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 September 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 November 10, 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 September 30, 2006			 3

    	CONDENSED STATEMENTS OF OPERATIONS
	For the Three Months Ended and Nine
        Months Ended September 30, 2006 and 2005 5

	CONDENSED STATEMENTS OF CASH FLOWS
	For the Nine Months Ended September 30,
        2006 and 2005				      6

	NOTES TO THE CONDENSED FINANCIAL
       STATEMENTS					 	7

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

        Overview					      12

	  Results of Operations				14

	  Liquidity and Capital Resources		16

 Item 3. Controls and Procedures                17

PART II.  OTHER INFORMATION

	   Item 6.  Exhibits			      18

	   SIGNATURES					19

         CERTIFICATIONS					20



PART I.  Financial Information

Item 1. Condensed Financial Statements

MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)

				              September 30,
ASSETS				          2006
------ 			             --------

CURRENT ASSETS

  Cash					$ 181,679
  Receivables on Government
      Contracts                 	  168,452
  Other Current Assets		         23,950
					       --------
  TOTAL CURRENT ASSETS		        374,081
   					       --------

FIXED ASSETS

  EQUIPMENT				   	   13,114
    Less: Accumulated Depreciation     (4,901)
					       --------
FIXED ASSETS, NET			          8,213
				             --------

OTHER ASSETS

   Deferred Tax Asset			   64,800

   Patents					    7,488
     Less: Accumulated Amortization    (6,280)
                                     --------
   Patents, Net                         1,208
                                     --------

TOTAL OTHER ASSETS			   66,008
                                     --------

TOTAL ASSETS		  	 	$ 448,302
                                    =========


  See Accompanying Notes to Condensed Financial Statements.





MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET (UNAUDITED)

                                                September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY              2006
						           ---------
CURRENT LIABILITIES
  Accrued Payroll and Payroll Taxes		      $  70,320
  Accrued Expenses				          7,860
  Accounts Payable				         78,991
                                                ---------
TOTAL CURRENT LIABILITIES                         157,171

  Accrued Expenses                                 16,269
                                                ---------
TOTAL LIABILITIES						  173,440
                                                ---------
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                         (11,566,706)
                                               -----------
TOTAL SHAREHOLDERS' EQUITY                        194,412
                                               -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $ 448,302
                                               ===========
See Accompanying Notes to Condensed Financial Statements.


                        MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

		          Three Months Ended,        Nine Months Ended,
                 Sept. 30, 2006 Sept. 30, 2005  Sept. 30, 2006 Sept. 30, 2005
                 -------------  -------------  -------------  ---------------

Revenues:

   Contract Revenue    $  626,290	 $   444,970     $ 1,576,283    $1,236,679

   Cost of Sales	      365,936     276,114         939,865       748,759
                      ------------   -----------    -----------   -----------
Gross Margin	            260,354      168,856         636,418       487,920
                      ------------   -----------    -----------   -----------

Expenses:

  Engineering		      56,440       44,530          155,983       92,663
  General &
    Administrative       128,625       96,710          374,721      293,363
                      ------------   -----------    -----------   -----------
      185,065      141,240          530,704      386,026

Income from
  Operations              75,289       27,616          105,714      101,894

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

Net Income Before
  Income Tax Expense      75,289       27,616          105,999      101,894

Income Tax Expense
  (Benefit)		      (2,800)          0             9,200           0
-----------   -----------

Net Income            $   78,089   $   27,616     $     96,799    $ 101,894
                      ============   ===========    ===========   ===========

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)

                                              Nine Months Ended
                                       Sept. 30, 2006   Sept. 30, 2005
                                       -------------   ----------------
Cash Flow From Operating Activities:
   Net Income                            $    96,799	   $   101,894
Adjustments to reconcile Net Income
   to net cash provided (used in) by
   Operating Activities:
   Depreciation and Amortization	           7,581           1,013
   Deferred Tax Provision           	       200               0
   Net Changes in Operating Assets and
   Liabilities
   (Increase) Decrease in:
   Accounts Receivable			         (66,093)        (64,016)
   Other Current Assets			          (7,057)        (18,546)
   Increase (Decrease) in:
   Accounts Payable  			          20,820          68,406
   Accrued Payroll and Payroll Taxes	    19,882            (447)
   Accrued Expenses	       	           3,141 	   	 (93,554)
                                            ---------       ---------
 Net Cash provided by (used in)
    Operating Activities                      75,273 	        (5,250)
                                             ---------	---------
 Cash Flow from Investing Activities:
     Purchase of Equipment			    (1,590)		  (3,041)
     Costs associated with Patent Development (2,158)              0
                                             ---------      ---------
 Net Cash used in Investing Activities        (3,748)         (3,041)
                                             ---------      ---------

 Net Increase (Decrease) in Cash	          71,525          (8,291)
 Cash, beginning of the period               110,154          93,723
                                             ---------      ---------
 Cash, end of period           	    $    181,679 	   $    85,432
                                             ========= 	=========



See Accompanying Notes to Condensed Financial Statements.





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


Note 1 ? Basis of Presentation:

The financial statements included herein have been prepared
by Mikros Systems Corporation (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 September 30, 2006 and the results of its operations and
its cash flows for the three and nine months ended September 30, 2006.

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

Note 2 ? Shareholders? 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 September 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.


Note 3  Earnings Per Share

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


			      Three Months Ended           Nine Months Ended
                   Sept. 30, 2006 Sept. 30, 2005  Sept. 30, 2006 Sept. 30, 2005


Net income
  applicable to
  common stockholders $  78,089   $    27,616        $  96,799     $ 101,894
433:    ===========  =============   =============  =============

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

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

Effect of dilutive
 options                 120,437        58,947           124,843        46,666
                    ------------   -------------   --------------  ------------
Average diluted shares
  outstanding         35,449,489    35,387,999        35,453,895    35,375,718
446:   ============   =============   ==============  ============

Earnings per common
share, basic and
diluted		   $    0.00   $     0.00        $     0.00     $     0.00
                    ============   =============   ==============  ============

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 three and nine months ended
September 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 and nine months ended
September 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.  Management is currently evaluating the
impact of adopting FIN 48 on the financial statements.

In September 2006, the FASB issued Statement No. 157, Fair Value
Measurements, which defines fair value, establishes a framework for
measuring fair value under GAAP, and expands disclosures about fair
value measurements.  FASB Statement No. 157 applies to other accounting
pronouncements that require or permit fair value measurements.  The new
guidance is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and for interim periods within those
fiscal years.  We are currently evaluating the potential impact, if
any, of the adoption of FASB Statement No. 157 on our consolidated
financial position, results of operations and cash flows.

On September 13, 2006, the Securities and Exchange Commission ?SEC?
issued Staff Accounting Bulleting No. 108 (?SAB 108?).  SAB 108
provides interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in
quantifying a potential current year misstatement.  Prior to SAB 108,
companies might evaluate the materiality of financial statement
misstatements using either the income statement or balance sheet
approach, with the income statement approach focusing on new
misstatements added in the current year, and the balance sheet approach
focusing on the cumulative amount of misstatement present in a
company?s balance sheet.  Misstatements that would be material under
one approach could be viewed as immaterial under another approach, and
not be corrected.  SAB 108 now requires that companies view financial
statement misstatements as material if they are material according to
either the income statement or balance sheet approach.  The Company has
analyzed SAB 108 and determined that upon adoption it will have no
impact on the reported results of operations or financial condition.

In September 2006, the FASB Staff Position AUG AIR-1, ?Accounting for
Planned Major Maintenance Activities? which is effective for fiscal
years beginning after December 15, 2006.  This position statement
eliminates the accrue-in-advance method of accounting for planned major
maintenance activities.  We do not expect this pronouncement to have a
significant impact on the determination or reporting of our financial
results.

Note 5 - Income Tax Matters

We currently conduct an on-going analysis to review the valuation
allowance that we have recorded against our deferred tax assets.  As a
result of better than anticipated operating results on our existing
contracts, we reduced this valuation allowance by $21,800 during the
quarter ended September 30, 2006.



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.
Shipboard testing is scheduled for November 2006, and more
comprehensive, land-based, controlled testing is scheduled for December
2006 at the newly opened SPY-1A test facility at Lockheed Martin
Corporation?s Moorestown, New Jersey facility.  Mikros is currently in
the process of developing a smaller, lighter version of ADEPT? for
applications where weight and size are critical factors.

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.

In September 2006, in support of the RWSE contract, personnel from
Mikros were dispatched to the USS George Washington (CVN-73) to perform
a survey of wireless infrastructure on board.  A survey team from
Mikros went aboard the USS George Washington and used special purpose
test equipment and software to evaluate the introduction of wireless
data networks and the interactions between wireless networks and
existing ship systems.

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 our products, the trends favoring the
use of our proposed commercial products, the anticipated demand for our
new products, the timing of development and implementation of our new
product offerings, the utilization of such products by our clients and
trends in future operating performance, and other factors not within
our control.  The factors discussed herein and expressed from time to
time in our 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
we undertake 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.  Except as set forth in this Quarterly Report on Form 10-QSB, as
of September 30, 2006, there have been no changes to such critical
accounting policies and estimates.

We currently conduct an on-going analysis to review the valuation
allowance that we have recorded against our deferred tax assets.  As a
result of better than anticipated operating results on our existing
contracts, we reduced this valuation allowance by $21,800 during the
quarter ended September 30, 2006.

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. 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 September 30, 2006 and 2005

There were revenues of $626,290 for the third quarter ended September
30, 2006 compared to $444,970 for the same period in 2005 and
there were cost of sales of $365,936 for the quarter ended
September 30, 2006 compared to $276,114 for the same period in 2005.
These increases are attributable primarily to increased
subcontractors? costs and higher direct charges incurred on the
SBIR Phase III contract and direct charges on the SBIR Phase II (RWSE)
contract which was awarded on May 1, 2006.

Engineering costs for the quarter ended September 30, 2006
were $56,440 compared to $44,530 in the quarter ended September
30, 2005. There were higher engineering costs for the quarter ended
September 30, 2006 due to increased salary expenses to the hiring of
additional engineering staff and costs related to our research and
development engineering office.

General and administrative expenses for the quarter ended
September 30, 2006 were $130,775 compared to $96,710 in the quarter
ended September 30, 2005.  This increase was due to higher costs
incurred for salaries and related costs in connection with the
Company?s bid and proposal efforts.

For the three months ended September 30, 2006, income tax benefit was
$2,800 compared to $0 for the same period in 2005. The deferred tax
benefit for the three months ended September 30, 2006 was $21,800 due
to a reduction in the valuation allowance for the Company?s net
operating loss carryforwards offset in part by income tax expense of
$19,000.

We realized a net income of $78,089 for the three months ended
September 30, 2006 compared to net income of $27,616 for the same
period in 2005.

Nine Months Ended September 30, 2006 and 2005

There were revenues of $1,576,283 for the nine months ended
September 30, 2006 compared to $1,236,679 for the same period in 2005
and there were cost of sales of $939,865 for the nine months ended
September 30, 2006 compared to $748,759 for the same period in 2005.
These increases are attributable primarily to higher direct
charges related to the SBIR Phase III contract and direct charges on
the SBIR Phase II (RWSE) contract which was awarded on May 1, 2006.

Engineering costs for the nine months ended September 30, 2006 were
$155,983 compared to $92,663 for the same period in 2005. This
increase is attributable primarily to increased salary expenses
due to the hiring of additional engineering staff and costs related to
our research and development engineering office.

General and administrative expenses for the nine months ended
September 30, 2006 were $375,371 compared to $293,363 in the nine
months ended September 30, 2005.  This increase is attributable
primarily to higher costs incurred for salaries and related costs in
connection with the Company?s bid and proposal efforts.




For the nine months ended September 30, 2006, income tax expense was
$9,200 compared to $0 for the same period in 2005. The increase is due
to current income tax expense which is partially offset by a reduction
in the valuation allowance for the Company?s net operating loss
carryforwards.

Net income for the nine months ended September 30, 2006 was $96,799
compared to $101,894 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 maintained a line of credit facility for maximum borrowings of
up to $34,000 until October 7, 2006 at which time such line of
credit facility was terminated in accordance with its terms. We are
currently negotiating with the lender for a new line of credit
facility with maximum borrowings of up to $50,000.

For the nine months ended September 30, 2006, we had net income
of $96,799 and working capital of $216,910. However, we still
had an accumulated deficit of $11,566,706.

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 September 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 September 30, 2006.




PART II.  OTHER INFORMATION


Item 6.	Exhibits


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: November 14, 2006  By:/s/Thomas J. Meaney
			       ----------------------
			       President
			       (Chief Executive Officer and
                          Chief Financial Officer)





									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:  November 14, 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 September 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:  November 14, 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.








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