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 SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 2004, or

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

                         Commission File Number 0-16106

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

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

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

                                 (763) 784-4995
              (Registrant's telephone number, including area code)

                         FORMER NAME:  APA OPTICS, INC.
  (FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR END IF CHANGED SINCE LAST
                                     REPORT)
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 November 3, 2004
       Common stock, par value $.01                   11,872,331


<PAGE>
<TABLE>
<CAPTION>
                                APA ENTERPRISES, INC.
                                       FORM 10Q
                                  TABLE OF CONTENTS

<S>                                                                                <C>
PART I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
  ITEM 1. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .   3
    CONSOLIDATED CONDENSED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . .   3
    CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS . . . . . . . . . . . . . . .   4
    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . .   5
    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. . . . . . . . . . . . .   6
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. . . . . . .  19
  ITEM 4.  CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . .  19

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
  ITEMS 1 THROUGH 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . .  21
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                                                       September 30,     March 31,
                                                           2004            2004
                                                      ---------------  -------------
<S>                                                   <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $   12,363,455   $ 13,544,910
  Accounts receivable, net of allowance for
  uncollectible accounts of $48,107 at September 30,
  2004 and $49,038 at March 31, 2004                       1,540,890      1,787,541
  Inventories                                              1,577,271      1,574,188
  Prepaid expenses                                           140,059        174,503
  Bond reserve funds                                          88,368        133,865
                                                      ---------------  -------------
Total current assets                                      15,710,043     17,215,007

Property, plant and equipment, net                         4,213,792      4,550,956

Other assets:
  Bond reserve funds                                         334,238        332,433
  Goodwill                                                 3,422,511      3,422,511
  Other                                                      490,692        562,609
                                                      ---------------  -------------
                                                           4,247,441      4,317,553
                                                      ---------------  -------------

Total assets                                          $   24,171,276   $ 26,083,516
                                                      ===============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                   $    1,475,827   $  1,637,923
  Accounts payable                                           990,865      1,050,690
  Accrued compensation                                       586,281        645,293
  Accrued expenses                                           239,749        212,713
                                                      ---------------  -------------
Total current liabilities                                  3,292,722      3,546,619

Long-term debt                                               130,284        173,836

Shareholders' equity:
  Undesignated shares                                              -              -
  Preferred stock                                                  -              -
  Common stock                                               118,723        118,723
  Additional paid-in capital                              51,952,038     51,980,946
  Accumulated deficit                                    (31,322,491)   (29,736,608)
                                                      ---------------  -------------
Total shareholders' equity                                20,748,270     22,363,061
                                                      ---------------  -------------

Total liabilities and shareholders' equity            $   24,171,276   $ 26,083,516
                                                      ===============  =============
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


                                        3
<PAGE>
<TABLE>
<CAPTION>
                               APA ENTERPRISES, INC.
                  CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                    (UNAUDITED)


                                 Three Months Ended          Six Months Ended
                                   September 30,               September 30,
                            --------------------------  --------------------------

                                2004          2003          2004          2003
                            ------------  ------------  ------------  ------------
<S>                         <C>           <C>           <C>           <C>
Revenues                    $ 3,668,068   $ 3,557,586   $ 7,355,786   $ 5,128,562

Costs and expenses:
  Cost of sales               2,885,804     3,358,169     5,972,647     5,230,034
  Research and                  220,595       210,861       411,803       408,964
  development
  Selling, general and        1,476,049     1,686,796     2,816,858     2,754,958
  administrative
                            ------------  ------------  ------------  ------------
                              4,582,448     5,255,826     9,201,308     8,393,956
                            ------------  ------------  ------------  ------------

Loss from operations           (914,380)   (1,698,240)   (1,845,522)   (3,265,394)

Gain on sale of operations            -             -       208,314             -
Other income                     57,062        31,502       104,256       108,087
Other expense                   (24,979)            -       (50,231)      (54,580)
                            ------------  ------------  ------------  ------------
                                 32,083        31,502       262,339        53,507
                            ------------  ------------  ------------  ------------

Loss before income taxes       (882,297)   (1,666,738)   (1,583,183)   (3,211,887)

Income taxes                        750           750         2,700         1,000
                            ------------  ------------  ------------  ------------

Net loss                    $  (883,047)  $(1,667,488)  $(1,585,883)  $(3,212,887)
                            ============  ============  ============  ============

Net loss per share:
  Basic and diluted              ($0.07)       ($0.14)       ($0.13)       ($0.27)
                            ============  ============  ============  ============

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

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                    APA ENTERPRISES, INC.
                      CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)


                                                                      Six Months Ended
                                                                        September 30,
                                                                 --------------------------

                                                                     2004          2003
                                                                 ------------  ------------
<S>                                                              <C>           <C>
OPERATING ACTIVITIES
Net loss                                                         $(1,585,883)  $(3,212,887)
Adjustments to reconcile net loss to net cash used in operating
activities, net of acquisition:
      Depreciation and amortization                                  471,791       451,852
      Stock based compensation                                       (28,908)       29,879
    Changes in operating assets and liabilities:
      Accounts receivable                                            246,651      (797,873)
      Inventories                                                     (3,083)     (145,819)
      Prepaid expenses and other                                      36,131       (99,956)
      Accounts payable and accrued expenses                          133,199       729,934
                                                                 ------------  ------------
Net cash used in operating activities                               (730,102)   (3,044,870)

INVESTING ACTIVITIES
Purchases of property and equipment                                 (289,397)     (234,176)
Acquisition of business                                                    -    (1,960,000)
Other                                                                      -        (7,375)
                                                                 ------------  ------------
Net cash used in investing activities                               (289,397)   (2,201,551)

FINANCING ACTIVITIES
Repayment of long-term debt                                         (205,648)     (340,028)
Increase in bond reserve funds                                        43,692         4,248
                                                                 ------------  ------------
Net cash used in financing activities                               (161,956)     (335,780)
                                                                 ------------  ------------

Decrease in cash and cash equivalents                             (1,181,455)   (5,582,201)

Cash and cash equivalents at beginning of period                  13,544,910    22,235,686
                                                                 ------------  ------------

Cash and cash equivalents at end of period                       $12,363,455   $16,653,485
                                                                 ============  ============

Noncash investing and financing activities
  Capital expenditure included in accounts payable               $  (225,000)            -
</TABLE>

      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


                                        5
<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,  2004.

     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          Six Months Ended
                                             September 30,              September 30,
                                      --------------------------  --------------------------

                                          2004          2003          2004          2003
                                      ------------  ------------  ------------  ------------
<S>                                   <C>           <C>           <C>           <C>
Numerator for basic and diluted net
loss                                  $  (883,047)  $(1,667,488)  $(1,585,883)  $(3,212,887)
                                      ============  ============  ============  ============

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

Basic and diluted net loss per share       ($0.07)       ($0.14)       ($0.13)       ($0.27)
                                      ============  ============  ============  ============
</TABLE>

Common  stock  options  and warrants to purchase 873,742 and 1,014,197 shares of
common  stock  with  a  weighted  average exercise price of $6.65 and $6.70 were
outstanding at September 30, 2004 and 2003, respectively, but were excluded from
calculating diluted net loss per share because they were antidilutive.


NOTE  3.  ACQUISITION

     On  June  27, 2003, the Company acquired certain assets of Americable, Inc.
The  acquisition  was  accounted  for as a purchase and, accordingly, results of
operations  relating to the purchased assets have been included in the statement
of  operations  from  the  date of acquisition. There are no contingent payments
related  to the acquisition.  The Company reclassified certain balances from the
original  Americable  purchase  price  allocation  as part of an asset valuation
adjustment.  The  adjustment  was  made  after determining the fair value of the
assets  purchased.  The  result  of  the  change was a decrease in inventory and
property,  an  increase  in  accounts  receivable,  and  an  increase


                                        6
<PAGE>
in  goodwill.  This  did  not  change the purchase price of the transaction. The
purchase  price  and  assets  acquired  with  purchase  price adjustments are as
follows:

<TABLE>
<CAPTION>
                                  Original        Purchase        Revised
                               Purchase Price      Price      Purchase Price
                                 Allocation      Adjustment     Allocation
                               ---------------  ------------  ---------------
<S>                            <C>              <C>           <C>
Accounts receivable            $       594,000  $    46,279   $       640,279
Inventory                              638,000      (13,944)          624,056
Property, plant and equipment          450,000      (49,186)          400,814
                               ---------------  ------------  ---------------
     Assets purchased                1,682,000      (16,851)        1,665,149
Goodwill                               278,000       16,851           294,851
                               ---------------  ------------  ---------------
     Purchase price            $     1,960,000  $         -   $     1,960,000
                               ===============  ============  ===============
</TABLE>

Goodwill is expected to be fully deductible for tax purposes.

NOTE 4.  SEGMENT REPORTING

          The  Company  has  identified  two  reportable  segments  based on its
internal  organizational  structure,  management  of operations, and performance
evaluation.  These  segments  are Optronics (historically referred to as the APA
Optics,  Inc.  segment) and Cables and Networks (historically referred to as the
APACN  segment).  Optronic's revenue is generated in the design, manufacture and
marketing  of  ultraviolet  (UV)  detection  and measurement devices and optical
components.  Cables  &  Network'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 are allocated.  Segment
detail is summarized as follows (unaudited, in thousands):

<TABLE>
<CAPTION>
                                                      Cables &
                                         Optronics    Networks    Eliminations    Consolidated
                                        -----------  ----------  --------------  --------------
<S>                                     <C>          <C>         <C>             <C>
THREE MONTHS ENDED SEPTEMBER 30, 2004
  External sales                        $      149   $   3,623   $        (104)  $       3,668
  Cost of sales                                389       2,601            (104)          2,886
  Operating income (loss)                   (1,025)        111               -            (914)
  Depreciation and amortization                179          53               -             232
  Capital expenditures                           2          26               -              28
  Total assets                              24,056       7,506          (7,391)         24,171

THREE MONTHS ENDED SEPTEMBER 30, 2003
  External sales                        $       61   $   3,497               -   $       3,558
  Cost of sales                                680       2,678               -           3,358
  Operating loss                            (1,432)       (266)              -          (1,698)
  Depreciation and amortization                185          54               -             239
  Capital expenditures                          31         127               -             158
  Total assets                              28,428       7,652          (7,039)         29,041


                                        7
<PAGE>
SIX MONTHS ENDED SEPTEMBER 30, 2004
  External sales                        $      292   $   7,295   $        (231)  $       7,356
  Cost of sales                                961       5,243            (231)          5,973
  Operating income (loss)                   (2,062)        216               -          (1,846)
  Depreciation and amortization                364         108               -             472
  Capital expenditures                         236          53               -             289
  Total assets                              24,056       7,506          (7,391)         24,171

SIX MONTHS ENDED SEPTEMBER 30, 2003
  External sales                        $      122   $   5,014              (7)  $       5,129
  Cost of sales                              1,359       3,878              (7)          5,230
  Operating loss                            (2,796)       (469)              -          (3,265)
  Depreciation and amortization                368          84               -             452
  Capital expenditures                         101         133               -             234
  Total assets                              28,428       7,652          (7,039)         29,041
</TABLE>


NOTE 5. SALE OF OPTICS MANUFACTURING OPERATIONS

     In  January,  2004  the  Company  announced  the  discontinuance  of optics
manufacturing  at  its Blaine facility. The closure was the result of aggressive
off-shore  pricing  and  continued  lower  demand  for  this  product line. This
resulted  in a charge of $171,000 taken in the 4th quarter ended March 31, 2004.
The  Company  sold  its  optics  manufacturing  operations on April 14, 2004 for
$220,000.   The  terms  of  the  sale required the Company to restructure a loan
with  the City of Aberdeen which included an upfront loan payment of $89,305 and
payment  of  the  remaining $140,000 loan amount in seven annual installments of
$20,000  each  beginning  June  30,  2004.

NOTE 6. STOCK BASED COMPENSATION

     The  Company  has  various  incentive  and non-qualified stock option plans
which  are  used  as  an incentive for directors, officers, and other employees.
The  Company  uses  the  intrinsic value method to value stock options issued to
employees.  Under this method, compensation expense is recognized for the amount
by  which  the market price of the common stock on the date of grant exceeds the
exercise price. The Company's stock based compensation expense also reflects the
benefit  of  the  cancellation  of  previously  unvested  expensed options.  The
Company  recognized compensation income of $15,446 and $28,908 for the three and
six months ended September 30, 2004, and compensation expense of $29,879 for the
three  and six months ended September 30, 2003.  For those stock options granted
where  the exercise price was equal to the market value of the underlying common
stock  on  the  date  of  grant,  no  stock-based  employee compensation cost is
reflected  in  the  net  loss.  Had  the  fair  value  method  been applied, our
compensation  expense  would  have  been  different.  The  following  table


                                        8
<PAGE>
illustrates  the  effect  on  net loss and net loss per share if the Company had
applied  the  fair  value  method,  to stock-based employee compensation for the
following  three  months  ended:

<TABLE>
<CAPTION>
                                    Three Months Ended          Six Months Ended
                                       September 30,              September 30,
                                -------------------------  --------------------------

                                   2004          2003          2004          2003
                                -----------  ------------  ------------  ------------
<S>                             <C>          <C>           <C>           <C>

Net loss to common
shareholders - as reported      $ (883,047)  $(1,667,488)  $(1,585,883)  $(3,212,887)
Less: Total stock-based
employee compensation
expense  determined under
fair value based method for        (37,980)      (50,318)      (86,322)     (100,635)
all awards, net of related tax
effects
                                -----------  ------------  ------------  ------------
Net loss - pro forma            $ (921,027)  $(1,717,806)  $(1,672,205)  $(3,313,522)
                                ===========  ============  ============  ============

Basic and diluted net loss
per common share - as
reported                            ($0.07)       ($0.14)       ($0.13)       ($0.27)
Basic and diluted net loss
per common share - pro
forma                               ($0.08)       ($0.15)       ($0.14)       ($0.28)
</TABLE>


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


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


OVERVIEW


     APA  Enterprises,  Inc., (formerly known as APA Optics, Inc.) consisting of
the  Optronics  group  and  the  Cables  &  Networks  group,  develops, designs,
manufactures  and  markets  fiber optics, copper and gallium nitride (GaN) based
components  and  devices  for  industrial,  commercial,  consumer and scientific
applications.  Optronics  is  active in the development, design, manufacture and
marketing  of  ultraviolet  (UV)  measurement  instruments  for  consumers  and
industrial  customers,  and  gallium  nitride  (GaN) based transistors for power
amplifiers  and  other  commercial  applications.  Cables  &  Networks  designs,
manufactures  and  markets a variety of fiber optic and copper components to the
data  communication  and  telecommunication  industries. Both groups also source
from  third  parties  components and devices for direct and value-added sales to
our  customers  in  all  these  technology  areas.


                                        9
<PAGE>
     Cables  &  Networks'  internally  manufactured products primarily include a
broad  line  of  standard  and custom fiber optic cable assemblies, copper cable
assemblies,  optical  components,  value  added fiber optic distribution frames,
panels  and  modules.  These  products are manufactured at the Cables & Networks
plant  in Plymouth, Minnesota and Optronics' facility in Aberdeen, South Dakota,
and  marketed  to  broadband  service  providers,  commercial data networks, and
original  equipment  manufacturers. Cables & Networks 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 of these acquisitions.

     In  January  2004  Optronics terminated its optics manufacturing in Blaine,
Minnesota  as  described  in  Note  5.  Additionally  in  January 2004 Optronics
consolidated  its  fiber  optics  operations  within Blaine.  Optronics plans to
continue to market and sell fiber optic products using mainly Cables & Network's
sales  team  and  channels.  We  outsource several components from third parties
including  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 over the past several years.
Decreased  demand  and  competition  have  continued to 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.

     Optronic's  consumer  UV detection product, the SunUVTM Personal UV Monitor
(PUVM,  formerly  SunWatch) continues in low volume production.  We are shipping
small  quantities  to  retailers and catalog customers on an ongoing basis.  The
offshore  manufacturer  is  maintaining  a flow of product, but low yield caused
primarily  by  mechanical  and cosmetic issues has limited our ability to pursue
larger orders from our distribution channels. High volume manufacturing is being
addressed  with  the current supplier. We have selected another supplier for our
PUVM's.  Our  goal  is  to  qualify  this  supplier  prior  to the initiation of
production  runs.  We  anticipate  production  samples for qualification will be
available during the early part of the fourth quarter of fiscal 2005.

     In addition to the UV consumer product line, Optronics has reconfigured its
TrUVMeterTM  for monitoring UV radiation printing and curing systems, which is a
growing  segment  of  the  printing and coating industries. This reconfiguration
involves  detection  and  analysis  of  four light bands (all in the UV spectral
range)  using  four separate detector assemblies, as compared to only one in the
TrUVMeterTM.  We  have completed the design and major development tasks for this
product,  called  Profiler  M.  We  introduced  the  Profiler M at the Specialty
Graphics  and  Imaging  trade  show  held  in  Minneapolis  in  October  2004.
Subsequently  we have shipped test units for customer evaluation. Our plans call
for  integrating  customers'  feedback in the final configuration and initiating
manufacturing of the Profiler M.  We anticipate units will be available for sale
during  the  fourth  quarter  of  fiscal  2005.

     Optronics  continues  to  develop  transistors  based on GaN/AlGaN (gallium
nitride/aluminum  gallium  nitride) for base transceiver station power amplifier
applications  while  assessing  other  commercialization  opportunities.  With
assistance  from  outside  foundries  we  are  processing, packaging and testing
transistors  built  from  our  material.  Our plan is to continue characterizing
demonstration  power  amplifiers  built  using AlGaN/GaN based transistors while
qualifying  the  long  term  reliability  of  these  devices.

     During the latter part of fiscal 2004 we purchased a multi-wafer (6 wafers,
2  inches in diameter) metal organic chemical vapor deposition (MOCVD) system to
supply  high  performance  epitaxial wafers for internal requirements as well as
for  other  potential  customers.  Installation of this system will be completed
within  the  third  fiscal  quarter  of  2005 at a leased facility that provides
state-of-the-art  characterization  equipment.  Included in the reactor purchase
was  a  quantity  of  wafers,  grown  at  the  vendor's application lab to APA's
specifications.  These  wafers  were  grown to demonstrate the capability of the
tool and to serve as a bridge until the reactor is brought on-line. These wafers
are  currently  being  processed  and  evaluated.

     We  will be working with potential epi-wafer customers to initially qualify
our material during the third quarter of fiscal 2004. This qualification process
is  dependent  on  the  customer  fabrication and testing schedule and typically
ranges  from  several  weeks  to  several months. We expect to work toward wafer
supply  agreements  with  these potential customers, leveraging our cutting edge
material  and  fundamental  patent  position.


                                       10
<PAGE>
RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED SEPTEMBER 30, 2004 VS. THREE MONTHS ENDED SEPTEMBER 30, 2003

     Consolidated  revenues  for  the  three  months  ended  September  30, 2004
increased $110,482, or 3%, to $3,668,068 from $3,557,586 in 2003.

     Revenues  at  Cables  &  Networks  were  $3,622,735,  compared  to sales of
$3,497,188 reported in the same quarter a year ago, an increase of 4%. Sales for
the  current  quarter to broadband service provider and commercial data networks
were  $2,478,000  versus  $2,031,000.  The  increase  was  due  to  revenue from
additional  customers  in  the  Fiber-to-the-Home  market.  Sales  to OEM's were
$1,145,000  versus  $1,466,000  in the year ago period. The decrease is due to a
focus away from lower margin products as well as lower demand in the market.  We
expect  that future sales of Cables & Networks products will continue to account
for  a  substantial  portion  of our revenue. We anticipate revenues may decline
slightly due to seasonality in the third quarter of fiscal 2005, consistent with
the  decline  experienced  by Cables & Networks during the prior year's quarter.

     Gross  revenues  at  Optronics increased $88,796, or 147%, to $149,194 from
$60,398  in  the same quarter a year ago.  Gross revenues for the second quarter
ended  reflect  approximately  $103,800  of sales to Cables & Networks for fiber
optics  products  and  subcontracted  labor versus none in the comparable period
last  year.   These  sales  are  eliminated  as  intercompany  sales  in  the
consolidated  financials  in  each quarter. The net decrease in revenues for the
quarter  was  due  primarily to lower sales of fiber optics and optics products,
offset  by  additional  sales  for  foundry  services.

COST OF SALES AND GROSS PROFIT

     Cables  &  Network's gross profit increased $202,445, or 25%, to $1,021,683
from $819,238. Gross margins as a percent of revenues increased from 23% to 28%.
The increase in margins reflects reduced production costs in the current quarter
for  duplicate  overhead  and  personnel  costs absorbed in the prior year while
operating  and  consolidating multiple facilities, as well as an increased focus
on  selling  higher  margin  products.

      Gross  cost  of sales at Optronics decreased $291,606, or 43%, to $388,613
from  $680,219.  Gross  cost of sales reflects approximately $103,800 related to
cost  of  sales to Cables & Networks for fiber optics products and subcontracted
labor versus none last year.  These costs are eliminated as intercompany cost of
sales  in the consolidated financials in each quarter.  The net decrease in cost
of sales is due to lower material and production expenses related to the closure
of  the  optics  manufacturing  line as well as lower personnel costs associated
with  cost  reduction  efforts.

      We  anticipate  comparable  gross  margins  and cost of sales for Cables &
Networks  and  Optronics  for  the  third  quarter.

RESEARCH AND DEVELOPMENT EXPENSES

     Research  and  development expenses consist of the research and development
expense  at  Optronics.  There have been no research and development expenses at
Cables & Networks. Expenses were $220,595, relatively unchanged between periods.
We  expect  research  and  development  expenses  to  grow slightly in the third
quarter.

SELLING, GENERAL AND ADMINISTRATIVE

     Consolidated  S,  G  & A expenses decreased $210,747, or 12%, to $1,476,049
from  $1,686,796  in  2003.

     Selling, general and administrative expenses at Cables & Networks decreased
$174,391,  or 16%, to $910,771 from $1,085,162.  The majority of the decrease is
attributable  to  the  elimination of duplicate and one time expenses related to
operating multiple facilities and consolidating them in the fiscal 2004 quarter,
offset  by  slightly  higher  administration  and  professional  costs.


                                       11
<PAGE>
     Selling,  general  and  administrative  expenses  at  Optronics  decreased
$36,356,  or  6%,  to  $565,278  from  $601,634.  The  decrease  is due to lower
personnel  and  related  costs  associated with cost reductions implemented over
fiscal  year  2004,  offset  slightly  by  higher  professional  fees.

INCOME  (LOSS)  FROM  OPERATIONS

     Consolidated losses from operations decreased $783,860, or 46%, to $914,380
from  $1,698,240  in  2003.

     The  income from operations at Cables & Networks was $110,912 versus a loss
of  $265,924  in  the fiscal 2004 quarter.   The increased income in the quarter
was  mainly  the  result  of  a  combination  of increased gross margins and the
reduction  in duplicate expenses relating to multiple facilities absorbed in the
prior  year  period.

     The  loss  from  operations  at  Optronics  was  $1,025,292,  a decrease of
$407,024,  or 28%.  The decrease in the loss is primarily the result of the cost
reductions  implemented  over  the  prior  fiscal  year,  mainly  for  personnel
reductions  and  the  elimination  of the optics line of business.  We expect to
incur  losses  at Optronics until we realize significant revenues from the sales
of  our  PUVM  and  GaN  related  products.

OTHER INCOME AND EXPENSE

     Consolidated  other  income  and  expense  increased  $581  to $32,083 from
$31,502.

     Other  expense  at  Cables  &  Networks  increased approximately $8,500 for
interest expense due to a larger outstanding debt balance in the current period.

     Other  income  at Optronics increased $32,976 to $128,166.  Interest income
increased  approximately  $23,000  due  to a higher outstanding debt balance due
from Cables & Networks and higher amount earned on short term investments, while
other  income  increased  approximately  $10,000  from  facility  rental.

NET INCOME (LOSS)

     Consolidated  net  loss  for  the  quarter  decreased  $784,441, or 47%, to
$883,047,  or  $.07 cents per share, from $1,667,488, or $.14 cents per share in
the  year  ago  period.

     Cables  &  Networks had net income of $37,160 in the quarter, compared to a
loss  of $331,103 in the year ago quarter.  The increase reflects improved gross
margins  through  reduced  production  costs  and  reduced  S,  G,  & A expenses
attributable  to  operating  multiple  facilities  in  the  year  ago  period.

     Optronics  recorded a net loss of $920,207, a decrease of $416,178, or 31%,
from  the  loss  of  $1,336,385  reported in the same period of fiscal 2004. The
decrease is due mainly to cost reductions implemented over the past year.  While
cost  reductions  implemented  so  far  at Optronics will help lower the overall
losses  for  the  Company,  achieving  profitability in the future will strongly
depend  upon  Optronic's  ability  to  manufacture  and  market  gallium-nitride
products.

SIX MONTHS ENDED SEPTEMBER 30, 2004 VS. SIX MONTHS ENDED SEPTEMBER 30, 2003

     Consolidated revenues for the six months ended September 30, 2004 increased
$2,227,224,  or  43%,  to  $7,355,786  from  $5,128,562  in  2003.

     Revenues  at  Cables  & Networks increased $2,281,007, or 45% to $7,294,547
from  $5,013,540.  The  increase is attributable to higher revenues in the first
quarter  of  fiscal  2005  quarter generated by the acquisition from Americable,
Inc.,  which  occurred  at  the  end  of  the  first quarter of fiscal 2004. The
Americable assets contributed no corresponding revenues for the first quarter of
fiscal  2004.  Sales  to broadband service provider and commercial data networks
were $4,961,000 or 68% of revenue, and sales to OEM's were $2,334,000, or 32% of
revenue. This compares to 60% for broadband and commercial data networks and 40%
for  OEM's  in  the  prior  period.  The  change  reflects  higher demand in the
Fiber-to-the-Home  market,  offset  by  lower  demand  from  OEM's.


                                       12
<PAGE>
     Gross  revenues  at Optronics increased $169,496, or 139%, to $291,688 from
$122,192  in  the  same period a year ago.  Gross revenues reflect approximately
$230,000  of  sales  to  Cables  &  Networks  for  fiber  optics  products  and
subcontracted  labor  versus  $7,100  last  year.  These sales are eliminated as
intercompany  sales  in  the  consolidated  financials  in each quarter. The net
decrease  in revenues is due primarily to lower sales of fiber optics and optics
products.

COST OF SALES AND GROSS PROFIT

     Cables  &  Network's gross profit increased $915,821, or 81%, to $2,051,623
from $1,135,802. The increase is mainly to higher margins generated in the first
quarter  of  fiscal  2005 generated by the acquisition of Americable, Inc. Gross
margins  as  a  percent  of  revenues increased from 23% to 28%. The increase in
margin  percentage  reflects reduced production costs for overhead and personnel
costs  absorbed  in  the  prior  year  while  operating  and  combining multiple
facilities, as well as an increased focus on selling higher margin products.

      Gross  cost  of sales at Optronics decreased $399,294, or 29%, to $960,172
from $1,359,466.  Gross cost of sales reflects $230,000 related to cost of sales
to  Cables  &  Networks for fiber optics products and subcontracted labor versus
$7,100  last  year.  These costs are eliminated as intercompany cost of sales in
the  consolidated financials in each quarter.  The net decrease in cost of sales
is  due  to lower material and production expenses related to the closure of the
optics  manufacturing line as well as lower personnel costs associated with cost
reduction  efforts.

RESEARCH AND DEVELOPMENT EXPENSES

     Research  and  development expenses consist of the research and development
expense  at  Optronics.  There have been no research and development expenses at
Cables & Networks. Expenses were $411,803, relatively unchanged between periods.

SELLING, GENERAL AND ADMINISTRATIVE

     Consolidated S, G & A expenses increased $61,900, or 2%, to $2,816,858 from
$2,754,958  in  2003.

     Selling, general and administrative expenses at Cables & Networks increased
$231,453,  or  14%, to $1,836,030 from $1,604,577.  The majority of the increase
is  attributable  to expenses generated by the acquisition from Americable, Inc.
which  occurred  at  the  end  of  the  first  quarter of fiscal 2004 and had no
expenses  in  the  fiscal  2004  first  quarter.

     Selling,  general  and  administrative  expenses  at  Optronics  decreased
$169,553,  or  15%,  to  $980,828  from $1,150,381. The decrease is due to lower
personnel  and  related  costs  associated with cost reductions implemented over
fiscal  year  2004.

INCOME  (LOSS)  FROM  OPERATIONS

     Consolidated  losses  from  operations  decreased  $1,419,872,  or  43%, to
$1,845,522  from  $3,265,394  in  2003.

     The  income from operations at Cables & Networks was $215,593 versus a loss
of $468,775 in the year ago period.   The increased income was mainly the result
of  a  combination of increased revenues and gross margins as well as reductions
in  S,  G,  &  A  expenses relating to multiple facilities absorbed in the prior
year.

     The  loss  from  operations  at  Optronics  was  $2,061,115,  a decrease of
$735,504,  or 26%.  The decrease in the loss is primarily the result of the cost
reductions  implemented  over  the  prior  fiscal  year,  mainly  for  personnel
reductions,  and  the  elimination  of  the  optics  line  of  business.

OTHER INCOME AND EXPENSE


                                       13
<PAGE>
     Consolidated  other  income and expense increased $208,832 to $262,339 from
$53,507.

      Higher  income  at  Cables & Networks in fiscal 2004 was due to management
fee  income earned in relation to the acquisition from CSP.  Interest expense at
Cables & Networks increased $42,773. The increase is due to a larger outstanding
debt  balance mainly related to the acquisition of Americable late in the second
quarter  in  fiscal  2004.

     Other  income  at  Optronics  increased $268,179, or 147%, to $451,035 from
$182,856.  The  sale  of  the  optics manufacturing operations in April 2004 and
related facility income accounted for $230,000 of the increase.  Interest income
increased  slightly  due  to a higher outstanding debt balance due from Cables &
Networks.  Interest  expense  was $45,662, relatively unchanged between periods.

NET INCOME (LOSS)

     Consolidated  net loss decreased $1,627,004, or 51%, to $1,585,883, or $.13
cents  per  share,  from  $3,212,887,  or  $.27  cents per share in the year ago
period.

     Cables  &  Networks  had net income of $70,359 versus a loss of $548,482 in
the  year  ago  period.  The  increase  reflects  improved gross margins, mainly
through reduced production costs, and reduced S, G, & A expenses attributable to
operating  multiple  facilities  in  the  prior  year.

     Optronics  recorded  a net loss of $1,656,242, a decrease of $1,008,163, or
38%, from the loss of $2,664,405 reported in the same period of fiscal 2004. The
decrease is due mainly to cost reductions relating to personnel implemented over
the  past  year as well as the gain on sale of the optics manufacturing business
and  the  elimination  of  its  related  expenses.

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

     The  Company'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.

     Cash  used  in  operating  activities was $730,102 for the six month period
ending  September  30,  2004  compared  to $3,044,870 used in the same period in
fiscal  2004.  The  decrease in the cash used between the two periods reflects a
decrease  in  loss  from  operations of $1,419,872, achieved by a combination of
increased  revenue  and profitable operations at Cables & Networks and decreased
costs  at  Optronics due to cost reduction efforts and a gain on the sale of the
optics  manufacturing  business  at  Optronics  in  April  2004.

     We  used  net  cash  of $289,397 in investing activities for the six months
ended  September  30, 2004 compared to $2,201,551 used in the same period of the
preceding  fiscal  year.  The  use of cash in the six months ended September 30,
2004 reflects capital expenditures mainly for production equipment at Optronics.
For the six months ended September 30, 2003, $1,960,000 was used to purchase the
assets  of Americable, Inc.  We anticipate approximately $600,000 to $800,000 in
capital  expenditures  in  fiscal  2005.

     Net  cash  used  in financing activities for the six months ended September
30,  2004 totaled $161,956. We used $205,648 for the scheduled reduction of debt
and  generated $43,692 from the reduction of bond reserve funds. During the same
period  in  fiscal  2004  we  used  $335,780  in  financing activities, of which
$340,028  was  used for the scheduled reduction of debt and $4,248 was generated
from  the  reduction  of  bond  reserve  funds.

     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          $1,606  $    1,476  $       70  $       40  $     20
Leases                   1,285         527         730          28         -
                        ----------------------------------------------------

Total Contractual Cash
  Obligations           $2,891  $    2,003  $      800  $       68  $     20
                        ====================================================
</TABLE>


                                       14
<PAGE>
Application of Critical Accounting Policies


     In  preparing  our  consolidated  financial  statements, we make estimates,
assumptions  and  judgments  that can have a significant impact on our revenues,
loss from operations and net loss, as well as on the value of certain assets and
liabilities on our consolidated balance sheet. We believe that there are several
accounting  policies that are critical to an understanding of our historical and
future  performance,  as these policies affect the reported amounts of revenues,
expenses  and  significant  estimates and judgments applied by management. While
there  are  a number of accounting policies, methods and estimates affecting our
consolidated  financial  statements,  areas  that  are  particularly significant
include:

     -     Revenue recognition;

     -     Accounting for income taxes; and

     -     Valuation and evaluating impairment of long-lived assets and goodwill

Revenue  Recognition
--------------------

     Revenue  is  recognized  when persuasive evidence of an arrangement exists,
the  product  has been shipped, acceptance by the customer is reasonably certain
and  collection  is  probable.

Accounting  for  Income  Taxes
------------------------------

     As  part of the process of preparing our consolidated financial statements,
we  are  required  to  estimate  our  income  tax  liability  in  each  of  the
jurisdictions  in  which  we  do  business. This process involves estimating our
actual  current  tax  expense  together  with  assessing  temporary  differences
resulting  from  differing  treatment  of items for tax and accounting purposes.
These  differences  result  in deferred tax assets and liabilities. We must then
assess  the  likelihood  that  these  deferred tax assets will be recovered from
future  taxable  income  and, to the extent we believe that recovery is not more
likely than not or unknown, we must establish a valuation allowance.

     Significant  management  judgment  is required in determining our provision
for  income  taxes,  our  deferred  tax assets and liabilities and any valuation
allowance  recorded  against  our  deferred  tax  assets.  At March 31, 2004, we
recorded  a  full  valuation  allowance  of $11,075,084 against our deferred tax
assets,  due to uncertainties related to our ability to utilize our deferred tax
assets,  consisting principally of certain net operating losses carried forward.
The  valuation  allowance  is  based  on  our  estimates  of  taxable  income by
jurisdiction  and  the  period  over  which  our  deferred  tax  assets  will be
recoverable.  The  Company  had  U.S.  net operating loss (NOL) carryforwards of
approximately $27,899,000 which expire in fiscal years 2004 to 2024.

     Realization  of  the  NOL  carryforwards  and  other deferred tax temporary
differences  are  contingent  on future taxable earnings. The deferred tax asset
was reviewed for expected utilization using a "more likely than not" approach by
assessing  the  available  positive  and  negative  evidence  surrounding  its
recoverability.  We  will  continue  to assess and evaluate strategies that will
enable  the  deferred  tax  asset,  or portion thereof, to be utilized, and will
reduce  the valuation allowance appropriately at such time when it is determined
that  the  "more  likely  than  not"  approach  is  satisfied.

Valuation and evaluating impairment of long-lived assets and goodwill
---------------------------------------------------------------------


                                       15
<PAGE>
     Goodwill represents the excess of the purchase price over the fair value of
net  assets  acquired.  Goodwill  should  not  be  amortized  but  reviewed  for
impairment  at the fiscal year end or whenever conditions exist that indicate an
impairment  could  exist.  The  Company  performed the annual impairment test in
fiscal  years  2004  and  2003  and  concluded  that no impairment had occurred.

     The  Company  evaluates  the  recoverability  of  its long-lived assets and
requires recognition of impairment of long-lived assets in the event that events
or  circumstances indicate an impairment may have occurred and when the net book
value  of  such  assets exceeds the future undiscounted cash flows attributed to
such  assets.  We  assess the impairment of long-lived assets whenever events or
changes  in  circumstances  indicate  that  the  carrying  value  may  not  be
recoverable.  No  impairment of long-lived assets has occurred through September
30,  2004.


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 September 30, 2004, we
had  an  accumulated deficit of $31.3 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.


                                       16
<PAGE>
Demand for our products is subject to significant fluctuation. Adverse market
conditions in the communications equipment industry and any slowdown in the
United States economy 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 U.S. economic
slowdown has been more profound in the telecommunications market, resulting in a
significant  reduction in capital expenditures for the Company's products. 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 products.
Moreover, some of our customers have experienced serious financial difficulties,
which  in  certain  cases  have  resulted  in bankruptcy filings or cessation of
operations.

Our industry is highly competitive and subject to pricing pressure.

     Competition  in  the  communications  equipment  market is intense. We have
experienced  and  anticipate  experiencing  increasing  pricing  pressures  from
current  and  future  competitors  as  well as general pricing pressure from our
customers  as  part of their cost containment efforts.   Many of our competitors
have  more  extensive  engineering,  manufacturing,  marketing,  financial  and
personnel  resources  than we do.  As a result, these competitors may be able to
respond  more  quickly  to  new or emerging technologies and changes in customer
requirements  or  to  offer  more  aggressive  price  reductions.

Our  sales  could  be  negatively  impacted  if one or more of our key customers
substantially  reduce  orders  for  our  products.

     If  we  lose  a  significant customer, our sales and gross margins would be
negatively  impacted.  In  addition,  the loss of sales may require us to record
impairment, restructuring charges or exit a particular business or product line.

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
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 precise 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  and labor that are incorporated into our products
from outside vendors. In the case of the SunUV(R) Personal UV Monitor, we supply
components to an outside assembler who delivers the completed product.  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


                                       17
<PAGE>
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.   In addition, we have increased our
reliance  on  the  use  of contract manufacturers to make our products. If these
contract manufacturers do not fulfill their obligations or if we do not properly
manage  these  relationships,  our  existing  customer relationships may suffer.

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

     Some  of  the  Company's  products are designed to be deployed in large and
complex  networks  and  must  be compatible with other components of the system,
both  current  and  future.  Our customers may discover errors or defects in our
products only after they have been fully deployed. In addition, our products may
not  operate  as expected over long periods of time. In the case of the SunUV(R)
Personal  UV  Monitor,  a  consumer  product, customers could encounter a latent
defect not detected in the quality inspection. 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.

Consolidation among our customers could result in our losing a customer or
experiencing a slowdown as integration takes place.

     It is likely that there will be increased consolidation among our customers
in  order  for  them  to  increase market share and achieve greater economies of
scale.  Consolidation is likely to impact our business as our customers focus on
integrating  their  operations  and  choosing  their  equipment vendors. After a
consolidation  occurs, there can be no assurance that we will continue to supply
the  surviving  entity.

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
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.

Customer  payment  defaults  could  have  an  adverse  effect  on  our financial
condition  and  results  of  operations.

     As a result of adverse conditions in the telecommunications market, some of
our  customers  have  and may continue to experience financial difficulties.  In
the future, if customers experiencing financial problems default and fail to pay
amounts  owed  to  the  Company,  we may not be able to collect these amounts or
recognize expected revenue. In the current environment in the telecommunications
industry  and  in  the  United  States and global economies, it is possible that
customers from whom we expect to derive substantial revenue will default or that
the  level  of  defaults  will  increase.  Any  material payment defaults by our
customers  would  have  an  adverse  effect  on  our  results  of operations and
financial  condition.

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


                                       18
<PAGE>
     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.

     In March 2003, we completed the acquisition of the assets of CSP as part of
our  strategy  to  expand  our  product  offerings,  develop internal sources of
components  and  materials, and acquire new technologies. We acquired the assets
of  Americable, Inc. in June 2003 and integrated them with the assets of CSP. 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 as
          of  the  end of the fiscal period covered by this report the Company's
          disclosure  controls  and  procedures (as defined in Exchange Act Rule
          13a-14(c))  were sufficiently effective to ensure that the information
          required  to  be  disclosed by the Company in the report was gathered,
          analyzed  and  disclosed  with  adequate  timeliness,  accuracy  and
          completeness.

     b.   Changes  in  internal controls. There were no changes in the Company's
          internal  controls  over  financial reporting during the fiscal period
          covered  by  this  report  that  materially affected, or are likely to
          materially  affect,  the  Company's  control over financial reporting.


                                     PART II

ITEMS 1 THROUGH 3. NOT APPLICABLE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


                                       19
<PAGE>
     (a)  The  annual  meeting of shareholders of the Company was held on August
          19,  2004.  As of the record date, July 6, 2004, there were 11,872,331
          shares  of Common Stock issued and outstanding. There were present and
          voting  at  the  meeting,  in person or by proxy, 10,506,044 shares of
          Common  Stock (approximately 88% of the total issued and outstanding).

     (b)  (1)  The  election  of  5  directors  to  serve for one-year terms was
          approved.  The individual results are as follows. There were no broker
          non-votes.

<TABLE>
<CAPTION>
----------------------------------------------------------------------
                                             Voting Authority
      Name                Affirmative Votes      Withheld      Abstain
----------------------------------------------------------------------
<S>                       <C>                <C>               <C>

----------------------------------------------------------------------
Anil K. Jain                     10,422,290            83,754        -
----------------------------------------------------------------------
Kenneth A. Olsen                 10,402,290           103,754        -
----------------------------------------------------------------------
John G. Reddan                   10,437,190            68,854        -
----------------------------------------------------------------------
Ronald G. Roth                   10,453,890            52,154        -
----------------------------------------------------------------------
Stephen L. Zuckerman, MD         10,452,290            53,754        -
----------------------------------------------------------------------
</TABLE>

     (c)  The  change  of company name to APA Enterprises, Inc. from APA Optics,
          Inc.  was  approved. The individual results are as follows. There were
          no  broker  non-votes.

<TABLE>
<CAPTION>
---------------------------------------------
For Name Change  Against Name Change  Abstain
---------------------------------------------
<S>              <C>                  <C>
10,380,245              92,344         30,544
---------------------------------------------
</TABLE>

ITEM 5. NOT APPLICABLE


                                       20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a)    Exhibits.


               Exhibit  3.1  -  Restated  Articles  of Incorporation, as amended

               Exhibit  10.1  (c)  -  Lease Agreement with Jain-Olsen Properties

               Exhibit  10.9  (b)  -  Amendment of Sublease Agreement with Veeco
               Compound  Semiconductor

               Exhibit 31.1 - Certification of Chief Executive Officer and Chief
               Financial  Officer  pursuant to Section 302 of the Sarbanes-Oxley
               Act  of  2002

               Exhibit  32.1 - Certification required of Chief Executive Officer
               and  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 ENTERPRISES, INC.


 11/5/04                                  /s/ Anil K. Jain
----------                                ----------------

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


 11/5/04                                  /s/ Daniel Herzog
----------                                -----------------

   Date                                   Comptroller
                                          (Principal Accounting Officer)


                                       21
<PAGE>