UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549

                           FORM 10-QSB

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

For the quarterly period ended June 30, 2004

                               OR

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

For the transition period from                 to
                               ---------------    --------------.

Commission file number 0-17966
                       -------

                       MICRONETICS, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

          Delaware                          22-2063614
-------------------------------         -------------------------
(State or other jurisdiction of         (IRS Employer
incorporation or organization)           Identification No.)

              26 Hampshire Drive, Hudson NH         03051
-----------------------------------------------------------------
(Address of principal executive offices)          (Zip Code)

                         (603) 883-2900
-----------------------------------------------------------------
        (Issuer's telephone number, including area code)

-----------------------------------------------------------------
      (Former name, former address and former fiscal year,
                   if changed since last report)

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

Yes   X     No
     ---       ---

As  of  August 3, 2004, the issuer had 4,388,056 shares of common
stock, par value $.01 per share outstanding.


                       MICRONETICS, INC.

<TABLE> <CAPTION>
                             INDEX

                                                        Page No.
                                                        --------
<S>                                                      <C>
Part I.  Financial Information:

     Item 1.   Financial Statements.

               Consolidated Condensed Balance
               Sheets (unaudited) - June 30, 2004
               and March 31, 2004                         3-4

               Consolidated Condensed Statements
               of Income(unaudited) - Three Months
               Ended June 30, 2004 and June 30, 2003        5

               Consolidated Condensed Statements
               of Cash Flows (unaudited) - Three Months
               Ended June 30, 2004 and June 30, 2003      6-7

               Notes to Consolidated Condensed
               Financial Statements (unaudited)          8-14


     Item 2.   Management's Discussion and Analysis
               or Plan of Operation.                     15-17

     Item 3.   Controls and Procedures                   17-18


Part II.  Other Information:

     Item 1.   Legal Proceedings.                           19

     Item 2.   Unregistered Sales of Equity Securities
               And Use of Proceeds.                      19-21

     Item 6.   Exhibits and Reports on Form 8-K.            22


Signature                                                   23
</TABLE>


                  PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements.
<TABLE> <CAPTION>
                MICRONETICS, INC. AND SUBSIDIARIES
              CONSOLIDATED CONDENSED BALANCE SHEETS



                                    June 30, 2004   March 31, 2004
                                    -------------   --------------
                                      (unaudited)
                  ASSETS
                  ------
<S>                                  <C>           <C>
Current assets:

  Cash and cash equivalents          $ 2,526,678   $ 2,147,836

  Marketable securities                  551,036       551,935

  Accounts receivable, net of
   allowance for doubtful accounts of
   $73,781 and $79,384, respectively   1,877,770     2,379,717

  Inventories                          3,916,645     3,576,027

  Prepaid expenses                       152,061       116,531

  Deferred tax asset                           -         3,994

  Prepaid income taxes                   111,516             -

  Other current assets                       287        26,575
                                       ---------    ----------
     Total current assets              9,135,993     8,802,615
                                      ----------    ----------

Property, Plant and Equipment - net    3,143,631     3,038,506

Other assets:

 Security deposits                         5,335         5,335

 Goodwill                              1,117,197     1,117,197
                                      ----------    ----------
     Total other assets                1,122,532     1,122,532
                                      ----------    ----------
                                     $13,402,156   $12,963,653
                                      ==========    ==========

See   accompanying   notes  to  consolidated  condensed financial statements.
</TABLE>


<TABLE> <CAPTION>
                MICRONETICS, INC. AND SUBSIDIARIES
               CONSOLIDATED CONDENSED BALANCE SHEET

                                    June 30, 2004   March 31, 2004
                                    -------------   --------------
                                     (unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S>                                    <C>             <C>
Current liabilities:
  Accounts payable                     $  436,806      $538,141

  Accrued expenses                        818,169       951,921

  Deferred revenue                          1,000         2,000

  Income taxes payable                          -       204,280

  Long-Term Debt - current portion        574,268       320,091
  Capital lease obligations -
   current portion                         24,578        34,436
                                        ---------     ---------
        Total current liabilities       1,854,821     2,050,869

 Long-term debt - net of current portion  808,765       891,452
 Capital lease obligations - net of
  current portion                          16,986        28,908

        Deferred tax liability            195,791       162,582
                                        ---------     ---------
                                        2,876,363     3,133,811
                                        ---------     ---------
Commitments and contingencies
Shareholders' equity:
  Preferred stock - $0.10 par value;
  100,000 shares authorized; no shares
  issued and outstanding                        -             -
Common stock - $0.01 par value;
  100,000,000 shares authorized;
  4,646,147 and 4,571,326 issued,
  respectively; 4,323,980 and
  4,251,326 outstanding, respectively      46,461         42,513

Additional paid in capital              5,288,776      4,930,449
Retained earnings                       6,406,827      6,056,880
                                       ----------     ----------
                                       11,742,064     11,029,842
Treasury stock, 322,167 and 320,000
 shares, at cost                       (1,216,271)    (1,200,000)
                                       ----------     ----------
Total shareholders' equity             10,525,793      9,829,842
                                       ----------     ----------
                                      $13,402,156     12,963,653
                                       ==========     ==========
See accompanying notes to consolidated condensed financial statements.
</TABLE>


<TABLE> <CAPTION>
                MICRONETICS, INC. AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS OF INCOME

                                     Three months Ended June 30,
                                         2004           2003
                                      ----------      ----------
                                     (unaudited)     (unaudited)
<S>                                  <C>             <C>

Net sales                            $3,379,331      $3,025,895

Cost of sales                         1,839,086       1,762,255
                                      ---------       ---------

Gross profit                          1,540,245       1,263,640

Operating expenses:
Selling, general and
 administrative                         787,004         701,823

Research & development                  234,061         193,955
                                      ---------       ---------
Total operating expenses              1,021,065         895,778
                                      ---------       ---------

Income from operations                  519,180         367,862
                                      ---------       ---------
Other (expenses) income:

 Interest income                           (225)         15,839
 Interest expense                       (15,334)        (22,612)
 Rental income                           13,947          16,488
 Miscellaneous (expense) income          20,812          (7,305)
                                      ---------       ---------
        Total other (expenses) income    19,200           2,410
                                      ---------       ---------
Income before provision
 for income taxes                       538,380         370,272

Provision for income taxes              188,433          55,541
                                      ---------       ---------
Net income                           $  349,947      $  314,731
                                      =========       =========
Earnings per common share:

     Basic                           $      .08     $       .07
                                      =========       =========
     Diluted                         $      .08     $       .07
                                      =========       =========
Weighted average common shares
 outstanding:

     Basic                            4,286,962       4,457,339

     Diluted                          4,361,937       4,505,380

See accompanying notes to consolidated condensed financial statements.
</TABLE>

<TABLE> <CAPTION>
                MICRONETICS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                       Three Months Ended June 30,
                                         2004             2003
                                        -------         ---------
                                      (unaudited)      (unaudited)
<S>                                     <C>             <C>
Cash flows from operating
 activities:

Net income                              $  349,947      $  314,731

Adjustments to reconcile net
 income to net cash provided
 by operating activities:

Depreciation                               111,970          87,857

Bad debt (recovery) expense                 (5,603)         11,695

Inventory reserve                          (32,814)         50,558

Deferred taxes                              37,203               -

Options issued for services                  2,095               -

Common Stock issued for settlement          84,000               -

Tax benefit upon exercise of stock options  82,932               -

Changes in operating assets and
 liabilities:

Accounts receivable                         507,550         78,888

Inventories                                (307,804)      (220,303)

Prepaid expenses, other current assets
 and other assets                            (9,242)       (96,007)

Accounts payable                           (101,335)        56,076

Accrued expenses and deferred revenue      (134,752)         1,172

Income taxes payable                       (315,796)      (111,031)
                                          ---------      ---------
Net cash provided
 by operating activities                 $  268,351     $  173,636
                                          ---------      ---------

See accompanying notes to consolidated condensed financial statements.
</TABLE>

<TABLE> <CAPTION>

                MICRONETICS, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


                                            Three Months Ended June 30,
                                              2004             2003
                                           (unaudited)     (unaudited)
                                            ---------       ---------
<S>                                         <C>             <C>
Cash flows from investing activities:
 Net proceeds (purchase) of marketable
  securities                                       899               -

  Purchase of equipment                       (217,095)       (146,300)
                                             ---------        --------
Net cash used in investing activities         (216,196)       (146,300)
                                             ---------        --------
Cash flows from financing activities:

  Proceeds from line of credit                 250,000              -

  Payment on mortgages payable                 (78,510)      (367,373)

  Payment of capital lease obligations         (21,780)       (13,270)

  Net proceeds from exercise of stock options  193,248         94,575

  Purchase of treasury shares                  (16,271)        (2,894)
                                             ---------       --------
Net cash provided by (used in)
 financing activities                          326,687       (288,962)
                                             ---------       --------
Net change in cash and cash equivalents        378,842       (261,626)

Cash and cash equivalents at beginning of
 period                                      2,147,836      2,629,212
                                             ---------      ---------
Cash and cash equivalents at end of period  $2,526,678     $2,367,586
                                             =========      =========
Supplemental disclosure of cash flow
 information:

  Cash paid during the period for:

      Interest                             $   15,334      $  81,890
                                            =========      =========
      Income taxes                         $  384,000      $ 343,596
                                            =========      =========

See accompanying notes to consolidated condensed financial statements.
</TABLE>



               MICRONETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note 1.   BASIS OF PRESENTATION

The   accompanying   unaudited  consolidated  condensed   financial
statements  contain  all  adjustments (consisting  of  only  normal
recurring  adjustments)  which in the  opinion  of  management  are
necessary in order to present fairly the financial position  as  of
June  30,  2004, the results of operations and cash flows  for  the
three month periods ended June 30, 2004 and 2003.

While  the  Company  believes that the  disclosures  presented  are
adequate  to  make the information not misleading, it is  suggested
that  these consolidated condensed financial statements be read  in
conjunction with the Company's Annual Report on Form 10-KSB for its
fiscal year ended March 31, 2004.

The  results of operations for the three months ended June 30, 2004
are not necessarily indicative of the results of the full year.


Note 2.   PRINCIPAL  BUSINESS ACTIVITY AND SUMMARY  OF  SIGNIFICANT
          ACCOUNTING POLICIES

Summary of operations -

Micronetics,  Inc. and Subsidiaries (collectively the "Company"  or
"Micronetics")   are   engaged   in   the   design,    development,
manufacturing  and marketing of a broad range of  high  performance
wireless components and test equipment used in cellular, microwave,
satellite, radar and communication systems around the world.

The  consolidated  financial statements  include  the  accounts  of
Micronetics,    Inc.   ("Micronetics")   and    its    wholly-owned
subsidiaries,  Microwave  &  Video  Systems,  Inc.  ("MVS"),   Enon
Microwave, Inc. ("Enon") and Microwave Concepts, Inc. ("MicroCon").
All  material  intercompany  balances and  transactions  have  been
eliminated in consolidation.

The  Company  generates  its revenues from the  sale  of  products,
technology  development  and  licensing.   The  Company  sells  its
products  through  a direct sales force and sales  representatives.
The  Company's  products  are generally hardware  and  occasionally
bundled  hardware  and  software that  are  delivered  together  to
original   equipment  manufacturers  (OEMs)   of   a   variety   of
telecommunications and networking products that are considered  end
users.

Use  of  estimates  -  The preparation of financial  statements  in
conformity  with  accounting principles generally accepted  in  the
United States of America requires management to make estimates  and
assumptions  that  affect  the  reported  amounts  of  assets   and
liabilities and disclosure of contingent assets and liabilities  at
the  date  of the financial statements and the reported amounts  of
revenue  and expenses during the reporting period.  Actual  results
could differ from those estimates.

Cash  and cash equivalents - For purposes of the statements of cash
flows,  the  Company considers all highly liquid  debt  instruments
with  an  original  maturity of three months or  less  to  be  cash
equivalents.

Marketable securities - The Company's marketable securities consist
of bond mutual funds that are carried at fair value; any unrealized
gains or losses are included in income.

Accounts  receivable - Accounts receivable are  reported  at  their
outstanding  unpaid principal balances reduced by an allowance  for
doubtful  accounts.  The Company estimates doubtful accounts  based
on  historical  bad  debt, factors related to  specific  customers'
ability to pay and current economic trends.  The Company writes off
accounts  receivable  against  the  allowance  when  a  balance  is
determined to be uncollectible.

Inventories  -  Inventories  are  stated  at  the  lower  of  cost,
determined by the first-in, first-out method, or market.

Property, Plant and Equipment - Depreciation of property, plant and
equipment ("PPE") is computed by both straight-line and accelerated
methods at rates adequate to allocate the cost of applicable assets
over their expected useful lives.

Goodwill - Goodwill relates to the Company's acquisitions accounted
for  under  the purchase method of accounting.  Under the  purchase
method  of  accounting, the excess of the purchase price  over  the
identifiable  net  assets of the acquired  entity  is  recorded  as
goodwill.

As  of  June  30, 2004, the Company has goodwill of  $1,117,197  in
connection with its acquisition of Enon in March 2002.

Income  taxes  - The financial statements (including the  provision
for  income  taxes)  are prepared on an accrual  basis.   Temporary
differences  occur  when  income and  expenses  are  recognized  in
different periods for financial reporting purposes and for purposes
for  computing income taxes currently payable.  Deferred taxes  are
provided as a result of such temporary differences.

Concentration of credit risk - The Company maintains cash  in  bank
deposit  accounts that, at times, exceed federally insured  limits.
The Company has not experienced any losses on these accounts.

Fair value of financial instruments - The carrying amounts reported
in  the  consolidated  balance sheet for cash,  trade  receivables,
accounts payable, and accrued expenses approximate fair value based
on  the  short-term  maturity of these  instruments.  The  carrying
amount  of  the  Company's long-term debt  also  approximates  fair
value.

Revenues  -   Revenues from products are recognized  in  accordance
with  Staff  Accounting Bulletin No. 104, "Revenue  Recognition  in
Financial  Statements" ("SAB 104") when the following criteria  are
met:  persuasive  evidence of an arrangement  exists,  delivery  of
product  has  occurred,  the  price  to  the  buyer  is  fixed   or
determinable, and collectibility is probable.  The Company  has  no
obligation  to  customers  after the date  on  which  products  are
delivered other than pursuant to warranty obligations.

At  this  time,  Micronetics does not offer a right to  return  any
Micronetics product (other than for warranty obligations),  has  no
post-shipment  obligations, has no policy of  awarding  credits  or
discounts  and  currently  offers no price  protection  or  similar
privileges.  Unless purchasers acquire an extended warranty,  which
is a new program, Micronetics offers a one-year warranty policy and
establishes  a warranty reserve.  Micronetics charges  to  expense,
when  incurred,  any warranty costs not covered by  the  change  in
reserve.   In  order  to return a product, Micronetics  requires  a
customer to obtain a Return Material Authorization.  This policy is
the same for each of Micronetics' two segments (Defense Electronics
Group and Commercial Products Group). As of June 30, 2004 and 2003,
the  Company  has  not set up a warranty reserve, due  to  warranty
expense being insignificant.

Impairment of long-lived assets -  The Company assesses the need to
record  impairment  losses on long-lived  assets,  including  fixed
assets,  goodwill and other intangible assets, to be held and  used
in  operations whenever events or changes in circumstances indicate
that  the  carrying amount of an asset may not be recoverable.   If
events  or  changes  in circumstances indicate  that  the  carrying
amount  of  an asset may not be recoverable, the Company  estimates
the  undiscounted future cash flows to result from the use  of  the
asset and its ultimate disposition.  If the sum of the undiscounted
cash  flows is less than the carrying value, the Company recognizes
an  impairment loss, measured as the amount by which  the  carrying
value  exceeds the fair value of the asset.  Assets to be  disposed
of  are carried at their lower of the carrying value or fair  value
less  costs  to  sell.   Additionally,  goodwill  is  assessed  for
impairment on an annual basis.

On  an  on-going basis, management reviews the value and period  of
amortization  or  depreciation of long-lived  assets.  During  this
review, the Company reevaluates the significant assumptions used in
determining  the original cost of long-lived assets.  Although  the
assumptions   may  vary  from  transaction  to  transaction,   they
generally include revenue growth, operating results, cash flows and
other  indicators  of  value.  Management then  determines  whether
there  has  been  an  impairment of the value of long-lived  assets
based  upon  events  or circumstances, which  have  occurred  since
acquisition.   The  impairment policy is  consistently  applied  in
evaluating  impairment  for  each of  the  Company's  wholly  owned
subsidiaries  and  investments. In accordance with  SFAS  No.  142,
Goodwill  and  Other  Intangibles, the  Company  has  tested  their
valuation  of goodwill on an annual basis, and has determined  that
no impairment exists.

Earnings  per  share - Basic and diluted net income  per  share  is
calculated based on the net income for each period divided  by  the
weighted  average  number of common shares  and  common  equivalent
shares  outstanding during each period.  Common  stock  equivalents
represent  the dilutive effect of the assumed exercise  of  certain
outstanding stock options.

Reclassifications  - Certain reclassifications have  been  made  to
prior  year  consolidated financial statements to  conform  to  the
current period presented.

Recent accounting pronouncements - Management does not believe that
any recently issued, but not yet effective, accounting standards if
currently  adopted would have a material effect on the accompanying
consolidated financial statements.


Note 3.   STOCK BASED COMPENSATION

The  Company measures employee stock-based compensation cost  using
Accounting Principles Board ("APB") Opinion No. 25 as is  permitted
by  Statement of Financial Accounting Standards No. 123 ("SFAS  No.
123"),   Accounting  for  Stock-Based  Compensation.    Pro   forma
information regarding net income (loss) and net income  (loss)  per
share is required by SFAS No. 123 and has been determined as if the
Company had accounted for its stock options granted using the  fair
value method of SFAS No. 123.  The fair value for these options was
estimated  at  the  date  of grant using the  Black-Scholes  option
pricing  model with the following weighted-average assumptions  for
the  three  month  periods ended June 30, 2004 and 2003:  risk-free
interest rates of 3.87% and 2.27%, respectively; no dividend yield;
volatility  factors of the expected market price of  the  Company's
common  stock of 75% and 75%, respectively, and expected  lives  of
the  options were estimated at approximately 2-1/2 and 1-1/2 years,
respectively.  The  weighted average fair value  of  stock  options
granted  for the three month periods ended June 30, 2004  and  2003
was $3.29 and $3.00, respectively.
<TABLE> <CAPTION>
For purposes of pro forma disclosures, the estimated fair value  of
the  options  is  amortized to expense over  the  options'  vesting
period.  The Company's pro forma information is as follows:

                                           Three Months Ended
                                                June 30,
                                            2004        2003
                                        ----------   ----------
     <S>                               <C>          <C>
     Net income - as reported          $   349,947  $   314,731

     Deduct:    stock-based   employee
      compensation  expense  determined
      under  fair-value  based  method,
      net of income tax effect              52,581       50,472
                                        ----------   ----------

     Net income - pro forma            $   297,366  $   264,259
                                        ==========   ==========

     Basic  income  per  share-
       as reported                     $       .08  $       .07
                                        ==========   ==========
     Basic  income  per  share-
      pro forma                        $       .07  $       .06
                                        ==========   ==========

     Diluted  income per  share-
      as reported                      $       .08  $       .07
                                        ==========   ==========
     Diluted  income per share-
      pro forma                        $       .07  $       .06
                                        ==========   ==========
</TABLE>

Note 4.   INVENTORIES

<TABLE> <CAPTION>
Inventories consist of the following:

                                        June 30,      March 31,
                                          2004          2004
                                       -----------   -----------
                                       (Unaudited)    (Audited)
         <S>                       <C>             <C>
         Raw  materials and work-
          in-process               $    3,549,303  $  3,243,381
         Finished goods                   487,333       485,451
                                        ---------     ---------
                                        4,036,636     3,728,832
         Less: allowance for
          obsolescence                   (119,991)     (152,805)
                                        ---------     ---------
                                   $    3,916,645  $  3,576,027
                                        =========     =========
</TABLE>


Note 5.     LONG-TERM DEBT

During the three months ended June 30, 2004, the Company drew  down
$250,000  of  an  available  $1,500,000  line  of  credit  from   a
commercial bank. This line, issued on March 25, 2002, was to expire
on  July  31, 2004, and has been extended until November 30,  2004.
This  line bears interest at .5% above the bank index of 4.25%,  as
of June 30, 2004.

Note 6.     SHAREHOLDERS' EQUITY

During  the three months ended June 30, 2004, the Company issued  a
total  of  54,821 shares for net proceeds of approximately $193,000
upon  the  exercise  of stock options granted under  the  Company's
various  option  plans.  During the period  ended  June  30,  2004,
certain  employees exercised options by delivering 2,167 shares  of
common  stock held by them to the Company. These shares  have  been
accounted for as treasury stock.

As  the result of a legal settlement with former financial advisors
in June 2004, the Company issued 20,000 shares of common stock, and
agreed  to pay the advisors $10,000. These shares have been  valued
at   $84,000.  The  Company  incurred  approximately   $24,000   in
litigation expense in the settlement of this dispute.

Note 7.     INDUSTRY SEGMENT INFORMATION

The  Company has two reportable segments: Defense Electronics Group
and  Commercial  Products  Group.  The  Defense  Electronics  Group
develops  and  manufactures  a  broad  line  of  microwave  and  RF
components  and  subassemblies that are used in a wide  variety  of
microwave   products.   The  Commercial  Products  Group   produces
components  and  test equipment used in the development,  test  and
deployment of wireless communications and automated testing systems
(ATE).

<TABLE> <CAPTION>
The  tables below present segment information for the three  months
ended June 30, 2004 (in thousands):


                      Defense      Commercial
                    Electronics     Products   Corporate   Total
                    -----------    ----------  ---------   ------
    <S>             <C>         <C>          <C>        <C>

    Net sales       $   2,226   $   1,153    $     -    $  3,379
    Interest        $       -   $       -    $     -    $      -
    Income
    Interest        $       -   $       -    $    15    $     15
    expense
    Depreciation    $      76   $      36    $     -    $    112
    Pre-tax income  $     187   $     295    $    56    $    538
</TABLE>

<TABLE> <CAPTION>
The  tables below present segment information for years  ended
June 30, 2003 (in thousands):


                        Defense     Commercial
                       Electronics   Products   Corporate   Total
                      ------------  ---------  ----------  -------
    <S>             <C>            <C>         <C>        <C>
    Net sales       $      2,287   $      739  $       -  $  3,026
    Interest        $         11   $        -  $       5  $     16
    Income
    Interest        $          -   $        -  $      23  $     23
    expense
    Depreciation    $         60   $       28  $       -  $     88
    Pre-tax income  $        302   $       61  $       7  $    370
</TABLE>



Item   2.    Management's  Discussion  and  Analysis  or  Plan   of
Operation.

Results of Operations

Operating  Revenue  for  Q1  FY05 was  $3,379,331  as  compared  to
$3,025,895 for Q1 FY04, an increase of $353,436, or 11.7%.  All  of
the  increase  was attributable to the Commercial  Products  Group,
whose  revenues  increased by $414,255 or 56%, as compared  to  the
same  period last year. Revenues for the Defense Electronics  Group
declined by 3% as compared to Q1 FY04.

Significant  increase in revenue from the Noise  Products  and  VCO
divisions accounted for the growth in Commercial Group. The Defense
Group's  earnings  were  impacted by a  customer  who  requested  a
temporary delay in shipments on a multi-year order.

Gross  Profit Margin was 45.6% for Q1 FY05 as compared to  41.8%  a
year  earlier.  The  increase  was  attributed  to  the  Commercial
Products  Group as gross margins increased from 46% in Q1  FY04  to
56%  this  quarter. The Defense Electronics Group was flat compared
to last year.

Research  and  Development ("R&D") expenses increased  to  6.9%  of
revenues  compared to 6.4% in Q1 FY04. Total R&D increased  $40,106
or  21% as compared to Q1 FY04. The overall increase in dollars was
evenly  spread  between  the  Commercial  and  Defense  Electronics
Groups.

Selling, general and administrative ("SG&A") expenses as a  percent
of  revenues slightly increased to 23.3% from 23.2% the same period
last  year.  SG&A  attributable to the  Defense  Electronics  Group
increased  to  23.7% as compared to 21.8% in the same  period  last
year  while the Commercial Products Group's SG&A expenses decreased
from  29.8%  to  22.2%  this  year. The change  in  the  Commercial
Products  Group  was  due to the significant increase  in  revenues
coupled  with  only  a small increase in SG&A expenses.  Commercial
expenses  increased 16% over last year while the  Defense  Products
Group's  expenses grew at a 6% rate. Expenses increased $85,181  or
12%  from the same period of the previous year. If the Company does
not include the impact of a one-time charge to settle a legal issue
during  the  quarter,  Q1  expenses would have  been  approximately
$33,000  less  than the same period last year. This was  due  to  a
reduction in resources in one of our divisions.

Net  income for Q1 FY05 was $349,947, or $.08 per share, basic  and
diluted,  as  compared to $314,731, or $.07 per  share,  basic  and
diluted,  in  Q1 FY04.  This is an increase of $35,216  or  11%  as
compared  to the same period last year. Significant increases  from
our  Commercial  Products  Group due  to  increased  revenues  were
partially  offset  with  year over year  declines  in  our  Defense
Electronics Group. Most of the decline in the Defense Group was due
to  reduced revenues from a customer who requested temporary  delay
for  shipments from a multi-year order. Without the impact  of  the
one-time  charge for legal fees as mentioned above, the  EPS  would
have been 10 cents for the quarter.

Financial Condition

The  Company's  working capital at June 30, 2004 was $7,281,172  as
compared  to  $6,751,746 at March 31, 2004.  The Company's  current
ratio  was  approximately 4.9 to 1 at June 30, 2004 as compared  to
4.3 to 1 at March 31, 2004.

Net  cash  of $268,351 was provided by operating activities  during
the  three months ended June 30, 2004 as compared to $173,636  that
was  provided  by  operating activities  during  the  year  earlier
period.   This  was  primarily due to increased  profit  offset  by
increased  inventory  and  reductions in payables  and  income  tax
liabilities  in  the current period.  Net cash  used  by  investing
activities during the three months ended June 30, 2004 was $216,196
as  compared to $146,300 during the year earlier period.  This  was
due to the purchase of new equipment during both periods.  Net cash
provided by financing activities during the three months ended June
30,  2004 was $326,687 as compared to cash used of $288,962  during
the year earlier period.  This was largely due to proceeds from our
line  of credit and from exercised stock options during the current
period.   As  a  result  of these activities,  the  Company's  cash
position  increased  $378,842 during the current  three  months  as
compared to a decrease of $261,626 in the year ago period.

In  accordance with loans from a bank, the Company is  required  to
maintain  a  minimum net worth of at least $2,000,000, a  ratio  of
total  debt to net worth not exceeding 1.25:1, and a debt  coverage
ratio  of  not less than 1.25:1.  At present, the Company does  not
anticipate  failing to comply with any of these  financial  ratios.
The  Company also has a line of credit with the bank in the  amount
of  $1,500,000.  As of June 30, 2004, we have drawn  $250,000  from
this available credit to support capital expenditures.

We  believe  that  cash and cash equivalents on  hand,  anticipated
future  cash receipts, and borrowings available under our  line  of
credit  will  be sufficient to meet our obligations as they  become
due  for the next twelve months.  However, a decrease in our  sales
or  demand  for  our  products would likely  adversely  affect  our
working  capital  amounts.  As part of our  business  strategy,  we
occasionally   evaluate  potential  acquisitions   of   businesses,
products and technologies.  Accordingly, a portion of our available
cash  may  be used at any time for the acquisition of complementary
products  or businesses.  These potential transactions may  require
substantial  capital resources, which, in turn, may require  us  to
seek  additional debt or equity financing.  There are no assurances
that  we  will  be  able to consummate any of  these  transactions.
There  are  no  present plans to raise additional  debt  or  equity
capital, nor is there a projected need to raise any such capital.

Safe Harbor Statement

Statements  which  are  not historical facts, including  statements
about  the Company's confidence and strategies and its expectations
about  new  and  existing products, technologies and opportunities,
market  and industry segment growth, demand and acceptance  of  new
and  existing products are forward looking statements that  involve
risks  and  uncertainties.  These include, but are not limited  to,
product   demand  and  market  acceptance  risks;  the  impact   of
competitive products and pricing; the results of financing efforts;
the  loss of any significant customers of any business; the  effect
of  the  Company's  accounting policies; the  effects  of  economic
conditions  and trade, legal, social, and economic risks,  such  as
import,  licensing,  and trade restrictions;  the  results  of  the
Company's  business  plan and the impact  on  the  Company  of  its
relationship  with  its  lender.  This report  should  be  read  in
conjunction with the Company's Annual Report on Form 10-KSB for its
fiscal year ended March 31, 2004.


Item 3.   Controls and Procedures.

The Company maintains "disclosure controls and procedures," as such
term  is  defined  in Rules 13a-15e and 15d-15e of  the  Securities
Exchange  Act  of 1934, as amended (the "Exchange Act"),  that  are
designed to ensure that information required to be disclosed in its
reports,  pursuant  to  the Exchange Act, is  recorded,  processed,
summarized  and reported within the time periods specified  in  the
SEC's rules and forms, and that such information is accumulated and
communicated  to  its  management, including  its  Chief  Executive
Officer  and  Chief  Financial Officer, as  appropriate,  to  allow
timely  decisions regarding the required disclosures. In  designing
and  evaluating the disclosure controls and procedures,  management
has recognized that any controls and procedures, no matter how well
designed  and  operated, can provide only reasonable assurances  of
achieving   the   desired   control  objectives,   and   management
necessarily  is  required to apply its judgment in  evaluating  the
cost benefit relationship of possible controls and procedures.

The  Company's  Chief Executive Officer and Vice  President-Finance
(its  principal executive officer and principal financial  officer,
respectively)  have evaluated the effectiveness  of  the  Company's
"disclosure  controls and procedures" as of the end of  the  period
covered  by  this Quarterly Report on Form 10-QSB. Based  on  their
evaluation, the principal executive officer and principal financial
officer  concluded  that  the  Company's  disclosure  controls  and
procedures are effective. There were no significant changes in  the
Company's  internal  controls  or  in  other  factors  that   could
significantly  affect these controls subsequent  to  the  date  the
controls were evaluated.



                       PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

           In  December 2003, the Company was served with a Demand for
     Arbitration   from  EarlybirdCapital,  Inc.  ("Earlybird"),   the
     company  with  whom it had entered into a Financial Advisory  and
     Investment  Banking  Agreement in October  2002  (the  "Financial
     Agreement").   The  Company terminated  the  Financial  Agreement
     after  six months since the Company believed it was not receiving
     much  benefit  from  it.   As part of the consideration  for  the
     Financial  Agreement,  the  Company  issued  a  warrant  to   the
     EarlyBird to purchase 50,000 shares of the Company's Common Stock
     (the  "Common Stock"). After Micronetics terminated the Financial
     Agreement, it discovered information about EarlyBird, which,  had
     it known prior to the execution of the Financial Agreement, would
     have  estopped  Micronetics  from  entering  into  the  Financial
     Agreement.  The entity alleged damages of approximately $235,000,
     an  amount  which  the Company disputed and the Company  filed  a
     counter-claim.   In June 2004, the Company and Earlybird  entered
     into a settlement agreement pursuant to which the Company allowed
     Earlybird  to  exercise its warrant to receive 20,000  shares  of
     Common  Stock  (the  "Shares").  As set forth in  the  settlement
     agreement,  the Company allowed Earlybird to pay for  the  Shares
     through  a cashless exercise of the warrant.  Earlybird  utilized
     the  shares  of  the  Common Stock contained in  the  Warrant  to
     purchase the Shares and the balance of the warrant was cancelled.
     The  Company  also paid Earlybird $10,000.  This  matter  is  now
     concluded.   There  are  no other material legal  proceedings  to
     which  the Company is a party or known to be contemplated at  the
     present time.


Item  2.    Unregistered Sales of Equity Securities  and  Use  of
            Proceeds.

     Recent Sales of Unregistered Securities

          As  previously  reported, the Company had  entered  into  a
     Financial Agreement with Earlybird on October 16, 2002. Pursuant
     to  the  Financial Agreement, the Company granted a  three  year
     warrant  to purchase 50,000 shares of Common Stock to  Earlybird
     exercisable  at $3.00 per share (the "Warrant").  The  Financial
     Agreement  subsequently became the subject  of  a  dispute.   In
     settlement  of this dispute, the Company allowed the  entity  to
     exercise the Warrant as to 20,000 shares utilizing the shares of
     the  Warrant  as  payment  for the exercise  and  cancelled  the
     balance  of the Warrant.  The Company allowed Earlybird  to  use
     shares of Common Stock based on the market value on the date  of
     settlement, as payment for the shares of Common Stock  exercised
     pursuant  to  the  Warrant.  See Item 1. Legal Proceedings.   No
     underwriters  were involved in the transaction.  The  securities
     were not sold for cash. The securities were being issued to this
     entity  as  part  of the consideration for this entity  entering
     into   the   Financial  Agreement  and  providing  the  services
     thereunder.  The issuance of the Warrant and the shares received
     upon conversion of the Warrant was accomplished pursuant to  the
     exemption  from registration contained in Section  4(2)  of  the
     Securities Act of 1933.

<TABLE> <CAPTION>

          Small Business Issuer Purchases of Equity Securities


Period     (a) Total Number  (b) Average     (c) Total    (d) Maximum
               Of Shares         Price Paid      Number       Number
               Purchased         per Share       of Shares    (or Approx-
                                                 Purchased    imate
                                                 as part of   Dollar
                                                 Publicly     Value) of
                                                 Announced    Shares
                                                 Plans or     that may
                                                 Programs     yet be
                                                              purchased
                                                              under the
                                                              Plans or
                                                              Programs
-------------------------------------------------------------------------
<S>             <C>            <C>                <C>            <C>

April 1, to
April 30, 2004       0            0               0              0



May 1, to
May 31, 2004     2,496          $6.28             0              0



June 1 to
June 30, 2004        0            0               0              0



    Total        2,496          $6.28             0              0



-------------------------------------------------------------------------
</TABLE>


Item 6.   Exhibits and Reports on Form 8-K.

          (a)  Exhibits.

31.1      Certification pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.

31.2      Certification pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.


32.1       Certification  pursuant  to  18  U.S.C.
           Section  1350, as adopted pursuant to Section  906
           of the Sarbanes-Oxley Act of 2002.

32.2       Certification  pursuant  to  18  U.S.C.
           Section  1350, as adopted pursuant to Section  906
           of the Sarbanes-Oxley Act of 2002.


     (b)  Reports on Form 8-K.


      On June 28, 2004, the registrant filed a Current Report  on
Form  8-K  to disclose the issuance of a press release announcing
its  results  of operations for its fiscal year ended  March  31,
2004.

                           SIGNATURE



      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.



                                   MICRONETICS, INC.
                                   (Registrant)



Dated:  August 16, 2004            By:/s/David Robbins
                                      --------------------------
                                      David Robbins,
                                      President (Principal
                                      Executive Officer)