U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------------------

FORM 10QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2001
Commission File No. 2-67918

Mikros Systems Corporation
--------------------------
(Exact Name of Small Business Issuer as Specified
 in its Charter)

Delaware				14-1598200
--------				----------
(State of Other Jurisdiction	(I.R.S. Employer
 of Incorporation or Organization) Identification No.)

707 Alexander Road, Building Two, Suite 208,
Princeton, New Jersey 08540
-------------------------------------------
(Address of Principal Executive Offices)

609-987-1513
------------
(Issuer's Telephone Number, Including Area Code)

-------------------------------------------------
(Former Address, 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 Securities Exchange
Act of 1934 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:_______

State the number of shares outstanding of each of the Issuer's
classes of common stock, as of June 30, 2001:

Class                           Number of Shares
-----                           ----------------
Common Stock, Par Value $.01      31,106,753

Transitional Small Business Disclosure Format (check one):

Yes:___X___        No:________






TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION               PAGE #

Item 1.  Financial Statements 3

	CONDENSED BALANCE SHEET
	As of June 30, 2001 4

    	CONDENSED STATEMENTS OF OPERATIONS
	For the Three Months Ended and the Six Months
       Ended June 30, 2001 and 2000    6

	CONDENSED STATEMENTS OF CASH FLOWS
	 For the Three Months Ended and Six Months Ended
        June 30, 2001 and 2000 7

	NOTES TO THE CONDENSED FINANCIAL
        STATEMENTS 8

 Item 2. Management's Discussion and Analysis of
         Financial Condition and Results of
	  Operations 12

	  Results of Operations 14

	  Liquidity and Capital Resources 14

PART II  OTHER INFORMATION

	   Item 2.  Changes in Securities and Use
		      of Proceeds 16

	   Item 5.  Other Information 16

	   Item 6.  Exhibits and Reports on
		      Form 8-K 16

	   SIGNATURES 17




PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements.

Certain information and footnote disclosures required
under generally accepted accounting principles have been
condensed or omitted from the following financial statements
pursuant to the rules and regulations of the Securities and
Exchange Commission, although Mikros Systems Corporation
(the "Company") believes that such financial disclosures are
adequate to assure that the information presented is not
misleading in any material respect.  The following financial
statements should be read in conjunction with the year-end
financial statements and notes thereto included in the
Company's Annual Report on Form 10KSB for the fiscal year
ended December 31, 2000.

The results of operations for the interim periods presented
herein are not necessarily indicative of the results to be
expected for the entire fiscal year.





MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)

					JUNE 30,
ASSETS				        2001
------ 				--------

CURRENT ASSETS

  Cash					$ 124,990
  Accounts Receivable		   55,952
  Other Current Assets		      870
					  --------
  TOTAL CURRENT ASSETS		  181,812
   					  --------

  EQUIPMENT				   61,063
    Less: Accumulated Depreciation (51,389)
					  --------
EQUIPMENT, NET   			    9,674
				        --------
OTHER ASSETS

  Patent Costs, Net                 24,314
                                  --------
                                    24,314
					 --------
TOTAL ASSETS		  	 	$ 215,800
                                 ==========

  See Notes to Financial Statements






MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)


                                                   JUNE 30,
LIABILITIES AND SHAREHOLDERS' DEFICIENCY              2001
						      ---------
CURRENT LIABILITIES
  Accounts Payable                                 $36,112
  Accrued Payroll and Payroll Taxes                 23,189
  Accrued Expenses                                  19,394
  Advances from an affiliate                        48,555
  Customer Advances                                 15,000
                                                 ---------
TOTAL LIABILITIES                                 $142,250
                                            --------
COMMITMENTS AND CONTINGENCIES
MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
  par value $.01 per share, authorized 150,000
  shares, issued and outstanding 5,000 shares
  		                                     80,450
			                             -------
SHAREHOLDERS' DEFICIENCY

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

  Preferred Stock, Series B convertible, par value
  $.01 per share, authorized 1,200,000 shares, issued
  and outstanding 1,102,433 shares                  11,024

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

  Common Stock, par value $.01 per share,
  authorized 60,000,000 shares, issued and
  outstanding 31,106,753                           311,068

  Capital in excess of par                      11,363,671
  Accumulated deficit                          (11,702,113)
                                                -----------
TOTAL SHAREHOLDERS' DEFICIENCY                 (     6,900)
                                                -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY  $  215,800
                                               ============

See Notes to Financial Statements








MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)


                       Three Months Ended,		  Six Months Ended
                   June 30, 2001  June 30, 2000  June 30, 2001 June 30, 2000
                  -------------- -------------- ------------   -------------
Revenues:
  Royalties       $      18,193   $   17,232	    $ 50,153       $ 23,614

                   -------------  -----------    ------------  --------------
Expenses:
 General &
 Administrative          37,529       38,339	       95,088        83,897
                   -------------  -----------    ------------  --------------
                         37,529       38,339       (44,935)       83,897
                    ------------  -----------    ------------  --------------

Net Operating Loss      (19,336)     (21,107)	     -       (60,283)

Gain from disposition
  of asset                    -            -              -         4,377
                     -----------  -----------    ------------  --------------
Net Loss           $    (19,336)  $   (21,107)   $  (44,935)    $ (55,906)
                    ============  ============   ============  ==============

Basic Loss Per
 Share             $        0.00  $       0.00  $     0.00     $     0.00
                    ============  ============   ============  ==============
Weighted Average number
 of shares
 outstanding          30,831,979   29,230,790     30,726,109      28,949,135
                    ============= ============   ============  ==============

See Notes to Financial Statements










MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                         The Three Months Ended  The Six Months Ended
                   June 30, 2001  June 30, 2000  June 30, 2001 June 30, 2000
                   -------------- -------------- ------------- --------------
Cash Flow From Operating Activities:
   Net Loss                 $( 19,334) $ (21,107)  $ (44,935)  $ (55,906)
Adjustments to reconcile Net (Loss)
 to Net Cash Provided (Used) by Operating
 Activities:
  Depreciation and
     Amortization	           664        530        1,194	 1,060
  Gain from Disposition of Assets  -          -            -       (4,377)
 Net Changes in Operating Assets and
   Liabilities (Increase) Decrease in:
   Accounts Receivable	        11,544	    (14,831)     24,045        8,607
   Other Current Assets	(5,030)       1,049       (370)      (3,009)
   Other Assets    	             -          - 	   2,206  	    -
  Increase (Decrease) in:
   Accounts Payable		(16,657)   (1,926)	   6,272       14,862
   Accrued Payroll and Payroll
    Taxes	                  (325)        -	   1,110           -
   Accrued Expenses            (2,359)  (15,028)      (15,658)      17,218
                            ---------   --------	---------     --------
 Net (used in) by
  Operations                  (21,437)   (51,313)     (26,136)     (21,545)
			     ----------    --------	----------	--------
 Cash flows provided by Investing Activities:
     Sale of equipment		    -            -	        -        6,000
     Purchase of Equipment     (1,341)         -       (1,341)            -
                            ----------    --------    ----------    --------
  Net Cash Provided by
   (used in) investing
    activities                 (1,341)         -       (1,341)	  6,000
                             ----------   ---------   ----------    ---------
 Cash Flows Provided from Financing
      Activities:
     Advance (repayment) from
       related party		3,619             -	   (23,495)        1,432
     Proceeds from exercise of options
       and warrants               -            437	         -	    2,812
     Proceeds from issuance
      of common stock         9,646              -        9,646             -
                             ----------   ---------	  ----------	   -------
 Net Cash Provided by financing
   Activities		       6,029             437       10,151	    4,244
	  		       ---------    ---------    ----------     --------
 Net increase (decrease)
  in cash		      (16,751)       (50,876)	    (17,326)       (11,301)
 Cash, beginning of the
   period                    141,741         73,341	    142,316         33,766
                            ---------      --------     ---------	    --------
Cash at the end of
  the period		   $   124,990       $ 22,465     $ 124,990      $ 22,465
                             ========      =========     =========	     ========

Supplemental Disclosure of non-cash
Information:

  Stock Issued from Conversion of
    Accrued Expenses      $   24,000    $         -      $  24,000      $      -

  Stock Issued from Conversion of
    Non-Secured Debt	   $         -    $         -	     $       -       $230,946

      See Notes to Financial Statements

MIKROS SYSTEMS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 2001

Note 1  Basis of Presentation:

he financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission.  Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
Annual Report on Form 10KSB for the year ended December 31, 2000.

In the opinion of the Company's management the accompanying
unaudited financial statements contain all adjustments,
consisting solely of those which are of a normal recurring
nature, necessary to present fairly its financial position as
of June 30, 2001 and the results of its operations and
its cash flows for the six months ended June 30, 2001.

Interim results are not necessarily indicative of results
for the full fiscal year.

Basic loss per common share was calculated based upon the
net loss available to common stockholders divided by the
weighted average number of shares of common stock
outstanding during the period.

The Company's financial statements have been prepared
assuming that the Company will be able to continue 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.  These conditions raise substantial doubt
about the Company's ability to continue as a going
concern.  Management's plans and intentions on
the going concern issue are discussed below.  These financial
statements do not include any adjustments that would be
required if the Company were unable to continue as a going
concern.

In order to continue as a going concern, the Company will
need to 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 business sheet is
dependent upon continued operations of the Company, which
in turn is dependent on the Company being able to obtain
financing and/or equity capital 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.





Note 2  Stockholder's Equity:

MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
----------------------------------------------------

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. 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.


SERIES B CONVERTIBLE PREFERRED STOCK
------------------------------------

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.  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.


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.

COMMON STOCK
------------

The Company has neither paid nor declared dividends on
its Common Stock since its inception and does not plan
to pay dividends on its Common Stock in the foreseeable
future.

The Company expects that any earnings which the Company
may realize and which are not paid as dividends to holders
of Preferred Stock will be retained to finance the growth
of the Company.

Note 3  Financing:

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 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.

The Company paid the investors all of the interest accrued
on promissory notes payable through May 15, 1998.  At that
time, it offered to convert the notes at face value to
stock valued at $0.06 per share in order to restructure its
debt. Most debt holders converted at that time.  In 2000,
the remaining note holder converted the
debt and interest, totaling $43,000 under the 1998 terms.
As a result of all conversions 4,840,268 shares of
common stock were issued.

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

The Company paid the investors of the 1992-93 financing all
of the interest accrued on their notes payable through May
15, 1998.   At that time, it offered to convert the notes
at face value to stock valued at $0.06 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 totaled $72,500.  During 2000, the investor
converted his note into 290,000 shares of common stock.




Item 2.  Management's Discussion and Analysis of
	  Financial Condition and Result of Operations.


Overview

Mikros Systems Corporation was founded in 1978 in Albany,
New York to exploit microprocessor technology developed
at the General Electric Research and Development Center
for the military defense industry. The Company's headquarters
are located at 707 Alexander Road, Suite 208, Princeton,
New Jersey; telephone (609)987-1513.

Initially, the Company supplied technology for military
applications.  The knowledge base and proprietary technology
developed was recognized as applicable to the commercial rapidly
expanding wireless business.

In 1995, the Company decided to also pursue contracts commercially
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.

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
2/3 of 3D, and Safeguard owns the remaining 1/3.

Mikros entered negotiations in late 1997 for the sale of
its military contracts to General Atronics Corporation (GAC).
The resulting transaction was concluded in 1998 and included
a $600,000 cash payment and a 2% royalty to be paid to the
Company over four years on all data terminal set sales.  In
addition, the purchaser was obligated to supply $1,000,000
in engineering services to the Company which since has been
expended.

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 digital system Mikros is developing for AM radio data
transmission will allow simultaneous broadcasting of the
present radio signal with a digital signal. 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
is not expected to require new FCC approval since
adjacent channel interference is avoided.

The Company developed a business model for the AM
Technology during 1999.  This model combines the AM
data transmission technology with the operations of a
nationwide or area wide network of AM radio stations
equipped with the minor modifications to the radio
station's transmitter.  Data could be broadcast from
point to multipoint and the signal received by the
listener who will have a small portable receiver to be
developed based on the prototype presently being used
in the Company's experimental trials.

In a related development, the Company's Board of
Directors has decided to explore providing services to
the government business sector.  Prior to 1998, Mikros
was successful in securing some governmental contracts.
By the end of 1997, Mikros had received over twelve
competitive contract awards through the Small Business
Innovative Research Program.  The Company's defense
business was sold to General Atronics Corporation in 1998,
resulting in an ongoing royalty stream.  Mikros' current
strategy is to build a core of highly specialized people
to support both the government business, as well as its
developments in the commercial market.

Under the proposed plan, Mikros' technical team would
provide support for many of the larger defense contractors
that are required by law to subcontract a significant
portion of their governmental business to smaller
contractors.  Mikros plans to initiate this strategic plan
immediately by contacting various defense contractors
that they have successfully assisted in the past.  There is
no assurance that any of the contemplated services will be
established.

Certain matters discussed in this Form 10-QSB are "forward-
looking statements" intended to qualify for the safe harbors
from liability established by the Private Securities
Litigation Reform Act of 1995.  Such forward-looking statements
include, without limitation, statements regarding technology
under development, strategies and objectives.  The forward-
looking statements include risks and uncertainties, including,
but not limited to, the anticipated size of and growth in the
markets for the Company's products, the trends favoring the use
of the Company's proposed commercial products, the anticipated
demand for the Company's new products, the timing of development
and implementation of the Company's new product offerings, the
utilization of such products by the Company's clients and trends
in future operating performance, and other factors not within the
Company's control.  The factors discussed herein and expressed
from time to time in the Company's filings with the Securities
and Exchange Commission could cause actual results and
development to be materially different from those expressed in
or implied by such statements.  The forward-looking statements
made herein are only made as of the date of this report and
the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances.

Results of Operations
---------------------

Six Months Ended June 30, 2001

Total revenues were $18,193 for the second quarter ended June
30, 2001 compared to $17,232 the same period in 2000. The
2001 revenues represent royalties earned pursuant to the
Company's divestiture of its military contracts.

General and Administrative expenses for the quarter ended
June 30, 2001 were $37,529 versus $38,339 in the quarter
ended June 30, 2000.

No interest expense was recorded during the second quarter
of 2001 or during the quarter ended June 30, 2000.

Net loss for the six months ended June 30, 2001 was
$19,336 versus a net loss of $21,107 for the same period
in 2000.

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.

At June 30, 2001, the Company had cash of $124,990. As of
June 30, 2001, the Company had working capital of
$39,562.

Net cash used by operating activities was approximately
$26,136 includes changes in certain of the Company's
operating assets and liabilities and the net loss of the
six months ended June 30, 2001.

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 (GAC).  The royalty
agreement provides for quarterly reports and payments based
on the GAC shipments and receipts during the quarter. The
royalties for the quarter ended June 30, 2001 were
$18,193.

Mikros is presently seeking $5,000,000 in financing in order to
implement its business plan.  There is no guarantee that
the Company will be able to obtain the necessary financing
or that the application contemplated will be embraced by
potential users.

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 raise 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.



PART II.  OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

In April 2001, the Company issued 400,000 shares of Common
Stock to a consultant in consideration of consulting services
previously rendered to the Company.

In June 2001, the Company issued 87,690 shares of Common
Stock upon the conversion of 29,230 shares of Series B
Convertible Preferred Stock of the Company.  The Series
B stockholder paid the Company an aggregate conversion price
of $9,646 for such shares.

The Company believes that the issuances of shares of Common
Stock were exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended (the "Act"), and Rule
506 of Regulation D promulgated under the Act, as transactions
not involving a public offering.  Appropriate legends have been
affixed to the stock certificates issued to the purchasers of
the shares of Common Stock.  All purchasers had adequate access
to information about the Company and each purchaser acquired
the securities for investment only and not with a view to
distribution.


Item 5.	Other Information

Item 6.	Exhibits and Reports on Form 8-K

(a)	Exhibits

None.

(b)	Reports on Form 8-K.

None.






SIGNATURES

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

				MIKROS SYSTEMS CORPORATION


DATE:  August 15, 2001	By:/s/Thomas J. Meaney
			       ----------------------
				 President