
     (Address of Principal Executive Offices, Including Zip Code)

   Registrant's Telephone Number, Including Area Code: 609-987-1513

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.  [ ]Yes    [X]No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
                                                 OUTSTANDING  AT
           CLASS                                   March 31, 1998 
----------------------------                     ----------------
COMMON STOCK, PAR VALUE $.01                       13,451,452 SHARES

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

























<PAGE>

                      MIKROS SYSTEMS CORPORATION

                           TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                 Page #

   ITEM I - FINANCIAL STATEMENTS

   Balance Sheets at March 31, 1998 and December 31, 1997
   (Unaudited)................................................. 1

   Statements of Operations for the Three Months Ended
   March 31, 1998 and 1997 (Unaudited) ........................ 3

   Statements of Shareholders' Equity for the Years ended 
   1996 and 1997 and Three Months Ended March 31, 1998 
   (Unaudited)................................................. 4

   Statements of Cash Flows for the Three Months Ended
   March 31, 1998 and 1997 (Unaudited)......................... 5

   Notes to the Financial Statements........................... 6


   ITEM II

   Management's Discussion and Analysis of Financial
   Condition and Results of Operations......................... 10


PART II - OTHER INFORMATION.................................... 12

<PAGE>
<PAGE>

                      MIKROS SYSTEMS CORPORATION
                            BALANCE SHEETS
                              (UNAUDITED)


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

CURRENT ASSETS
  Cash                            $  115,636      $   85,592 

  Accounts Receivable
    Government                        37,662         342,726 
    Trade                             16,655         112,258 

  Inventories                              -           5,293

  Other Current Assets                 9,910           9,561 
                                  ------------    ------------

TOTAL CURRENT ASSETS                 179,863         555,430 
                                  ------------    ------------

PROPERTY & EQUIPMENT

  Equipment                          135,530         135,530 

  Furniture and Fixtures                   -          50,241 
                                  ------------    ------------
TOTAL                               135,530         185,771
  Less:  Accumulated Depreciation   ( 52,481)       (100,672)
                                  ------------    ------------
PROPERTY & EQUIPMENT, NET             83,049          85,099 
                                  ------------    ------------

OTHER ASSETS:
 Unbilled Receivables                      -           3,837 

 Patent Costs, Net                    14,315          14,609

 Other Assets                         17,428          17,048
                                  ------------    ------------
TOTAL OTHER ASSETS                    31,743          35,494
                                  ------------    ------------

TOTAL ASSETS                      $  294,655      $  676,023
                                  ============    ============

                   See Notes to Financial Statements


<PAGE>
                      MIKROS SYSTEMS CORPORATION
                            BALANCE SHEETS
                              (UNAUDITED)

           LIABILITIES AND                          MARCH 31,    DECEMBER 31,
    SHAREHOLDERS' DEFICIENCY                         1998           1997
------------------------------------------         -----------   ------------
CURRENT LIABILITIES
  Accounts Payable                                 $  661,214     $  685,139 
  Notes Payable
    Bank                                                7,663          9,271 
    Related Parties                                   547,500        547,500
    Other                                             446,500        446,500
  Obligations under Capital Leases                     23,967         23,967 
  Accrued Payroll and Payroll Taxes                    45,307         35,391
  Accrued Interest                                     66,294         34,712
  Accrued Vacations                                    15,042         84,821
  Accrued Expenses                                    119,266         84,241
 Unliquidated Progress Payments and Other
  Customer Advances                                    15,000        122,849
                                                  ------------   ------------
TOTAL CURRENT LIABILITIES                           1,947,753      2,074,391 
                                                  ------------   ------------
NOTES PAYABLE -Bank                                         -            716 
                                                  ------------   ------------
TOTAL LIABILITIES                    1,947,753      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 25,000,000 shares, issued and
  outstanding 13,451,452 shares in 1998 and 1997      134,515        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                         10,248,378     10,248,378 

  Accumulated deficit                             (12,137,207)   (11,883,193)
                                                  ------------   ------------

TOTAL SHAREHOLDERS' DEFICIENCY                     (1,733,548)     (1,479,534)
                                                  ------------   ------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY     $  294,655     $   676,023
                                                  ============   ============

                        See Notes to Financial Statements
<PAGE>
<PAGE>

                    MIKROS SYSTEMS CORPORATION
                     STATEMENTS OF OPERATIONS
                           (UNAUDITED)

                                           Three Months Ended,
                                     March 31, 1998      March 31, 1997
                                     --------------      --------------
Revenues:
 Equipment Sales                       $ 333,592           $ 385,404
 Contract Research and Development        46,874             190,284
                                      -----------          ----------
Total Revenues                           380,466             575,688    
   
Cost of Sales:
  Equipment Sales                        317,618             297,714
  Contract Research and Development       41,914             126,289
                                      -----------          ----------
Total Cost of Sales                      359,532             424,003
                                      -----------          ----------

Gross Margin                              20,934              151,685          
                                      -----------          ----------

Expenses:
 Research & Development                   98,647             109,009
 General & Administrative                143,870             256,267
 Interest                                 32,431              32,544
                                      -----------          ----------

Total Expenses                           274,948             397,820
                                      -----------          ----------

Net Income (Loss)                      ($254,014)          ($246,135)
                                      ===========          ==========

Net Income (Loss) per share               ($0.02)             ($0.02)          
                                      ===========          ==========

Weighted average number of
 shares outstanding                   13,451,452          12,018,827
                                      ===========         ===========



                See Notes to Financial Statements

<PAGE>
<PAGE>
                            MIKROS SYSTEMS CORPORATION
                 STATEMENTS OF SHAREHOLDERS  DEFICIENCY
                                   (UNAUDITED)
<TABLE>
<CAPTION>                 Common            Preferred          Preferred
                          Stock              Stock             Stock B
                          $.01 PAR            $.01 PAR         $.01 PAR
                          VALUE              VALUE             VALUE
                         ---------  -------  -------- -------- -------- ------- 
                                      PAR              PAR              PAR
                          SHARES     VALUE     SHARES  VALUE    SHARES  VALUE
                         ---------  -------  -------- -------- -------- ------
                         <C>        <C>      <C>       <C>     <C>      <C>

Balance December 31, 1995 7,352,108 $73,521  1,005,000 $10,050 $1,131,663$11,316
Year Ended December 31, 1996:
Issuance of Common Stock  2,582,844  25,829
Sale of Common Stock      1,912,000  19,120
Net Loss
                         ---------  -------  -------- -------- ------- --------
Balance-December 31, 1996 11,846,952 118,470 1,005,000 10,050 1,131,663 11,316
Year Ended December 31, 1997 
Issuance of Common Stock     854,500   8,545
Conversion of Preferred Stock 750,000  7,500 (750,000) (7,500)
Net Loss                          
                         ---------  -------  --------  -------- ------- -------
Balance December 31, 1997 13,451,452 134,515  255,000   2,550 1,131,663 11,316
Three Months Ended 
   March 31, 1998
Net Loss                          
                         ---------  ------- -------- ------- -------- -------
Balance March 31, 1998 13,451,452$134,515255,000$2,5501,131,663 $11,316         
                        ========= ======= ======= ======== ======== ======
                           
                             Preferred
                               Stock D               Capital
                              $.01 PAR              in excess    Accumulated
                                VALUE                of Par        Deficit
                              ---------  -------    ---------    -----------
                                           PAR
                               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)
Three Months Ended 
March 31, 1998
Net Loss                                                            (254,014)
                              ---------  -------    ----------   ------------
Balance December 31, 1997       690,000  $ 6,900   $10,248,378  ($12,137,207)
                              =========  =======    ==========   ============
</TABLE>
                        See Notes to Financial Statements
<PAGE>
<PAGE>
                    MIKROS SYSTEMS CORPORATION
                     STATEMENTS OF CASH FLOWS
                           (UNAUDITED)

                                                The Three Months Ended
                                           March 31, 1998      March 31, 1997
                                           --------------      --------------
Cash Flows Provided (Used) by Operating
 Activities: 
  Net Loss                                   ($254,014)           ($246,135)

Adjustments to reconcile Net Loss
 to Net Cash Provided (Used) by Operating
 Activities:
  Depreciation and Amortization                  2,344               20,418 

Net Changes in Operating Assets and
 Liabilities:
 (Increase) Decrease in:
   Accounts Receivable                         400,667               41,094 
   Unbilled Receivables                          3,837                4,824
   Inventories                                   5,293              (33,997)
   Other Current Assets                           (349)              (4,868)
   Other Assets                                   (380)              (1,989) 
 Increase (Decrease) in:
   Accounts Payable                            (23,925)               5,288 
   Accrued Payroll and Payroll Taxes             9,916               (2,417)  
   Unliquidated Progress Billings and
     Other Customer Advances                  (107,849)             142,093
   Other Liabilities and Interest               (3,172)              83,013 
                                              ---------            ---------
 Net Cash Provided (Used) by Operations         32,368                7,324
                                             
 Cash Flows Provided (Used) by Investing
 Activities:
 Equipment Purchases                                 -               (69,947) 

Cash Flows Provided (Used) by Financing
 Activities:
   Proceeds from Exercise of Options
   And Warrants                                      -                15,812

  Repayment of Debt and Capital Leases           (2,324)        (25,310)        
                                              ---------       ---------
Net Cash Provided (Used) by Financing
 Activities:                                    (2,324)               (9,498)
                                              ---------             ---------
Net Increase (Decrease) in Cash                 30,044               (72,121)
Cash at Beginning of Period                     85,592               395,120 
                                             ----------             ---------
Cash at End of Period                         $115,636             $ 322,999
                                             ==========            ==========
Supplemental disclosure of cash flow
 information:
 Cash paid during the quarter for interest    $    219               $31,507 
                                              =========            ==========

                     See Notes to Financial Statements

<PAGE>
<PAGE>
                    
                    MIKROS SYSTEMS CORPORATION
                NOTES TO THE FINANCIAL STATEMENTS
                           (UNAUDITED)

NOTE A - 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 March 31, 1998, its current 
liabilities exceed its current assets by $1,767,890, and at December 31, 1997,
its current liabilities exceed its current assets by $1,518,961.
     
As shown in the accompanying financial statements, the Company incurred a net 
loss of $254,014 for the quarter ended March 31, 1998, and as of March 31, 1998,
had an accumulated deficit of $12,137,207. As of March 31, 1998, the Company 
was in arrears for its March, 1998 and December, 1997 interest  payments and 
could not meet its principal repayment obligations in 1998. 
Management is attempting to restructure its notes obligations with related 
parties and other note holders. Starting in April 1998, the Company began 
negotiating settlement agreements with its vendors to settle its accounts 
payable for reduced amounts. 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 restructure 
its obligations and to obtain financing to support 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.  

As permitted by rules of the Securities and Exchange Commission applicable to
quarterly reports on Form 10-Q, these notes are condensed and do not contain
all disclosures required by generally accepted accounting principles.
Reference should be made to the financial statements and related notes
included in the Company's 1997 Annual Report on Form 10-K.

In the opinion of the management of Mikros Systems Corporation, the
accompanying financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's financial
position at March 31, 1998, the changes in deficiency in assets, and the
results of operations, and cash flows for the three-month periods ended
March 31, 1998 and 1997.
           
The results disclosed in the Statements of Operations for the three months
ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.


<PAGE>

 NOTE B - NOTES AND LOANS PAYABLE
--------------------------------
1) Outstanding Debt is summarized as follows:

                                            03/31/98      12/31/97
                                            --------      --------
  Notes Payable to Banks                    $  7,663         9,987
  Related Parties                            547,500       547,500
  Other Notes Payable                        446,500       446,500
                                            --------      --------
                                          $1,001,663    $1,003,987
                                          ==========    ==========

2)  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 $140,000 from officers and directors).

The promissory notes are for a term of approximately eighteen months, bear
interest at 12% on the unpaid balance, and are 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 noteholders 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.

As of March 31, 1998, the Company was in arrears its December, 1997 and March,
1998 interest payments.

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
 <PAGE>
      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 will
     be paid for the development of the AM technology. 3D will own 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 each of 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. 

<PAGE>
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 on the unpaid principal balance is 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.

As of March 31, 1998, the Company was in arrears for its March, 1998 and
December, 1997 interest payments.

NOTE C - INVENTORIES
--------------------
There were no inventories at March 31, 1998. Inventories as of December 31,
1997 are stated at the lower of cost or market, computed on the first-in,
first-out method.  

NOTE S - SUBSEQUENT EVENTS
--------------------------
Effective, April 10, 1998, the Company sold substantially all of the tangible
and intangible assets related to its defense contracts.  The sales agreement
provided for a sales price of $1,000,000 in engineering services to be
performed by the purchaser  for the Company in the future, and $600,000 in
cash.  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 

<PAGE>
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  warranty
obligation under contract N00600-96-C-3063. 
 
A net gain on the sale estimated at $1,500,000 will be recognized upon the
completion of the sale.  Results of operations for 1997 included net sales of
$2,945,000 from defense contracts. 
<PAGE>
<PAGE>
Part I. Item II.

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

REVENUE
-------
Total revenues were $380,466 for the first quarter ended March 31, 1998
compared to $575,688 for the same period in 1997.

In 1998, revenues from equipment sales were $333,592 or 87.7% of total revenue
compared to $385,404 or 66.9% of total revenue for the first quarter in 1997.
The 1998 equipment revenues represent the final revenues on the Company s
government contracts.
  
Research and development revenues in 1998 were $46,874 or 12.3% for the first
quarter and $190,284 or 33.1% of total revenue for the first quarter in 1997.
The 1998 research and development revenues represent the revenues on two
contracts which were completed in the first quarter.

 
COST OF SALES
-------------
Total Cost of Sales for the quarter ended March 31, 1998 was $359,532 or 94.5%
of total revenue compared to $424,003 or 73.7% of total revenue for the same
period in 1997.  Equipment Cost of Sales was $317,618 or 95.2% of equipment
revenue in the first quarter of 1998 compared to $297,714 or 77.2% of
equipment revenue in the first quarter of 1997.  Cost of Sales for Contract R
& D was $41,914 or 89.4% of contract R & D revenue and $126,289 or 66.4% of
Contract R & D revenue in the first quarters of 1998 and 1997, respectively. 
In 1998 the higher Cost of Sales percentages were mainly because of
unabsorption of fixed overhead costs due to low volume of revenue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
Selling, General and Administrative expenses for the quarter ended March 31,
1998 was $143,870 versus $256,267 in the quarter ended March 31, 1997, a
decrease of 43.9%.  This decrease is due mainly to downsizing which began in
the second quarter of 1997 and continued into 1998.

INTEREST EXPENSE
----------------
Interest expense was $32,431 in the quarter ended March 31, 1998 compared to
$32,544 for the same quarter in 1997. 

NET LOSS 
--------
Net loss for the quarter ended March 31, 1998 was $254,014 versus a net loss
of $246,135 for the same period in 1997. The loss was slightly higher in 1998.
Although the level of revenues were significantly less, the increase in the
net loss was not proportionately greater due to cost reductions implemented by
management.







<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's financial statements for the quarter ended March 31, 1998 have
been prepared on a going concern basis which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course
of business. 

The Company incurred a net loss of $254,014 for the quarter ended March 31,
1998, and as of March 31, 1998 had an accumulated deficit of $12,137,207.  At
March 31, 1998 the Company had negative working capital of $1,767,890 compared
to negative working capital of $1,518,961 at December 31, 1997.  For the
quarter ended March 31, 1998 the Company provided $32,368 by operating
activities. For the same period in 1997, the Company provided $7,324.  The
Company expects to continue to incur substantial expenditures to expand its
commercial wireless communications business.

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

As of March 31, 1998, the Company was in arrears on its December, 1997 and
March 1998 interest payments and could not meet its principal repayment
obligation in 1998. Management is attempting to restructure its note
obligations with related parties and other note holders.  In addition, the
Company has negotiated a settlement with over 80% of its vendor accounts
payable.

During 1998, management has divested its military contracts to General
Atronics Corporation (GAC). The agreement, which was finalized in April, 1998,
included terms that included cash in the amount of $600,000, a $1,000,000
credit for engineering services and future royalties. The Company is utilizing
the engineering services credit to continue development of its AM radio
technology. Because GAC hired key Mikros engineers which were involved in the
development, Mikros was able to continue the development and maintain
continuity for the project.  

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

The Company has negotiated a settlement with over 80% of its vendor accounts
payable.

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 restructure 
its obligations and to obtain financing to support 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.  

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Part II.    OTHER INFORMATION

Item 6.     EXHIBITS AND REPORTS ON FORM 8-K.

a)  Exhibits.  None.
b)  Reports on Form 8-K.
    No reports on Form 8-K have been filed during the
    quarter for which this report is filed.

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                            SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.


                                MIKROS SYSTEMS CORPORATION
                                       (Registrant)

Dated: November 23, 1998

                                /s/Thomas J. Meaney    
                                -----------------------
                                Thomas J. Meaney
                                President