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:  June 30, 1999    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. [x]Yes [ ]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                                  June 30, 1999
----------------------------                     ----------------
COMMON STOCK, PAR VALUE $.01                     28,588,963 SHARES

















                      MIKROS SYSTEMS CORPORATION
                           TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION                                 Page #

   ITEM I - FINANCIAL STATEMENTS

   Balance Sheets at June 30, 1999 and December 31, 1998
   (Unaudited)................................................. 1

   Statements of Operations for the Three Months Ended and the
   Six Months Ended June 30, 1999 and 1998 (Unaudited)......... 3

   Statements of Shareholders' Equity for the Years ended
   1997 and 1998 and Six Months Ended June 30, 1999
   (Unaudited)................................................. 4

   Statements of Cash Flows for the Three Months Ended and
   the Six Months ended June 30, 1999 and 1998 (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



                      MIKROS SYSTEMS CORPORATION
                            BALANCE SHEETS
                              (UNAUDITED)


                                      JUNE 30,    DECEMBER 31,
          ASSETS                       1999           1998
------------------------------    ------------    ------------

CURRENT ASSETS
  Cash                            $   57,981      $  100,983

  Accounts Receivable
    Government                       -            -
    Trade                           -         22,023

  Prepaid Engineering Services             -         234,722
  Other Current Assets                 3,646           7,148
                                  ------------    ------------

TOTAL CURRENT ASSETS                  61,627         364,876
                                  ------------    ------------



EQUIPMENT                             71,170          71,170

  Less:  Accumulated Depreciation     46,080          36,080
                                  ------------    ------------
EQUIPMENT, NET                        25,090          35,090
                                  ------------    ------------

PATENT COST, NET                      28,571          29,648
                                  ------------    ------------

TOTAL ASSETS                      $  115,288      $  429,614
                                  ============    ============

                   See Notes to Financial Statements















                      MIKROS SYSTEMS CORPORATION
                            BALANCE SHEETS
                              (UNAUDITED)

                                                     JUNE 30,    DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' DEFICIENCY              1999          1998
-----------------------------------------         -----------   ------------
CURRENT LIABILITIES
  Accounts Payable                                 $   44,291       $ 69,173
  Notes Payable
    Related Parties                                    72,500         72,500
    Other                                              35,000        105,000
  Obligations under Capital Leases                     26,063         26,063
  Accrued Payroll and Payroll Taxes                    25,980         25,932
  Accrued Expenses                                    154,211         48,220
  Deferred Contract Credits                       -        234,722
  Advance from Mobile Broadcasting                     70,741              -
  Other Customer Advances                              15,000         15,000
                                                    ------------   ------------
TOTAL LIABILITIES                                     443,786        596,610
                                                    ------------   ------------

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 60,000,000 shares, issued and
  outstanding 27,422,296 shares in 1998 and
  28,588,963 in 1999                                  285,890        274,223

  Preferred Stock, convertible,
  par value $.01 per share, authorized 2,000,000
  shares, issued and outstanding 255,000 shares
  in 1999 and 1998                                      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 1999 and 1998    11,316         11,316

  Preferred Stock, Series D, par value $.01 per
  share, 690,000 shares authorized, issued and
  outstanding in 1999 and 1998                          6,900          6,900

  Capital in excess of par                         11,005,252     10,946,919

  Accumulated deficit                             (11,720,856)   (11,489,354)
                                                  ------------   ------------

TOTAL SHAREHOLDERS' DEFICIENCY                    (   408,948)   (   247,446)
                                                  ------------   ------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY     $  115,288     $  429,614
                                                  ============   ============

                        See Notes to Financial Statements

<PAGE>
<PAGE>
                    MIKROS SYSTEMS CORPORATION
                     STATEMENTS OF OPERATIONS
                           (UNAUDITED)

                         Three Months Ended,           Six Months Ended
                     June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998

Revenues:
 Equipment Sales      $         -    $           -    $         -    $   333,592
 Contract Research and
   Development                  -                -              -         46,874
 Royalties                 12,743            4,177         18,393          4,177
                      -----------      ------------     ----------   -------
 Total Revenues            12,743            4,177         18,393        384,643

Cost of Sales:
  Equipment Sales               -            4,169              -        321,787
  Contract Research
    and Development         4,509            2,515          9,009         44,429
                      ----------      -----------      ----------     ----------
Total Cost of Sales         4,509            6,684          9,009   366,216

Gross Margin                8,234           (2,507)          9,384   18,427

Expenses:
 Research &
  Development             180,786          229,419        400,547        327,966
General & Admin.           37,199           75,684         77,135        219,654
Interest                        -           16,670              -         49,101
                    -----------      -----------     ----------     ------------
Total Operating Expenses  217,985          321,773        477,682        596,721
                 -----------      -----------      ----------     ------------
Net Loss before
  Extraordinary Items    (209,751)        (324,280)     (468,298) (578,294)

Gain on the Sale of
  Government Contracts      14,961        763,955        234,722        763,955
Gain on Settlment of
  Accounts Payable Debt         -          286,640          2,074        286,640
                    --------      -----------     -----------    ------------
Net Loss               $ (194,790)      $  726,315      $(231,502)   $   472,301
                  ============      ==========      ==========    ============

Basic Loss per share    (0.01)           (0.02)         (0.02)          (0.04)
Basic Income per share
  - Extraordinary        0.00             0.08           0.01            0.08
                    ----------      -----------     ----------    ------------
Basic Loss per share $    (0.01)            0.05          (0.01)        0.04
                       ============      ==========     ========== ===========
Weighted average number of
 shares outstanding    28,588,963        13,451,452     28,092,646  13,451,452
                       ===========       ===========    =========== ==========
                    See Notes to Financial Statements

<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, 199611,846,952 $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

Year Ended December 31, 1998:
Issuance of Common Stock        800,000    8,000
Conversion of Secured Debt   13,170,844  131,708
Net Income
                        ----------  -------  --------- -------  --------- ------
Balance-December 31, 1998  27,422,296 274,223 255,000   2,550  1,131,663  11,316
Six Months Ended
   June 30, 1999
Conversion of Secured Debt    1,166,667   11,667
Net Loss
                       ---------  -------  ---------  --------  ---------  -----
Balance June 30, 1999 28,588,963 $285,890    255,000  $2,550  1,131,663 $11,316
                      ========== ======= ======== ======== =========  =======

                            Preferred
                               Stock D                  Capital
                              $.01 PAR                in excess      Accumulated
                                VALUE                    of Par         Deficit
                              ---------    -------    ------------    ----------
                                             PAR
                               SHARES       VALUE
                              ---------    -------    ------------    ----------
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)

Year Ended December 31, 1998:
Issuance of Common Stock                                     40,000
Conversion of Secured Debt                                  658,541
Net Income                                                           393,839
                                  ---------  -------    -----------  -----------
Balance-December 31, 1998         690,000     6,900      10,946,919 (11,489,354)
Six Months Ended
  June 30, 1999
Conversion of Secured Debt                               58,333
Net Loss                                                (231,502)
                                  ---------  -------    ------------   --------
Balance June 30, 1999             690,000   $ 6,900 $(11,005,252)  $(11,720,856)
                                  ========    =====      ==========    =========
</TABLE>                        See Notes to Financial Statements
<PAGE>
                    MIKROS SYSTEMS CORPORATION
                     STATEMENTS OF CASH FLOWS
                           (UNAUDITED)

                               The Three Months Ended  Six Months Ended
                      June 30, 1999  June 30, 1998  June 30, 1999 June 30, 1998
                     --------------   -------------- ------------ -------------
Cash Flows Provided (Used) by Operating
 Activities:
  Net Income (Loss)   $(194,790)        $ 726,315      $ (231,502)   $ 472,301

Adjustments to reconcile Net Loss
 to Net Cash Provided (Used) by Operating
 Activities:
  Gain from  Sale of Defense Contracts,
    net of Engineering Credit and
    Equipment sold           -          (575,662)           -        (575,662)

  Settlement of Accounts Payable  -     (286,640)      (2,074)       (286,640)
  Depreciation and Amortization 5,539      2,344       11,078           4,689

Net Changes in Operating Assets and
 Liabilities:

   Accounts Receivable        15,233      50,140       22,023        450,807
   Unbilled Receivables           -            -            -          3,837
   Inventories                    -            -            -          5,293
   Other Current Assets        8,968       3,639        3,501          3,290
   Other Assets                   -          (1)            -           (381)
 Increase (Decrease) in:
   Accounts Payable           (4,841)   (249,375)     (22,808)      (273,300)
   Accrued Payroll and Payroll (1,128)   (12,821)          48         (2,905)
      Taxes
   Unliquidated Progress Billings and
     Other Customer Advances   70,741          -        70,741       (107,849)
   Other Liabilities and Interest 137,694 (72,556)     105,991        (75,728)
                             ---------   ---------    --------       ---------
 Net Cash Provided (Used) by   37,416    (414,617)    (43,002)       (382,248)
     Operations
 Cash Flows Provided by Investing
 Activities:
   Sale of Government Contracts     -     600,000           -         600,000
                              ---------  ----------   ---------      ----------
Net Cash Provided (Used) by Financing
 Activities:
   Repayment of Debt                -      (2,325)           -         (4,650)
                              ---------  ----------   ----------     ----------

Net Increase (Decrease) in Cash  37,416    183,058      (43,002)       213,102
Cash at Beginning of Period      20,565    115,636      100,983         85,592
                              ---------   --------    ----------     ----------
Cash at End of Period         $  57,981 $  298,694       57,981      $ 298,694
                             ========== ============ =============   ==========
Supplemental disclosure of cash flow
 information:
 Cash paid for interest      $       -  $     63,165  $      -      $  63,684
                              ========== ============= =============  =========
Supplemental disclosure of non-cash
 information:
  Credit for Engineering Services from
    Sale of Government       $       -  $  1,000,000   $     -      $1,000,000
      Contracts
    Engineering Services     $  14,961  $    229,419   $    234,722    229,419
      Utilized
    Stock Issued from Conversion of
      Secured Debt           $       -  $          -   $     70,000   $     -


               See Notes to Financial Statements

<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 utilized
substantial amounts of working capital in its operations. Further, at
June 30, 1999, its current liabilities exceed its current assets by $382,159 and
at December 31, 1998 exceeded its current assets by $231,734 .

As shown in the accompanying financial statements, the Company recorded a net
operating loss before extraordinary items of $209,751 for the quarter ended
June 30, 1999, and as of June 30, 1999 a year to date net operating loss of
$468,298. The net loss after extraordinary gains was $194,790 and $231,502 for
the quarter and year to date as of June 30, 1999, respectively. As of
June 30, 1999, the Company had an accumulated deficit of $11,720,856.

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 obtain
financing 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.

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 1998 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 June 30, 1999, the changes in deficiency in assets, and the
results of operations, and cash flows for the six-month periods ended
June 30, 1999 and 1998.


The results disclosed in the Statements of Operations for the six months
ended June 30, 1999 are not necessarily indicative of the results to be
expected for the full year.






NOTE B - NOTES AND LOANS PAYABLE
--------------------------------

1) Outstanding Debt is summarized as follows:

                                            06/30/99      12/31/98
                                            --------      --------
  Related Parties                             72,500        72,500
  Other Notes Payable                         35,000       105,000
                                            --------      --------
           Total                            $105,500      $177,500
                                            ========      ========

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 $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 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.

During 1998, the Company paid the investors all of the interest accrued on
promissory notes payable through May 15, 1998. No additional interest accrued
after that date. At that time, it offered to convert the notes at face value to
 stock valued at $.06 per share in order to restructure its debt. Most of the
investors elected to convert. As a result, 8,504,177 shares of common stock
were issued. Three of its investors (not related parties) chose not to convert
notes totalling $105,000.

In February 1999, two of the remaining three investors converted their debt,
totalling $70,000, under the same terms as debt exchanged in 1998. As a result,
1,166,167 shares were issued in March, 1999. There is one remaining investor
(not related party) who has not converted as of June 30, 1999. The note is
included in Notes Payable.

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 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 was paid for the development of the AM
technology.  3D owns 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 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.

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 at 14% per annum on the unpaid principal balance was 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.

During 1998, the Company paid the investors all of the interest accrued on these
payable notes through May 15, 1998. At that time, it offered to convert the
notes at face value to stock valued at $.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 totalled $62,500. This amount is included
in Notes Payable as of June 30, 1999.

The Company ceased accruing interest on the remaining debt as of May 15, 1998.
  
<PAGE>
<PAGE>
Part I. Item II.


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

REVENUE
-------
Total revenues were $12,743 for the quarter ended June 30, 1999 and $18,393 for
the six months ended June 30, 1999 compared to $4,177 for the quarter ended
June 30, 1998 and $384,643 for the six months ended June 30, 1998.

The 1999 revenues are related to royalties earned pursuant to the Company's
divestiture of its military contracts. The year to date royalty
revenues of $18,393 represents 100% of the Company's 1999 revenue versus $4,177
or 1.1% in 1998.

In 1999, there were no revenues from equipment sales. In 1998, revenues from
equipment sales were $333,592 or 86.7% of total year to date revenue revenue.
The 1998 equipment revenues represent the final revenues on the Company s
government contracts.

In 1999, there were no revenues research and development contracts. There
were no Research and development revenues for the second quarter of 1998,
although there were $46,874 or 12.2% year to date as of june 30, 1998. 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 June 30, 1999 was $4,509 or 39.3% of
total revenues compared to $6,684 or 1.60% of total revenue for the quarter
ended June 30, 1998. Year to date as of June 30, 1999 total Cost of Sales was
$9,009 or 49.0% of total revenues compared to $366,216 or 95.3% of total
revenue  year to date. There were $0 Equipment Cost of Sales was $0 for the
second quarter and year to date 1999, compared to $4,169 in the second quarter
and $321,787 year to date as of June 30, 1998. Cost of Sales for Contract R & D
was $4,509 for the quarter and $9,009 year to date as of June 30, 1999,
compared to $2,515 for the quarter and $44,429 as of June 30, 1998,
respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
Selling, General and Administrative expenses for the quarter ended June 30,
1999 was $37,199 versus $75,684 in the quarter ended June 30, 1998, a decrease
 of $38,485 or 50.8%.  This decrease is due mainly to downsizing into 1998.

INTEREST EXPENSE
----------------
No interest expense was recorded during the second quarter of 1999. Interest
expense was $16,670 in the quarter ended June 30, 1998. Year to date, no
interest has been recorded in 1999. As of June 30, 1998, interest expense
equaled $44,429.

NET LOSS
--------
Net loss for the six months ended June 30, 1999 was $231,502 versus net income
of $472,301 for the same period in 1998. Net loss for the quarter ended June
30, 1999 was $209,751 versus net income of of $726,315 for the same quarter in
1998. Although the level of total revenues is lower in 1999, the loss is not
proportionate to the
<PAGE>
change in revenues due to the extraordinary gains recorded during the second
quarter of 1998.

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.

Year to date as of June 30, 1999, the Company had negative cash flow from
operations of approximately $43,000. This compares to negative cash flow from
operations of approximately $382,000 for the six months ended June 30, 1998.
There was negative working capital of approximately $382,000 as of June 30, 1999
as compared to negative working capital of approximately $1,015,000 as of
June 30, 1998.

As of June  30, 1999, the Company could not meet its remaining principal
repayment obligations under the 1996 Financing and the 1992-93 Financing. The
Company has ceased accruing interest on its notes payable as of May 15, 1998.
Management is attempting to finalize the restructuring of its remaining note
obligations with one related party and other note holders.

A substantial portion of the Company s costs and expenses is represented by
 labor, related benefits and subcontractors.  From January 1, 1998 to the
present, the Company decreased its number of employees from 19 to 2.

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 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 raises 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.

Based upon the foregoing there is a sufficient risk that the Company will not
 be able to continue as a going concern.

The Company anticipates that its existing working capital will be sufficient to
 fund the Company's operations through the end of 1999.

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PART II OTHER INFORMATION

Year 2000 Compliance
--------------------

Assessment.  The Company believes that its exposure to Year 2000 problems lies
primarily in three areas:  (i) its internal operating systems; (ii) Year 2000
compliance of any products sold to customers; and (iii) non-compliance of third
parties with whom the Company has material relationships.  The Company has
completed its assessment with respect to its internal operating systems.  The
Company continues to evaluate its exposure with respect to its products sold to
customers and its relationships with third parties.

Internal Operating Systems.  The Company believes its internal accounting system
 are not currently Year 2000 compliant,  The Company does not believe that
there  will be future significant costs related to upgrading or replacing
such accounting system. Products Sold to Customers.  The Company is continuing
to analyze the extent to which any products sold to customers are not Year
2000 compliant.  The Company does not believe any required remediation will be
significant or will materially adversely affect the Company's financial
condition and results of operations.

Third Party Relationships.  The Company is dependent on third party service
providers and partners such as telephone companies, banks, insurance carriers,
auditors and marketing partners.  The failure of such third parties to deliver
Year 2000 compliant products or to remediate their internal systems could
jeopardize the Company's ability to meet its obligations to its customers.
As a result, the Company is presently conducting inquiries of its outside
vendors, suppliers, service providers and marketing partners to identify and
resolve Year 2000 exposure from third parties. Upon completion of the
foregoing,  the Company will be able to assess such exposure and financial
impact, if any, should such parties fail to be Year 2000 compliant.

Risks of Year 2000 Issues.  The Company expects to identify and resolve all
Year 2000 problems that could materially adversely affect its business,
financial condition or results of operations.  However, the Company believes
that it is not possible to determine with complete certainty that all Year 2000
problems affecting the Company have been identified or corrected.  Further, the
Company cannot accurately predict how many failures related to the Year 2000
Problem will occur or the severity, duration or financial consequences of such
failures.

Additionally, the Company cannot guarantee that its products will not be
integrated by customers or interact with non-compliant software or other
products which may expose the Company to claims from its customers.

Costs.  Other than time spent by the Company's personnel, the costs associated
with remediating non-compliant products and assessing Year 2000 compliance
issues have not been significant to date.  The Company believes that the
continued analysis of compliance of products and evaluation of potential Year
2000 problems will not result in material expenditures.

Contingency Plans.  The Company believes its plans for addressing the Year 2000
Problem are adequate. The Company does not believe it will incur a material
financial impact from system failures, or from the costs associated with
assessing the risks of failure, arising from the Year 2000 Problem.
Consequently, the Company does not intend to create a detailed contingency
plan.   In the event that the Company does not adequately identify and resolve
its Year 2000 issues, the absence of a detailed contingency plan may materially
adversely affect the Company's business, financial condition and results of
operations.

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

a)   Exhibits.   None.
b)    Reports on Form 8-K.
c)   No reports on Form 8-K have been filed during the quarter for which
     this report is filed.
<PAGE>
                                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:  August 16, 1999

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

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