SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

              For the quarterly period ended December 31, 2002, or

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

                    For the transition period from NA to NA.

                         Commission File Number 0-16106

                                APA OPTICS, INC.
             (Exact name of Registrant as specified in its charter)

                   MINNESOTA                         41-1347235
         (State or other jurisdiction of         (I.R.S. Employer
          incorporation or organization)         Identification No.)


                  2950 N.E. 84TH LANE, BLAINE, MINNESOTA 55449
              (Address of principal executive offices and zip code)

                                 (763) 784-4995
              (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  preceding 12 months (or for such shorter period that the registrant
was  required  to  file  such  reports),  and (2) has been subject to the filing
requirement  for  the  past  90  days.

                     Yes     X          No
                            ---               ---


Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the  latest  practicable  date:

                Class:                     Outstanding at December 31, 2002
     Common stock, par value $.01                    11,872,331


<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                APA OPTICS, INC.
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)

                                             December 31,     March 31,
                                                 2002           2002
                                            --------------  -------------
<S>                                         <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents                 $  27,721,495   $ 31,606,403
  Accounts receivable                              33,502         20,613
  Inventories:
    Raw materials                                  95,298         21,448
    Work-in-process                                11,029         18,627
  Prepaid expenses                                120,033        103,588
  Bond reserve funds                               50,000         70,000
                                            --------------  -------------
Total current assets                           28,031,357     31,840,679

Property, plant and equipment, net              3,565,919      3,748,004

Other assets                                      619,336        807,727
                                            --------------  -------------

Total assets                                $  32,216,612   $ 36,396,410
                                            ==============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt         $   1,795,026   $  1,996,345
  Accounts payable                                131,641        127,926
  Accrued expenses                                261,908        302,204
                                            --------------  -------------
Total current liabilities                       2,188,575      2,426,475

Long-term debt                                    229,305        465,018

Shareholders' equity:
  Common stock                                    118,723        118,759
  Additional paid-in capital                   51,595,262     51,578,185
  Accumulated deficit                         (21,915,253)   (18,192,027)
                                            --------------  -------------
Total shareholders' equity                     29,798,732     33,504,917
                                            --------------  -------------
Total liabilities and shareholders' equity  $  32,216,612   $ 36,396,410
                                            ==============  =============
</TABLE>


            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS


                                        2
<PAGE>
<TABLE>
<CAPTION>
                                       APA OPTICS, INC.
                              CONDENSED STATEMENTS OF OPERATIONS
                                          (Unaudited)

                                             Three Months Ended         Nine Months Ended
                                                December 31,                December 31,
                                        --------------------------  --------------------------
                                            2002          2001          2002          2001
                                        ------------  ------------  ------------  ------------
<S>                                     <C>           <C>           <C>           <C>
Revenues                                $    40,674   $    49,089   $   152,025   $   570,997

Costs and expenses:
  Cost of sales                             554,053     1,026,341     2,030,730     2,926,509
  Research and development                  360,178       342,224     1,050,025       761,116
  Selling, general and administrative       296,638       315,842     1,014,573     1,262,674
                                        ------------  ------------  ------------  ------------
                                          1,210,869     1,684,407     4,095,328     4,950,299
                                        ------------  ------------  ------------  ------------

Loss from operations                     (1,170,195)   (1,635,318)   (3,943,303)   (4,379,302)

Interest income                              44,906       244,499       300,795     1,046,760
Interest expense                            (25,705)      (30,933)      (79,716)      (97,385)
                                        ------------  ------------  ------------  ------------
                                             19,201       213,566       221,079       949,375
                                        ------------  ------------  ------------  ------------

Loss before income taxes                 (1,150,994)   (1,421,752)   (3,722,224)   (3,429,927)

Income taxes                                    500           250         1,000         1,637
                                        ------------  ------------  ------------  ------------

Net loss                                $(1,151,494)  $(1,422,002)  $(3,723,224)  $(3,431,564)
                                        ============  ============  ============  ============

Net loss per share:
  Basic and diluted                          ($0.10)       ($0.12)       ($0.31)       ($0.29)
                                        ============  ============  ============  ============

Weighted average shares
outstanding:
   Basic and diluted                     11,872,331    11,875,881    11,874,371    11,903,496
                                        ============  ============  ============  ============
</TABLE>


            SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                 APA OPTICS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                         Nine Months Ended
                                                            December 31,
                                                     --------------------------
                                                         2002          2001
                                                     ------------  ------------
<S>                                                  <C>           <C>
OPERATING ACTIVITIES
Net loss                                             $(3,723,224)  $(3,431,564)
Adjustments to reconcile net loss to net cash used
  in operating activities:
    Depreciation and amortization                        512,638       470,886
    Write-off of patents                                 108,660             -
    Deferred compensation expense                        (44,729)       27,389
  Changes in operating assets and liabilities:
    Accounts receivable                                  (12,889)      294,134
    Inventories and prepaid expenses                     (82,697)      323,298
    Accounts payable and accrued expenses                (36,581)     (426,820)
                                                     ------------  ------------
Net cash used in operating activities                 (3,278,822)   (2,742,677)

INVESTING ACTIVITIES
Purchases of property and equipment                     (181,793)     (938,722)
Investment in patents                                    (14,176)      (64,521)
                                                     ------------  ------------
Net cash used in investing activities                   (195,969)   (1,003,243)

FINANCING ACTIVITIES
Proceeds from the sale of short-term investments               -    15,759,000
Bond reserve funds                                        32,906        20,180
Proceeds from the sale of common stock                         -        10,041
Repurchase of common stock                                (5,991)      (92,639)
Repayment of long-term debt                             (437,032)     (363,140)
                                                     ------------  ------------
Net cash provided by (used in) financing activities     (410,117)   15,333,442
                                                     ------------  ------------

Increase (decrease) in cash and cash equivalents      (3,884,908)   11,587,522

Cash and cash equivalents at beginning of period      31,606,403    21,225,492
                                                     ------------  ------------

Cash and cash equivalents at end of period           $27,721,495   $32,813,014
                                                     ============  ============

NON-CASH FINANCING AND INVESTING TRANSACTIONS
Addition of land and additional paid in capital      $    67,760             -
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                        4
<PAGE>
NOTES  TO  CONDENSED  FINANCIAL  STATEMENTS


NOTE 1. BASIS OF PRESENTATION

     The accompanying condensed financial statements have been prepared pursuant
to  the  rules  and  regulations  of  the  Securities  and  Exchange Commission.
Accordingly,  they  do not include all of the information and footnotes required
by  generally  accepted accounting principles for complete financial statements.
For further information, refer to the financial statements and footnotes thereto
included  in  the  Company's annual report on Form 10-K for the year ended March
31,  2002.

     In  the  opinion  of  management,  all  adjustments  (consisting  of normal
recurring  accruals)  considered  necessary  for  a  fair presentation have been
included.  Certain  reclassifications  of  previously reported amounts have been
made  to  conform  that  presentation  to  the  current  period  presentation.

NOTE 2. NET LOSS PER SHARE

     Basic  and diluted net loss per share has been computed by dividing the net
loss  by  the  weighted  average number of shares outstanding during the period.

     Common stock options and warrants to purchase 548,697 and 655,872 shares of
common  stock  with  a  weighted average exercise price of $9.51 and $10.15 were
outstanding  at December 31, 2002 and 2001, respectively, but were excluded from
calculating  the  three  months  diluted  net  loss  per share because they were
antidilutive.

     Common stock options and warrants to purchase 548,697 and 400,485 shares of
common  stock  with  a  weighted average exercise price of $9.51 and $13.76 were
outstanding  at December 31, 2002 and 2001, respectively, but were excluded from
calculating  the  nine  months  diluted  net  loss  per  share because they were
antidilutive.

NOTE 3. STOCK REPURCHASE PLAN

     On  October  1,  2002, the Board of Directors extended its plan authorizing
the  repurchase  of  up  to  the  greater of $2,000,000 or 500,000 shares of our
common  stock.  For  the  nine  months ended December 31, 2002, we repurchased a
total  of  3,550  shares  for  $5,991  at  an  average price of $1.69 per share.

NOTE 4. LAND

     The  Company  acquired  land in Aberdeen, SD as part of a financing package
provided  by  the  Aberdeen  Development  Corporation  to locate a manufacturing
facility  in  that  city.  Ownership of the land was contingent upon the Company
remaining in the facility through June 23, 2002. After satisfying the contingent
requirement,  the  Company added $67,760 (the assessed value of the land for tax
purposes)  to  its  balance  sheet and increased additional-paid-in capital by a
like  amount.

NOTE 5. STOCK OPTION GRANT

     On  August  22,  2002  the  Company  granted 2,500 options to every current
employee  with  the  exception of Anil Jain, the Chief Executive Officer and Ken
Olsen,  the Chief Operating Officer.  A total of 122,500 options were granted at
the  fair  market  value  of the stock on the day of grant.  The options are 60%
exercisable  when  the  Company  achieves  certain  financial objectives and 40%
exercisable  when  the Company achieves certain operational objectives set forth
in  the  Company's  Short-Term  Incentive  Plan.  Accordingly, these options are
treated  as  variable  awards,  and  changes in their value will be reflected in
sales,  general  and  administrative  expense until the options are exercised or
expire.


                                        5
<PAGE>
NOTE 6. WRITE-OFF OF PATENT COSTS

     As  a  result  of  the  slowdown  in the sale of fiber optic components and
uncertainty  regarding  if and when demand for such components will recover, the
Company  expensed  the  unamortized  balance  of  patents  related  to its dense
wavelength  multiplexer  /  demultiplexers  or  "DWDM"  technology. As a result,
expenses  related  to  patents  included  in  sales,  general and administrative
expenses  increased  $108,660  for  the  nine  months  ended  December 31, 2002.

NOTE  7.  ADOPTION  OF  NEW  ACCOUNTING  PRONOUNCEMENTS

     In  September  2001, the Financial Accounting Standards Board (FASB) issued
Statement  of Financial Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement supercedes SFAS 121
and  was  effective April 1, 2002 for the Company. This statement did not have a
material  effect  on  the  financial statements of the Company, but could have a
future  effect  in  the  event  that  an  asset  impairment  occurs.

     In April 2002, FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4,  44,  and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
The  Company  believes  the  adoption  of  SFAS No. 145 will not have a material
effect  on  the  Company's  financial  position  or  results  of  operations.

     In  June  2002,  FASB issued SFAS No. 146, "Accounting for Costs Associated
with  Exit  or Disposal Activities."  SFAS No. 146 requires the recognition of a
liability  for  a  cost  associated  with  an exit or disposal activity when the
liability  is  incurred versus the date the Company commits to an exit plan.  In
addition, SFAS No. 146 states the liability should be initially measured at fair
value.  The  requirements  of  SFAS  No.  146 are effective for exit or disposal
activities that are initiated after December 31, 2002.  The Company believes the
adoption  of  SFAS  No.  146  will  not  have a material effect on the Company's
financial  position or results or operations. In December 2002, FASB issued SFAS
No.  148, "Accounting for Stock-Based Compensation - Transition and Disclosure."
This  statement  amends  FASB  Statement  No.  123,  "Accounting for Stock-Based
Compensation",  to  provide  alternative  methods  of transition for a voluntary
change  to  the  fair  value based method of accounting for stock-based employee
compensation.  It  also  amends the disclosure requirements to require prominent
disclosures  in both annual and interim financial statements about the method of
accounting  for stock-based employee compensation.  The transition provisions of
this statement are effective for fiscal years ending after December 15, 2002 and
the  disclosure  provisions  are  effective  for annual financial statements for
fiscal  years  ending  after  December  15,  2002  and  the first interim period
beginning  after  December  15, 2002.  The Company believes the adoption of SFAS
No.  148  will not have a material effect on the Company's financial position or
results  of  operations.

     In  November  2002,  FASB  issued  Interpretation 45 (FIN 45), "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others."  This statement clarifies the initial
accounting  and  disclosure  requirements  of SFAS 5 for certain guarantees. The
initial  recognition  and  measurement  provisions  are effective for guarantees
issued  or  modified after December 31, 2002 and the disclosure requirements are
effective  for  financial  statements  of interim or annual periods ending after
December  15,  2002. The Company believes the adoption of FIN 45 will not have a
material  effect  on  the Company's financial position or results of operations.


                                        6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     Statements in this Report about future sales prospects and other matters to
occur  in  the  future  are  forward  looking  statements  and  are  subject  to
uncertainties  due  to many factors, many of which are beyond our control. These
factors  include,  but  are  not  limited  to,  the continued development of our
products,  acceptance  of  those products by potential customers, our ability to
sell  such  products  at  a  profitable  price,  and  our  ability  to  fund our
operations.  For  further  discussion regarding these factors, see "Factors That
May  Affect  Future  Results."


OVERVIEW
--------

     We  are  engaged in designing, manufacturing, and marketing various optical
components  (including  dense wavelength multiplexer / demultiplexers or "DWDMs"
and  splitters), ultraviolet (UV) detection and measurement devices, and optical
components.  For  several  years,  we  also  received  significant revenues from
research  and  development  services  projects  sponsored  by various government
agencies.  Since fiscal 1998, we focused on product development, with the intent
to  manufacture  and  market  both  our  own proprietary products and externally
sourced  products.

     We  received  no revenues from government sponsored research in fiscal 2001
or 2002 and do not expect any revenues from this source in fiscal 2003. However,
one  of  our  research  and  development  areas,  Gallium  Nitride  (GaN)  based
transistors,  has  drawn  significant attention from various government agencies
over  the  past few years. Although we may seek future involvement in government
sponsored research projects that are closely related to our internal development
efforts,  our  primary focus will remain the commercialization of products based
on  this  research.

     Two  of  our  GaN based products, the TRUVMETERTM and the SunUV Personal UV
Monitor  (SunWatch(R))),  have  required  extended  engineering  and prototyping
phases that have resulted in delays in their full rollout to the market. We have
made  significant progress towards resolving development issues on both products
and  initiated  the  marketing  of  these products. In particular, both of these
products  have  been  provided  to our marketing representatives to initiate the
marketing  and  sales  activities.  Additionally,  we plan to showcase the SunUV
Personal  UV  Monitor  (SunWatch(R)))  in  various trade shows during the fourth
quarter  of  fiscal  year 2003. Production ramp up will also start in the fourth
quarter  as  well.

     Most  companies in the communications equipment industry have been affected
by  the slowdown in telecommunications equipment spending. Continued weakness in
the  general  economy,  and  the  telecom sector in particular, have resulted in
downward  pressure  on  average  selling  prices  of  DWDMs  and  other  optical
components,  leading to declining margins and profits. We do not know if or when
demand will return to levels allowing profitable production of these components.

     In  response  to  these  market  conditions,  we  are expanding our optical
components  product  offering, primarily through externally sourced products. We
have  been  broadening our markets to include fiber to the home and CATV systems
integrators and service providers. New products have been added to our portfolio
to  address  these  applications. One of these product lines includes components
for  the  broadband  optical  access  network,  a  market  with near term growth
potential.  Our  goal is to offer products that reduce inefficiencies in network
deployment.  We have identified key sources for lower cost components, primarily
from  overseas,  in  pursuit  of  this  goal.  Our  experience  in optical fiber
components  is  used  to  identify  the  best  vendors and products. We are also
assisting  in complex testing and qualification processes. APA is also using its
customer  relationships  and  understanding  of optical communication systems to
place  products  in  the  hands  of  the  appropriate  customers.


RESULTS  OF  OPERATIONS
-----------------------

REVENUES

     Revenues  for the quarter ended December 31, 2002, were $40,674, reflecting
a 17% decrease from the comparable period in the preceding fiscal year. Revenues
were  $  152,025  for the nine months ended December 31, 2002, a decrease of 73%
from  the  revenues for the comparable period in the preceding fiscal year. Lack
of demand for DWDM components was the primary factor contributing to the decline
in  revenues  for  the  three  and  nine  month periods ended December 31, 2002.


                                        7
<PAGE>
COST  OF  SALES

     Cost of sales decreased $472,288 to $557,053 for the quarter ended December
31,  2002, reflecting a 46% decrease from the comparable period in the preceding
fiscal  year.  For  the  nine  months  ended  December  31,  2002, cost of sales
decreased  $895,779  or  31%  over the comparable period in the preceding fiscal
year.  The  decreases  in  the cost of sales for both periods were the result of
reduced production due to the lack of orders, a reduced production staff and the
transfer  of  production  staff  to  research and development activities.  Gross
margins  for  sales  were  negative  in  both  periods.  We  expect  to continue
experiencing  negative  gross  margins  until there is a significant increase in
sales  and  production  levels.

RESEARCH  AND  DEVELOPMENT  EXPENSES

     Research  and  development  expenses  increased  by $17,954 for the quarter
ended  December  31,  2002.  This represents an increase of 5% from research and
development  expenses in the comparable period of the preceding fiscal year. For
the  nine  months  ended  December  31,  2002, research and development expenses
increased  $288,909  or  38%  from the comparable period in the preceding fiscal
year.  These  increases are the result of increased research activity related to
our  GaN HFET effort and shifting of production personnel to research activities
due  to  the  lack  of  demand for our existing products. We expect research and
development  expenses  to  increase  gradually  for  the  foreseeable  future.

SELLING,  GENERAL  AND  ADMINISTRATIVE

     Selling,  general  and  administrative  expenses  decreased $19,204 for the
quarter  ended  December  31,  2002,  reflecting  a  6% decrease compared to the
comparable  period  in  the  preceding  fiscal  year.  For the nine months ended
December  31,  2002,  selling,  general  and  administrative  expenses decreased
$248,101  or  20%  from  the comparable period in the preceding fiscal year. The
decreases  were  primarily  due  to the absence of any incentive compensation to
employees,  a  decrease  in personnel and savings from cost containment measures
implemented  in  response  to  the  lack  of  demand  for  our  products.

LOSS  FROM  OPERATIONS

     The  loss from operations was $1,170,195, a decrease of $465,123 or 28% for
the  quarter  ended December 31, 2002 over the comparable period in fiscal 2002.
For  the nine months ended December 31, 2002, the loss from operations decreased
$435,999  or  10%  over  the comparable period in the preceding fiscal year. The
decreased  loss  in the quarter and the nine months ended December 31, 2002, was
the  result of the cost containment measures, which more than offset the drop in
revenues.

     Lack of demand for DWDM components was the major factor contributing to the
decline  in  sales.  We  do not see demand for these components returning in the
near  future. In addition, declining average selling prices for these components
will  require  demand  to  exceed  prior  levels  for  us  to achieve unit sales
sufficient  to  generate  revenues  consistent  with  prior  periods.

OTHER  INCOME  AND  EXPENSE

     Other  income  decreased $194,365 or 91% for the quarter ended December 31,
2002,  from  the  comparable  period  in  fiscal 2002. For the nine months ended
December  31,  2002,  other income decreased $728,296 or 77% from the comparable
period  in  the preceding fiscal year. The decreases were due to the combination
of  a  decline  in  the  rate of interest earned on short-term investments and a
lower  average  cash  balance,  as cash was consumed to fund operations, capital
investment  and  debt  service.  Unless  short-term  interest rates increase, we
anticipate  continuing  decreases  in  interest income as a result of the use of
cash  in  operations,  for  capital  expansion  and  for  debt  service.


                                        8
<PAGE>
NET  LOSS

     The  net  loss  for the quarter ended December 31, 2002, was $1,151,494 (or
$0.10  per  basic and diluted share), a decrease of $267,355 or 19% from the net
loss  reported  for  the  same  period in fiscal 2002. For the nine months ended
December  31,  2002, the net loss was $3,723,224 (or $0.31 per basic and diluted
share),  an  11%  increase  over  the  net loss for the comparable period in the
preceding  fiscal year. For the quarter, the decreased net loss was attributable
to  the  cost  containment  measures  implemented  by the Company that more than
offset  the  decline  in interest income. For the nine months ended December 31,
2002,  the  increased  net  loss  was  primarily  attributable to the decline in
interest  income.

LIQUIDITY  AND  CAPITAL  RESOURCES
----------------------------------

     APA's  cash  and  cash  equivalents  consists  primarily of certificates of
deposits,  U.S.  Government  instruments  or  commercial  paper  with  original
maturities  of  less than three months. The balance of cash and cash equivalents
at  December  31, 2002 is $27,721,495 compared to $31,606,403 at March 31, 2002.
The  decrease in cash was primarily the result of using cash to fund operations.

     Cash  used in operating activities was $3,278,822 for the nine months ended
December  31,  2002,  compared  to  $2,742,677  for the comparable period in the
preceding  fiscal year. The increase reflects the lack of revenues and decreased
interest  income.

     We  used  net  cash  of $195,969 in investing activities in the nine months
ended  December  31, 2002, compared to $1,003,243 used in the same period of the
preceding  fiscal  year. The funds were used for limited purchases of equipment,
facility repairs and leasehold improvements. The decrease in the amount used for
investing  activities  reflects  our  efforts  to conserve cash by deferring the
purchase  of capital equipment for production until we experience an increase in
the  demand for our products. We do anticipate investing in equipment to support
the  HFET  research  and  development activities over the next several quarters.

     Net cash used in financing activities in the nine months ended December 31,
2002  totaled $410,117. We used a net of $437,032 for the scheduled reduction of
debt  and  $5,991 to redeem common stock. We repurchased a total of 3,550 shares
at  an  average cost of $1.69 per share. We generated $32,906 from the reduction
of  bond  reserve  funds.  For the nine months ended December 31, 2001, net cash
provided by financing activities totaled $15,333,442. We raised $15,759,000 from
the  sale  of  short-term investments, generated $10,041 from the sale of common
stock, generated $20,180 from the reduction of bond reserve funds, used $363,140
for  the  scheduled  reduction of debt, and used $92,639 to redeem common stock.

     We  anticipate a total of approximately $500,000 in capital expenditures in
fiscal  2003,  primarily for equipment. The majority of the capital expenditures
relate  to  the expansion of our research and development facilities. We believe
we  have  sufficient  funds  for operations for the remainder of fiscal 2003 and
beyond.

     Our  contractual  obligations  and  commitments are summarized in the table
below  (in  000's):

<TABLE>
<CAPTION>
                               Less than                          After
                        Total   1 Year   1-3 years   4-5 years   5 years
                        -------------------------------------------------
<S>                     <C>     <C>      <C>         <C>         <C>
Long-term debt          $2,024  $ 1,795  $       53  $       36  $    140
Operating leases           229      116         112           1         -
                        -------------------------------------------------

Total Contractual Cash
    Obligations         $2,253  $ 1,911  $      165  $       37  $    140
                        =================================================
</TABLE>


                                        9
<PAGE>
Application of Critical Accounting Policies

     We  have  reviewed our use of estimates in applying our accounting policies
and  determined that significant changes in our various estimates would not have
a  material  impact  on  the presentation of our financial condition, changes in
financial  condition  or  results of operations. Accordingly, we do not consider
any  of  our estimates to be "critical estimates" as defined in the rules of the
Securities  and Exchange Commission. See Note A of Notes to Financial Statements
under Item 8 of our Report on Form 10-K for descriptions of the use of estimates
in  our accounting policies. Our management and the audit committee of our board
of  directors  have  discussed  our  use  of  estimates  and  have  approved our
disclosure  relating  to  it  in  this  report.

     In  Note  7  of  this  report,  the  effect  of recent promulgations of the
Financial  Accounting  Standards  Board  (FASB)  on  the  Company are described.
Management believes the adoption of Statements of Financial Accounting Standards
(SFAS)  Nos. 144, 145, 146 and 148, and Interpretation 45 (FIN 45) will not have
a  material effect on the Company's financial position or results of operations.


FACTORS  THAT  MAY  INFLUENCE  FUTURE  RESULTS
----------------------------------------------

Unless we generate significant revenues, our expenses and negative cash flow
will significantly harm our financial position.

     We  have not been profitable since fiscal 1990. As of December 31, 2002, we
had an accumulated deficit of $21.9 million. We expect to incur operating losses
for the foreseeable future, and these losses may be substantial. Further, we may
continue to incur negative operating cash flow in the future. We have funded our
operations  primarily  through  the sale of equity securities and borrowings. We
have  significant  fixed expenses and we expect to continue to incur significant
manufacturing,  sales  and  marketing,  product  development  and administrative
expenses.  As  a  result,  we  will  need to generate significant revenues while
containing  costs  and  operating  expenses  if we are to achieve profitability.

Declining  demand  and average selling prices for our DWDM products will require
us  to  reduce production costs to effectively compete and market these products
and  could  force  us  to  discontinue  domestic manufacturing of these products
altogether.

     Since  the time we first introduced our DWDM components to the marketplace,
we have seen the demand and the average selling price for this type of component
decline.  We expect the trend of declining average prices to continue. We cannot
assure  you  that  demand  for these components will recover to prior levels. To
achieve  profitability  in  this  environment,  we must continually decrease our
costs  of  production. In order to reduce our production costs, we will continue
to  seek lower cost suppliers of raw materials, components, or assemblies within
the  United  States,  or  internationally.

     We  will  also  seek  to  form  strategic alliances with companies that can
supply  these  components  or services. Decreases in average selling prices also
require  that  we  increase  unit sales to maintain or increase our revenue. Our
efforts  to  increase  revenues  could  include:
  -  Expansion  of  our product offerings, both through internally developed and
     externally  sourced  products;  and
  -  Expansion  of  both  domestic  and  international  marketing  efforts.

     There  can  be no guarantee that we will achieve these objectives or goals.
Our  inability  to significantly decrease production costs or increase our sales
could  seriously  harm  our  business,  financial  condition  and  results  of
operations.

Our  Sun(UV)  Watch(R) personal ultraviolet monitor is a relatively new consumer
product  concept  that  may  be  adopted  more  slowly  than  projected.


                                       10
<PAGE>
     The  Sun(UV) Watch(R) is an innovative product that helps consumers monitor
and  plan their exposure to the UV radiation in sunlight. Personal UV monitoring
is  a  relatively  new concept for consumers. Adoption and widespread use of the
product  by  consumers  could take a substantial period of time and may not ever
achieve  levels of acceptance necessary to make commercial production viable. In
addition,  creation  of  brand  identity  and  consumer  awareness  requires the
commitment  of  substantial  capital  and  could  divert  resources  from  our
development  efforts.  Even  if we are successful in developing a market for the
Sun(UV)  Watch(R),  large  consumer product manufacturers with strong name brand
identity  could develop competing devices resulting in declining average selling
prices and increased marketing costs for this type of product. Moreover, we have
limited  experience  in  designing  for,  and  marketing to, the retail consumer
market.

We  have  limited  experience  in  the development, manufacturing, marketing and
distribution  of  products  internationally.

     If  our  effort  to  reduce  the development and manufacturing costs of our
products  and/or  seek  more  international  customers requires the expansion of
offshore subcontracting or the establishment of facilities outside of the United
States,  we  will  be  subject to inherent risks, including, without limitation:

  -  Reduced  protection of intellectual property rights in foreign countries in
     which  we  may  choose  to  operate;
  -  Difficulties  in  attracting,  training  and  retaining  qualified  staff;
  -  Political  and  economic  instability,  terrorism  or  war;
  -  The  increased  burden  of  complying with foreign laws and tax structures;
  -  Risks  associated with fluctuations in the value of foreign currencies; and
  -  Risk  associated with trade barriers such as high duty placed on components
     imported  from  our  partner  countries.

Demand for our products is subject to significant fluctuation. Market conditions
in the telecommunications market in particular may harm our financial condition.

     Demand for our optical components is dependent on several factors including
capital  expenditures  in  the telecommunications industry. Capital expenditures
can  be cyclical in nature and there may be protracted periods of reduced demand
for  component parts. Similarly, periods of slow economic expansion or recession
can  result  in periods of reduced demand for our products. The current economic
slowdown has hit the telecommunications market particularly hard, resulting in a
significant reduction in capital expenditures for products such as our DWDMs. It
is  impossible  to  predict  how  long  the  slowdown will last. Such periods of
reduced demand harm our business, financial condition and results of operations.

We  may be unable to increase our manufacturing capacity and will not be able to
deliver  our  products  to  our  customers  in a timely manner if demand for our
products  increases.

     Manufacturing  of our products is a complex and precise process. Should our
products  achieve  broad  based  market  acceptance, we will need to either ramp
internal production rapidly or secure manufacturing services from third parties.
We  have  limited experience in rapidly increasing our manufacturing capacity or
in  manufacturing  products at high volumes. We or a contract manufacturer would
be  required  to  hire,  train and manage additional manufacturing personnel and
improve production processes in order to increase production capacity. There are
numerous  risks  associated  with  rapidly  increasing  capacity,  including:

  -  Difficulties  in  achieving  adequate  yields from new manufacturing lines;
  -  Difficulty  maintaining  the  precision manufacturing processes required by
     our  products  while  increasing  capacity;
  -  The  inability  to  timely  procure  and  install  the necessary equipment;
  -  The  lack  of  availability  of  qualified  manufacturing  personnel;  and
  -  The  inabilities  to  timely  procure  outsourced  components.

     In  addition,  competitive third party manufacturers may be located outside
the  United  States.  Some  of  the  risks  associated  with  doing  business
internationally  are  discussed  under  "We  have  limited  experience  in  the
development,  manufacturing,  marketing  and  distribution  of  products
internationally,"  above.


                                       11
<PAGE>
Our dependence on outside manufacturers may result in product delivery delays.

     We  purchase  components  that  are  incorporated  into  our  products  and
components  for  resale from outside vendors. If these vendors fail to supply us
with  components  on  a  timely basis, we could experience significant delays in
shipping  our  products.  If  components  that  are purchased for resale are not
delivered  on  a  timely basis or do not meet customer specifications, our sales
and  profitability  could be adversely affected. Any significant interruption in
the  supply  or support of any components could seriously harm our sales and our
relationships  with  our  customers.

Our products may have defects that are not detected before delivery to our
customers.

     Some  of  our  products  are  designed  to be deployed in large and complex
optical  networks  and  must  be compatible with other components of the system,
both  current  and future. In addition, our products may not operate as expected
over  long  periods of time. Our customers may discover errors or defects in our
products  only  after  they  have  been  fully deployed. If we are unable to fix
errors  or other problems, we could lose customers, lose revenues, suffer damage
to  our  brand  and reputation, and lose our ability to attract new customers or
achieve  market  acceptance.  Each of these factors would negatively impact cash
flow  and  would seriously harm our business, financial condition and results of
operations.

We must introduce new products and product enhancements to increase revenue.

     The  successful  operation  of  our  business  depends  on  our  ability to
anticipate  market  needs  and to develop and introduce new products and product
enhancements  that  respond  to  technological  changes  or  evolving  industry
standards  on  a  timely and cost-effective basis. Our products are complex, and
new  products  may  take  longer  and/or  cost  more  to develop than originally
anticipated.  These  products  may  contain  defects  or  have  unacceptable
manufacturing  yields when first introduced or as new versions are released. Our
products  could  quickly  become obsolete as new technologies are introduced. We
must  continue  to  develop  new  products  and introduce them to the commercial
market  quickly  in  order  to be successful. Our addition of externally sourced
components  to  our product offering reduces our ability to control this process
increasing  our  dependency on our suppliers for product development activities.
Our  failure  to  produce or source technologically and economically competitive
products  in  a  cost-effective manner and on a timely basis will seriously harm
our  business,  financial  condition  and  results  of  operations.

Our markets are characterized by rapid technological changes and evolving
standards.

     The  markets  we  serve  are  characterized  by rapid technological change,
frequent  new  product  introductions,  changes  in  customer  requirements  and
evolving  industry  standards.  In developing and sourcing our products, we have
made,  and  will  continue  to make, assumptions with respect to which standards
will  be adopted within our industry. If the standards that are actually adopted
are  different  from  those that we have chosen to support, our products may not
achieve  significant  market  acceptance.

Our products may infringe on the intellectual property rights of others.

     Our  products  are  sophisticated  and  rely  on  complicated manufacturing
processes. We have received several patents on certain aspects of our design and
manufacturing  processes and we have applied for several more. Third parties may
still  assert  claims  that  our  products or processes unlawfully utilize their
intellectual  property.  Our  decision  to  market externally sourced components
forces  us  to rely on our suppliers' representations that their products do not
infringe  the  intellectual  property  rights  of  others.  Defense against such
claims,  even  if  they  lack  merit, may be time consuming, result in expensive
litigation  and  divert management attention from operational matters. If such a
claim  was  successful,  we could be prevented from manufacturing or selling our
current  products,  we  could be forced to redesign our products, or we could be
required  to  license  the relevant intellectual property at a significant cost.
Any  of these actions could harm our business, financial condition or results of
operations.


                                       12
<PAGE>
We  may be required to litigate to enforce and protect our intellectual property
rights.

     Litigation  against  persons  who infringe our intellectual property rights
could  be  expensive  and  may  divert  management  resources from operating the
Company. Even if we prevail in such litigation, the costs incurred may adversely
affect  us.

Acquisitions or investments could have an adverse effect on our business.

     As  part  of our strategy to expand our product offerings, develop internal
sources  of  components  and  materials,  and  acquire  new  technologies,  we
periodically  review  acquisition  and  investment prospects. There are inherent
risks  associated  with  making  acquisitions and investments, including but not
limited  to:

  -  Challenges  associated with integrating the operations, personnel, etc., of
     an  acquired  company;
  -  Potentially  dilutive  issuances  of  equity  securities;
  -  Reduced  cash  balances  and/or  increased  debt  and  debt  service costs;
  -  Large  one-time  write-offs  of  intangible  assets;
  -  Risks  associated  with geographic or business markets different than those
     we  are  familiar  with;  and
  -  Diversion  of  management  attention  from  current  responsibilities.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Our exposure to market risk for changes in interest rates relates primarily
to  our  investment portfolio. We invest in short-term securities of high credit
issuers  with  maturities  ranging  from  overnight up to 24 months. The average
maturity of the portfolio does not exceed 12 months. The portfolio includes only
marketable  securities  with  active  secondary  or  resale  markets  to  ensure
liquidity. We have no investments denominated in foreign country currencies and,
therefore,  our  investments  are  not  subject  to  foreign  exchange  risk.


ITEM 4.  CONTROLS AND PROCEDURES.

      a.    Evaluation  of  disclosure  controls  and  procedures. The Company's
            chief  executive  officer and chief financial officer have concluded
            that the Company's disclosure controls and procedures (as defined in
            Exchange  Act  Rule  13a-14(c)) are sufficiently effective to ensure
            that  the information required to be disclosed by the Company in the
            reports  it  files  under the Exchange Act is gathered, analyzed and
            disclosed with adequate timeliness, accuracy and completeness, based
            on an evaluation of such controls and procedures conducted within 90
            days  prior  to  the  date  hereof.

      b.    Changes in internal controls. There have been no significant changes
            in  the  Company's  internal controls or in other factors that could
            significantly  affect  these  controls subsequent to the date of the
            evaluation  referred  to  above.


                                    PART II

ITEMS 1 THROUGH 5. NOT APPLICABLE


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

     (a)  Exhibits.

               Exhibit  99.1  - Chief Executive Officer's certification pursuant
               to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002


                                       13
<PAGE>
               Exhibit  99.2  - Chief Financial Officer's certification pursuant
               to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002

     (b)  Reports  on  Form  8-K.

               A  report  on  Form  8-K  dated  October  1,  2002,  reported the
               resignation  of  Director  Gregory  Von  Wald

               A report on Form 8-K dated October 30, 2002, reported our results
               of  operation  for  the  quarter  ended  September  30,  2002

               A  report  on  Form  8-K  dated  December  4,  2002, reported the
               resignation  of  Chief  Financial  Officer  Robert  Ringstad



                                   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.

                                  APA OPTICS, INC.


2/14/03                                   /s/ Anil K. Jain
-------                                   ----------------

 Date                                     Anil K. Jain
                                          President and
                                          Chief Executive Officer


2/14/03                                   /s/ David R. Peters
-------                                   -------------------

 Date                                     David R. Peters
                                          Chief Financial Officer


                                       14
<PAGE>
                                  CERTIFICATION

I, Anil K. Jain, certify that:

1.   I  have  reviewed  this  quarterly report on Form 10-Q of APA Optics, Inc.;

2.   Based  on  my  knowledge, this quarterly 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  quarterly  report;

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

4.   APA  Optics,  Inc.'s  other  certifying  officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange Act Rules 13a-14 and 15d-14) for APA Optics, Inc. and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  APA  Optics,  Inc., including its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during  the  period  in  which this quarterly
          report  is  being  prepared;

     b)   Evaluated  the  effectiveness  of  the  our  disclosure  controls  and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and

     c)   Presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   APA Optics, Inc.'s other certifying officers and I have disclosed, based on
     our  most recent evaluation, to our auditors and the audit committee of our
     board  of  directors:

     a)   There are no known deficiencies in the design or operation of internal
          controls  which  could  adversely affect APA Optics, Inc.'s ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     b)   There  has been no known fraud, whether or not material, that involves
          management  or  other  employees  who  have  a significant role in the
          registrant's  internal  controls;  and

6.   APA  Optics,  Inc.'s other certifying officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or  in  other  factors  that  could significantly affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

February 14, 2003


Signature: /s/ Anil K. Jain
           ----------------
Print Name: Anil K. Jain
            ------------
Print Title: Chief Executive Officer
             -----------------------


                                       15
<PAGE>
                                  CERTIFICATION

I, David R. Peters, certify that:

1.   I  have  reviewed  this  quarterly report on Form 10-Q of APA Optics, Inc.;

2.   Based  on  my  knowledge, this quarterly 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  quarterly  report;

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

4.   APA  Optics,  Inc.'s  other  certifying  officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange Act Rules 13a-14 and 15d-14) for APA Optics, Inc. and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  APA  Optics,  Inc., including its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during  the  period  in  which this quarterly
          report  is  being  prepared;

     b)   Evaluated  the  effectiveness  of  the  our  disclosure  controls  and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and

     c)   Presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   APA Optics, Inc.'s other certifying officers and I have disclosed, based on
     our  most recent evaluation, to our auditors and the audit committee of our
     board  of  directors:

     a)   There are no known deficiencies in the design or operation of internal
          controls  which  could  adversely affect APA Optics, Inc.'s ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     b)   There  has been no known fraud, whether or not material, that involves
          management  or  other  employees  who  have  a significant role in the
          registrant's  internal  controls;  and

6.   APA  Optics,  Inc.'s other certifying officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or  in  other  factors  that  could significantly affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

February 14, 2003

Signature: /s/ David R. Peters
           -------------------
Print Name: David R. Peters
            ---------------
Print Title: Chief Financial Officer
             -----------------------


                                       16
<PAGE>