UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-Q







xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period
ended September 30, 2009


or


oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from
_____to_____.





Commission
File Number: 000-14801




Mikros
Systems Corporation


(Exact
name of registrant as specified in its charter)





Delaware
                    14-1598200(State
      or other jurisdiction
                      of
      incorporation or organization)
                    (I.R.S.
      Employer
                      Identification
      No.)





707 Alexander Road, Building Two, Suite 208,
      Princeton, New Jersey 08540(Address
      of principal executive
offices)





(609) 987-1513(Registrant’s
      Telephone Number, Including Area
Code)




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 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. xYes   oNo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). oYes   oNo




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “ smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer
                  o
                  Accelerated
      filer
                  oNon-accelerated
      filer
                  o
                  Smaller
      reporting company
                  x


(Do
not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). oYes   xNo





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:  There were 31,766,753
issued and outstanding shares of the issuer’s common stock, $.01 par value per
share, on November 12, 2009.











TABLE OF
CONTENTS




PAGE
      #PART I.
                  FINANCIAL
      INFORMATIONItem
      1.
                  Financial
      Statements.Condensed
      Balance Sheets as of September 30, 2009 and December 31, 2008
      (unaudited)
                  1Condensed
      Statements Of Operations for the Three and Nine Months
      Ended  September 30, 2009 and 2008 (unaudited)
                  3Condensed
      Statements Of Cash Flows for the Nine Months Ended September 30, 2009 and
      2008 (unaudited)
                  4Notes
      To The Unaudited Condensed Financial Statements
                  5Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                  12Item
      4T.
                  Controls
      and Procedures.
                  18PART
      II.
                  OTHER
      INFORMATION
                  18Item
      6.
                  Exhibits.
                  18SIGNATURES
                  19









PART
I.  FINANCIAL INFORMATION


Item
1. Financial Statements





MIKROS
SYSTEMS CORPORATION


CONDENSED
BALANCE SHEETS


(UNAUDITED)





September
      30,
                                      2009
                                    
                                    
                                    December
      31,
                                      2008ASSETSCURRENT
      ASSETSCash
      and Cash Equivalents
                                    
                                    $
                                    302,389
                                    
                                    
                                    
                                    608,530Receivables
      on Government Contracts
                                    
                                    
                                    393,142
                                    
                                    
                                    
                                    169,766Other
      Current Assets
                                    
                                    
                                    53,026
                                    
                                    
                                    
                                    32,483TOTAL
      CURRENT ASSETS
                                    
                                    
                                    748,557
                                    
                                    
                                    
                                    810,779Patents
      and Trademarks
                                    
                                    
                                    5,383
                                    
                                    
                                    
                                    5,383Less:
      Accumulated Amortization
                                    
                                    
                                    (1,014)
                                    
                                    
                                    
                                    (760)4,369
                                    
                                    
                                    
                                    4,623PROPERTY
      AND EQUIPMENTEquipment
                                    
                                    
                                    25,801
                                    
                                    
                                    
                                    14,625Furniture
      and Fixtures
                                    
                                    
                                    9,264
                                    
                                    
                                    
                                    9,26435,065
                                    
                                    
                                    
                                    23,889Less:
      Accumulated Depreciation
                                    
                                    
                                    (18,286)
                                    
                                    
                                    
                                    (15,235)16,779
                                    
                                    
                                    
                                    8,654Deferred
      Tax Asset
                                    
                                    
                                    2,272
                                    
                                    
                                    
                                    18,000TOTAL
      ASSETS
                                    
                                    $
                                    771,977
                                    
                                    
                                    
                                    842,056





See
Accompanying Notes to Condensed Financial Statements.




1






MIKROS
SYSTEMS CORPORATION


CONDENSED
BALANCE SHEET (UNAUDITED)


(continued)






September 30,
                                2009
                              
                              
                              December
      31,
                                2008LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccrued
      Payroll and Payroll Taxes
                              
                              $
                              87,559
                              
                              
                              $
                              98,193Accounts
      Payable and Accrued Expenses
                              
                              
                              59,067
                              
                              
                              
                              158,234TOTAL
      CURRENT LIABILITIES
                              
                              
                              146,626
                              
                              
                              
                              256,427Long-term
      Liabilities
                              
                              
                              7,696
                              
                              
                              
                              11,170TOTAL
      LIABILITIES
                              
                              
                              154,322
                              
                              
                              
                              267,597REDEEMABLE
      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
                              
                              
                              
                              80,450SHAREHOLDERS’
      EQUITYPreferred
      Stock, Series B convertible, par value $.01 per share, authorized
      1,200,000 shares, issuedand
      outstanding 1,102,433 shares (involuntary liquidation value -
      $1,102,433)
                              
                              
                              11,024
                              
                              
                              
                              11,024Preferred
      Stock, convertible, par value $.01 per share, authorized 2,000,000 shares,
      issued andoutstanding
      255,000 shares (involuntary liquidation value - $255,000)
                              
                              
                              2,550
                              
                              
                              
                              2,550Preferred
      Stock, Series D, par value $.01 per share, 690,000 shares authorized,
      issued and outstanding(involuntary
      liquidation value - $1,518,000)
                              
                              
                              6,900
                              
                              
                              
                              6,900Common
      Stock, par value $.01 per share, authorized 60,000,000 shares, issued and
      outstanding 31,766,753 shares
                              
                              
                              317,668
                              
                              
                              
                              317,668Capital
      in excess of par value
                              
                              
                              11,496,787
                              
                              
                              
                              11,468,662Accumulated
      Deficit
                              
                              
                              (11,297,724)
                              
                              
                              
                              (11,312,795)TOTAL
      SHAREHOLDERS’ EQUITY
                              
                              
                              537,205
                              
                              
                              
                              494,009TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                              
                              $
                              771,977
                              
                              
                              $
                              842,056






See
Accompanying Notes to Condensed Financial Statements.




2







MIKROS
SYSTEMS CORPORATION


CONDENSED
STATEMENTS OF OPERATIONS (UNAUDITED)






Three
      Months Ended
                      
                      
                      Nine
      Months EndedSeptember 30,
                        2009
                      
                      
                      September 30,
                        2008
                      
                      
                      September 30,
                        2009
                      
                      
                      September
      30,
                        2008Contract
      Revenue
                      
                      $
                      588,719
                      
                      
                      $
                      822,764
                      
                      
                      $
                      1,732,505
                      
                      
                      $
                      2,536,878Cost
      of Revenue
                      
                      
                      271,347
                      
                      
                      
                      439,361
                      
                      
                      
                      756,068
                      
                      
                      
                      1,363,387Gross
      Margin
                      
                      
                      317,372
                      
                      
                      
                      383,403
                      
                      
                      
                      976,437
                      
                      
                      
                      1,173,491Expenses:Engineering
                      
                      
                      145,541
                      
                      
                      
                      144,897
                      
                      
                      
                      442,688
                      
                      
                      
                      430,327General
      & Administrative
                      
                      
                      158,920
                      
                      
                      
                      183,225
                      
                      
                      
                      499,920
                      
                      
                      
                      588,823Total
      Expenses
                      
                      
                      304,461
                      
                      
                      
                      328,122
                      
                      
                      
                      942,608
                      
                      
                      
                      1,019,150Income
      from Operations
                      
                      
                      12,911
                      
                      
                      
                      55,281
                      
                      
                      
                      33,829
                      
                      
                      
                      154,341Interest
      Income
                      
                      
                      -
                      
                      
                      
                      327
                      
                      
                      
                      3
                      
                      
                      
                      2,519Income
      Before Income Tax Expense
                      
                      
                      12,911
                      
                      
                      
                      55,608
                      
                      
                      
                      33,832
                      
                      
                      
                      156,860Income
      Tax Expense
                      
                      
                      6,957
                      
                      
                      
                      34,144
                      
                      
                      
                      18,761
                      
                      
                      
                      90,277Net
      Income
                      
                      $
                      5,954
                      
                      
                      $
                      21,464
                      
                      
                      $
                      15,071
                      
                      
                      $
                      66,583Basic
      and diluted earnings per share
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Basic
      weighted average number of Shares outstanding
                      
                      
                      31,766,753
                      
                      
                      
                      31,766,753
                      
                      
                      
                      31,766,753
                      
                      
                      
                      31,766,753Diluted
      weighted average number of Shares outstanding
                      
                      
                      35,415,299
                      
                      
                      
                      35,206,602
                      
                      
                      
                      35,418,758
                      
                      
                      
                      35,227,984






See
Accompanying Notes to Condensed Financial Statements.




3






MIKROS
SYSTEMS CORPORATION


CONDENSED
STATEMENTS OF CASH FLOWS


(UNAUDITED)





Nine
      Months EndedSeptember 30,
                                    2009
                                  
                                  
                                  September
      30,
                                    2008Cash
      Flow From Operating Activities:Net
      Income
                                  
                                  $
                                  15,071
                                  
                                  
                                  $
                                  66,583Adjustments
      to reconcile Net Income toNet
      Cash used in Operating Activities:Depreciation
      and Amortization
                                  
                                  
                                  3,305
                                  
                                  
                                  
                                  3,956Deferred
      Tax Expense
                                  
                                  
                                  15,728
                                  
                                  
                                  
                                  60,828Stock
      Compensation Expense
                                  
                                  
                                  28,125
                                  
                                  
                                  
                                  29,714Net
      Changes in Operating Assets and Liabilities:Increase
      (Decrease) in Receivables on Government Contracts
                                  
                                  
                                  (223,376)
                                  
                                  
                                  
                                  40,251Increase
      in Other Current Assets
                                  
                                  
                                  (20,543)
                                  
                                  
                                  
                                  (10,171)Decrease
      in Accounts Payable, Accrued Expenses and Long-term
      Liabilities
                                  
                                  
                                  (102,641)
                                  
                                  
                                  
                                  (74,590)Increase
      (decrease). in Accrued Payroll and Payroll Taxes
                                  
                                  
                                  (10,634)
                                  
                                  
                                  
                                  13,011Net
      Cash (used in ) provided by Operating Activities
                                  
                                  
                                  (294,965)
                                  
                                  
                                  
                                  129,582Cash
      Flow from Investing Activities:Purchase
      of  Equipment
                                  
                                  
                                  (11,176)
                                  
                                  
                                  
                                  -Net
      Cash used in Investing Activities
                                  
                                  
                                  (11,176)
                                  
                                  
                                  
                                  -Net
      increase (decrease) Increase in Cash and Cash Equivalents
                                  
                                  
                                  (306,141)
                                  
                                  
                                  
                                  129,582Cash
      and Cash Equivalents, beginning of the period
                                  
                                  
                                  608,530
                                  
                                  
                                  
                                  404,557Cash
      and Cash Equivalents, end of period
                                  
                                  $
                                  302,389
                                  
                                  
                                  $
                                  534,139





See
Accompanying Notes to Condensed Financial Statements.




4






MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)








NOTE 1 – Basis of
Presentation:




The
accompanying unaudited interim condensed financial statements of Mikros Systems
Corporation (the “Company”) were prepared in accordance with accounting
principles generally accepted in the United States of America and the interim
financial statements rules and regulations of the Securities and Exchange
Commission (“SEC”). In the opinion of management, these financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the Company’s results of operations,
financial position and cash flows for the interim periods presented. The interim
operating results are not necessarily indicative of the results for a full year.
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 relating to interim financial statements.The condensed
financial statements included in this Form 10-Q should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Form 10-Q and included together with the
Company's Financial Statements and Notes thereto included in the Company's 2008
Annual Report on Form 10-K.




The
Company evaluated subsequent events through November 13, 2009, the date the
Financial Statements as of and for the period ended September 30, 2009 were
issued.





Certain
amounts in the condensed balance sheet as of December 31, 2008 and statement of
cash flow for the nine months ended September 30, 2008 were reclassified to
conform to the current year presentation.





NOTE 2 – RECENT ACCOUNTING
PRONOUNCEMENTS




In August
2009, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Update (ASU) No. 2009-05. ASU No. 2009-05 provides amendments to FASB
Accounting Standards Codification (ASC) 820-10 for the fair value measurement of
liabilities. ASU No. 2009-05 provides clarification that in circumstances in
which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using a
valuation technique that uses the quoted price of the identical liability when
traded as an asset, the quoted prices for similar liabilities or similar
liabilities when traded as assets or another valuation technique that is
consistent with the principles of FASB ASC 820.  The amendments in the
update also clarify that when estimating the fair value of a liability, a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in the update also clarify that both a
quoted price in an active market for the identical liability at the measurement
date and the quoted price for the identical liability when traded as an asset in
an active market when no adjustments to the quoted price of the asset are
required are Level 1 fair value measurements. The guidance provided in
FASB  ASU No. 2009-05 is effective for the first reporting period
(including interim periods) beginning after issuance. The adoption of FASB ASU
No. 2009-05 did not have a material effect on the Company’s financial
statements.




In June
2009, the FASB issued Statement of Financial Accounting Standards No. 168,
“FASB Accounting Standards Codification” (“SFAS No. 168” or
“Codification”)as
the single source of authoritative non-governmental United States Generally
Accepted Accounting Principles (“US GAAP”) to be launched on July 1,
2009.  SFAS No. 168 replaces FASB Statement No. 162, “The Hierarchy of
Generally Accepted Accounting Principles”.The Codification does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place. All existing accounting standard documents will
be superseded and all other accounting literature not included in the
Codification will be considered non-authoritative. The Codification is effective
for interim and annual periods ending after September 15, 2009. The Codification
has no impact on the Company’s Consolidated Financial Statements.




5




MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)







In May
2009, the FASB issued Statement of Financial Accounting Standards No. 165,
“Subsequent Events” (“SFAS No. 165”) as codified in ASC Topic
855.  SFAS No. 165 establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued.   SFAS
No. 165 sets forth the period after the balance sheet date during which
management shall evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity shall recognize events or transactions occurring after the
balance sheet date in its financial statements and the disclosures that an
entity shall make about events or transactions that occurred after the balance
sheet date.   SFAS No. 165 is effective for interim and
annual periods ending after June 15, 2009.  The adoption of this
pronouncement did not have a material impact on the Company’s Consolidated
Financial Statements.





In June
2008, the EITF reached consensus on Issue No. 07-5, “Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF
07-5”) as codified in ASC Topic 815.  EITF 07-5 clarifies how to
determine whether certain instruments or features were indexed to an entity’s
own stock.  EITF 07-5 replaced EITF 01-6 as a critical component of
the literature applied to evaluating financial instruments for debt or equity
classification and embedded features for bifurcation as
derivatives.  The consensus is effective for financial statements
issued for fiscal years beginning after December 15, 2008, and interim periods
within those fiscal years.  The adoption of the consensus on
January 1, 2009 did not have a material impact on the Company’s Financial
Statements.




6




MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)







In
November 2008, the SEC released a proposed roadmap regarding the potential use
by U.S. issuers of financial statements prepared in accordance with
International Financial Reporting Standards (IFRS).  IFRS is a
comprehensive series of accounting standards published by the International
Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may
be required to prepare financial statements in accordance with IFRS as early as
2014.  The SEC is expected to make a determination in 2011 regarding
the mandatory adoption of IFRS.  The Company is currently assessing
the impact that this potential change would have on its financial statements,
and it will continue to monitor the development of the potential implementation
of IFRS.




NOTE 3 – REVENUE
RECOGNITION




The
Company is engaged in research and development contracts with the Federal
Government to develop certain technology to be utilized by the U.S. Department
of Defense. The contracts are cost plus fixed fee contracts and the Company
accounts for these contracts using the percentage-of-completion accounting
method. Under this method, revenue is recognized based on the extent of progress
towards completion of the long term contract.





The
Company generally uses a variation of the cost to cost method to measure
progress for all long term contracts unless it believes another method more
clearly measures progress towards completion of the contract.





Revenues
are recognized as costs are incurred and include estimated earned fees, or
profit, calculated on the basis of the relationship between costs incurred and
total estimated costs at completion.





Unbilled
revenue reflects work performed, but not billed at the time, per contractual
requirements.  As of September 30, 2009 and December 31, 2008, we had
no unbilled revenues.  Billings to customers in excess of revenue
earned are classified as advanced billings, and shown as a
liability.  As of September 30, 2009 and December 31, 2008, we had no
advanced billings.




7




MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)







NOTE 4 – REDEEMABLE SERIES C
PREFERRED STOCK





The
Redeemable Series C Preferred Stock is not convertible into any other class of
the Company’s stock, is subject to redemption at the Company’s option at any
time, and if certain events occur, such as capital reorganizations,
consolidations, mergers, or sale of all or substantially all of the Company’s
assets, is subject to mandatory redemption.  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 payment is
made upon any other class of stock of the Company, an amount in cash equal to
$16.09 for each share of Redeemable Series C Preferred Stock held by such
holder.





NOTE 5 – SHAREHOLDERS'
EQUITY




SERIES B CONVERTIBLE
PREFERRED STOCK




Each
share of Series B Convertible 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
per share 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 and Series D 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 Convertible Preferred Stock is entitled to dividends when, as and if
declared by the Board of Directors of the Company.  In the event any
dividend is payable to holders of the Company’s common stock, each share is
entitled to receive a dividend equal to the amount of such common stock dividend
multiplied by the number of shares of common stock into which each share of
Convertible Preferred Stock may be converted.  Shares of Convertible
Preferred Stock can be redeemed in whole, but not in part, at the Company’s
option for $1.00 per share.  Holders of Convertible Preferred Stock
are entitled to cast one vote per share on all matters to be voted upon by the
Company’s shareholders.  Each share of Convertible Preferred Stock is
convertible at any time into one share of common stock at a conversion price of
$1.00 per share, subject to adjustment in certain circumstances.  Upon
any liquidation, dissolution or winding up of the Company, each holder will be
entitled to be paid, after holders of Redeemable Series C Preferred Stock and
Series B Preferred Stock have been paid in full, an amount in cash equal to
$1.00 per share.




8




MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)





SERIES D PREFERRED
STOCK





The
Series D Preferred Stock provided for an annual cumulative dividend of $.10 per
share and entitles holders to cast one vote per share on all matters to be voted
on by the Company’s shareholders.  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 $1.00 plus all unpaid cumulative dividends 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.





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. As of
December 31, 2005, 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.  Accordingly, $828,000 of such
undeclared dividends in arrears remain outstanding at September 30,
2009.




NOTE 6 – EARNINGS PER
SHARE





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




Three
      Months Ended
                        
                        
                        Nine
      Months EndedSeptember 30,
      2009
                        
                        
                        September
      30, 2008
                        
                        
                        September
      30, 2009
                        
                        
                        September
      30, 2008Net
      income applicableto
      common stockholders
                        
                        $
                        5,954
                        
                        
                        $
                        21,464
                        
                        
                        $
                        15,071
                        
                        
                        $
                        66,583Average
      basicshares
      outstanding
                        
                        
                        31,766,753
                        
                        
                        
                        31,766,753
                        
                        
                        
                        31,766,753
                        
                        
                        
                        31,766,753Assumed
      conversionof
      preferred stock
                        
                        
                        3,562,299
                        
                        
                        
                        3,307,299
                        
                        
                        
                        3,562,299
                        
                        
                        
                        3,307,299Effect
      of dilutiveoptions
                        
                        
                        86,247
                        
                        
                        
                        132,550
                        
                        
                        
                        89,706
                        
                        
                        
                        153,932Average
      dilutedshares
      outstanding
                        
                        
                        35,415,299
                        
                        
                        
                        35,206,602
                        
                        
                        
                        35,418,758
                        
                        
                        
                        35,227,984Net
      earnings per common sharebasic
      and diluted
                        
                        $
                        0.00
                        
                        
                        $
                        0.00
                        
                        
                        $
                        0.00
                        
                        
                        $
                        0.00




For the
three and nine months ended September 30, 2009 and 2008, options to
purchase 420,000 shares and 440,000 shares of common stock, respectively, at
prices ranging from $0.55 to $0.62 per share, and their effects on
income, were excluded from thediluted net income per share
calculation because their effect would be anti-dilutive.







9






MIKROS
SYSTEMS CORPORATION


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)






NOTE7– INCOME TAX
MATTERS




The
Company conducts an on-going analysis to review the deferred tax assets and the
related valuation allowance that it has recorded against deferred tax assets,
primarily associated with Federal net operating loss
carryforwards.  As a result of this analysis and the actual results of
operations, the Company has decreased its net deferred tax assets by $15,728 and
$60,828 and charged income tax expense during the nine months ended September
30, 2009 and 2008, respectively.  Income tax expense includes expense
associated with state tax liabilities.




NOTE8–
SHARE BASED COMPENSATION





In July
2009, the Company issued options under the Plan to certain of its employees,
officers, directors, advisors and consultants to purchase an aggregate of
345,000 shares of common stock at an exercise price of $.20 per share, the last
sales price of the Company’s common stock on the date of grant.  The
60,000 options issued to the Company’s directors have a term of ten years and
vest in three equal annual installments over the three year period commencing on
the date of grant. The 285,000 options issued to the Company’s employees,
officers, advisors and consultants have a term of ten years and vest in five
equal annual installments over the five year period commencing on the date of
grant.  The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions:




Expected
      Life
                  6.5Expected
      volatility
                  117.2%Risk-free
      interest rate
                  2.94%





The
expected life of options granted is based on the vesting period.  The
expected volatility is based on historical stock prices.  The
risk-free interest rate is determined using the U.S. Treasury bill rate at the
time of grant.  The Company has never paid a dividend, and as such the
dividend yield is zero.  The forfeiture rate is zero.





The
Company recognized stock-based compensation expense of $12,900 and $9,900 for
the three months ended September 30, 2009 and 2008, respectively, and $28,125
and $29,714 for the nine months ended September 30, 2009 and 2008,
respectively.  No tax benefits were recognized related to this
stock-based compensation.


10




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 objectives 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, a decline or
redirection of the U.S. Defense budget, the termination of any contracts with
the U.S. Government, 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 Small Business Innovative Research (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-K for the year ended
December 31, 2008 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.




11




Item
2.   Management’s Discussion and Analysis of Financial Position
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
nine months ended September 30, 2009 and 2008.  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.




Below is
a brief description of certain of the material projects we are working on at
this time.




Adaptive Diagnostic
Electronic Portable Testset (ADEPT®)




Originally
designated as the Multiple Function Distributed Test and Analysis Tool (MFDAT),
the Adaptive Diagnostic Electronic Programmable Test-Set (ADEPT®) began as an
SBIR investigation in 2002. Additional ADEPT development was completed through a
series of SBIR grants and contracts. ADEPT is an automated maintenance
workstation 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.  ADEPT represents a new
approach to Navy shipboard maintenance, integrating modular instrumentation
cards in a rugged enclosure with an onboard computer, input and output devices,
networking hardware, removable hard drives, and a touch screen
display.  A custom software application provides the user interface
and integrates the hardware with a database that stores user information,
instrument readings, maintenance requirements, and training
aids.  ADEPT is designed to be adapted to other complex shipboard
systems, and to provide integrated distance support capabilities for remote
diagnostics and troubleshooting by shore-based Navy experts.




Key
anticipated benefits of ADEPT include:




•
              Significant
      reduction in system calibration, alignment, maintenance, and repair
      times;•
              Improved
      system readiness, availability, and performance;•
              More
      effective use of technical manpower through increased automation, distance
      support, and interactive
training;




•
            Distance
      support capable enabling “expert” remote (shore-based) system support and
      fleet-wide system analysis;




•
            Reduction
      in the amount of electronic test equipment required for organizational
      level support; and




•
            Modular
      and programmable to overcome current test equipment obsolescence issues
      and to support capability enhancements in future
  systems.




12




ADEPT is
being provided to the Navy’s Cruisers (CGs) and Destroyers (DDGs), through the
US Navy’s Cruiser and Destroyer modernization program.  On September
29, 2008, we were awarded an $800,000 modification to our contract with 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".  NSWCPHD for eight ADEPT LRIP
units and additional logistics development work.  The logistics effort
includes development of fielding support and calibration plans required for
widespread use of ADEPT aboard U.S. Navy ships.  In April 2009, we
received a $450,000 contract award for four ADEPT V2 systems which are scheduled
for delivery to the USS Mobile Bay (CG-53) and the USS Philippine Sea (CG-58) by
the end of 2009.





In
October 2009, we were awarded a contract by Technology Service Corporation (TSC)
to provide project management and engineering support for the Common Digital
Sensor Architecture (CDSA) project and new acquisition radar programs. This
contract also provides for continuation of pre-production engineering tasks in
support of the Adaptive Diagnostic Electronic Portable Testset
(ADEPT).





The goal
for ADEPT is to obtain a multi-year Indefinite-Delivery, Indefinite-Quantity
(IDIQ) contract for production, engineering, and logistics
support.  We anticipate this contract award and additional orders for
ADEPT equipment by the end of calendar year 2009.  It should be noted
that contracting with the Federal Government is a lengthy and complex process
and that many factors could materialize that would negatively impact our ability
to secure this contract and future ADEPT orders.




Wireless Local Area Network
Systems




Since
June 2004, we have been working with the Office of Naval Research regarding
emerging Wireless Local Area Network systems (WLANs) and DoD radar systems to,
among other things, evaluate and quantify the potential improvements which may
be afforded by selected mitigation techniques.  We continue to perform
contracts in connection with this project and are working closely with engineers
from the NAWCWD.  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.




Radar Wireless Spectral
Efficiency (RWSE)




From May
2006 through June 2009, we were involved in research and development under the
SBIR topic entitled RWSE, which is focused on the real world implications of
incorporating wireless networks 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 U.S.
Navy ships through the:  (1) identification and testing of potential
own-ship electromagnetic interference (EMI) issues; (2) development and testing
of viable mitigation technologies to overcome adverse EMI effects; and (3)
development of a CVN Wi-Fi network planning tool to support networking within a
highly reconfigurable shipboard environment.  This project was
initially for the CVN platform, but is expected to eventually be applicable to
other U.S. Navy ships.




Additional Contracts and
Recent Developments




In
October 2007, we were awarded an SBIR Phase I contract through
SPAWAR.  This $100,000 effort titled “Small Buoy for Energy
Harvesting” will collaborate in the design and development of a miniaturized,
self-powered ocean buoy which can be deployed at sea for extended periods to
support various on-board payload packages, such as network communications
nodes.  This communication package is designed to allow submarines to
communicate with the Battle Group while operating at speed and
depth.  This contract was structured as a base effort worth $70,000,
and an option worth $30,000.  The option was exercised on October 30,
2008, and we are pursuing an SBIR Phase II follow-on contract with this
customer.  If awarded, we could receive $750,000 or more to further
develop this technology.




In
February 2009, we were awarded a $68,000 production support contract on the
Navy’s Next Generation Command and Control Processor (NGC2P) program by Northrop
Grumman Corporation.  The NGC2P system is a tactical data link (TDL)
communications processor which provides warfighters with critical real-time
information during combat operations.  We anticipate future work with
Northrop Grumman in areas associated with our expertise in electronic systems
development and wireless technologies.




13




In
February 2009, we were awarded a $9,991 subcontract from Gnostech, Inc of
Warminster, Pennsylvania for engineering services in support of Gnostech’s
program entitled "GPS Scenario Development and Test Support for both Electronic
Protection and Electronic Attack Threat Environment."





In April
2009, we were awarded a $22,000 purchase order from Ocean Power Technologies,
Inc. (OPT), to support proposal development for the Littoral Expeditionary
Autonomous Power Buoy system for the U.S. Navy’s NUWC Keyport Program Office. As
a direct result of this effort, in October 2009, OPT was awarded a prime
contract for the first year of a proposed four-year program to develop and
deploy a Vessel Detection System based on the Littoral Expeditionary Autonomous
Power Buoy (LEAP) technology.  In turn, OPT awarded us a $275,000
subcontract for the first year.  The LEAP system is designed for
persistent littoral surveillance applications, and combines the OPT PowerBuoy
technology with advanced multistatic radar and data fusion capabilities
originally developed at the Rutgers University Instiitute of Marine and Coastal
Sciences.  We will provide system architecture, design and integration
support for the program.





In May
2009, we were awarded a $45,000 contract by the Navy to continue wireless
network design studies for the new CVN-78 aircraft carrier USS Gerald R.
Ford.  This program is a follow-on to work we performed in 2008 on
network modeling and simulation for the Navy's PMW 750 Carrier Integration
group.





In June
2009, we were awarded a $225,000 contract by DRS C3 Systems of Gaithersburg,
Maryland to develop interface definitions for distance support applications
in the Common Digital Sensor Architecture (CDSA) program. The CDSA Program will
provide a common computing platform for above water sensors and will reduce the
knowledge and skills required to operate and maintain the sensor systems, as
well as improve the quality, quantity, and compatibility of collected field
data. This work is an extension of the distance support experience Mikros gained
under Adaptive Diagnostic Electronic Portable Testset (ADEPT) development
contracts with the US Navy.





Key Performance
Indicator





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.





Outlook





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.





In 2009,
our primary strategic focus is to continue to: (i) establish ourselves as a
premium provider of research and development and product development services to
the defense industry; and (ii) grow our business, generate profits and increase
our cash reserves through obtaining additional SBIR contracts and positioning
ourselves to obtain future SBIR contracts.  From an operational
prospective, we expect to focus substantial resources on generating sales of our
ADEPT product.  We intend to capitalize on the Navy modernization
program, which could result in two or three ADEPT units being placed on each
destroyer and cruiser in the U.S. Navy, with the potential to install multiple
units on additional U.S. Navy ships and submarines.




14




Over the
longer term, we expect to further develop technology based on existing and
additional SBIR contracts and to develop these technologies into products for
wide deployment to DoD customers and contractors as well as developing potential
commercial applications.  For example, we recently entered into a
memorandum of understanding with a global provider of telecommunications
equipment and related services pursuant to which we will assist the global
provider in marketing its products to the DoD.





Changes to Critical
Accounting Policies and Estimates




Our
critical accounting policies and estimates are set forth in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008.  As of
September 30, 2009, there have been no changes to such critical accounting
policies and estimates.





The
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America.  The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities.  On an on-going basis, we evaluate our estimates,
including those related to bad debts, recoverability of long-lived assets,
income taxes and commitments.  We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.





Results of
Operations




Three Months Ended September
30, 2009 and 2008




We
generated revenues of $588,719 during the three months ended September 30, 2009
compared to $822,764 during the three months ended September 30, 2008, a
decrease of $234,045 or 28.5%.  The decrease was primarily due to the
delay in receipt of follow-on contracts from the Federal
Government.





Cost of
revenues consist of direct contract costs such as labor, materials,
subcontracts, travel, and other direct costs.  Cost of revenues for
the three months ended September 30, 2009 was $271,347 compared to $439,361 for
the three months ended September 30, 2008, a decrease of $168,014 or
38.2%.  The decrease was primarily due to the delay in receipt of
follow-on contracts from the Federal Government, resulting in lower
subcontractor and material costs and the change of distribution of direct costs
from 2008 to 2009.




Substantially
all of our engineering costs consist of (i) salary, wages and related fringe
benefits paid to engineering employees, (ii) rent-related costs, and (iii)
consulting fees paid to engineering consultants.  As the nature of
these costs benefit the entire organization and all research and development
efforts, and their benefit cannot be identified with a specific project or
contract, these engineering costs are classified as part of “engineering
overhead” and included in operating expenses.  Engineering costs for
the three months ended September 30, 2009 were $145,541 compared to $144,897 for
the three months ended September 30, 2008, an increase of $644 or
..4%.




15




General
and administrative expenses consist primarily of salary, consulting fees paid to
bid and proposal consultants and related costs, professional fees, business
insurance, corporate taxes, stock registrar and public company related costs,
travel, and unallowable expenses.  General and administrative costs
for the three months ended September 30, 2009 were $158,920 compared to $183,225
for the three months ended September 30, 2008, a decrease of $24,305 or
13.3%.  The decrease was due primarily to a reduction of general and
administrative salaries, outside services, and no incentive compensation costs
or general and administrative consultant costs.





The
application of the estimated effective income tax rate to the financial activity
of the three months ended September 30, 2009 resulted in a tax expense of
$6,957.   At September 30, 2009, the anticipated effective income
tax rate of 64.1% is attributable to state income taxes and income tax related
to permanent differences.





We
generated net income of $5,954 during the three months ended September 30, 2009
as compared to net income of $21,464 during the three months ended September 30,
2008.  The decrease was primarily due to a delay in receiving
follow-on contracts from the Federal Government.





Nine Months Ended September
30, 2009 and 2008





We
generated revenues of $1,732,505 during the nine months ended September 30, 2009
compared to $2,536,878 for the nine months ended September 30, 2008, a decrease
of $804,373 or 31.7%.  The decrease was primarily due to the delay in
receipt of follow-on contracts from the Federal Government.





Cost of
revenues for the nine months ended September 30, 2009 were $756,068 compared to
$1,363,387 for the nine months ended September 30, 2008, a decrease of $607,319
or 44.5%.  The decrease was primarily due to the delay in receipt of
follow-on contracts from the Federal Government resulting in lower subcontractor
and material costs and the change of distribution of direct costs from 2008 to
2009.





Engineering
costs for the nine months ended September 30, 2009 were $442,688 compared to
$430,327 for the nine months ended September 30, 2008, an increase of $12,361 or
2.9%.  The increase was due to additional engineering salaries and
medical benefit expenses, offset by no costs for engineering consultants and
incentive compensation in 2009.




16




General
and administrative costs for the nine months ended September 30, 2009 were
$499,920 compared to $588,823 for the nine months ended September 30, 2008, a
decrease of $88,903 or 15.1%.  The decrease was due primarily to a
reduction of general and administrative salaries, professional fees, general and
administrative travel and no incentive compensation costs in
2009.  These amounts were offset by increases in bid and proposal
salaries and consultant costs in connection with seeking new
business.





The
application of the estimated effective income tax rate to the financial activity
of the nine months ended September 30, 2009 results in a tax expense of $18,761.
At September 30, 2009, the anticipated effective income tax rate of 64.1% is
attributable to state income taxes and income tax related to permanent
differences.





We
generated net income of $15,071 during the nine months ended September 30, 2009
as compared to net income of $66,583 during the nine months ended September 30,
2008.  The decrease was due to a delay in receiving follow-on
contracts from the Federal Government.





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.





Net cash
used in operations was $294,965 for the nine months ended September 30, 2009
compared to net cash provided by operating activities of $129,582 for the nine
months ended September 30, 2008.  The increase in cash used in
operations was due primarily to an increase in receivables from government
contracts of approximately $264,000, the payment of  approximately
$72,000 of accrued incentive compensation and an approximately $33,000 decrease
in accounts payable and accrued payroll liability in 2009.  We had
working capital of $601,931 as of September 30, 2009 compared to working capital
of $554,352 at December 31, 2008.





On
January 9, 2009, we entered into a $50,000 line of credit agreement with Sun
National Bank (“Sun”).  The line of credit is available to us for one
year and is secured by a $50,000 Certificate of Deposit with Sun.





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.





In order
to pursue strategic opportunities, obtain additional SBIR contracts, or acquire
strategic assets or businesses, we may need to obtain additional financing or
seek strategic alliances or other partnership agreements with other
entities.  In order to raise any such financing, we anticipate
considering the sale of additional debt or equity securities under appropriate
market conditions.  There can be no assurance, assuming we
successfully raise additional funds or enter into business alliances, that any
such transaction will achieve profitability or generate positive cash
flow.




17






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 $5,613, and is subject to annual increase.





In
February 2009, we entered into a lease for a facility in Largo, Florida which
will support production of our Advanced Diagnostic Electronic Portable Testset
(ADEPT) product line, including quality assurance, field support, and life cycle
management.  The lease runs through February 2010 at a total cost of
$8,162 per year.





Off-Balance Sheet
Arrangements




As
of  September 30, 2009, we did not have any relationships with
unconsolidated entities or financial partners, such as entities often referred
to as structured finance or special purpose entities, established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes.  As such, we are not materially exposed to
any financing, liquidity, market or credit risk that could arise if we had
engaged in such relationships.




Item
4T.  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) was carried out by us under the supervision and with the participation of
our president, who serves as our principal executive officer and principal
financial officer.  Based upon that evaluation, our president
concluded that as of September 30, 2009, our disclosure controls and procedures
were effective to ensure (i) that information we are required to disclose in
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and (ii) that such information is accumulated and
communicated to management, including our president, in order to allow timely
decisions regarding required disclosure.




There
were no 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  September 30, 2009, 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 No.
              Description31.1
              Certification
      of principal executive officer and principal financial officer pursuant to
      Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as
      amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
      2002.32.1
              Certification
      of principal executive officer and principal financial officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes
      Oxley Act of 2002.




18




SIGNATURES




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




MIKROS
      SYSTEMS CORPORATIONNovember
      13, 2009
              By:
              /s/
      Thomas J. MeaneyThomas
      J. Meaney
                President
      (Principal Executive Officer and
                Principal
      Financial Officer)