U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------------------
FORM 10-QSB

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

For the quarterly period ended June 30, 2006
Commission File No. 2-67918

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

Delaware				   14-1598200
--------				         ----------
(State or 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 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:_______

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes:________ No:___X___

State the number of shares outstanding of each of the issuer?s
classes of common equity, as of August 11, 2006:

Class                           Number of Shares
-----                           ----------------
Common Stock, par value $.01      31,766,753

Transitional Small Business Disclosure Format (check one):

Yes:___  ___        No:__X____




TABLE OF CONTENTS
						     	    PAGE
PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

	CONDENSED BALANCE SHEET
	As of June 30, 2006			3

    	CONDENSED STATEMENTS OF OPERATIONS
	For the Three Months Ended and Six
                                                          5

	CONDENSED STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30,
        2006 and 2005				 6

	NOTES TO THE CONDENSED FINANCIAL
       STATEMENTS				7

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

        Overview			                           11

	  Results of Operations		                           13

	  Liquidity and Capital Resources	                           14

 Item 3. Controls and Procedures                                        16

PART II.  OTHER INFORMATION

	   Item 5.  Other Information                                    17

	   Item 6.  Exhibits		                           17

	   SIGNATURES			                           18

         CERTIFICATIONS			                           19



PART I.  Financial Information

Item 1. Condensed Financial Statements

MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)

				              June 30,
ASSETS				          2006
------ 			             --------

CURRENT ASSETS

  Cash					$ 142,954
  Receivables on Government
      Contracts                 	  104,717
  Other Current Assets		         24,627
					       --------
  TOTAL CURRENT ASSETS		        272,298
   					       --------

FIXED ASSETS

  EQUIPMENT				   	   11,524
    Less: Accumulated Depreciation     (3,964)
					       --------
FIXED ASSETS, NET			          7,560
				             --------

OTHER ASSETS

   Deferred Tax Asset			   53,000

   Patents					    6,941
   Less: Accumulated Amortization      (4,408)
                                     --------
   Patents, Net                         2,533
                                     --------

TOTAL OTHER ASSETS			   55,533
                                     --------

TOTAL ASSETS		  	 	$ 335,391
                                    =========


  See Accompanying Notes to Condensed Financial Statements.


MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET (UNAUDITED)

                                                June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY              2006
						           ---------
CURRENT LIABILITIES
  Accrued Payroll and Payroll Taxes		      $  66,796
  Accrued Expenses				          3,370
  Accounts Payable				         52,224
                                                ---------
TOTAL CURRENT LIABILITIES                         122,390

  Accrued Expenses                                 16,228
                                                ---------
TOTAL LIABILITIES						  138,618
                                                ---------
REDEEMABLE SERIES C PREFERRED STOCK
  par value $.01 per share, authorized 150,000
  shares, issued and outstanding 5,000 shares      80,450
  (involuntary liquidation value - $80,450)     ---------

SHAREHOLDERS' EQUITY
  Preferred Stock, Series B convertible, par value
  $.01 per share, authorized 1,200,000 shares, issued
  and outstanding 1,102,433 shares
  (involuntary liquidation value - $1,102,433)     11,024

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

  Preferred Stock, Series D, par value $.01 per
  share, 690,000 shares authorized, issued and
  outstanding
  (involuntary liquidation value - $1,518,000)      6,900

  Common Stock, par value $.01 per share,
  authorized 60,000,000 shares, issued and
  outstanding 31,766,753                          317,668

  Capital in excess of par                     11,422,976
  Accumulated deficit                         (11,644,795)
                                               -----------
TOTAL SHAREHOLDERS' EQUITY                        116,323
                                               -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $ 335,391
                                               ===========
See Accompanying Notes to Condensed Financial Statements.


                        MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)


		          Three Months Ended,         Six Months Ended,
                 June 30, 2006  June 30, 2005  June 30, 2006  June 30, 2005
                 -------------  -------------  -------------  -------------

Revenues:

Contract Revenue    $  411,403	 $  436,356     $  949,993     $ 791,769

Cost of Sales	          234,423       266,215        573,929       472,645
                    ------------   -----------    -----------   -----------
Gross Margin	          176,980       170,141        376,064       319,124
                    ------------   -----------    -----------   -----------

Expenses:

  Engineering		     47,360        26,677        99,542        48,132
  General &
    Administrative      131,362        99,939       246,097       196,653
                    ------------   -----------    -----------   -----------
Total Expenses          178,722       126,616       345,639       244,785

(Loss) Income from
  Operations             (1,742)       43,525        30,425        74,339

Other Income:
  Interest           285             0           285             0
                     ------------   -----------    -----------  -----------

Net (Loss) Income Before
  Income Tax Expense     (1,457)       43,525        30,710        74,339

Income Tax Expense            0             0        12,000             0
------------   -----------    -----------   -----------

Net (Loss) Income  $     (1,457)   $   43,525    $   18,710      $ 74,339
                    ============   ===========    ===========   ===========

Basic and diluted
earnings per share $      0.00     $      0.00   $     0.00      $   0.00
                    ============   ===========    ===========   ===========

Weighted average number
 of shares
 outstanding          31,766,753    31,766,753    31,766,753    31,766,753
                    ============   ===========    ===========   ===========


See Accompanying Notes to Condensed Financial Statements.




MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                                               Six Months Ended
                                        June 30, 2006   June 30, 2005
                                       -------------   ----------------
Cash Flow From Operating Activities:
   Net Income                            $    18,710	   $    74,339
Adjustments to reconcile Net Income
   to net cash provided by
   Operating Activities:
   Depreciation and Amortization	           4,772             707
   Deferred Tax Provision           	    12,000               0
   Net Changes in Operating Assets and
   Liabilities
   (Increase) Decrease in:
   Accounts Receivable			          (2,358)         30,732
   Other Current Assets			          (7,734)         (8,712)
   Increase (Decrease) in:
   Accounts Payable  			          (5,947)        (23,607)
   Accrued Payroll and Payroll Taxes	    16,358             390
   Accrued Expenses	       	          (1,390)	   	 (46,500)
                                            ---------       ---------
 Net Cash provided by
    Operating Activities                       34,411	        27,349
                                             ---------	---------
 Cash Flow from Investing Activities:
     Purchase of Equipment			         0		  (3,102)
     Costs associated with Patent Development (1,611)              0
                                             ---------      ---------
 Net Cash used in Investing Activities        (1,611)         (3,102)
                                             ---------      ---------

 Net Increase in Cash	    		          32,800          24,247
 Cash, beginning of the period               110,154          93,723
                                             ---------      ---------
 Cash, end of period           	    $    142,954 	   $   117,970
                                             ========= 	=========



See Accompanying Notes to Condensed Financial Statements.





MIKROS SYSTEMS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
 JUNE 30, 2006
(UNAUDITED)


Note 1 ? Basis of Presentation:

The 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 accounting
principles generally accepted in the United States of America
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 10-KSB for
the year ended December 31, 2005.

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, 2006 and the results of its operations and
its cash flows for the six months ended June 30, 2006.

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

Note 2 ? Shareholder?s Equity:

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

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. In addition, redemption is mandatory
if certain events occur, such as capital reorganizations,
consolidations, mergers, or a 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 then effective redemption price
for each share of Series C Preferred Stock held by such holder.
Upon payment of the effective redemption price, the holders of
Series C Preferred Stock will not be entitled to any further payment.





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

Each share of Series B Preferred Stock is convertible into
three shares of the Company's common stock at a price of $0.33
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.

CONVERTIBLE PREFERRED STOCK
---------------------------

Each share of the convertible preferred stock can be redeemed
at the Company's option for $1.00 per share or can be converted
into shares of the Company's common stock.  Each share of
preferred stock is convertible into one share of common stock.
This conversion rate is subject to adjustment in certain
circumstances.  Upon any liquidation, dissolution or winding
up of the Company, each holder will be entitled to their
redemption price once the holders of Series B and Series C
Preferred Stock have been fully paid.


SERIES D PREFERRED STOCK
------------------------

The Series D Preferred Stock provides for an annual cumulative
dividend of $0.10 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 Company, each
holder of Series D Preferred Stock will be entitled to be
paid, after all distributions or payments are made upon the
Company's Convertible Preferred Stock, Series B Preferred Stock,
and Series C Preferred Stock, an amount in cash equal to the
effective redemption price for each share of Series D Preferred
Stock held by such holder. Upon payment of the effective redemption
price, the holders of Series D Preferred Stock will not be
entitled to any further payment.




As of June 30, 2006, there were dividends in arrears on shares
of Series D Preferred Stock of $828,000.  In January 2006, the
holders of the shares of Series D Preferred Stock agreed to waive
future accumulation of dividends effective as of January 1, 2006.
Such waiver did not affect dividends accrued through December 31,
2005.


Note 3 ? Earnings Per Share

The Company?s calculation of earnings per share is as follows for
the periods presented:


			      Three Months Ended            Six Months Ended
                    June 30, 2006  June 30, 2005   June 30, 2006  June 30, 2005


Net (loss) income applicable to
to common stockholders $ (1,457)   $    43,525        $  18,710     $  74,339
============  =============   =============  =============

Average basic shares
 outstanding      	  31,766,753    31,766,753        31,766,753    31,766,753

Assumed conversion
 of preferred stock	           0     3,562,299         3,562,299     3,562,299

Effect of dilutive
 options and warrants          0        86,452           131,049        56,000
                    ------------   -------------   --------------  ------------
Average diluted shares
  outstanding         31,766,753    35,415,504       35,460,101     35,385,052
============   =============   ==============  ============

Net earnings per common
share, basic and
diluted		   $    0.00   $     0.00        $     0.00     $     0.00
                    ============   =============   ==============  ============

A total of 9,413,117 convertible preferred shares, common stock options
and warrants were not included in the computation of diluted earnings
per share because of their anti-dilutive effect for the three months
ended June 30, 2006.

A total of 5,489,000 common stock options and warrants were not
included in the computation of diluted earnings per share because
of their anti-dilutive effect for the six months ended June 30, 2006.

A total of 5,570,818 common stock options and warrants were not
included in the computation of diluted earnings per share because of
their anti-dilutive effect for the three months and six months ended
June 30, 2005.




Note 4 ? New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement No. 123(R), ?Share-Based Payment.?  Statement No.
123(R) replaces Statement No. 123, ?Accounting for Stock-Based
Compensation,? and supersedes APB Opinion No. 25, ?Accounting
for Stock Issued to Employees.?  Statement No. 123(R) requires
compensation costs related to share-based payment transactions
to be recognized in the financial statements over the period
that an employee provides service in exchange for the award.
Public companies are required to adopt the new standard using a
modified prospective method and may elect to restate prior periods
using the modified retrospective method.  Under the modified
prospective method, companies are required to record compensation
cost for new and modified awards over the related vesting period
of such awards prospectively and record compensation cost
prospectively for the unvested portion, at the date of adoption,
of previously issued and outstanding awards over the remaining
vesting period of such awards.  No change to prior periods
presented is permitted under the modified prospective method.
Under the modified retrospective method, companies record
compensation costs for prior periods retroactively through
restatement of such periods using the exact pro forma amounts
disclosed in the companies' footnotes.  Also, in the period of
adoption and after, companies record compensation cost based
on the modified prospective method.

The Company adopted SFAS No. 123(R) effective January 1, 2006,
using the modified prospective method with no restatement.  The
impact of future option or stock grants is dependent upon the
quantity and nature of future stock-based compensation grants.

In February 2006, the FASB issued FASB Staff Position No. FAS
123(R)-4, ?Classification of Options and Similar Instruments
Issued as Employee Compensation That Allow for Cash Settlement
upon the Occurrence of a Contingent Event?.  This position amends
SFAS 123R to incorporate that a cash settlement feature that
can be exercised only upon the occurrence of a contingent event
that is outside the employee?s control does not meet certain
conditions in SFAS 123R until it becomes probable that the
event will occur.  The guidance in this FASB Staff Position
was applied upon initial adoption of Statement 123R and did
not have an  impact on the Company?s financial statements.



In July 2006, the FASB issued FASB Interpretation No. 48,
?Accounting for Uncertainty in Income Taxes ? an interpretation
of FASB Statement No. 109? (FIN 48), which clarifies the
accounting for uncertainty in tax positions.  This Interpretation
requires that companies recognize in their financial statements
the impact of a tax position, and if that position is more likely
than not of being sustained on audit, based on the technical merits
of the position.  The provisions of FIN 48 are effective for fiscal
years beginning after December 15, 2006, with the cumulative effect
of the change in accounting principle recorded as an adjustment to
opening retained earnings.  We are currently evaluating the impact
of adopting FIN 48 on our financial statements.


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



OVERVIEW
--------

Unless otherwise indicated or the context otherwise requires, all
references to ?Mikros?, the ?Company?, ?we?, or ?our? and similar
terms refer to Mikros Systems Corporation.  Mikros is an advanced
technology company specializing in the research and development of
electronic systems technology primarily for military applications.
Classified by the U.S. Department of Defense (DoD) as a small
business, our capabilities include technology management, electronic
systems engineering and integration, radar systems engineering,
combat/command, control, communications, computers and intelligence
(C4I) systems engineering, and communications engineering. Our
headquarters are located at 707 Alexander Road, Suite 208, in
Princeton, New Jersey.

On March 2, 2006,  we received an amendment to the SBIR Phase III
contract for additional funding in the amount of $2,950,000 from
The Department of the Navy for the continuation of the development
and production of our Adaptive Diagnostic Electronic Portable Testset
or ADEPT? maintenance tool for U.S. Navy surface combatants.  This
modification will expand the application of ADEPT? to include all
Aegis ship variants for cruisers and destroyers.  This market totals
over 80 ships plus shore-based facilities.  Future potential markets
include foreign navies and other U.S. Navy ships.  This maintenance
and training tool allows U.S. Navy personnel to engage cutting-edge
technology to reduce maintenance time and enhance skill levels of
shipboard personnel.

ADEPT? began as a U.S. Navy Small Business Innovation Research (SBIR)
program in 2002, and over the course of development, Mikros has filed
for three technology patents with the U.S. Patent & Trademark Office
dealing with maintenance procedure automation and dynamic maintenance
personnel training.  Mikros expects to file additional patents in the
near future.

The SPY-1A development is complete and six production units have been
delivered to Mikros by DRS Technologies.  The production units
have passed environmental testing and have undergone limited functional
testing at the SPY-1A radar training site in Dahlgren, Virginia.
Additional functional testing is scheduled for August at the newly
opened SPY-1A test facility at Lockheed Martin Corporation?s
Moorestown, New Jersey facility.  The U.S. Navy is also planning for
ADEPT? testing at its Wallops Island, Virginia facility
as well as shipboard testing.  The existing contract calls for the
production of an additional ten ADEPT? systems to be installed
in Aegis ships.


On May 1, 2006, we were awarded an SBIR Phase II contract from Space
and Naval Warfare Systems Command (SPAWAR), San Diego, as a follow-on
to our SBIR Phase I work performed under the SBIR topic entitled Radar
Wireless Spectral Efficiency (RWSE).  The total award is valued at
approximately $750,000 divided into a $600,000 base program and a
$150,000 option program.  This SBIR Phase II effort will focus on the
real world implications of incorporating wireless networking into the
aircraft carrier (CVN platform) environment.  The overall technical
objective is to facilitate the introduction of commercial wireless
communication systems, e.g. Wi-Fi, onto the U.S. Navy CVN platform
through:  (1) the identification and testing of potential own-ship
electromagnetic interference (EMI) issues;  (2) the development and
testing of viable mitigation technologies to overcome adverse EMI
effects; and (3) the development of a CVN Wi-Fi network planning tool
to support networking within a highly reconfigurable shipboard
environment. This contract is initially for the CVN platform, but is
expected to be eventually applicable to other U.S. Navy ships.

Mikros continues to pursue several SBIR projects with the Department
of Homeland Security, the U.S. Navy, and other government agencies.

Statements contained or incorporated by reference in this
Quarterly Report on Form 10-QSB that are not based on historical
facts are ?forward-looking statements? within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  These forward-looking
statements regarding future events and our future results are based
on current expectations, estimates, forecasts, and projections
and the beliefs and assumptions of our management including,
without limitation, our expectations regarding results of operations,
selling, general and administrative expenses, research and
development expenses and the sufficiency of our cash for future
operations.  Forward-looking statements may be identified by
the use of forward-looking terminology such as ?may,? ?will,?
?expect,? ?estimate,? ?anticipate,? ?continue,? or similar terms,
variations of such terms or the negative of those terms.

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.


Changes to Accounting Policies and Estimates
--------------------------------------------

Our critical accounting policies and estimates are
set forth in our Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2005.  As of June 30, 2006,
there have been no changes to such critical accounting policies
and estimates.

Compliance with Sarbanes-Oxley Requirements
-------------------------------------------

Section 404 of the Sarbanes-Oxley Act of 2002 requires management
to perform an evaluation of its internal control over financial
reporting and have our independent auditors attest to such
evaluation as of December 31, 2007.  We have been actively preparing
for the implementation of this requirement by, among other things,
establishing an ongoing program to document, evaluate and test the
systems and processes necessary for compliance.  While we anticipate
that we will be able to comply on a timely basis with these
requirements, unforeseen delays may occur which could prevent
us from achieving timely compliance.

If we fail to complete our evaluation on a timely basis and in a
satisfactory manner, or if our external auditors are unable to attest
on a timely basis to the adequacy of our internal controls, we may be
subject to additional scrutiny surrounding our internal controls
over financial reporting.

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

Three Months Ended June 30, 2006 and 2005

There were revenues of $411,403 for the second quarter ended June
30, 2006 compared to $436,356 for the same period in 2005 and
there were cost of sales of $234,423 for the quarter ended
June 30, 2006 compared to $266,215 for the same period in 2005.
These decreases are attributable primarily to lower
subcontractors? costs and lower direct charges incurred on the
SBIR Phase III contract.



Engineering costs for the quarter ended June 30, 2006
were $47,360 compared to $26,677 in the quarter ended June 30,
2005. There were higher engineering costs for the quarter ended
June 30, 2006 due to increased salary expenses and costs related to
the relocation of our research and development engineering office.

General and administrative expenses for the quarter ended
June 30, 2006 were $131,362 compared to $99,939 in the quarter
ended June 30, 2005.  This increase was due to higher costs
incurred for salaries and related costs in connection with the
Company?s bid and proposals.

For the three months ended March 31, 2006, income tax expense
was $0, due to the net operating loss incurred.

We experienced a net loss of $1,457 for the three months ended
June 30, 2006 compared to net income of $43,525 for the same period
in 2005.

Six Months Ended June 30, 2006 and 2005

There were revenues of $949,993 for the six months ended June
30, 2006 compared to $791,769 for the same period in 2005 and
there were cost of sales of $573,929 for the six months ended
June 30, 2006 compared to $472,645 for the same period in 2005.
These increases are attributable primarily to higher direct
charges related to the SBIR Phase II and III contracts.

Engineering costs for the six months ended June 30, 2006 were
$99,542 compared to $48,132 for the same period in 2005. This
increase is attributable primarily to increased salary expenses
and costs related to the relocation of our research and development
engineering office.

General and administrative expenses for the six months ended
June 30, 2006 were $246,097 compared to $196,653 in the six
months ended June 30, 2005.  This increase is attributable
primarily to the SBIR Phase II and III contracts and higher
costs incurred for salaries and related costs in connection
with the Company?s bid and proposals.

For the six months ended June 30, 2006, income tax expense was
$12,000 compared to $0 for the same period in 2005.  During 2005,
the Company?s deferred tax assets were fully reserved by a
valuation allowance, thus the related income tax expense was
offset by the reversal of the corresponding valuation allowance.

Net income for the six months ended June 30, 2006 was $18,710
compared to $74,339 for the same period in 2005.


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

Since our inception, we have financed our operations
through debt, private and public offerings of equity
securities and cash generated by operations.

In September 2004, we were awarded an SBIR Phase III contract from the
Naval Surface Weapons Center ? Dahlgren, Virginia valued at
approximately $2,400,000. The contract is to complete the
development and to begin initial production of an intelligent
test tool for Navy radars.  The MFDAT has been designed by the
Company under a $1,000,000 SBIR Phase II contract, which began in
August 2003. In March 2006, an amendment to this SBIR Phase III
contract increased funding by approximately $2,950,000 and
extended the period of performance through February 2008.  The
contract amendment calls for an expansion of ADEPT? applications
to include all Aegis ship variants for cruisers and destroyers.

On May 1, 2006, we were awarded an SBIR Phase II contract from
Space and Naval Warfare Systems Command (SPAWAR), San Diego, as
a follow-on to our SBIR Phase I work performed under the SBIR topic
entitled Radar Wireless Spectral Efficiency (RWSE).  The total
award is valued at approximately $750,000 divided into a $600,000
base program and a $150,000 option program.

We maintain a line of credit facility for maximum
borrowings of up to $34,000.  There was $170 outstanding
under this line at June 30, 2006.

For the six months ended at June 30, 2006, we had net income
of $18,710 and working capital of $149,908. However, we still
had an accumulated deficit of $11,644,795.

We intend to continue the development and marketing of our
commercial applications of our wireless communications technology
both directly and through third parties.  In order to continue
such development and marketing, we will be required to raise
additional funds.  We intend to consider the sale of additional
debt and equity securities under appropriate market conditions,
alliances or other partnership agreements with entities interested
in supporting our commercial programs, or other business transactions
which would generate resources sufficient to assure continuation of
our operations and research programs.  There can be no assurance,
assuming we successfully raise additional funds or enter into business
alliances, that we will achieve profitability or positive cash flow.
If we are unable to obtain additional adequate financing or enter
into such business alliances, management will be required to sharply
curtail our operations.



Contractual Obligations
-----------------------

Our major outstanding contractual obligations relate to the
leases of our executive office and marketing facilities through
month-to-month leases.  We executed a new lease for engineering
office space in Fort Washington, Pennsylvania that commenced on
September 1, 2005 and continues for 63 months.  The first monthly
payment of $5,181.00 was due on January 1, 2006 and the terms of
the lease include an annual rate increase through the end of lease.

Item 3.	Controls and Procedures.


Based on his evaluation of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of June 30, 2006, our president (principal
executive officer and principal financial officer) has concluded that
our disclosure controls and procedures are designed to ensure that
information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SEC?s rules and forms and are operating in an effective manner.

There were no changes in our internal controls or in other
factors that could significantly affect these controls during
the quarter ended June 30, 2006.




PART II.  OTHER INFORMATION

Item 5.  	Other Information

On June 22, 2006, the Board of Directors of Mikros approved and
adopted the Mikros Systems Corporation Code of Business Conduct
and Ethics, a copy of which is attached to this Form 10-QSB
as Exhibit 14.

Our Code of Business Conduct and Ethics is also available on
our website, www.mikros.us, or without change upon written
request directed to Patricia A. Kapp, Secretary, Mikros
Systems Corporation, 707 Alexander Road, Building Two, Suite
208, Princeton, New Jersey 08540.

Our Code of Business Conduct and Ethics sets forth legal and
ethical standards applicable to all of our directors, officers,
and employees.  We intend to disclose on our website any
amendments to, or waivers from, our Code of Business Conduct
and Ethics that are required to be publicly disclosed.


Item 6.	Exhibits


Exhibit 14	      Mikros Systems Corporation Code of Business
                  Conduct and Ethics.

Exhibit 31.1	Certification of principal executive officer and
principal financial officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1	Certification of principal executive officer and
principal financial officer pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
1350.





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 11, 2006    By:/s/Thomas J. Meaney
			       ----------------------
			       President
			       (Chief Executive Officer and
                          Chief Financial Officer)




										Exhibit 14
MIKROS SYSTEMS CORPORATION
CODE OF BUSINESS CONDUCT AND ETHICS


This Code of Business Conduct and Ethics (the ?Code?) sets forth
legal and ethical standards of conduct for directors, officers and
employees of Mikros Systems Corporation (the ?Company?).  This Code
is intended to deter wrongdoing and to promote the conduct of all
Company business in accordance with high standards of integrity and
in compliance with all applicable laws and regulations.  This Code
applies to the Company and all of its subsidiaries and other business
entities controlled by it worldwide.

If you have any questions regarding this Code or its application to
you in any situation, you should contact your supervisor or the
Company?s Chief Executive Officer or Chief Financial Officer.

Compliance with Laws, Rules and Regulations

The Company requires that all employees, officers and directors
comply with all laws, rules and regulations applicable to the
Company wherever it does business.  You are expected to use good
judgment and common sense in seeking to comply with all applicable
laws, rules and regulations and to ask for advice when you are
uncertain about them.

If you become aware of the violation of any law, rule or regulation
by the Company, whether by its officers, employees, directors, or
any third party doing business on behalf of the Company, it is your
responsibility to promptly report the matter to your supervisor or
to the Company?s Chief Executive Officer or Chief Financial Officer.
While it is the Company?s desire to address matters internally,
nothing in this Code should discourage you from reporting any
illegal activity, including any violation of the securities laws,
antitrust laws, environmental laws or any other federal, state or
foreign law, rule or regulation, to the appropriate regulatory
authority.  Employees, officers and directors shall not discharge,
demote, suspend, threaten, harass or in any other manner discriminate
or retaliate against an employee because he or she reports any such
violation, unless it is determined that the report was made with
knowledge that it was false.  This Code should not be construed to
prohibit you from testifying, participating or otherwise assisting in
any state or federal administrative, judicial or legislative
proceeding or investigation.

Conflicts of Interest

Employees, officers and directors must act in the best interests
of the Company.  You must refrain from engaging in any activity or
having a personal interest that presents a ?conflict of interest.?
A conflict of interest occurs when your personal interest interferes,
or appears to interfere, with the interests of the Company.  A
conflict of interest can arise whenever you, as an officer, director
or employee, take action or have an interest that prevents you or
reasonably could be expected to prevent you from performing your
Company duties and responsibilities honestly, objectively and
effectively.

For example:

No employee, officer or director shall perform services as a
consultant, employee, officer, director, advisor or in any other
capacity for, or have a financial interest in, a direct competitor
of the Company, other than services performed at the request of the
Company and other than a financial interest representing less than
one percent (1%) of the outstanding shares of a publicly-held
company; and

No employee, officer or director shall use his or her position with
the Company to influence a transaction with a supplier or customer
in which such person has any personal interest, other than a
financial interest representing less than one percent (1%) of the
outstanding shares of a publicly-held company.

It is your responsibility to disclose any transaction or relationship
that reasonably could be expected to give rise to a conflict of
interest to the Company?s Chief Executive Officer or Chief Financial
Officer or, if you are an executive officer or director, to the Board
of Directors, who shall be responsible for determining whether such
transaction or relationship constitutes a conflict of interest.

Insider Trading

Employees, officers and directors who have material non-public
information about the Company or other companies, including our
suppliers and customers, as a result of their relationship with
the Company are prohibited by law and Company policy from trading
in securities of the Company or such other companies, as well as
from communicating such information to others who might trade on
the basis of that information.

If you are uncertain about the constraints on your purchase or
sale of any Company securities or the securities of any other
company that you are familiar with by virtue of your relationship
with the Company, you should consult with the Company?s Chief
Executive Officer or Chief Financial Officer before making any
such purchase or sale.

Confidentiality

Employees, officers and directors must maintain the
confidentiality of confidential information entrusted to them
by the Company or other companies, including our suppliers and
customers, except when disclosure is authorized by a supervisor
or legally mandated.  Unauthorized disclosure of any confidential
information is prohibited.  Additionally, employees should take
appropriate precautions to ensure that confidential or sensitive
business information, whether it is proprietary to the Company or
another company, is not communicated within the Company except to
employees who have a need to know such information to perform their
responsibilities for the Company.

Third parties may ask you for information concerning the Company.
Subject to the exceptions noted in the preceding paragraph,
employees, officers and directors (other than the Company?s
authorized spokespersons) must not discuss internal Company
matters with, or disseminate internal Company information to,
anyone outside the Company, except as required in the performance
 of their Company duties and after an appropriate confidentiality
agreement is in place.  This prohibition applies particularly
to inquiries concerning the Company from the media, market
professionals (such as securities analysts, institutional
investors, investment advisers, brokers and dealers) and
security holders.  All responses to inquiries on behalf of
the Company must be made only by the Company?s authorized
spokespersons.  If you receive any inquiries of this nature,
you must decline to comment and refer the inquirer to your
supervisor or one of the Company?s authorized spokespersons.

You also must abide by any lawful obligations that you have
to your former employer.  These obligations may include
restrictions on the use and disclosure of confidential
information, restrictions on the solicitation of former
colleagues to work at the Company and non-competition
obligations.

Honest and Ethical Conduct and Fair Dealing

Employees, officers and directors should endeavor to deal
honestly, ethically and fairly with the Company?s suppliers,
customers, competitors and employees.  Statements regarding the
Company?s products and services must not be untrue, misleading,
deceptive or fraudulent.  You must not take unfair advantage of
anyone through manipulation, concealment, abuse of privileged
information, misrepresentation of material facts or any other
unfair-dealing practice.

Protection and Proper Use of Corporate Assets

Employees, officers and directors should seek to protect the
Company?s assets.  Theft, carelessness and waste have a direct
impact on the Company?s financial performance.  Employees,
officers  and directors must use the Company?s assets and services
solely for legitimate business purposes of the Company and not
for any personal benefit or the personal benefit of anyone else.

Employees, officers and directors must advance the Company?s
legitimate interests when the opportunity to do so arises.
You must not take for yourself personal opportunities that
are discovered through your position with the Company or
the use of property or information of the Company.

Gifts and Gratuities

The use of Company funds or assets for gifts, gratuities or
other favors to employees or government officials is prohibited,
except to the extent such gifts are in compliance with applicable
law, insignificant in amount and not given in consideration or
expectation of any action by the recipient.

Employees, officers and directors must not accept, or permit
any member of his or her immediate family to accept, any gifts,
gratuities or other favors from any customer, supplier or other
person doing or seeking to do business with the Company, other
than items of insignificant value.  Any gifts that are not of
insignificant value should be returned immediately and reported
to your supervisor.  If immediate return is not practical, they
should be given to the Company for charitable disposition or
such other disposition as the Company, in its sole discretion,
believes appropriate.

Common sense and moderation should prevail in business
entertainment engaged in on behalf of the Company.  Employees,
officers and directors should provide, or accept, business
entertainment to or from anyone doing business with the
Company only if the entertainment is infrequent, modest
and intended to serve legitimate business goals. Bribes and
kickbacks are criminal acts, strictly prohibited by law.  You
must not offer, give, solicit or receive any form of bribe
or kickback anywhere in the world.

Accuracy of Books and Records and Public Reports

Employees, officers and directors must honestly and accurately
report all business transactions.  You are responsible for the
accuracy of your records and reports.  Accurate information is
essential to the Company?s ability to meet legal and regulatory
obligations.

All Company books, records and accounts shall be maintained in
accordance with all applicable regulations and standards and
accurately reflect the true nature of the transactions they record.
The financial statements of the Company shall conform to generally
accepted accounting rules and the Company?s accounting policies.
No undisclosed or unrecorded account or fund shall be established
for any purpose.  No false or misleading entries shall be made in
the Company?s books or records for any reason, and no disbursement
of corporate funds or other corporate property shall be made
without adequate supporting documentation.

It is the policy of the Company to provide full, fair,
accurate, timely and understandable disclosure in reports
and documents filed with, or submitted to, the Securities
and Exchange Commission and in other public communications.

Concerns Regarding Accounting or Auditing Matters

Employees with concerns regarding questionable accounting or
auditing matters or complaints regarding accounting, internal
accounting controls or auditing matters may confidentially, and
anonymously if they wish, submit such concerns or complaints in
writing to the Company?s Chief Executive Officer or Chief
Financial Officer at the Company?s principal executive offices
or may use the telephone number 609-987-1513.  All such concerns
and complaints will be forwarded to the Audit Committee of the
Board of Directors, unless they are determined to be without
merit by the Chief Executive Officer and Chief Financial Officer
of the Company.  In any event, a record of all complaints and
concerns received will be provided to the Audit Committee each
fiscal quarter.  Any such concerns or complaints may also be
communicated, confidentially and, if you desire, anonymously,
directly to any member of the Audit Committee of the Board of
Directors.

The Audit Committee will evaluate the merits of any concerns or
complaints received by it and authorize such follow-up actions,
if any, as it deems necessary or appropriate to address the
substance of the concern or complaint.

The Company will not discipline, discriminate against or
retaliate against any employee who reports a complaint or
concern, unless it is determined that the report was made
with knowledge that it was false.

Dealings with Independent Auditors

No employee, officer or director shall, directly or indirectly,
make or cause to be made a materially false or misleading
statement to an accountant in connection with (or omit to state,
or cause another person to omit to state, any material fact
necessary in order to make statements made, in light of the
circumstances under which such statements were made, not
misleading to, an accountant in connection with) any audit,
review or examination of the Company?s financial statements
or the preparation or filing of any document or report with
the SEC.  No employee, officer or director shall, directly or
indirectly, take any action to coerce, manipulate, mislead or
fraudulently influence any independent public or certified
public accountant engaged in the performance of an audit or
review of the Company?s financial statement.

Waivers of this Code of Business Conduct and Ethics

While some of the policies contained in this Code must be strictly
adhered to and no exceptions can be allowed, in other cases
exceptions may be appropriate.  Any employee or officer who
believes that an exception to any of these policies is appropriate
in his or her case should first contact his or her immediate
supervisor.  If the supervisor agrees that an exception is
appropriate, the approval of the Company?s Chief Executive
Officer must be obtained.  The Chief Executive Officer shall be
responsible for maintaining a record of all requests for
exceptions to any of these policies and the disposition of such
requests.

Any executive officer or director who seeks an exception to any
of these policies should contact the Chairman of the Board of
Directors of the Company.  Any waiver of this Code for executive
officers or directors or any change to this Code that applies to
executive officers or directors may be made only by the Board of
Directors of the Company and will be disclosed as required by
law or stock market regulation.

Reporting and Compliance Procedures

Every employee, officer and director has the responsibility to
ask questions, seek guidance, report suspected violations and
express concerns regarding compliance with this Code.  Any employee,
officer or director who knows or believes that any other employee
or representative of the Company has engaged or is engaging in
Company-related conduct that violates applicable law or this
Code should report such information to his or her supervisor
or to the Company?s Chief Executive Officer or Chief Financial
Officer, as described below.  You may report such conduct openly
or anonymously without fear of retaliation.  The Company will not
discipline, discriminate against or retaliate against any employee
who reports such conduct, unless it is determined that the report was
made with knowledge that it was false, or who cooperates in any
investigation or inquiry regarding such conduct.  Any supervisor who
receives a report of a violation of this Code must immediately inform
the Company?s Chief Executive Officer or Chief Financial Officer.

You may report violations of this Code, on a confidential or anonymous
basis, by contacting the Company?s Chief Executive Officer or Chief
Financial Officer by fax, mail or e-mail at:  707 Alexander Road,
Bldg 2, Suite 208, Princeton, New Jersey 08543, fax #609-987-8114 or
email to tmeaney@mikros.us.  In addition, the Company has established
a  telephone number 609-987-1513 where you can leave a recorded
message about any violation or suspected violation of this Code.
While we prefer that you identify yourself when reporting violations
so that we may follow up with you, as necessary, for additional
information, you may leave messages anonymously if you wish.

If the Company?s Chief Executive Officer or Chief Financial Officer
receives information regarding an alleged violation of this Code,
he or she shall, as appropriate, (a) evaluate such information, (b)
if the alleged violation involves an executive officer or a director,
inform the Chief Executive Officer and Board of Directors of the
alleged violation, (c) determine whether it is necessary to conduct
an informal inquiry or a formal investigation and, if so, initiate
such inquiry or investigation and (d) report the results of any such
inquiry or investigation, together with a recommendation as to
disposition of the matter, to the Company?s Chief Executive Officer
or Chief Financial Officer for action, or if the alleged violation
involves an executive officer or a director, report the results of
any such inquiry or investigation to the Board of Directors or a
committee thereof.  Employees, officers and directors are expected
to cooperate fully with any inquiry or investigation by the Company
regarding an alleged violation of this Code.  Failure to cooperate
with any such inquiry or investigation may result in disciplinary
action, up to and including discharge.

The Company shall determine whether violations of this Code have
occurred and, if so, shall determine the disciplinary measures to
be taken against any employee who has violated this Code.  In the
event that the alleged violation involves an executive officer or a
director, the Chief Executive Officer and the Board of Directors,
respectively, shall determine whether a violation of this Code
has occurred and, if so, shall determine the disciplinary measures
to be taken against such executive officer or director.

Failure to comply with the standards outlined in this Code will
result in disciplinary action including, but not limited to,
reprimands, warnings, probation or suspension without pay,
demotions, reductions in salary, discharge and restitution.
Certain violations of this Code may require the Company to
refer the matter to the appropriate governmental or regulatory
authorities for investigation or prosecution.  Moreover, any
supervisor who directs or approves of any conduct in violation
of this Code, or who has knowledge of such conduct and does not
immediately report it, also will be subject to disciplinary action,
up to and including discharge.



Dissemination and Amendment

This Code shall be distributed to each new employee, officer
and director of the Company upon commencement of his or her
employment or other relationship with the Company and shall
also be distributed annually to each employee, officer and director
of the Company, and each employee, officer and director shall
certify that he or she has received, read and understood the
Code and has complied with its terms.

The Company reserves the right to amend, alter or terminate this
Code at any time for any reason.  The most current version of
this Code can be found on the Company?s  website at www.mikros.us.
This document is not an employment contract between the Company
and any of its employees, officers or directors.




Certification

I, ______________________________ do hereby certify that:
     (Print Name Above)
1.	I have received and carefully read the Code of Business Conduct
and Ethics of Mikros Systems Corporation.

2.	I understand the Code of Business Conduct and Ethics.

3.	I have complied and will continue to comply with the terms of the
Code of Business Conduct and Ethics.


Date:  _____________________		__________________________________
								(Signature)

EACH EMPLOYEE, OFFICER AND DIRECTOR IS REQUIRED TO SIGN, DATE
AND RETURN THIS CERTIFICATION TO THE HUMAN RESOURCES DEPARTMENT
WITHIN FIVE (5) DAYS OF ISSUANCE.  FAILURE TO DO SO MAY RESULT
IN DISCIPLINARY ACTION.



									Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Meaney, certify that:

1. 	I have reviewed this quarterly report on Form 10-QSB of Mikros
Systems Corporation;

2. 	Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. 	Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the small business issuer as of, and
for, the periods presented in this report;

4. 	I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) for the small business issuer and have:

(a)	designed such disclosure controls and procedures, or caused
such disclosure  controls and procedures to be designed
under my supervision,  to ensure that material information
relating to the small business issuer, including its
consolidated subsidiaries, is made known to me by others
within those entities, particularly during the period in
which this report is being prepared;

(b)	[Paragraph omitted in accordance with SEC transition
instructions contained in SEC Release 34-47986]


(c)	evaluated the effectiveness of the small business issuer?s
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
       and



(d)	disclosed in this report any change in the small business
issuer?s internal control over financial reporting that
occurred during the small business issuer?s most recent
fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the small
business issuer?s internal control over financial
reporting; and

5. 	I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the small business issuer?s
auditors and the audit committee of the small business issuer?s
board of directors (or persons performing the equivalent
functions):

(a)	all significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the small business issuer?s ability to record, process,
summarize and report financial information; and

(b)	any fraud, whether or not material, that involves
management or other employees  who have a significant role
in the small business issuer?s internal control over
financial reporting.



	Dated:  August 11, 2006        s/ Thomas J. Meaney__________
                                     Thomas J. Meaney, Chief
						 Executive Officer and Chief
						 Financial Officer
						(Principal Executive Officer and
						 Principal Financial Officer)


								EXHIBIT 32.1


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


	In connection with the Quarterly Report on Form 10-QSB of Mikros
Systems Corporation (the ?Company?) for the quarter ended June 30, 2006
as filed with the Securities and Exchange Commission on the date hereof
(the ?Report?), the undersigned, Thomas J. Meaney, President of the
Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) 	The Report fully complies with the requirements of Section 13(a)
       or 15(d) of the Securities Exchange Act of 1934; and

(2) 	The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.

Dated:  August 11, 2006			/s/ Thomas J. Meaney *
                                    Thomas J. Meaney, President,
						Chief Executive Officer and Chief
						Financial Officer
						(Principal Executive Officer and
						 Principal Officer)


*A signed original of this written statement required by Section 906
has been provided to the Company and will be retained by the Company
and furnished to the Securities and Exchange Commission or its staff
upon request.