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

                For the quarterly period ended June 30, 2003, 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 Identification No.)
 incorporation or organization)


                   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 June 30, 2003
    Common stock, par value $.01                          11,872,331


<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                                APA OPTICS, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                                    (Unaudited)
                                                     June 30,       March 31,
                                                       2003           2003
                                                   -------------  -------------
<S>                                                <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents                        $ 18,309,434   $ 22,235,686
  Accounts receivable, net of allowance of
    uncollectible accounts of $20,644 at June 30,
    2003 and March 31, 2003                           1,237,484        468,576
  Inventories, net                                    2,062,061      1,398,203
  Prepaid expenses                                      166,882        134,045
  Bond reserve funds                                          -         75,000
                                                   -------------  -------------
Total current assets                                 21,775,861     24,311,510

Property, plant and equipment, net                    4,333,534      3,989,344

Bond reserve funds                                      342,557        340,629
Bond placement costs                                     13,771         20,013
Patents, net of accumulated amortization                 92,737         85,362
Goodwill                                              2,778,296      2,500,296
Other                                                   592,660        586,542
                                                   -------------  -------------
                                                      3,820,021      3,532,842
                                                   -------------  -------------

Total assets                                       $ 29,929,416   $ 31,833,696
                                                   =============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                $  1,714,305   $  1,846,922
  Accounts payable                                      317,132        454,804
  Accrued expenses                                      377,769        286,267
                                                   -------------  -------------
Total current liabilities                             2,409,206      2,587,993

Long-term debt                                          146,416        326,760

Shareholders' equity:
  Common stock                                          118,723        118,723
  Additional paid-in capital                         52,001,681     52,001,681
  Accumulated deficit                               (24,746,610)   (23,201,461)
                                                   -------------  -------------
Total shareholders' equity                           27,373,794     28,918,943
                                                   -------------  -------------

Total liabilities and shareholders' equity         $ 29,929,416   $ 31,833,696
                                                   =============  =============
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


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

                                            Three Months Ended
                                                 June 30,
                                        --------------------------
                                            2003          2002
                                        ------------  ------------
<S>                                     <C>           <C>
Revenues                                $ 1,566,992   $    72,451

Costs and expenses:
  Cost of sales                           1,867,881       753,720
  Research and development                  144,189       355,712
  Selling, general and administrative     1,070,952       321,579
                                        ------------  ------------
                                          3,083,022     1,431,011
                                        ------------  ------------

Loss from operations                     (1,516,030)   (1,358,560)

                                             25,451
Other income                                              133,092
Other expense                               (54,570)      (27,276)
                                        ------------  ------------
                                            (29,119)      105,816
                                        ------------  ------------

Loss before income taxes                 (1,545,149)   (1,252,744)

Income taxes                                    250           250
                                        ------------  ------------

Net loss                                $(1,545,399)  $(1,252,994)
                                        ============  ============

Net loss per share:
Basic and diluted                            ($0.13)       ($0.11)
                                        ============  ============

Weighted average shares outstanding:
  Basic and diluted                      11,872,331    11,875,840
                                        ============  ============
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


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

                                                          Three Months Ended
                                                              June 30,
                                                     --------------------------
                                                         2003          2002
                                                     ------------  ------------
<S>                                                  <C>           <C>
OPERATING ACTIVITIES
Net loss                                             $(1,545,149)  $(1,252,994)
Adjustments to reconcile net loss to net cash used
   in operating activities:
      Depreciation and amortization                      182,176       156,551
      Deferred compensation expense                       30,919        13,402
    Changes in operating assets and liabilities:
       Accounts receivable                              (768,908)      (27,707)
       Inventories                                      (663,858)       25,143
       Prepaid expenses                                  (69,871)       38,321
       Accounts payable and accrued expenses             (46,170)      (51,841)
       Other                                                   -        42,927
                                                     ------------  ------------
Net cash used in operating activities                 (2,880,864)   (1,056,198)

INVESTING ACTIVITIES
Purchases of property and equipment                     (526,366)      (56,360)
Purchase price paid in excess of market value           (278,000)            -
Investment in patents                                     (7,375)            -
                                                     ------------  ------------
Net cash used in investing activities                   (811,741)      (56,360)

FINANCING ACTIVITIES
Bond reserve funds                                        79,314        51,250
Repurchase of common stock                                     -        (1,287)
Repayment of long-term debt                             (312,961)     (422,651)
                                                     ------------  ------------
Net cash provided by (used in) financing activities     (233,647)     (372,688)
                                                     ------------  ------------

Increase (decrease) in cash and cash equivalents      (3,926,252)   (1,485,246)

Cash and cash equivalents at beginning of period      22,235,686    31,606,403
                                                     ------------  ------------

Cash and cash equivalents at end of period           $18,309,434   $30,121,157
                                                     ============  ============
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED 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,  2003.

     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  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 991,197 and 775,872 shares of
common  stock  with  a  weighted  average  exercise price of $9.91and $9.01 were
outstanding  at  June  30,  2003  and 2002, respectively, but were excluded from
calculating  the  three  months  diluted  net  loss  per share because they were
antidilutive.

NOTE  3.  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  4.  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, Vice President and Secretary.  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.

NOTE  5.  ACQUISITION

     The  Company  acquired the assets of Americable, Inc. on June 27, 2003. The
purchase  price  and  assets  acquired  are  as  follows:

     Accounts  receivable                              $      594,000
     Inventory                                                638,000
     Property, plant and equipment                            450,000
                                                       --------------
         Assets purchased                                   1,682,000
     Goodwill                                                 278,000
                                                       --------------
         Purchase price                                $    1,960,000
                                                       ==============


                                        5
<PAGE>
NOTE  6.  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  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.



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
Influence  Future  Results."


                                        6
<PAGE>
OVERVIEW

     We  design, manufacture, source from third parties, and market a variety of
fiber  optic  and  copper  components  to  the  data  communication  and
telecommunication  industries. We are also active in the design, manufacture and
marketing  of  ultraviolet  (UV)  detection  and  measurement  devices,  optical
components  and in research and development in the area of Gallium Nitride (GaN)
based  transistors.

     Our  primary  internally  manufactured products include standard and custom
fiber  optic  assemblies,  copper  cable  assemblies,  value  added fiber optics
frames,  panels and modules. These products are manufactured by our wholly owned
subsidiary  APA  Cables  & Networks, Inc. (APACN) who acquired certain assets of
Computer  System  Products, Inc. ("CSP") on March 14, 2003 and certain assets of
Americable, Inc. ("Americable") on June 27, 2003. Several of the items discussed
under  "Results  of  Operations"  show  significant  changes from the comparable
period  in  the  preceding fiscal year as a result of the acquisition of CSP. We
expect  to  see similar changes in the second quarter of fiscal 2004 as a result
of  our  acquisition  of  Americable.

     We  outsource  from  third  parties  passive  optical  splitters,  arrayed
waveguides (AWGs) and wavelength division multiplexers (WDMs) based on Thin Film
Filter  (TFF)  technology,  which  we  combine  with our internally manufactured
products to create value added components for our customers. The majority of our
outsourced  product  providers  are  located  offshore.

     Most  companies  in  the  communications industry have been affected by the
slowdown  in  telecommunications  equipment  spending.  Decreased  demand  and
competition  have  put  downward  pressure on margins. This downward pressure is
likely  to  continue  and  we  will  need  to reduce operating costs and improve
efficiencies  to  remain  competitive  in  the  marketplace.

     We  cannot  predict whether we will be able to compete with our existing or
new  products  or  with  current  and  future  competitors.  We  believe  that
technological  change,  the  convergence of Internet, data, video and voice on a
single  broadband  network,  the  possibility of regulatory changes and industry
consolidation  or  new  entrants  will  continue to cause rapid evolution in the
competitive  environment.  The full scope and nature of changes are difficult to
predict  at  this  time. Increased competition could lead to price cuts, reduced
profit  margins and loss of market share, which may seriously harm our business,
operating  results  and  financial  condition.

     Our  consumer GaN based product, the SunUVPersonal UV Monitor (SunWatch) is
ready  for  production.  As of June 30, 2003, and currently, we are working with
our  manufacturing  facility  in  China to address yield and production capacity
issues.  Our  goal is to increase production to meet demand for the 2003 holiday
season.  Our  ability  to  meet  this objective is dependent upon depends on our
ability  to  solve  production  related  issues.

     Our  industrial  GaN  based  product,  the TrUVMetertm, required additional
engineering  to meet the accuracy and reliability specifications for key markets
in  sterilization,  curing  and  scientific  measurement.  As  of  June 30, 2003
reliability  tests  were  in progress and field-testing will follow this process
prior  to  introduction.


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


REVENUES

     Revenues  for  the quarter ended June 30, 2003, were $1,566,992, reflecting
over  a  twenty-fold increase from the comparable period in the preceding fiscal
year.  The  increase  is  attributable to revenues generated by our wholly owned
subsidiary  APACN,  which produced $1,512,368 in revenues for the quarter. There
are  no  corresponding  revenues  from  APACN  in  the  comparable period in the
preceding  fiscal  year.  We  expect  revenues  to  increase again in the second
quarter of fiscal 2004 when the results of operations reflect the acquisition of
Americable.


                                        7
<PAGE>
COST  OF  SALES

     Cost of sales increased $1,114,161 to $1,867,881 for the quarter ended June
30, 2003, reflecting a 148% increase from the comparable period in the preceding
fiscal  year.  The increase is due primarily to the volume increase attributable
to  APACN. Gross margins for APACN for the current quarter were $316,564 or 21%.
Overall  gross margins were negative in both periods. We expect cost of sales to
increase  again  in  the  second  quarter  of  fiscal  2004  when the results of
operations  reflect the acquisition of Americable, Inc.  We expect gross margins
for APACN to gradually improve over the balance of fiscal 2004 as we consolidate
the  operations  of APACN and Americable, Inc. and eliminate duplicate expenses.
We  expect  overall  gross  margins  to  improve as well, but to remain negative
through  the  end  of  fiscal  2004.

RESEARCH  AND  DEVELOPMENT  EXPENSES

     Research and development expenses decreased by $211,523 to $144,189 for the
quarter ended June 30, 2003 compared to the same period for the preceding fiscal
year. This represents a decrease of 59%. The decrease is the result of decreased
research  activity  related  to  our  fiber  optic products. The majority of the
decrease is due to a reduction in salaries and other related expenses. We expect
research  and  development  expenses  to remain stable for the balance of fiscal
2004.

SELLING,  GENERAL  AND  ADMINISTRATIVE

     Selling,  general  and  administrative  expenses increased $699,411 for the
quarter  ended  June  30,  2003, reflecting a 249% increase compared to the same
period  in  the  preceding  fiscal  year.  The increase was primarily due to the
acquired  operations  of  APACN,  which  incurred  expenses  of $519,415 for the
quarter. Nearly half the total is employee related. The majority of the increase
of  $229,958 is related to non-recurring uncapitalized transaction costs for the
acquisitions  of  CSP  and  Americable.

LOSS  FROM  OPERATIONS

     The loss from operations was $1,516,030, an increase of $157,470 or 12% for
the  quarter  ended June 30, 2003 over the comparable period in fiscal 2003. The
increased loss in the quarter was the result of operating losses at APACN, which
totaled  $202,851  for  the  period.  We  expect the losses to decrease over the
balance  of  fiscal  2004 as we realize cost savings and efficiencies related to
the  consolidation  of  the  operations  of  APACN  and  Americable.

OTHER  INCOME  AND  EXPENSE

     Other income decreased $107,641 or 81% for the quarter ended June 30, 2003,
from  the  comparable period in fiscal 2003. The decrease was primarily due to a
decrease  in  interest  income  due to a decline in interest rates earned on the
investment  of  company funds. Other expenses increased $27,294 or 100% from the
same  period in the prior 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,  debt  service  and  acquisitions.  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.

NET  LOSS

     The  net loss for the quarter ended June 30, 2003, was $1,545,399 (or $0.13
per  basic  and diluted share), an increase of $292,405 or 23% from the net loss
reported  for  the  same  period  in  fiscal  2003.  The  increased net loss was
primarily  attributable  to  losses  at  APACN.

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

     APA's  cash  and  cash equivalents consist primarily of money market funds,
U.S.  Government  instruments  or  other  government  instruments  with original
maturities  of  less than three months. The balance of cash and cash equivalents


                                        8
<PAGE>
at  June  30, 2003 is $18,309,434 compared to $22,235,686 at March 31, 2003. The
decrease  in  cash  was primarily the result of the acquisition of the assets of
Americable,  Inc.  and  the  use  of  cash  to  fund  operations.

     We  used  net  cash  of  $811,741  in  investing  activities in the quarter
compared  to  $56,360  used  in the same period of the preceding fiscal year. Of
this  amount,  $456,357  was  used  to purchase assets and $278,000 was paid for
goodwill  in  connection  with  our  acquisition of Americable. We also invested
$70,009  during the quarter for computer and production equipment. We anticipate
a  total  of  approximately  $750,000  in  capital  expenditures in fiscal 2004,
primarily  for  equipment.  We expect to invest in equipment to support the HFET
research  and  development  activities  over  the  next  several  quarters.

     Net  cash  used in financing activities in the quarter totaled $233,647. We
used  $312,961  for  the  scheduled  reduction  of  debt and a reduction in bond
reserve  funds  generated $79,314. During the same period in fiscal 2003 we used
$372,688  in  financing activities, of which $422,651 was used for the scheduled
reduction  of  debt,  $51,250  was  generated from the reduction of bond reserve
funds  and  $1,287  was  used  to  repurchase  common  stock  of  the  company.

     We  believe  we  have sufficient funds for operations for at least the next
twelve  months.

     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          $1,861   $   1,615   $      70   $      36   $   140
Operating leases           908         337         571           -         -
                        ----------------------------------------------------
Total Contractual Cash
Obligations             $2,769   $   1,952   $     641   $      36   $   140
                        ====================================================
</TABLE>

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 our fiscal year ended March 31, 2003
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 is described. We
believe 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

     The  statements  contained  in this report on Form 10-Q that are not purely
historical  are  "forward-looking  statements" within the meaning of the Private
Securities  Litigation  Reform Act of 1995, Section 27A of the Securities Act of
1933  and Section 21E of the Securities Exchange Act of 1934, including, without
limitations,  statements  regarding  the Company's expectations, hopes, beliefs,
anticipations,  commitments,  intentions  and  strategies  regarding the future.


                                        9
<PAGE>
Forward-looking statements include, but are not limited to, statements contained
in  "Item  2.  Management's  Discussion  and Analysis of Financial Condition and
Results  of Operations." Actual results could differ from those projected in any
forward-looking  statements  for  the  reasons, among others, detailed below. We
believe  that  many of the risks detailed here are part of doing business in the
industry in which we compete and will likely be present in all periods reported.
The  fact  that certain risks are characteristic to the industry does not lessen
the  significance of the risk. The forward-looking statements are made as of the
date of this Form 10-Q and we assume no obligation to update the forward-looking
statements  or  to update the reasons why actual results could differ from those
projected  in  the  forward-looking  statements.

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

     We  have not been profitable since fiscal 1990. As of June 30, 2003, we had
an  accumulated  deficit of $24.7 million. We may 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
and  increasing  manufacturing,  sales  and  marketing,  product development and
administrative  expenses.  As  a  result, we will need to generate significantly
higher  revenues  while  containing  costs  and  operating expenses if we are to
achieve  profitability.

Declining average selling prices for our fiber optic products will require us to
reduce  production  costs  to  effectively  compete  and  market  these products

     Since  the  time  we  first  introduced  our  fiber optic components to the
marketplace  we  have  seen  the average selling price of fiber optic components
decline.  We  expect  this  trend  to continue. 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 pursue one or more of the
following:

     -    Seek lower cost suppliers of raw materials or components.
     -    Work to further automate our assembly process.
     -    Develop value-added components based on integrated optics.
     -    Seek offshore sources for assembly services.

     We  will  also  seek  to  form  strategic alliances with companies that can
supply  these services. Decreases in average selling prices also require that we
increase  unit  sales  to  maintain  or  increase  our  revenue. There can be no
guarantee  that  we  will  achieve  these  objectives. Our inability to decrease
production  costs  or increase our unit sales could seriously harm our business,
financial  condition  and  results  of  operations.

     We believe our success in competing with other manufacturers of fiber optic
and  copper components and assemblies will depend primarily on our manufacturing
and  marketing  skills,  the price, quality and reliability of our products, our
delivery capabilities and our control of operating expenses. We have experienced
and  anticipate  experiencing  increasing pricing pressures from our current and
future  competitors  as  well  as general pricing pressure from our customers as
part  of  their  cost  reduction  efforts.  Competition  may also be affected by
consolidation  among  suppliers  in  this  industry  which  may  increase  their
resources. As a result, other competitors may be able to respond more quickly to
new  or  emerging  technologies  and  changes  in  customer  requirements.

     We  cannot  predict whether we will be able to compete with our existing or
new  products  or  with  current  and  future  competitors.  We  believe  that
technological  change,  the  convergence of Internet, data, video and voice on a
single  broadband  network,  the  possibility of regulatory changes and industry
consolidation  or  new  entrants  will  continue to cause rapid evolution in the
competitive  environment.  The full scope and nature of changes are difficult to
predict  at  this  time. Increased competition could lead to price cuts, reduced
profit  margins and loss of market share, which may seriously harm our business,
operating  results  and  financial  condition.

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


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     Demand  for our products is dependent on several factors, including capital
expenditures  in  the  communications  industry.  Capital  expenditures  can  be
cyclical  in  nature  and  result  in  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 been more profound in the telecommunications market resulting in a
significant reduction in capital expenditures for products such as our DWDMs and
our  fiber  optic  components. It is impossible to predict how long the slowdown
will  last.  Such  periods  of  reduced demand will harm our business, financial
condition  and  results of operations. Changes to the regulatory requirements of
the telecommunications industry could also affect market conditions, which could
also  reduce  demand  for  our  fiber  optic  components.

We may be required to rapidly increase our manufacturing capacity to deliver our
products  to  our  customers  in  a  timely  manner.

     Manufacturing  of  our products is a complex and precision process. We have
limited  experience  in  rapidly  increasing  our  manufacturing  capacity or in
manufacturing products at high volumes. If demand for our products increases, we
will  be  required  to hire, train and manage additional manufacturing personnel
and  improve  our  production  processes  in  order  to  increase our 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,
          and

     -    Lack of availability of qualified manufacturing personnel.

     If  we  apply our capital resources to expanding our manufacturing capacity
in anticipation of increased customer orders, we run the risk that the projected
increase  in  orders  will  not  be  realized. If anticipated levels of customer
orders  are not received, we will not be able to generate positive gross margins
and  profitability.

Our  dependence  on outside manufacturers may result in product delivery delays.

     We purchase components that are incorporated into our products from outside
vendors.  If  these  vendors  fail  to  supply  us  with components or completed
assemblies  on  a  timely basis, or if the quality of the supplied components or
completed  assemblies  is not acceptable, we could experience significant delays
in  shipping our products. Any significant interruption in the supply or support
of any components or completed assemblies 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  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  to  develop than originally anticipated. These
products  may  contain  defects  or  have unacceptable manufacturing yields when


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first  introduced  or  as  new versions are released. Our products could quickly
become  obsolete  as new technologies are introduced or as other firms introduce
lower  cost  alternatives. We must continue to develop leading-edge products and
introduce  them  to the commercial market quickly in order to be successful. Our
failure  to  produce  technologically  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 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  multiple  patents  on  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  infringe  upon  their
intellectual  property.  Defending  our  interests against these 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 were
successful,  we  could  be  prevented  from manufacturing or selling our current
products,  be  forced  to  redesign  our  products,  or be forced to license the
relevant intellectual property at a significant cost. Any of these actions could
harm  our  business,  financial  condition  or  results  of  operations.

Acquisitions  or  investments  could  have  an  adverse  affect  on our business
     We  completed  acquisitions of the assets of Computer System Products, Inc.
and  Americable,  Inc.  in March 2003 and June 2003 respectively, as part of our
strategy to expand our product offerings, develop internal sources of components
and  materials,  and  acquire  new technologies. We intend to continue reviewing
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


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<PAGE>
          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  10.8  -  Sublease  with  Newport  Corporation

               Exhibit  31.1  -  Chief  Executive  Officer's  Certification

               Exhibit  32.2  -  Chief  Financial  Officer's  Certification

               Exhibit  32.1  - Chief Executive Officer's certification pursuant
               to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002

               Exhibit  32.2  - 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 May 23, 2003, reported the acquisition
               of the assets of Computer System Products, Inc.

               A report on Form 8-K dated June 30, 2003, reported the
               acquisition of the assets of Americable, Inc.


                                   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.


  8/8/03                       /s/  Anil  K.  Jain
----------                     -------------------

   Date                             Anil  K.  Jain
                                    President  and
                                    Chief  Executive  Officer
                                    (Principal executive officer)


                                       13
<PAGE>
  8/8/03                       /s/  David  R.  Peters
----------                     ----------------------

   Date                             David  R.  Peters
                                    Chief Financial Officer
                                    (Principal financial and accounting officer)


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