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, 2007
Commission File No. 000-14801

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, 2007:

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, 2007                                   3

CONDENSED STATEMENTS OF INCOME
For the Three and Six Months Ended
June 30, 2007 and 2006                                5

CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
2007 and 2006                                         6

NOTES TO THE CONDENSED FINANCIAL
 STATEMENTS                                           7

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

Overview                                             11

Results of Operations                                15

Liquidity and Capital Resources                      16

Item 3. Controls and Procedures                      17


PART II.  OTHER INFORMATION

Item 6.  Exhibits                                    18

SIGNATURES                                           19

CERTIFICATIONS                                       Exhibit 1

















PART I.  Financial Information

Item 1. Condensed Financial Statements



MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET
(UNAUDITED)

       June 30,
                                        2007
ASSETS                                --------

CURRENT ASSETS

  Cash and Cash Equivalents         $ 274,591
  Receivables on Government
      Contracts                       388,717
  Other Current Assets                 35,685
  Deferred Tax Asset                   48,000
                                     --------
  TOTAL CURRENT ASSETS                746,993
                                     --------

  Patents & Trademarks                  5,383

  Less: Accumulated Amortization         (252)
                                     --------
                                        5,131
                                     --------

  Equipment                            13,114

  Less: Accumulated Depreciation       (7,844)
                                     --------
                                        5,270
                                     --------

  Furniture & Fixtures			    9,264

  Less: Accumulated Depreciation         (192)
                                     --------
                                        9,072
                                     --------

  Deferred Tax Asset                   34,100
                                     --------

TOTAL ASSETS                        $ 800,566
                                    =========


See Accompanying Notes to Condensed Financial Statements.


MIKROS SYSTEMS CORPORATION
CONDENSED BALANCE SHEET (UNAUDITED)
(continued)
    LIABILITIES AND                               June 30,
 SHAREHOLDERS'  EQUITY                              2007
----------------------------------             -----------
CURRENT LIABILITIES

  Accrued Expenses                              $   15,500
  Accrued Payroll and Payroll Taxes                 85,713
  Accounts Payable                                 212,350
  Taxes Payable                                     13,000
                                               -----------
TOTAL CURRENT LIABILITIES                          326,563
                                               -----------

Long-term Liabilities                               15,529
                                               -----------
TOTAL LIABILITIES                                  342,092

REDEEMABLE SERIES C PREFERRED STOCK
par value $.01 per share, authorized 150,000
shares, issued and outstanding 5,000 shares
(involuntary liquidation value - $80,450)           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                    11,024
(involuntary liquidation value - $1,102,433)

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    6,900
(involuntary liquidation value - $1,518,000)

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

Capital in excess of par value                  11,422,976

Accumulated Deficit                            (11,383,094)
                                            --------------
TOTAL SHAREHOLDERS' EQUITY                         378,024
                                            --------------
TOTAL LIABILITIES AND SHAREHOLDERS'
 EQUITY                                    $       800,566
                                            ==============

See Accompanying Notes to Condensed Financial Statements.


                          MIKROS SYSTEMS CORPORATION
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)


                        Three Months Ended,       Six Months Ended
                June 30, 2007  June 30, 2006   June 30, 2007  June 30, 2006
                -------------   -------------  -------------  -------------

Revenues:

Contract Revenue   $   844,935    $  411,403     $ 1,639,885  $ 949,993

Cost of Sales          520,246       234,423       1,006,480    573,929
                    -------------   -----------   ----------  ----------
Gross Margin           324,689       176,980         633,405    376,064
                    -------------   -----------   ----------  ----------

Expenses:

  Engineering           96,271        47,360         191,704     99,542
  General &
  Administrative       157,540       131,362         310,749    246,097
                     -----------   ----------     ----------  ----------
Total Expenses         253,811       178,722         502,453    345,639
                     -----------   ----------     ----------  ----------
Income(Loss)from
  Operations            70,878        (1,742)        130,952     30,425

Other Income: Interest   2,419           285           2,589        285
                     -----------   ----------     ----------  ----------

Income (Loss) Before
  Income Tax Expense    73,297        (1,457)        133,541     30,710

Income Tax Expense
  (Benefit)            (46,700)            0         (17,070)    12,000
                     -----------   ----------     ----------  ----------

Net Income (Loss)   $   119,997     $  (1,457)    $   150,611  $  18,710
                    ============    =========     ==========  ==========

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

Weighted average number of
  share 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, 2007    June 30, 2006
                                       -------------   ----------------
Cash Flow From Operating Activities:
   Net Income                            $   150,611    $    18,710
Adjustments to reconcile Net Income
  to net cash provided by
  Operating Activities:

  Depreciation and Amortization                2,323          4,772
  Deferred Tax Provision                     (34,100)        12,000

Net Changes in Operating Assets and
  Liabilities
  Increase in:
    Receivables on Government Contracts     (186,995)       (2,358)
    Other Current Assets                     (19,885)       (7,734)

Increase (Decrease) in:
    Accounts Payable                         109,711        (5,947)
    Accrued Payroll and Payroll Taxes         10,594        16,358
    Other Accrued Expenses                    22,137        (1,390)
                                            ---------       ---------
Net Cash provided by
  Operating Activities                        54,396        34,411
                                            ----------      ---------
Cash Flow from Investing Activities:

  Purchase of Furniture & Fixtures            (9,264)            0
  Costs associated with Patent                     0        (1,611)
    and Trademark Development
                                            ----------      ---------
Net Cash used in Investing Activities         (9,264)       (1,611)
                                            ----------      ---------

Net Increase in Cash and Cash Equivalents     45,132        32,800

Cash and Cash Equivalents, beginning of the  229,459       110,154
  period                                    ---------     ----------

Cash and Cash Equivalents, end of period  $  274,591     $ 142,954
                                            =========     ==========



See Accompanying Notes to Condensed Financial Statements.


MIKROS SYSTEMS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
 JUNE 30, 2007
(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, 2006.

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, 2007, and the results of its operations for
the three and six months ended June 30, 2007 and 2006, and its cash flows for
the six months ended June 30, 2007 and 2006.

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


NOTE 2 - REDEEMABLE SERIES C PREFERRED STOCK AND SHAREHOLDERS' EQUITY
--------------------------------------------------------------------

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

The Redeemable 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 or if certain events occur, such as capital
reorganizations, consolidations, mergers, or sale of all or substantially all
of the Company's assets. Upon any liquidation, dissolution or winding up of
the Company, each holder of Redeemable Series C Preferred Stock will be
entitled to be paid, before any distribution or payment is made upon any
other class of stock of the Company, an amount in cash equal to the
redemption price for each share of Redeemable Series C Preferred Stock held
by such holder, and the holders of Redeemable Series C Preferred Stock will
not be entitled to any further payment. The redemption price per share is
$16.09.


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

Each share of Series B Preferred Stock is convertible into three shares of
the Company's common stock at a price of $.33 per share of common stock to be
received upon conversion and entitles the holder thereof to cast three votes
on all matters to be voted on by the Company's shareholders.  Upon any
liquidation, dissolution, or winding up of the Company, each holder of Series
B Preferred Stock will be entitled to be paid, after all distributions of
payments are made upon the Redeemable 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 his or her redemption price once
shareholders of Redeemable Series C Preferred Stock and Series B Preferred
stock have been fully paid.


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

The Series D Preferred Stock provided for an annual cumulative dividend of
$.10 per share.  The shares are not convertible into any other class of stock
and are subject to redemption at the Company's option at any time at a
redemption price of $1.00 per share plus all unpaid cumulative dividends.
Upon liquidation, dissolution or winding up of the 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 Redeemable Series C Preferred Stock, an amount in cash
equal to the Redemption Price for each share of Series D Preferred Stock held
by such holder. The holders of Series D Preferred Stock will not be entitled
to any further payment.

During 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. As of June 30, 2007, there were dividends in arrears on shares of
Series D Preferred Stock of $828,000.  Such waiver does 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,  June 30,   June 30, June 30,
                            2007     2006        2007     2006
                            -------   -------    -------  -------
Net income (loss) applicable
  to common Stockholders  $ 119,997   $ (1,457)  $ 150,611  $   18,710
                          =========    ========    =========  ========
Average basic
  shares outstanding     31,766,753  31,766,753  31,766,753  31,766,753

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

Effect of dilutive
  options and warrants      254,675           0     241,818     131,049
                        ------------ ---------- ----------- -----------
Average diluted
  shares outstanding     35,583,727  31,766,753  35,570,870  35,460,101
                        ============ ========== =========== ===========

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

No options had an anti-dilutive effect, thus none were excluded for purposes
of calculating diluted earnings per share for the three months and six months
ended June 30, 2007. 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 for the three months ended June 30, 2006 because
of their anti-dilutive effect.

A total of 5,489,000 shares issuable upon exercise of stock options or
warrants or conversion of preferred shares were not included in the
computation of diluted earnings per share for the six months ended June 30,
2007 because the exercise or conversion price of such securities was greater
than the average market price of the Company's common stock for the period.

A total of 5,489,000 shares issuable upon exercise of stock options or
warrants or conversion of preferred shares were not included in the
computation of diluted earnings per share for the six months ended June 30,
2006 because the exercise or conversion price of such securities was greater
than the average market price of the Company's common stock for the period.







Note 4 - New Accounting Pronouncements

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.  Adoption of this pronouncement did not impact the Company's
financial position.

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.  The Company is
currently evaluating the potential impact, if any, of the adoption of FASB
Statement No. 157 on our financial statements.

In February 2007, the FASB Issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115".  SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value.  Unrealized
gains and losses on items for which the fair value option has been elected
will be recognized in earnings at each subsequent reporting date.  SFAS No.
159 is effective for the Company January 1, 2008.  The Company is evaluating
the impact that the adoption of SFAS No. 159 will have on its financial
statements.

In May 2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition
of Settlement in FASB Interpretation No. 48" (FSP FIN 48-1). FSP FIN 48-1
provides guidance on how to determine whether a tax position is effectively
settled for the purpose of recognizing previously unrecognized tax benefits.
FSP FIN 48-1 is effective retroactively to January 1, 2007. The
implementation of this standard did not have a material impact on our
financial position or results of operations.

Note 5 - Income Tax Matters

We routinely conduct an on-going analysis to review the deferred tax assets
and the related valuation allowance that we have recorded against our
deferred tax assets, primarily associated with Federal net operating loss
carryforwards.  As a result of this analysis we increased our net deferred
tax assets by $53,200 during the quarter ended June 30, 2007 and by $34,100
during the six months ended June 30, 2007. Income tax expense also includes
expense associated with our state tax liabilities.

Note 6 - Subsequent Events
--------------------------

On August 6, 2007, the Board of Directors adopted the Mikros Systems
Corporation 2007 Stock Incentive Plan (the "Plan").  Awards may be made under
the Plan for up to 3,000,000 shares of our common stock in the form of stock
options or restricted stock awards.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended.  All statements other
than statements of historical facts included or incorporated by reference
in this report, including, without limitation, statements regarding our
future financial position, business strategy, budgets, projected revenues,
projected costs and plans and objective of management for future operations,
are forward-looking statements.  In addition, forward-looking statements
generally can be identified by the use of forward-looking terminology such
as "may," "will," "expects," "intends," "plans," "projects," "estimates,"
"anticipates," or "believes" or the negative thereof or any variation
thereon or similar terminology or expressions.

These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from results
proposed in such statements.  Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give
no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially
from our expectations include, but are not limited to: changes in business
conditions, changes in our sales strategy and product development plans,
changes in the marketplace, continued services of our executive management
team, our limited marketing experience, competition between us and other
companies seeking SBIR grants, competitive pricing pressures, market
acceptance of our products under development, delays in the development
of products, and statements of assumption underlying any of the foregoing,
as well as other factors set forth under the caption "Risk Factors"
in our Annual Report on Form 10-KSB for the year ended December 31, 2006
filed with the Securities and Exchange Commission.

All subsequent written and oral forward-looking statements attributable
to us, or persons acting on our behalf, are expressly qualified in their
entirety by the foregoing.  Except as required by law, we assume no
duty to update or revise our forward-looking statements based on changes
in internal estimates or expectations or otherwise.

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

Mikros Systems Corporation (the "Company", "we" or "us") was founded in 1978.
We are 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.

Overview

Our primary business focus is to pursue Small Business Innovation Research
(SBIR) programs from the U.S. Department of Defense, Department of Homeland
Security, and other governmental authorities, and to expand this Government
funded research and development into products, services, and business areas
of the Company.  Since 2002, we have been awarded a number of Phase I, II,
and III SBIR contracts.

Revenues from our government contracts represented 100% of our revenues for
the three and six months ended June 30, 2007 and 2006.  We believe that we
can utilize the intellectual property developed under our various SBIR awards
to develop proprietary products for both the government and commercial
marketplace.

Contracts

In September 2004, we were awarded a SBIR Phase III contract valued at
approximately $2,400,000 from the Naval Surface Warfare Center - Dahlgren,
Virginia, for the commercialization of the Company's MFDAT (Multi-Functional
Distributed Analysis Tool) SBIR-developed technology.  This contract resulted
in the development of ADEPT(r) (a registered trademark of the Company), a
computer-aided alignment and maintenance tool for the AN/SPY-1 radar system,
which is the primary air and surface radar for the AEGIS Combat System
installed on the Ticonderoga (CG-47) and Arleigh Burke (DDG-51) class guided
missile warships.  Five Low Rate Initial Production (LRIP) ADEPT units were
manufactured for U.S. Navy evaluation.

In March 2006, we were awarded an amendment to this SBIR Phase III contract
valued at approximately $2,950,000 to expand the application of ADEPT to
include all the SPY-1 radar variants aboard all of the AEGIS cruisers and
destroyers.  In addition, we are developing a smaller, lighter version of
ADEPT for applications where weight and size are critical factors.  ADEPT
functional testing has been accomplished aboard the USS SAN JACINTO (CG-56)
and continues at the Cruiser Modernization (CGM) SPY-1A Test Facility in
Moorestown, New Jersey.

In May 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 focuses on the real world implications of incorporating
wireless networking into the aircraft carrier (CVN class ships) and
amphibious assault ship (LHD class ships) environments.  Under this program,
a prototype of an Interference-Aware Wireless Network Planning Tool is being
developed to assist in the implementation and fielding of wireless networks
on board U.S. Navy surface vessels.

As part of this RWSE SBIR Phase II program, our engineers have performed Wi-
Fi propagation surveys aboard the aircraft carrier USS GEORGE WASHINGTON
(CVN-73) and the amphibious assault ship USS BATAAN (LHD-5).  The empirical
results from these surveys were used to refine the Wi-Fi signal propagation
algorithms embedded in the Wireless Network Planning Tool prototype.  In
March 2007, our engineers sailed aboard the U.S. Navy amphibious assault ship
USS KEARSARGE (LHD-3) during its underway exercise in the Atlantic Ocean near
Norfolk, Virginia.  This afforded us the opportunity to measure the shipboard
radio frequency environment during actual at-sea operating conditions.  This
information is critical to analyzing potential interference to and from
commercial wireless networks and to validate the interference aspect of the
Interference-Aware Wireless Network Planning Tool currently under
development.

On April 30, 2007, we were awarded a $2.4 million contract from the Naval
Surface Weapons Center, Port Hueneme Division (NSWC PHD) for the continuing
development of ADEPT(r),  our automated maintenance tool designed to
significantly reduce the man-hours required to align the AN/SPY-1 Radar
System aboard U.S. Navy AEGIS cruisers and destroyers while optimizing system
performance and readiness.  NSWC PHD is the U.S. Navy's In-Service
Engineering Agency (ISEA) for the AN/SPY-1 Radar System.

This new contract provides for the continuing development of advanced
capabilities for ADEPT, the finalizing of an ADEPT Integrated Logistics
Support Plan required for fleet fielding, and the Low Rate Initial Production
(LRIP) of ten (10) ADEPT(V)2 units, which are half the size and weight of the
original ADEPT(V)1 while maintaining the same functionality.   The contract
follows successful testing and evaluation of ADEPT on one AEGIS cruiser along
with testing at the Navy's AN/SPY-1 Cruiser Modernization Test Facility in
Moorestown, NJ.  It is expected that the ADEPT equipment will initially be
installed on AEGIS cruisers undergoing modernization with introduction into
the destroyers to follow.  The entire U.S. Navy AEGIS fleet consists of 22
cruisers and 62 destroyers.

In May, 2007, we were awarded SBIR Phase II funding through Space and Naval
Warfare Systems Command (SPAWAR), San Diego.  This $750,000 effort is a spin
off of work performed under the SBIR topic entitled Radar Wireless Spectral
Efficiency (RWSE).  This SBIR Phase II effort, entitled 'Kill Chain
Vulnerability Analysis Tool' focuses on the interaction between tactical data
links and interferers such as hostile jammers.  Mikros will work closely with
engineers from the Naval Air Warfare Center Weapons Division (NAWCWD),
located in China Lake, California.  NAWCWD, a division of Naval Air Systems
Command (NAVAIR), is responsible for 'Arming the Fleet'. The technical
objective of this effort is to develop simulation models that can be used to
predict the performance of data links in a jamming environment.

In May, 2007, we were awarded additional funding on SBIR Topic "A Study of
Commercial Wireless LAN Interference Issues Aboard U.S. Navy Carriers"
(CVNs).  The contract is a follow-on to Mikros' SBIR Phase I work performed
under Radar Wireless Spectral Efficiency (RWSE). The additional funding of
$150,000 was awarded to Mikros from Space and Naval Warfare Systems Command
(SPAWAR) San Diego, bringing the total amount of the SBIR Phase II contract
to $750,000.  During the contract option period, Mikros and team partner
Mobilisa Inc. plan to continue development of the Interference-aware Wireless
Network Design tool (IWIND), a software package which allows the Navy to plan
and optimize deployment of shipboard WiFi networks.  IWIND automatically
places shipboard Access Points to optimize coverage based on  user-specified
wireless requirements.  It also analyzes potential interference between
network equipment and onboard RF systems such as radars, and where possible,
mitigates interference using smart placement and channel selection
algorithms.  IWIND will be used by the Navy to plan network deployments on
aircraft carriers (CVNs) and other platforms.

On June 1, 2007, we received  a subcontract from Mobilisa, Inc. to assist in
the development of a "Radio Frequency/Microwave Hazard Assessment Tool
(RHAZ)".  RHAZ is a hazard analysis software tool designed to enable medics,
range safety officers, and researchers to determine radio frequency personnel
hazards in real time deployment environments.  Valued at approximately
$33,000, the subcontract brings our expertise in radio frequency (RF)
propagation and simulation to the issue of RF safety in deployed
environments.  Working in conjunction with the U.S. Air Force, the
Mobilisa/Mikros team will work to develop a tool to predict the RF hazards
associated with the deployment of RF and Microwave assets.

Key Performance Indicator and Outlook
As substantially all of our revenue is derived from SBIR contracts with the
federal government, our key performance indicator is the dollar volume of
contracts awarded to us. Increases in the number and value of contracts
awarded will generally result in increased revenues in future periods and
assuming relatively stable variable costs associated with our fulfilling such
contracts, increased profits in future periods.  The timing of such awards is
uncertain as we sell to federal government agencies where the process of
obtaining such awards can be lengthy and at times uncertain.
Competition in the SBIR arena is intense, and we compete against numerous
small businesses for SBIR awards.  We believe that the primary competitive
factors in obtaining SBIR contracts are technical expertise, prior relevant
experience, and cost. Our history of completing projects in a timely and
efficient manner as well as the experience of our management and technical
personnel position us well to compete for future SBIR grants.
Our strategy for continued growth is three-fold.  First, we expect to
continue expanding our technology base, backlog and revenue by continuing our
active participation in the DoD SBIR program and bidding on projects that
fall within our areas of expertise.  These areas include electronic systems
engineering and integration, radar systems engineering, combat/C4I (Command,
Control, Communications, Computers & Intelligence) systems engineering, and
communications engineering.  We believe that we can utilize the intellectual
property developed under our various SBIR awards to develop proprietary
products, such as the ADEPT described above, with broad appeal in both the
government and commercial marketplace.  This state-of-the-art test equipment
can be used by many commercial and governmental customers such as the FAA,
radio and television stations, cell phone stations, and airlines.  Second, we
will continue to pursue SBIR projects with the Department of Homeland
Security, the U.S. Navy, and other government agencies.  Third, we believe
that through our marketing of products such as ADEPT we will develop key
relationships with prime defense system contractors.  Our strategy is to
develop these relationships into longer-term, key subcontractor roles on
future major defense programs awarded to these prime contractors.

Changes to Critical 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, 2006.  As of
June 30, 2007, there have been no changes to such critical accounting
policies and estimates.


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

Three Months Ended June 30, 2007 and 2006

We generated revenues of $844,935 during the three months ended June 30, 2007
compared to $411,403 for the same period in 2006. Cost of sales were $520,246
during the quarter ended June 30, 2007 compared to $234,423 for the quarter
ended June 30, 2006. These increases were primarily attributable to the
additional SBIR Phase III and RWSE Phase II contracts we secured during 2007.

Engineering costs for the three months ended June 30, 2007 were $96,271
compared to $47,360 for the three months ended June 30, 2006. The increase in
engineering costs for the three months ended June 30, 2007 was due to the
hiring of an engineering consultant and additional engineering personnel, and
the addition of medical and other fringe benefits associated with our
engineering personnel in engineering costs.

General and administrative expenses for the three months ended June 30, 2007
were $157,540 compared to $131,362 for the three months ended June 30, 2006.
The increase was due to higher costs related to increased consulting fees,
salaries, and additional travel expenses associated with fulfilling a larger
number of contracts.

We recognized a net income tax benefit of $46,700 and $0 for the three months
ended June 30, 2007 and June 30, 2006, respectively.  The net income tax
benefit for the three months ended June 30, 2007 includes $28,200 of federal
and state taxes which were offset by a reversal of a portion of the valuation
allowance recorded against the deferred tax assets associated with the
federal net operating loss carryforwards in the amount of $74,900.

As a result, we generated net income for the three months ended June 30, 2007
of $119,997 as compared to a net loss of $1,457 for the three months ended
June 30, 2006. The increase in net income was largely due to the addition of
the SBIR Phase III and RWSE Phase II contracts. The increase is also due to
the reversal of the valuation allowance related to the federal net operating
loss carryforwards as mentioned above. With regard to income tax expense,
amounts recorded for both periods are impacted by actual contract
profitability versus that estimated for purposes of recording our deferred
tax assets and associated valuation allowance.

Six Months Ended June 30, 2007 and 2006

We generated revenues of $1,639,885 during the six months ended June 30, 2007
compared to $949,993 during the six months ended June 30, 2006. Cost of sales
were $1,006,480 for the six months ended June 30, 2007 compared to $573,929
for the six months ended June 30, 2006. These increases were primarily
attributable to the additional SBIR Phase III and RWSE Phase II contracts we
generated in 2007.

Engineering costs for the six months ended June 30, 2007 were $191,704
compared to $99,542 for the six months ended in 2006. The increase in
engineering costs for the six months ended June 30, 2007 was due to the
hiring of an engineering consultant and additional engineering personnel, and
the addition of medical and other fringe benefits associated with our
engineering personnel in engineering costs.

General and administrative expenses for the six months ended June 30, 2007
were $310,749 compared to $246,097 for the six months ended June 30, 2006.
The increase was due to higher costs related to increased consulting fees,
salaries, and additional travel expenses associated with fulfilling a larger
number of contracts.

We recognized a net income tax benefit for the six months ended June 30,
2007 of $17,070 compared to income tax expense of $12,000 for the six months
ended June 30, 2006.  The net income tax benefit for the six months
ended June 30, 2007 includes $70,030 of federal and state taxes which are
offset by a reversal of a portion of the valuation allowance recorded against
the deferred tax assets associated with the federal net operating
loss carryforwards in the amount of $87,100.  The $12,000 recorded for the
six months ended June 30, 2006 represents the current income tax expense.

As a result, we generated net income for the six months ended June 30, 2007
of $150,611 compared to $18,710 for the six months ended June 30, 2006. The
increase in net income was largely due to the additional profits generated
from the SBIR Phase III and RWSE Phase II contracts in 2007 and the reversal
of a portion of the valuation allowance as previously noted. With regard to
income tax expense, amounts recorded for both periods are impacted by actual
contract profitability versus that estimated for purposes of recording our
deferred tax assets and associated valuation allowance.

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.

For the six months ended June 30, 2007, net cash provided by operations was
$54,396 compared to $34,411 for the six months ended June 30, 2006. The
increase was primarily the result of increased contract revenues. We had
working capital of $420,430 as of June 30, 2007 as compared to working
capital of $263,353 at December 31, 2006.  The increase was due primarily to
increases in cash of $45,132 and in accounts receivable of $186,995 partially
offset by a $109,711 in accounts payable.

On November 16, 2006, we entered into a $50,000 revolving line of credit with
Sun National Bank (the "Lender") evidenced by a promissory note in favor of
the Lender.  The revolving line of credit will be available to us for two
years.  On November 14, 2008, advances will no longer be able to be made
under the revolving line of credit.  At that time, the then outstanding
principal balance will be converted into a five-year term loan with payments
based on a five-year amortization schedule.  The term loan will be payable in
60 equal monthly installments and be due in full on November 14, 2013. During
the first five months of the revolving line of credit, any outstanding
principal balance will bear interest at 5.99% per annum.  Thereafter, any
outstanding principal balance will bear interest equal to the Sun National
Bank Prime Rate.  The loan is secured by substantially all of our assets
pursuant to a Commercial Security Agreement (the "Security Agreement") in
favor of the Lender and is guaranteed by Thomas J. Meaney, our President and
Chief Executive Officer. There were no outstanding amounts under this line of
credit at June 30, 2007.

We believe our available cash resources and expected cash flows from
operations will be sufficient to fund operations for the next twelve months.
We do not expect to incur any material capital expenditures during the next
twelve months.

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

We lease our engineering office in Fort Washington, Pennsylvania pursuant to
a five-year lease which continues through November 30, 2010.  Our current
monthly lease payment is $5,324.92, and is subject to an annual increase.


Item 3.  Controls and Procedures.

An evaluation of the effectiveness of our disclosure controls and procedures
(as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act
of 1934) as of June 30, 2007, was carried out by our president, who serves as
our principal executive officer and principal financial officer.  Based upon
that evaluation, our president 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 Securities Exchange Act
of 1934: (i) is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms; and (ii) is accumulated and
communicated to management, including our president, as appropriate to allow
timely decisions regarding required disclosures.

There have not been any changes in our internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) or 15d-15(f)) that
occurred during the fiscal quarter ended June 30, 2007 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.


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: August 13, 2007    By:/s/Thomas J. Meaney
                          ----------------------
                          President
                         (Principal Executive Officer and
                          Principal 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 (the "Company");

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.  As the Company's sole certifying officer, 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.    As the Company's sole certifying officer, 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 13, 2007       /s/ Thomas J. Meaney__________
                                  Thomas J. Meaney, President
                                  (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, 2007 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 to his knowledge:

   (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 13, 2007        /s/ Thomas J. Meaney *
                              Thomas J. Meaney, President,
                              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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