UNITED STATES
                       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 December 31, 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                           Yes           No  X
                               ---          ---

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


<PAGE>
<TABLE>
<CAPTION>
                          PART I. FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

                                APA OPTICS, INC.
                       CONSOLIDATED CONDENSED BALANCE SHEETS
                                    (UNAUDITED)


                                                      December 31,     March 31,
                                                          2003           2003
                                                     --------------  -------------
<S>                                                  <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents                          $  15,040,465   $ 22,235,686
  Accounts receivable, net of allowance for
  uncollectible accounts of $24,838 at December 31,
  2003 and $20,644 at March 31, 2003                     1,407,578        468,576
  Inventories                                            2,403,681      1,398,203
  Prepaid expenses                                         182,897        134,045
  Bond reserve funds                                        84,282        125,830
                                                     --------------  -------------
Total current assets                                    19,118,903     24,362,340

Property, plant and equipment, net                       4,402,452      3,989,344

Other assets:
  Bond reserve funds                                       335,618        340,629
  Bond placement costs, net of accumulated
  amortization                                               1,771         20,013
  Patents, net of accumulated amortization                  92,738         85,362
  Goodwill                                               2,778,296      2,500,296
  Other                                                    569,386        586,542
                                                     --------------  -------------
                                                         3,777,809      3,532,842
                                                     --------------  -------------

Total assets                                         $  27,299,164   $ 31,884,526
                                                     ==============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                  $   1,545,149   $  1,846,922
  Accounts payable                                         910,483        454,804
  Accrued expenses                                         529,417        337,097
                                                     --------------  -------------
Total current liabilities                                2,985,049      2,638,823

Long-term debt                                             276,831        326,760

Shareholders' equity:
  Common Stock                                             118,723        118,723
  Additional paid-in capital                            51,975,345     52,001,681
  Accumulated deficit                                  (28,056,784)   (23,201,461)
                                                     --------------  -------------
Total shareholders' equity                              24,037,284     28,918,943
                                                     --------------  -------------

Total liabilities and shareholders' equity           $  27,299,164   $ 31,884,526
                                                     ==============  =============
</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          Nine Months Ended
                                                December 31,               December 31,
                                        --------------------------  --------------------------
                                            2003          2002          2003          2002
                                        ------------  ------------  ------------  ------------
<S>                                     <C>           <C>           <C>           <C>
Revenues                                $ 3,301,955   $    40,674   $ 8,426,533   $   152,025

Costs and expenses:
   Cost of sales                          3,314,468       554,053     8,521,606     2,030,730
   Research and development                 248,128       360,178       655,302     1,050,025
   Selling, general and administrative    1,380,005       296,638     4,104,496     1,014,573
                                        ------------  ------------  ------------  ------------
                                          4,942,601     1,210,869    13,281,404     4,095,328
                                        ------------  ------------  ------------  ------------

Loss from operations                     (1,640,646)   (1,170,195)   (4,854,871)   (3,943,303)

Other income                                 38,569        44,906        98,677       300,795
Other expense                               (39,196)      (25,705)      (96,966)      (79,716)
                                        ------------  ------------  ------------  ------------
                                               (627)       19,201         1,711       221,079
                                        ------------  ------------  ------------  ------------

Loss before income taxes                 (1,641,273)   (1,150,994)   (4,853,160)   (3,722,224)

Income taxes                                  1,163           500         2,163         1,000
                                        ------------  ------------  ------------  ------------

Net loss                                $(1,642,436)  $(1,151,494)  $(4,855,323)  $(3,723,224)
                                        ============  ============  ============  ============
Net loss per share:
   Basic and diluted                         ($0.14)       ($0.10)       ($0.41)       ($0.31)

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

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


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


                                                                    Nine Months Ended
                                                                        December 31,
                                                                 --------------------------
                                                                     2003          2002
                                                                 ------------  ------------
<S>                                                              <C>           <C>
OPERATING ACTIVITIES
Net loss                                                         $(4,855,323)  $(3,723,224)
Adjustments to reconcile net loss to net cash used in operating
activities, net of acquisition:
    Depreciation and amortization                                    672,528       512,638
    Write-off of patents                                                   -       108,660
    Stock based compensation expense                                 (26,336)      (44,729)
  Changes in operating assets and liabilities:
    Accounts receivable                                             (345,002)      (12,889)
    Inventories                                                     (367,478)      (66,252)
    Prepaid expenses and other                                      (124,441)      (16,445)
    Accounts payable and accrued expenses                            647,999       (55,966)
                                                                 ------------  ------------
Net cash used in operating activities                             (4,398,053)   (3,298,207)

INVESTING ACTIVITIES
Purchases of property and equipment, net                            (542,891)     (181,793)
Cash paid for business acquisition                                (1,960,000)            -
Investment in patents                                                 (7,376)      (14,176)
                                                                 ------------  ------------
Net cash used in investing activities                             (2,510,267)     (195,969)

FINANCING ACTIVITIES
Repayment of long-term debt                                         (351,702)     (437,032)
Repurchase of common stock                                                 -        (5,991)
Bond reserve funds                                                    64,801        52,291
                                                                 ------------  ------------
Net cash used in financing activities                               (286,901)     (390,732)
                                                                 ------------  ------------

Decrease in cash and cash equivalents                             (7,195,221)   (3,884,908)

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

Cash and cash equivalents at end of period                       $15,040,465   $27,721,495
                                                                 ============  ============
Noncash investing and financing activities
   Contributed land                                                        -   $    67,760
   Net assets held for sale                                      $    57,564
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


                                        4
<PAGE>
NOTES TO CONSOLIDATED 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  accounting principles generally accepted in the United States of America 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  that  presentation  to  the  current  period  presentation.


NOTE 2.  NET LOSS PER SHARE

     The  following  table  sets  forth the computation of basic and diluted net
loss  per  share:

<TABLE>
<CAPTION>
                                                                     Three Months Ended          Nine Months Ended
                                                                         December 31,               December 31,
                                                                 --------------------------  --------------------------
                                                                     2003          2002          2003          2002
                                                                 ------------  ------------  ------------  ------------
<S>                                                              <C>           <C>           <C>           <C>

Numerator for basic and diluted net loss                         $(1,642,436)  $(1,151,494)  $(4,855,323)  $(3,723,224)
                                                                 ------------  ------------  ------------  ------------

Denominator for basic and diluted net loss per share- weighted-
  average shares outstanding                                      11,872,331    11,872,331    11,872,331    11,874,371
                                                                 ============  ============  ============  ============

Basic and diluted net loss per share                                  ($0.14)       ($0.10)       ($0.41)       ($0.31)
                                                                 ============  ============  ============  ============
</TABLE>


Common  stock  options  and warrants to purchase 1,008,697 and 548,697 shares of
common  stock  with  a  weighted  average exercise price of $6.67 and $9.51 were
outstanding  at December 31, 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
contingency,  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 GRANTS

     On  August  22, 2002 the Company granted an option to purchase 2,500 shares
of  common  stock 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,  all  with  an exercise price equal to the fair
market  value  of the stock on the day of grant.  The options become exercisable
for  60%  of the shares when the Company achieves specified financial objectives
and  exercisable  as  to  the  remaining 40% when the Company achieves specified


                                        5
<PAGE>
operational objectives set forth in the Short-Term Incentive Plan.  Accordingly,
these  options  are treated as variable awards, and the Company reflects changes
in  their value in the general and administrative expense line until the options
are  exercised  or  expire.  As  of December 31, 2003, 14,940 shares have vested
and  related expense has been  recorded within SG&A. The Company recorded a gain
of  $10,458  for the three months ended December 31, 2003 and  expense of $3,436
for the nine months ended December 31, 2003 related to these options.

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
                                                 ==========

NOTE 6.  SEGMENT REPORTING

     The March 2003 and June 2003 acquisitions of Computer System Products, Inc.
and  Americable,  Inc,,  prompted  the  Company's  management  to  adjust how it
evaluates  its business. As a result the Company established segments under FASB
131"Disclosures  about  Segments of an Enterprise and Related Information." This
evaluation  is  based  on  the way segments are organized within the Company for
making operating decisions and assessing performance. The Company has identified
two  reportable  segments  based  on  its  internal  organizational  structure,
management  of  operations,  and  performance evaluation. These segments are APA
Optics  (APA) and APA Cables and Networks (APACN). APA's revenue is generated in
the  design,  manufacture  and  marketing  of  ultraviolet  (UV)  detection  and
measurement devices and optical components. APACN's revenue is derived primarily
from  standard and custom fiber optic cable assemblies, copper cable assemblies,
value  added  fiber  optics  frames,  panels and modules. Expenses are allocated
between  the  companies  based on detailed information contained in invoices. In
addition,  corporate  overhead  costs  for  management's time and other expenses
absorbed  at  APA  are  allocated  to  APACN on an ongoing basis. Such allocated
expenses  were  $61,251 and $96,851 for the three and nine months ended December
31,  2003.  Segment  detail  is summarized as follows (unaudited, in thousands):

<TABLE>
<CAPTION>
                                   APA Optics    APACN    Eliminations    Consolidated
                                  ------------  -------  --------------  --------------
<S>                               <C>           <C>      <C>             <C>
THREE MONTHS ENDED DECEMBER 31,
2003
   External sales                 $        99   $3,239   $         (36)  $       3,302
   Cost of sales                          790    2,561             (36)          3,315
   Operating loss                      (1,307)    (334)              -          (1,641)
   Depreciation and amortization          188       54               -             242
   Capital expenditures, net              373       15               -             388
   Assets                              27,029    7,456          (7,186)         27,299

THREE MONTHS ENDED DECEMBER 31,
2002
   External sales                 $        41        -               -   $          41
   Cost of sales                          554        -               -             554
   Operating loss                      (1,170)       -               -          (1,170)
   Depreciation and amortization          170        -               -             170
   Capital expenditures                   116        -               -             116
   Assets                              32,217        -               -          32,217


                                        6
<PAGE>
NINE MONTHS ENDED DECEMBER 31,
2003
   External sales                 $       222   $8,249   $         (44)  $       8,427
   Cost of sales                        2,150    6,416             (44)          8,522
   Operating loss                      (4,053)    (802)              -          (4,855)
   Depreciation and amortization          557      116               -             673
   Capital expenditures, net              473      127               -             600
   Assets                              27,029    7,456          (7,186)         27,299

NINE MONTHS ENDED DECEMBER 31,
2002
   External sales                 $       152    $   -   $           -   $         152
   Cost of sales                        2,031        -               -           2,031
   Operating loss                      (3,943)       -               -          (3,943)
   Depreciation and amortization          513        -               -             513
   Capital expenditures                   182        -               -             182
   Assets                              32,217        -               -          32,217
</TABLE>

Note 7.   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 the
Company's common stock. For the nine months ended December 31, 2002, the Company
repurchased  a total of 3,550 shares for $5,991 at an average price of $1.69 per
share.  No shares were purchased during the nine months ended December 31, 2003.

NOTE 8.   WRITE-OFF OF PATENT COSTS

     As  a  result  of  the  slow down 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 increased $108,660 for the quarter and nine months
ended  December 31, 2002. There was no comparable expense during the quarter and
nine  months  ended  December  31,  2003.

NOTE 9.   DISCONTINUED OPERATIONS

     In  January,  2004  the  Company  announced  the  discontinuance  of optics
manufacturing  at  its  Blaine  facility,  affecting its APA Optics segment. The
closure  was  the  result  of  aggressive  off-shore pricing and continued lower
demand  for this product line. This will result in a charge of up to $200,000 to
be  taken  in the 4th quarter ending March 31, 2004.  The Company has identified
certain  assets  related  to  this activity and effective December 31, 2003, has
listed  their  book value as of that date as net assets held for sale.  The book
value  amount,  which  has  been  determined  to  be  approximately $58,000, was
reclassified  and  removed  from  Property,  Plant and Equipment and is included
within  Other  Assets  on  the  Balance  Sheet.

NOTE 10.  STOCK BASED COMPENSATION

     In  accordance  with  Accounting Principles Board (APB) Opinion No. 25, the
Company  uses  the  intrinsic  value-based  method  for  measuring  stock-based
compensation cost which measures compensation cost as the excess, if any, of the
quoted  market  price  of  the Company's common stock at the grant date over the
amount  the  employee  must  pay for the stock. The Company's policy is to grant
stock  options  at  fair  value  at  the  date  of  grant.  The  following table
illustrates  the  effect  on  net loss and net loss per share if the Company had
applied  the  fair  value  recognition  provisions  of  FASB  Statement No. 123,
"Accounting  for Stock-Based Compensation", to stock-based employee compensation
(in  thousands,  except  per  share  data).


                                        7
<PAGE>
<TABLE>
<CAPTION>
                                      Thee Months Ended           Nine Months Ended
                                         December 31,                December 31,
                                  --------------------------  --------------------------
                                      2003          2002          2003          2002
                                  ------------  ------------  ------------  ------------
<S>                               <C>           <C>           <C>           <C>

Net loss as reported              $(1,642,436)  $(1,151,494)  $(4,855,323)  $(3,723,224)
Less: Compensation expense
determined under the fair value
method, net of tax                     50,318        32,180       150,952        96,540
                                  ------------  ------------  ------------  ------------
Pro forma net loss                $(1,692,754)  $(1,183,674)  $(5,006,275)  $(3,819,764)
                                  ============  ============  ============  ============

Net loss per share:
Basic and diluted as reported          ($0.14)       ($0.10)       ($0.41)       ($0.31)
Basic and diluted pro forma            ($0.14)       ($0.10)       ($0.42)       ($0.32)
</TABLE>

NOTE 11.  ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

     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.  In accordance with SFAS
No.  146, the Company expects to incur a charge of approximately $200,000 in the
4th  quarter  ending  March  31,  2004  related  to  the  closing  of  it Optics
operations.

     In  November 2002, the 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 did not have a
material  effect  on  the Company's financial position or results of operations.

     In  January  2003,  the  FASB  issued  Interpretation  No.  46  (FIN  46),
"Consolidation  of  Variable  Interest  Entities"  (VIE),  which  requires
consolidation  of  variable  interest  entities by holders of variable interests
that  meet  certain  conditions.  FIN  46  establishes  accounting  for variable
interests  in  a  VIE  created  after  January 31, 2003. FIN 46 clarifies how an
enterprise  should determine if it should consolidate a VIE. The adoption of FIN
46  has  not  had  a  material  affect  on  the Company's consolidated financial
position  or  results  of  operations.

     In  May  2003,  the  FASB  issued  Statement  150,  "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
statement  changes  the  classification  of certain common financial instruments
from either equity or mezzanine presentation to liabilities in the balance sheet
and  requires  an  issuer of those financial instruments to recognize changes in
fair  value  or redemption amount, as applicable, in earnings. This statement is
effective  for financial instruments entered into or modified after May 31, 2003
and, with one exception, is effective for the quarter beginning July 1, 2003 for
public  companies.  As  the  Company  has  not  issued any financial instruments
addressed by this new pronouncement, its adoption did not have a material effect
on  the  Company's  consolidated  financial  statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


                                        8
<PAGE>
     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  Influence  Future  Results."

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, 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 cable assemblies, copper cable assemblies, value added fiber optics
frames,  panels and modules. These products are manufactured by our wholly owned
subsidiary  APA Cables and Networks, Inc. (APACN), which 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  periods  in  the  preceding  fiscal  year  as  a  result  from  the
acquisitions  of  CSP  and  Americable.

     In  January  2004  APA  terminated  its  optics  manufacturing  in  Blaine,
Minnesota  as  described in Note 9 to the financial statements.  Additionally in
January  2004  APA  consolidated its fiber optics operations within Blaine.  APA
plans  to  continue to market and sell fiber optic products using mainly APACN's
sales  team  and  channels.  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.

     Our consumer GaN based product, the SunUV(TM) Personal UV Monitor (formerly
SunWatch)  is  now ready for production. As of December 31, 2003, and currently,
we  are  working  with  our manufacturing facility in China to address yield and
production  capacity  issues.  Whereas  we  shipped  several  hundred  SunUV(TM)
Personal  UV  Monitors  to  one customer in the 3rd quarter, our ability to ship
large  quantity orders is dependent upon our ability to solve production related
issues.

     We  continue to work on our industrial GaN based product, the TrUVMeter(TM)
to  meet  accuracy  and  reliability  specifications  for  key  markets  in
sterilization,  curing  and  scientific measurement. As reported previously, our
primary  focus  at  present is to introduce the SunUV(TM) Personal UV Monitor to
the  market  and,  subsequently,  to  introduce  the  TrUVMeter(TM).

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

REVENUES

     Revenues  for  the  quarter  ended  December  31,  2003  were  $3,301,955,
reflecting  over  an  eighty-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 $3,239,275 in revenues for the
quarter.  This  compares  to $3,497,188 in the prior quarter ended September 30,


                                        9
<PAGE>
2003.  Sales at APACN were affected by seasonality and the number of holidays in
the  third  quarter.  Sales  for  the  nine  months ended December 31, 2003 were
$8,426,533,  reflecting  a  54-fold  increase  from the comparable period in the
preceding  year.  The  increase  is attributable to revenues generated by APACN,
which  recorded  revenue  of $8,248,831 for the nine month period ended December
31,  2003.  There  are  no  corresponding  revenues from APACN in the comparable
period  in  the  preceding  fiscal  year.  We  expect that future sales of APACN
products  will  continue to account for a substantial portion of our revenue. We
anticipate  that  revenues  in  the  fourth  quarter  ending  March 31, 2004, as
compared  to  the third quarter ended December 31, 2003, will remain constant at
APA  Optics  and  may  grow  slightly  at  APACN.

COST OF SALES

     Cost  of  sales  for the quarter ended December 31, 2003 was $3,314,468 and
$8,521,606  for  the  nine months ended December 31, 2003, respectively. Cost of
sales  for  the  three  and nine months ended December 31, 2002 was $554,053 and
$2,030,730,  respectively.  The  increases  over  the  comparable periods in the
preceding  fiscal  year are due primarily to the volume increase attributable to
APACN. Gross margins for APACN for the current quarter were $678,369 or 21%, and
$1,833,083,  or  22%, for the nine months ended December 31, 2003. This compares
to  gross margins of $838,150 for APACN in the prior quarter ended September 30,
2003.  Gross  margins  for  the  quarter  ended  December 31, 2003 at APACN were
negatively affected by lower revenues as well as costs associated with expanding
to  APA's  Aberdeen  production  facility.  Cost  of sales for the quarter ended
December  31,  2003  at  APA  were  negatively  affected  by  the  write  off of
approximately  $165,000  of  obsolete  inventory  mainly related to fiber optics
products.  We  expect gross margins for APACN to improve as we gradually realize
lower  manufacturing  costs  associated  with  APA's  Aberdeen  facility.

RESEARCH AND DEVELOPMENT EXPENSES

     Research  and  development expenses decreased by $112,050, to $248,128, for
the  quarter  ended  December  31,  2003  compared  to  the  same period for the
preceding  fiscal  year.  This represents a decrease of 31% compared to the same
period  in  the  prior  year.  Research  and  development  expenses decreased by
$394,723,  from  $1,050,025  to $655,302, for the nine months ended December 31,
2003  compared to the same period in 2002.  Decreases in both the three and nine
month  periods  in  2003  versus  2002  are  due primarily to decreased research
activity  related to our fiber optic products. The majority of the decreases are
due  to reduction in salaries and other related expenses. We expect research and
development  expenses  to  remain  consistent  with  previous  quarters  for the
balance  of  fiscal  2004.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling,  general  and  administrative  expenses  increased  $1,083,367  to
$1,380,005  for  the  quarter  ended  December  31, 2003 versus $296,638 for the
comparable  period in the preceding fiscal year, reflecting an increase of 365%.
The  increase is due primarily to the addition of APACN, which had $1,012,066 in
SG&A expenses for the quarter. This compares to $1,104,028 in the second quarter
ended  September 30, 2003, or a decrease of $91,962. The decrease form the prior
quarter  is due mainly to one time expenses APACN incurred in the second quarter
associated  with  its consolidation of facilities, coupled with additional sales
and  marketing  expenses  in  the  third quarter attributable to compensation of
additional  outside manufacturer representatives and higher marketing costs. For
the  three  months  ended  December  31,  2003, expenses at APA Optics increased
$71,301  to  $367,939  from  $296,638,  due primarily to higher depreciation and
amortization  expenses.

     For  the nine months ended December 31, 2003, SG&A increased $3,089,923, or
305%,  to $4,104,496.  The increase was primarily due to the acquired operations
of  APACN,  which  had $2,635,510 in expenses for the nine months ended December
31,  2003, approximately 67% of which is personnel related.  For the nine months
ended  December  31,  2003,  SG&A  expenses  at APA Optics increased $454,413 to
$1,468,986  from  $1,014,573,  primarily  due  to  higher  depreciation  and
amortization  along  with  higher personnel expenses.  For the nine months ended
December 31, 2003, approximately $230,000 of APA Optics SG&A expenses, primarily
professional  fees, have been related to non-recurring uncapitalized transaction
costs  for  the  acquisitions of CSP and Americable.  We expect SG&A expenses to
decrease  next  quarter  as  cost  savings  related  to the consolidation of the
operations  of  APA's  fiber  optic  segment  are  achieved.


                                        10
<PAGE>
LOSS FROM OPERATIONS

     The  loss  from  operations was $1,640,646, an increase of $470,451, or 40%
for  the  quarter  ended  December 31, 2003 over the comparable period in fiscal
2003.  The  increased  loss in the quarter was the result of operating losses at
APACN,  which  totaled $333,697 for the period. The loss from operations for the
nine  months ended December 31, 2003 was $4,854,871, an increase of $911,568, or
23%,  from  $3,943,303  in  the  comparable  period  in  the preceding year. The
increased  loss  is  primarily  the  result of the operating losses at APACN. We
expect  to  incur  losses  over  the  balance  of  fiscal 2004 as we continue to
experience  low  sales  volumes  of fiber optic products and SunUVTM Personal UV
Monitor  products at APA; however we have taken steps through expense reductions
to  decrease  the  losses.

OTHER INCOME AND EXPENSE

     Other  income decreased $6,337, or 14%, for the three months ended December
31,  2003  from  the comparable period in fiscal 2003. For the nine months ended
December  31,  2003, other income decreased $202,118, or 67% from the comparable
period  in  the  preceding fiscal year. Other expenses increased $13,491 for the
three  months  ended December 31, 2003. For the nine-month period ended December
31, 2003, other expenses increased $17,250 due to additional interest expense on
capital leases at APACN. Interest income, a component of other income, decreased
$13,728,  or  26%  and  $185,317,  or  60%  for  the three and nine months ended
December  31,  2003,  respectively, from the comparable periods in the preceding
fiscal  year.  The decreases in interest income 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 December 31, 2003, was $1,642,436 (or
$0.14  per  basic  and diluted share), an increased loss of $490,942 or 43% from
the  net  loss  reported  for  the same period in fiscal 2003. The increased net
losses  are  primarily  the result of net losses at APACN.   For the nine months
ended  December  31,  2003,  the net loss was $4,855,323, (or $.41 per basic and
diluted  share), an increase of $1,132,099 or 30% from the net loss reported for
the  same  period  in  fiscal  2003.

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
at  December  31, 2003 is $15,040,465 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 $2,510,267 in investing activities for the nine months
ended  December  31,  2003  compared  to $195,969 used in the same period of the
preceding  fiscal  year.  Of  this  amount,  $1,960,000 was used to purchase the
assets  of  Americable,  Inc.  We  also had a net investment of $542,891 for the
nine  months  ended  December 31, 2003 for computer and production equipment. We
anticipate a total of approximately $1,250,000 in capital expenditures in fiscal
2004,  primarily  for  equipment  in  HFET research at APA Optics. This includes
payment  of  $375,000 in the quarter ended December 31, 2003 toward the $750,000
purchase  price  of  a Gallium Nitride 2 inch multiwafer material growth system.
We  anticipate  the  delivery  of the system during the fourth quarter of fiscal
2004.  The  balance  of  the purchase price, $375,000, is due three months after
delivery.  We  also  expect  to  invest  in  leasehold  improvements including a
sprinkler  system  for  the  Blaine  facility.

     Net  cash  used  in financing activities for the nine months ended December
31,  2003 totaled $286,901. We used $351,702 for the scheduled reduction of debt
and  generated $64,801 from the reduction of bond reserve funds. During the same
period  in  fiscal  2003  we  used  $390,732  in  financing activities, of which
$437,032  was  used  for  the scheduled reduction of debt, $52,291 was generated
from  the  reduction  of  bond  reserve  funds and $5,991 was used to repurchase
common  stock  of  the  Company.


                                       11
<PAGE>
     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          $1,822  $    1,545  $      101  $       35  $    141
Leases                     673         349         324           -         -
                        ----------------------------------------------------

Total Contractual Cash
   Obligations          $2,495  $    1,894  $      425  $       35  $    141
                        ====================================================
</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  11  to  the  financial  statements 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  these  Statements  and
Interpretations  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
limitation,  statements  regarding  the  Company's expectations, hopes, beliefs,
anticipations,  commitments,  intentions  and  strategies  regarding the future.
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 December 31, 2003, we
had an accumulated deficit of $28 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.


                                       12
<PAGE>
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
than  we  can  to  new  or  emerging  technologies  and  changes  in  customer
requirements.

     We  cannot  predict  whether we will be able to compete against current and
future  competitors  with  our  existing  and  new  products.  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.

     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 precise 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


                                       13
<PAGE>
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 network,
both  current  and  future.  Our  products  may  not be compatible or 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  such  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. We continue to acquire these
products  from  off  shore  partners,  qualify  the  products, and integrate (if
necessary)  the products into our platforms and systems.  These products may not
meet our target specification, which may delay their introduction into our sales
channels.  Outsourcing  products also brings potential risks such as the general
financial  strength  of  our outsourcing partners and the economic and political
stability  in  our partner's nation.  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 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 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.


                                       14
<PAGE>
Our products may infringe on the intellectual property rights of others

     Some  of  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
          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


                                       15
<PAGE>
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.

               Exhibit  31.1  - Chief Executive Officer's certification pursuant
               to  Section  302  of  the  Sarbanes-Oxley  Act  of  2002

               Exhibit  31.2  - Chief Financial Officer's certification pursuant
               to  Section  302  of  the  Sarbanes-Oxley  Act  of  2002

               Exhibit  32.1 - Certification required of Chief Executive Officer
               by  Section  906  of  the  Sarbanes  Oxley  Act  of  2002

               Exhibit  32.2 - Certification required of Chief Financial Officer
               by  Section  906  of  the  Sarbanes  Oxley  Act  of  2002

     (b)  Reports  on  Form  8-K.

               None

                                   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.


                                          /s/ Anil K. Jain
--------------                            ----------------
   Date                                   Anil K. Jain
                                          President,
                                          Chief Executive Officer and Chief
                                          Financial Officer (Principal
                                          Executive and
                                          Principal Financial Officer)


                                          /s/  Daniel  Herzog
--------------                            -------------------
   Date                                   Comptroller
                                          (Principal Accounting Officer)


                                       16
<PAGE>