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 September 30, 2003, or

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

                    For the transition period from NA to NA.

                         Commission File Number 0-16106

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

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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to  be  filed  by  Section  13  or 15 (d) of the Securities Exchange Act of 1934
during  the  preceding 12 months (or for such shorter period that the registrant
was  required  to  file  such  reports),  and (2) has been subject to the filing
requirement  for  the  past  90  days.

                               Yes  [X]     No [ ]


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

                  Class:                       Outstanding at September 30, 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)


                                                       September 30,     March 31,

                                                           2003            2003
                                                      ---------------  -------------
<S>                                                   <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                           $   16,653,485   $ 22,235,686
  Accounts receivable, net of allowance of
  uncollectible accounts of $21,836 at September 30,
  2003 and $20,644 at March 31, 2003                       1,824,849        468,576
  Inventories                                              2,182,022      1,398,203
  Prepaid expenses                                           182,642        134,045
  Bond reserve funds                                          40,000         75,000
                                                      ---------------  -------------
Total current assets                                      20,882,998     24,311,510

Property, plant and equipment, net                         4,283,499      3,989,344

Other assets:
  Bond reserve funds                                         383,623        340,629
  Bond placement costs, net of accumulated
  amortization                                                 7,771         20,013
  Patents, net of accumulated amortization                    92,737         85,362
  Goodwill                                                 2,778,296      2,500,296
  Other                                                      576,070        586,542
                                                      ---------------  -------------
                                                           3,838,497      3,532,842
                                                      ---------------  -------------

Total assets                                          $   29,004,994   $ 31,833,696
                                                      ===============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                   $    1,545,569   $  1,846,922
  Accounts payable                                           870,311        454,804
  Accrued expenses                                           565,094        286,267
                                                      ---------------  -------------
Total current liabilities                                  2,980,974      2,587,993

Long-term debt                                               288,085        326,760

Shareholders' equity:
  Common Stock                                               118,723        118,723
  Additional paid-in capital                              52,031,560     52,001,681
  Accumulated deficit                                    (26,414,348)   (23,201,461)
                                                      ---------------  -------------
Total shareholders' equity                                25,735,935     28,918,943
                                                      ---------------  -------------

Total liabilities and shareholders' equity            $   29,004,994   $ 31,833,696
                                                      ===============  =============
</TABLE>


      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


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


                                           Three Months Ended           Six Months Ended
                                              September 30,               September 30,
                                       --------------------------  --------------------------
                                           2003          2002          2003          2002
                                       ------------  ------------  ------------  ------------
<S>                                    <C>           <C>           <C>           <C>
Revenues                               $ 3,557,586   $    38,900   $ 5,124,578   $   111,351

Costs and expenses:
  Cost of sales                          3,339,257       718,944     5,207,138     1,476,677
  Research and development                 210,861       336,680       407,529       689,847
  Selling, general and administrative    1,705,663       397,824     2,724,136       717,935
                                       ------------  ------------  ------------  ------------
                                         5,255,781     1,453,448     8,338,803     2,884,459
                                       ------------  ------------  ------------  ------------

Loss from operations                    (1,698,195)   (1,414,548)   (3,214,225)   (2,773,108)

Interest income                             34,657       122,797        60,108       255,889
Interest expense                            (3,200)      (26,736)      (57,770)      (54,011)
                                       ------------  ------------  ------------  ------------
                                            31,457        96,061         2,338       201,878
                                       ------------  ------------  ------------  ------------

Loss before income taxes                (1,666,738)   (1,318,487)   (3,211,887)   (2,571,230)

Income taxes                                   750           250         1,000           500
                                       ------------  ------------  ------------  ------------

Net loss                               $(1,667,488)  $(1,318,737)  $(3,212,887)  $(2,571,730)
                                       ============  ============  ============  ============

Net loss per share:
  Basic and diluted                         ($0.14)       ($0.11)       ($0.27)       ($0.22)

Weighted average shares outstanding:
  Basic and diluted                     11,872,331    11,874,957    11,872,331    11,875,396
                                       ============  ============  ============  ============
</TABLE>


      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


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


                                                                       Six Months Ended
                                                                         September 30,
                                                                  --------------------------
                                                                      2003          2002
                                                                  ------------  ------------
<S>                                                               <C>           <C>
OPERATING ACTIVITIES
Net loss                                                          $(3,212,887)  $(2,571,730)
Adjustments to reconcile net loss to net cash used  in operating
activities, net of acquisition:
          Depreciation and amortization                               430,198       342,166
          Write-off of patents                                              -       108,660
          Stock based compensation expense                             29,879        26,804
        Changes in operating assets and liabilities:
          Accounts receivable                                        (762,273)         (687)
          Inventories                                                (145,819)       24,484
          Prepaid expenses and other                                  (99,956)       62,768
          Accounts payable and accrued expenses                       694,334      (161,427)
                                                                  ------------  ------------
Net cash used in operating activities                              (3,066,524)   (2,168,962)

INVESTING ACTIVITIES
Purchases of property and equipment                                  (212,522)      (65,937)
Cash paid for business acquisition                                 (1,960,000)            -
Investment in patents                                                  (7,375)      (13,851)
                                                                  ------------  ------------
Net cash used in investing activities                              (2,197,897)      (79,788)

FINANCING ACTIVITIES
Repayment of long-term debt                                          (340,028)     (429,677)
Repurchase of common stock                                                  -        (5,991)
Bond reserve funds                                                      4,248        45,406
                                                                  ------------  ------------
Net cash used in financing activities                                (335,780)     (390,262)
                                                                  ------------  ------------

Decrease in cash and cash equivalents                              (5,582,201)   (2,639,012)

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

Cash and cash equivalents at end of period                        $16,653,485   $28,967,391
                                                                  ============  ============

Noncash investing and financing activities
  Contributed land                                                          -   $    67,760
</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            Six Months Ended
                                                                         September 30,                 September,
                                                                 --------------------------  --------------------------
                                                                     2003          2002          2003          2002
                                                                 ------------  ------------  ------------  ------------
<S>                                                              <C>           <C>           <C>           <C>
Numerator for basic and diluted  net loss                        $(1,667,488)  $(1,318,737)  ($3,212,887)  $(2,571,730)
                                                                 ------------  ------------  ------------  ------------

Denominator for basic and diluted net loss per share- weighted-
  average shares outstanding                                      11,872,331    11,874,957    11,872,331    11,875,396
                                                                 ============  ============  ============  ============

Basic and diluted net loss per share                                  ($0.14)       ($0.11)       ($0.27)       ($0.22)
                                                                 ============  ============  ============  ============
</TABLE>


Common  stock  options  and warrants to purchase 1,014,197 and 785,872 shares of
common  stock  with  a  weighted  average exercise price of $6.70 and $8.80 were
outstanding at September 30, 2003 and 2002, respectively, but were excluded from
calculating  the  three  months  diluted  net  loss  per share because they were
antidilutive.

NOTE 3.  LAND

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

NOTE 4.  STOCK OPTION 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
operational objectives set forth in the Short-Term Incentive Plan.  Accordingly,
these  options  are  treated  as  variable


                                        5
<PAGE>
awards,  and  the  Company  reflects  changes  in their value in the general and
administrative  expense  line until the options are exercised or expire.  14,940
shares have been vested related to this program and $13,894 is included in S,G&A
expense  for  the  three  and  six  months  ended  September  30,  2003.

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  and,  as  a  result,  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  the  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 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 expenses absorbed at APA in
the  amount  of  $35,600  have  been  allocated  to  APACN.  Segment  detail  is
summarized  as  follows  (unaudited,  in  thousands):

<TABLE>
<CAPTION>
                                   APA Optics    APACN   Eliminations    Consolidated
                                  ------------  -------  -------------  --------------
<S>                               <C>           <C>      <C>            <C>
THREE MONTHS ENDED SEPTEMBER 30,
2003
  External sales                  $        61   $3,497              -   $       3,558
  Cost of Sales                           680    2,659              -           3,339
  Operating loss                       (1,432)    (266)             -          (1,698)
  Depreciation and amortization           185       32              -             217
  Capital expenditures                     31      105              -             136
  Assets                               28,428    7,652         (7,075)         29,005

THREE MONTHS ENDED SEPTEMBER 30,
2002
  External sales                           39        -              -              39
  Cost of Sales                           719        -              -             719
  Operating loss                       (1,415)       -              -          (1,415)
  Depreciation and amortization           186        -              -             186
  Capital expenditures                     10        -              -              10
  Assets                               33,332        -              -          33,332

SIX MONTHS ENDED SEPTEMBER 30,
2003
  External sales                          122    5,010             (7)          5,125


                                        6
<PAGE>
  Cost of Sales                         1,359    3,855             (7)          5,207
  Operating loss                       (2,746)    (469)             -          (3,214)
  Depreciation and amortization           368       62              -             430
  Capital expenditures                    100      112              -             212
  Assets                               28,428    7,652         (7,075)         29,005

SIX MONTHS ENDED SEPTEMBER 30,
2002
  External sales                          111        -              -             111
  Cost of Sales                         1,477        -              -           1,477
  Operating loss                       (2,773)       -              -          (2,773)
  Depreciation and amortization           342        -              -             342
  Capital expenditures                     66        -              -              66
  Assets                               33,322        -              -          33,322
</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 six months ended September 30, 2002, the Company
repurchased  a total of 3,550 shares for $5,991 at an average price of $1.69 per
share.

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 six months
ended  September  30,  2002.

NOTE  9.  ADOPTION  OF  NEW  ACCOUNTING  PRONOUNCEMENTS

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

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

     In  June  2002,  FASB issued SFAS No. 146, "Accounting for Costs Associated
with  Exit  or Disposal Activities."  SFAS No. 146 requires the recognition of a
liability  for  a  cost  associated  with  an exit or disposal activity when the
liability  is  incurred versus the date the Company commits to an exit plan.  In
addition, SFAS No. 146 states the liability should be initially measured at fair
value.  The  requirements  of  SFAS  No.  146 are effective for exit or disposal
activities that are initiated after December 31, 2002.  The Company believes the
adoption  of  SFAS  No.  146  will  not  have a material effect on the Company's
financial  position  or  results  or  operations.

     In  December  2002,  FASB  issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure."  This statement amends FASB Statement
No.  123,  "Accounting  for  Stock-Based  Compensation",  to provide alternative
methods  of  transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation.  It also amends the disclosure
requirements  to  require  prominent  disclosures  in  both  annual  and interim
financial  statements  about  the  method of accounting for stock-based employee
compensation.  The  transition  provisions  of  this statement are effective for
fiscal  years  ending  after  December  15,


                                        7
<PAGE>
2002 and the disclosure provisions are effective for annual financial statements
for  fiscal  years  ending  after December 15, 2002 and the first interim period
beginning  after  December  15, 2002.  The Company believes the adoption of SFAS
No.  148  will not have a material effect on the Company's financial position or
results  of  operations.

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

     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  operation.

     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 is not anticipated to 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


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


OVERVIEW
--------

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

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


                                        8
<PAGE>
     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 SunUVPersonal UV Monitor (formerly
SunWatch)  is now ready for production. As of September 30, 2003, and currently,
we  are  working  with  our manufacturing facility in China to address yield and
production capacity issues. Our goal is to start sending samples of our products
to several retailers and distributors and fulfill small volume orders during the
3rd  quarter  of  FY 2004.  Our ability to meet this objective is dependent upon
our  ability  to  solve  production  related  issues.

     As  of  September  30,  2003,  our  industrial  GaN  based  product,  the
TrUVMeterTM,  has  required  additional  engineering  to  meet  accuracy  and
reliability  specifications  for  key  markets  in  sterilization,  curing  and
scientific  measurement.  Our  primary  focus  at  present  is  to introduce the
SunUVPersonal  UV  Monitor  to  the  market  and, subsequently, to introduce the
TrUVMeterTM  .


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

REVENUES

     Revenues  for  the  quarter  ended  September  30,  2003,  were $3,557,586,
reflecting  over  a  ninety-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 $3,497,188 in revenues for the
quarter.  This  includes  sales  for  a  full  quarter  from  the acquisition of
Americable,  which  occurred  on June 27, 2003.   Sales for the six months ended
September  30,  2003  were  $5,124,578,  reflecting  a 45-fold increase from the
comparable  period  in  the  preceding  year.  The  increase  is attributable to
revenues  generated  by  APACN, which recorded revenue of $5,009,556 for the six
month period ended September 30, 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 may be mildly adversely
affected  by  seasonality  in  the  third  quarter  of  fiscal  2004,  primarily
attributable to the number of holidays and customer budget cycles within APACN's
marketplace.

COST  OF  SALES

     Cost  of  sales for the quarter ended September 30, 2003 was $3,339,257 and
$5,207,138  for  the six months ended September 30, 2003, respectively.  Cost of
sales  for  the  three  and six months ended September 30, 2002 was $718,944 and
$1,476,677,  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 $838,150 or 24%, and
$1,154,714,  or 23%, for the six months ended September 30, 2003.  Gross margins
for  the  quarter  ended September 30, 2003 at APACN were negatively affected by
duplicate expenses related to operating multiple facilities and higher personnel
costs related to moving to a new facility.  We expect gross margins for APACN to
gradually  improve over the balance of fiscal 2004 as we continue to consolidate
the  operations  of  APACN  and  eliminate  duplicate  expenses.

RESEARCH  AND  DEVELOPMENT  EXPENSES

     Research  and  development expenses decreased by $125,819, to $210,861, for
the  quarter  ended  September  30,  2003  compared  to  the same period for the
preceding  fiscal  year.  This  represents a decrease of 37%. For the six months
ended  September  30,  2003,  research  and  development  expenses  decreased by
$282,318,  from  $689,847  to


                                        9
<PAGE>
$407,529.  Both  the  three  and six month ending decreases are due primarily to
decreased research activity related to our fiber optic products. The majority of
the  decrease  is  due to a reduction in salaries and other related expenses. We
expect  research  and  development  expenses to remain stable for the balance of
fiscal  2004.

SELLING,  GENERAL  AND  ADMINISTRATIVE

     Selling,  general  and  administrative  expenses  increased  $1,307,839  to
$1,705,663  for  the  quarter  ended  September 30, 2003 versus $397,824 for the
comparable  period in the preceding fiscal year, reflecting an increase of 329%.
The  increase is due primarily to the addition of APACN, which had $1,104,028 in
SG&A  expenses  for  the  quarter.  APACN incurred approximately $161,000 in one
time  fees  and  expenses within the quarter associated with expenses related to
operating  multiple facilities and for moving costs related to its move to a new
facility. We expect we will not incur any more significant costs associated with
this  move  going  forward.  Expenses  at  APA  Optics  increased  $203,810, due
primarily  to  higher professional fees and higher depreciation and amortization
expenses.  For  the  six  months  ended  September  30,  2003,  SG&A  increased
$2,006,201,  or  279%,  to  $2,724,136.  The  increase  was primarily due to the
acquired  operations  of  APACN,  which  had  $1,623,443 in expenses for the six
months ended September 30, 2003, approximately 65% of which is employee related.
Expenses  at APA Optics increased $382,757, primarily due to higher professional
fees related to the acquisition of APACN and higher personnel expenses.  For the
six  months  ended September 30, 2003, approximately $230,000 of APA Optics SG&A
expenses  have been related to non-recurring uncapitalized transaction costs for
the  acquisitions  of  CSP  and Americable.  We expect expenses to decrease next
quarter  as  cost  savings and the elimination of duplicate costs related to the
consolidation  of  the  operations  of  APACN  are  achieved.

LOSS  FROM  OPERATIONS

     The  loss  from  operations was $1,698,195, an increase of $283,647, or 20%
for  the  quarter  ended September 30, 2003 over the comparable period in fiscal
2003.  The  increased  loss in the quarter was the result of operating losses at
APACN,  which  totaled $265,879 for the period. The loss from operations for the
six  months ended September 30, 2003 was $3,214,225, an increase of $441,117, or
16%,  from  $2,773,108  in  the  comparable  period  in the preceding year.  The
increased  loss  is  primarily  the result of the operating losses at APACN.  We
expect the losses to decrease over the balance of fiscal 2004 as we realize cost
savings  and  efficiencies  related  to  the  consolidation of the operations of
APACN.

OTHER  INCOME  AND  EXPENSE

     Other  income decreased $88,140 or 72% for the three months ended September
30,  2003  from  the comparable period in fiscal 2003.  For the six months ended
September  30, 2003, other income decreased $195,781, or 77% from the comparable
period  in  the  preceding fiscal year.  Other expenses decreased $23,536 or 88%
for  the  three  months  ended  September 30, 2003 from the comparable period in
fiscal  2003 due to the retirement in May 2003 of an interest bearing bond debt.
For  the  six-month  period  ended  September 30, 2003, other expenses increased
$3,759,  or 7%, due to additional interest expense on operating leases at APACN.
Interest income decreased $78,264, or 66% and $156,871, or 61% for the three and
six  months  ended September 30, 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 September 30, 2003, was $1,667,488 (or
$0.14  per basic and diluted share), an increase of $348,751 or 26% from the net
loss  reported  for  the  same  period in fiscal 2003.  For the six months ended
September  30, 2003, the net loss was $3,212,887, (or $.27 per basic and diluted
share),  an  increase of $641,157 or 25% from the net loss reported for the same
period in fiscal 2003.  The increased net losses were primarily due to losses at
APACN,  which was negatively affected by duplicate expenses related to operating
multiple


                                       10
<PAGE>
facilities and higher personnel costs related to moving to a new facility, while
the  increase  in  loss  at  APA Optics is attributable to lower interest income
earned  in  the  six  months  ending  September  30,  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  September 30, 2003 is $16,653,485 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 $2,197,897 in investing activities for the six months
ended  September  30,  2003  compared  to $79,788 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 invested $212,522 for the six months ended
September  30, 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. We expect to invest in equipment
to  support  the  HFET research and development activities over the next several
quarters.

     Net  cash  used  in financing activities for the six months ended September
30,  2003 totaled $335,780. We used $340,028 for the scheduled reduction of debt
and  a  reduction in bond reserve funds generated $4,248. During the same period
in  fiscal  2003 we used $390,262 in financing activities, of which $429,677 was
used  for  the  scheduled  reduction  of  debt,  $45,406  was generated from the
reduction  of  bond reserve funds and $5,991 was used to repurchase common stock
of  the  Company.

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

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

<TABLE>
<CAPTION>
                               Less than                         After
                        Total   1 Year    1-3 years  4-5 years  5 years
                        -----------------------------------------------
<S>                     <C>    <C>        <C>        <C>        <C>
Long-term debt          1,833      1,546        111         35      141
Operating leases          764        361        403          -        -
                        -----------------------------------------------

Total Contractual Cash
    Obligations         2,597      1,907        514         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  9  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.


                                       11
<PAGE>
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, 2003, we
had  an  accumulated deficit of $26.4 million. We may incur operating losses for
the  foreseeable  future,  and  these losses may be substantial. Further, we may
continue to incur negative operating cash flow in the future. We have funded our
operations  primarily  through  the sale of equity securities and borrowings. We
have  significant  fixed expenses and we expect to continue to incur significant
and  increasing  manufacturing,  sales  and  marketing,  product development and
administrative  expenses.  As  a  result, we will need to generate significantly
higher  revenues  while  containing  costs  and  operating expenses if we are to
achieve  profitability.

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

     Since  the  time  we  first  introduced  our  fiber optic components to the
marketplace  we  have  seen  the average selling price of fiber optic components
decline.  We  expect  this  trend  to continue. To achieve profitability in this
environment  we  must  continually decrease our costs of production. In order to
reduce  our  production  costs,  we  will  continue to pursue one or more of the
following:

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

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

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


                                       12
<PAGE>
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 precision process. We have
limited  experience  in  rapidly  increasing  our  manufacturing  capacity or in
manufacturing products at high volumes. If demand for our products increases, we
will  be  required  to hire, train and manage additional manufacturing personnel
and  improve  our  production  processes  in  order  to  increase our production
capacity.  There are numerous risks associated with rapidly increasing capacity,
including:

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

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

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

     We purchase components that are incorporated into our products from outside
vendors.  If  these  vendors  fail  to  supply  us  with components or completed
assemblies  on  a  timely basis, or if the quality of the supplied components or
completed  assemblies  is not acceptable, we could experience significant delays
in  shipping our products. Any significant interruption in the supply or support
of any components or completed assemblies could seriously harm our sales and our
relationships  with  our  customers.

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

     Some  of  our  products  are  designed  to be deployed in large and complex
optical  networks  and  must be compatible with other components of the 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.


                                       13
<PAGE>
     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.

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.


                                       14
<PAGE>
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 3. NOT APPLICABLE

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

     (a)  The  annual  meeting of shareholders of the Company was held on August
          21,  2003.  As of the record date, July 7, 2003, 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, 10,265,560 shares of
          Common  Stock (approximately 86% 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                   9,346,664           918,896              -
----------------------------------------------------------------------------
Kenneth A. Olsen               9,342,264           923,296              -
----------------------------------------------------------------------------
John G. Reddan                10,211,255            54,305              -
----------------------------------------------------------------------------
Ronald G. Roth                10,225,155            40,405              -
----------------------------------------------------------------------------
Stephen L. Zuckerman, MD      10,225,155            40,405              -
----------------------------------------------------------------------------
</TABLE>


ITEM 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.

               A report on Form 8-K dated July 2, 2003, reported the acquisition
               of the assets of Americable, Inc.

               A report on Form 8-K dated July 23, 2003, reported the
               resignation of the Chief Financial Officer David R. Peters.

               A report on Form 8-K/A dated August 8, 2003, amended the report
               on Form 8-K filed on July 2, 2003 providing the required
               financial statements and pro forma financial information within
               the time allowed under the requirement of Form 8-K.


                                   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>