UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  SCHEDULE 14A

          PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                      EXCHANGE ACT OF 1934 (AMENDMENT NO. )


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Check the appropriate box:

[ ]   Preliminary  Proxy  Statement
[ ]   CONFIDENTIAL,  FOR  USE  OF  THE COMMISSION ONLY (AS PERMITTED BY RULE
      14A-6(E)(2))
[X]   Definitive  Proxy  Statement
[ ]   Definitive  Additional  Materials
[ ]   Soliciting  Material  Pursuant  to  Sec.240.14a-12


                                APA Optics, Inc.
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                (Name of Registrant as Specified In Its Charter)


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    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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                                APA OPTICS, INC.
                               2950 N.E. 84TH LANE
                             BLAINE, MINNESOTA 55449

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO OUR SHAREHOLDERS:

     The  2004  Annual  Meeting  of  the  shareholders  of  APA  Optics, Inc., a
Minnesota corporation (the "Company"), will be held at the Four Points Sheraton,
1330  Industrial Boulevard, Minneapolis, Minnesota 55431, on August 19, 2004, at
3:30  p.m.,  Central  Daylight  Time,  to  consider  and vote upon the following
matters:

     1.   Election  of  five  directors.

     2.   Amendment  of  the Articles of Incorporation to change the name of the
          Company  to  APA  Enterprises,  Inc.

     3.   Such  other  business  as  may properly come before the meeting or any
          adjournment  or  adjournments  thereof.

     We have fixed the close of business on July 6, 2004, as the record date for
the  determination  of  shareholders  entitled  to  notice of and to vote at the
Annual  Meeting.  Our  transfer  books  will  not  be  closed.

     Whether  or  not you expect to be present personally at the Annual Meeting,
please  complete, date, sign, and return the accompanying Proxy in the enclosed,
self-addressed  envelope  at  your  earliest convenience.  This will insure your
participation  in  the  decisions  to be made by the shareholders.  We sincerely
hope  that  all  shareholders  who  can  attend  the  Annual Meeting will do so.

                                        BY ORDER OF THE BOARD OF DIRECTORS


                                        Kenneth A. Olsen
                                        Secretary

July 12, 2004



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SOLICITATION AND REVOCATION OF PROXIES. . . . . . . . . . . . . . . . . . .    1

BOARD RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .    2

VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2

OWNERSHIP OF COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . .    2

PROPOSAL 1:  ELECTION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . .    4

EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . .    8

CERTAIN RELATIONSHIPS AND TRANSACTIONS. . . . . . . . . . . . . . . . . . .   12

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . .   13

RELATIONSHIP WITH INDEPENDENT AUDITORS. . . . . . . . . . . . . . . . . . .   14

PROPOSAL 2:  CHANGE OF NAME . . . . . . . . . . . . . . . . . . . . . . . .   15

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15

SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING . . . . . . . . . . . . . . .   15

ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .   16



                                APA OPTICS, INC.
                               2950 N.E. 84TH LANE
                            BLAINE, MINNESOTA  55449

                                _________________

                                 PROXY STATEMENT
                       FOR ANNUAL MEETING OF SHAREHOLDERS
                                 AUGUST 19, 2004
                                _________________

                     SOLICITATION AND REVOCATION OF PROXIES

     The  accompanying  Proxy  is  solicited  by  the  Board of Directors of APA
Optics,  Inc.  (the "Company") in connection with the 2004 Annual Meeting of the
Shareholders  of  the  Company,  to  be  held  on  August 19, 2004, at 3:30 p.m.
Minneapolis  time,  at  the  Four  Points  Sheraton,  1330 Industrial Boulevard,
Minneapolis, Minnesota 55431 and any adjournments thereof.  This Proxy Statement
is  first  being  mailed  to  shareholders  on  or  about  July  12,  2004.

HOW TO VOTE

     -    By  signing  and returning the enclosed proxy card, you will be giving
          your proxy to our board of directors and authorizing them to vote your
          shares.

HOW YOUR PROXY WILL BE VOTED

     -    Unless  revoked,  all  properly  executed  Proxies  will  be  voted as
          specified.  Proxies  that  are  signed but that lack any specification
          will, subject to the following, be voted FOR all nominees for director
          and  FOR  changing  the  name  of  the  Company.  If any other matters
          properly  come  before  the  Annual  Meeting, or if any of the persons
          named  to serve as directors should decline or be unable to serve, the
          persons  named  in  the  Proxy  will  vote  in  accordance  with their
          discretion.

HOW TO REVOKE YOUR PROXY

     -    You  have  the  power  to  revoke  your  proxy  at any time before the
          convening  of the Annual Meeting. Revocations of proxy will be honored
          if  received by us, at the Company, addressed to the attention of Anil
          K.  Jain, on or before August 18, 2004. In addition, on the day of the
          meeting,  prior to the convening thereof, revocations may be delivered
          to  the  tellers  who  will be seated at the door of the meeting room.

ABSTENTIONS

     -    If  you  abstain  from  voting  as to any matter, your shares shall be
          deemed present at the meeting for purposes of determining a quorum and
          for  purposes of calculating the vote with respect to such matter, but
          shall  not  be  deemed  to  have  been  voted  in  favor



          of  such  matter. Abstentions, therefore, as to any proposal will have
          the  same  effect  as  votes  against  such  proposal.

BROKER NON-VOTES

     -    If  a  broker turns in a "non-vote" Proxy, indicating a lack of voting
          instruction  by  the  beneficial  holder  of  the shares and a lack of
          discretionary  authority  on  the  part  of  the  broker  to vote on a
          particular matter, then the shares covered by such non-vote Proxy will
          be  considered  present  at  the meeting for purposes of determining a
          quorum but will not be considered to be represented at the meeting for
          purposes of calculating the vote required for approval of such matter.

COST OF SOLICITATION

     -    We  will  pay  all  expenses  in  connection  with the solicitation of
          proxies.  Proxies are being solicited primarily by mail, but officers,
          directors, and other employees of the Company may also solicit proxies
          by telephone, telegraph, or personal calls. No extra compensation will
          be  paid by us for such solicitation. We may reimburse brokers, banks,
          and  other  nominees  holding  shares  for  others  for  the  cost  of
          forwarding  proxy  materials  to,  and  obtaining  proxies from, their
          principals.

                              BOARD RECOMMENDATIONS

     The Board of Directors unanimously recommends that you vote FOR election of
each  nominee  and  FOR  the  change  of  name  of  the  company.

                                  VOTING RIGHTS

     Only  shareholders  of record at the close of business on July 6, 2004, are
entitled to notice of and to vote at the meeting or any adjournment thereof.  As
of  that  date, we had issued and outstanding 11,872,331 shares of common stock.
Each holder of record of our common stock is entitled to one vote for each share
registered  in  the  shareholder's  name as of the record date.  The Articles of
Incorporation  of  the  Company  do not grant the shareholders the right to vote
cumulatively  for the election of directors.  No shareholder will have appraisal
rights  or  similar dissenter's rights as a result of any matters expected to be
voted  on  at  the  meeting.

     The  presence  in person or by proxy of holders of a majority of the shares
of  common stock entitled to vote at the Annual Meeting will constitute a quorum
for  the  transaction  of  business.

                            OWNERSHIP OF COMMON STOCK

     The  following  table  shows as of July 6, 2004, the stock ownership of (i)
all persons known by us to be beneficial owners of more than five percent of our
outstanding  shares  of  common  stock,  (ii) each director and each nominee for
election  as  a  director,  (iii)  the  Named


                                        2

Executive  Officers  (as  defined  below  under  the  caption  "EXECUTIVE
COMPENSATION"),  and  (iv)  all  current  directors  and executive officers as a
group:



 Name and Address of                Number of Shares      Percentage of
  Beneficial Owner                 Beneficially Owned   Outstanding Shares
---------------------------------  -------------------  ------------------
                                                  

Anil K. Jain                             1,670,502 (l)                14.1
2950 N.E. 84th Lane
Blaine, Minnesota 55449

Kenneth A. Olsen                           742,832 (2)                 6.3
2950 N.E. 84th Lane
Blaine, Minnesota 55449

Cheri Podzimek                                    -0-                    *
5480 Nathan Lane
Plymouth, Minnesota 55442

Herman Lee                                    761,700                  6.4
20152 Highway 9N
Borup, Minnesota 56519

John G. Reddan                              11,000 (3)                   *
1950 Ridgewood Avenue
White Bear Lake, MN 55110

Ronald G. Roth                             334,800 (3)                 2.8
19 East Oaks Road
North Oaks, MN 55127

Stephen A. Zuckerman, M.D.                  23,000 (3)                   *
2828 Kenwood Isles Drive
Minneapolis, MN  55408

All current directors and             2,782,134 (3)(4)                23.4
executive officers as a group (6
persons)



*    Less  than  1%.
(1)  Includes  5,250  shares  held by Dr. Jain as custodian for minor relatives.
     Dr.  Jain  disclaims  beneficial  ownership  of  such  shares.
(2)  Includes 19,332 shares held in trusts for Anil K. Jain's children, of which
     Mr.  Olsen  serves  as trustee. Mr. Olsen disclaims beneficial ownership of
     such  shares.
(3)  Includes  5,000  shares  that may be acquired upon exercise of options that
     are  or  will  become  exercisable  within  sixty  days of the record date.
(4)  Includes  15,000  shares that may be acquired upon exercise of options that
     are  or  will  become  exercisable  within  sixty  days of the record date.



                                        3

                                 PROPOSAL NO. 1
                              ELECTION OF DIRECTORS

     Our  Nominating  Committee  has  named  the  individuals  listed  below for
election  as  directors,  each  to  serve  until  the next annual meeting of the
shareholders  and  until  his  successor  is  elected and qualified or until his
earlier  resignation  or  removal.  All of the nominees are currently directors.

     Unless  instructed not to vote for the election of directors or not to vote
for any specific nominee, your proxy will be voted to elect the listed nominees.
If any nominee withdraws as a candidate or is otherwise unavailable to stand for
election  at  the meeting, the named proxies will vote for such other persons as
they  may  determine,  in  their  discretion.  We  do  not  anticipate  that any
candidate  will  withdraw.

     The  following  information  is  provided  with respect to the nominees for
directors:

     Name                             Age       Director Since
     ----                             ---       --------------

     Anil K. Jain                      58                 1979
     Kenneth A. Olsen                  60                 1980
     Ronald G. Roth                    59                 2002
     Stephen A. Zuckerman, M.D.        62                 2002
     John G. (Jack) Reddan             74                 2002

     Dr.  Anil K. Jain has been president of the Company since 1979, Chairman of
the Board since 1987, and Chief Executive Officer since 1988.  He also currently
serves  as  Chief  Financial  Officer.  Dr.  Jain  is a past director and former
chairman  of  Minnesota  Project  Innovation,  Inc.,  a  nonprofit  corporation.

     Kenneth  A.  Olsen has been secretary of the Company since 1983.  From 1992
through  2003 he also served as vice president in charge of the Company's optics
fabrication  operations.  Prior  to  joining  the Company in 1979, Mr. Olsen had
been  employed  at  3M  since  1966.

     Ronald  G.  Roth  was  Chairman of the Board and Chief Executive Officer of
Waste Systems Corp., a privately held waste hauling and disposal company, for 25
years  prior  to  its  sale to a national sold waste management company in 1995.
From  1995  to  2001,  he was Chairman of the Board of Access Cash International
L.L.C.,  a  North American provider of ATMs and related processing and financial
services  until its sale to a national payment and technology solutions company.
Since  1990  he  has  been  an  owner  of, and has served in various capacities,
including  director  and  officer,  with Phillips Recycling Systems, a privately
held  regional recycling service provider in Minnesota.  Mr. Roth graduated with
a  B.A.  in  Marketing  from  Michigan  State  University.

     Dr.  Stephen  L. Zuckerman served as a director of the Company from January
1986 through August 1991 and was reappointed to the Board in February 2002.  Dr.
Zuckerman  is Chief of Internal Medicine at Aspen Medical Group East Lake Street
Clinic,  and  in  addition,  has


                                        4

been actively involved for many years with developing companies in the high tech
area.  He  served  as  chairman  of  the board of ProtaTek International Inc., a
biotechnology  company  manufacturing  for the human and veterinary marketplace,
from  1984  to  1987,  as  co-founder  and chairman of the board of Hypertension
Diagnostic  Inc.,  also a biotechnology company that has developed a methodology
for  early  detection  of  blood  vessel  disorders, from 1988 to 1991, and as a
member  of the board of Biosensor Inc. (1989 to 1991) and Micromedics Inc. (1986
to  1991  and  February  2002 to present).  From 1982 to 1995, Dr. Zuckerman was
president  of M-T Venture Capital Fund, Inc., a Minnesota corporation created to
invest  in  early-stage  biotechnology  and medical technology companies.  Since
1976,  Dr.  Zuckerman  has consulted in the health care delivery field, focusing
his  efforts  on  the  regionalization  of  health  care  services.  He  was the
designer,  founder  and  director  of  the  University  of  Minnesota Hospitals'
Outreach Program from 1976 to 1984.  Besides his internal medicine practice, Dr.
Zuckerman  presently is chairman of the board of The Foundation for Rural Health
Care,  a nonprofit organization that owns and manages three rural nursing homes,
and  a  member  of  the  board of Micromedics, Inc.  He is also president of M-T
Venture  Capital  Fund II, Inc. and chairman of the board of The University Film
Society,  Minneapolis,  Minnesota  (2000  to  present).

     John  G. (Jack) Reddan joined the Board of Directors in November 2002.  Mr.
Reddan,  retired,  has  worked  as  a  volunteer with the Presbytery of the Twin
Cities  Area  (Presbyterian  Church  USA)  in computer application, hardware and
software  support,  and  accounting and finance.  From 1992 to 1994, immediately
following  his  retirement  for  Unisys Corp., he worked as a volunteer with the
Presbyterian  Border  Ministries  in  McAllen,  Texas  in  multiple  capacities,
including  accounting  consulting,  which  he  continued  until  1999.  His last
position  at  Unisys  (1986  until  retirement in 1991) was as Program Manager -
Communication  Systems,  where  he was responsible for budgets, procurement, and
administration  of  hardware  and  software development.  During his career with
Unisys  (then  known  as  Sperry  Univac)  he  served  as General Manager of its
division in Brazil (1970-1973) and as European regional manager for sales to the
U.S.  government  and  military  in  Frankfurt,  Germany  (1967-1969).

     Board Meetings.  The Board of Directors held 6 meetings during fiscal 2004.
All  directors  attended  at least 85% of the meetings of the Board of Directors
and  of  each  committee  on  which  they  served.

COMMITTEES

     The  Company  has  an  audit  committee,  a  compensation  committee, and a
nominating  committee,  each  of which is comprised of all non-employee (outside
directors).  The members of these committees during fiscal 2004 were as follows:

Audit Committee             Compensation Committee       Nominating Committee
---------------------       ----------------------       ---------------------

Ronald Roth                 Ronald Roth, Chairman        Ronald Roth, Chairman
Stephen Zuckerman,          Stephen Zuckerman            Stephen Zuckerman
Jack Reddan, Chairman       Jack Reddan                  Jack Reddan


                                        5

     Audit Committee.  The audit committee has sole authority to appoint, review
and discharge our independent auditors.  The committee also reviews and approves
in  advance  the  services  provided  by  the independent auditors, oversees the
internal audit function and reviews our internal accounting controls.  The audit
committee  operates  under  a written charter adopted by the Board of Directors.
All  members  of  the Audit Committee are "independent" under the current Nasdaq
stock  market listing standards.  The Board has identified John G. Reddan as the
current  member  of  our  Audit  Committee who meets the definition of an "Audit
Committee  Financial Expert" recently established by the Securities and Exchange
Commission  ("SEC").  During  fiscal  2004, the Audit Committee held 3 meetings.
See  "RELATIONSHIP WITH INDEPENDENT AUDITORS - Report of Audit Committee" below.

     Compensation  Committee.  The  compensation  committee  develops  general
compensation  policies  and  establishes  compensation  plans  and  specific
compensation levels for executive officers.  The compensation committee met once
during  fiscal 2004 to consider the compensation of the executive officers.  See
"EXECUTIVE  COMPENSATION  -  Report  of  Compensation  Committee"  below.

     Nominating  Committee.  The  nominating  committee  selects  nominees  for
election  as  directors  of the Company.  The nominating committee was formed on
May  27,  2004 and has met once, at which time it selected nominees for election
at  the  upcoming  annual  meeting.  The  nominating  committee  will  consider
qualified director nominees recommended by shareholders for election in 2005 and
beyond.  Our  process for receiving and evaluating Board member nominations from
our  shareholders  is  described below under the caption "Nomination of Director
Candidates."

     Compensation  of  Directors.  Each  director who is not also an employee of
the  Company receives an annual director's fee of $5,000 and $500 for each Board
or committee meeting attended (subject to a maximum of $500 per day).  We paid a
total  of  $26,500  in directors' fees for services rendered during fiscal 2004.
We  have  discontinued the $500 meeting fee effective with the annual meeting in
2004.

     In  addition,  under  the  terms  of  our Stock Option Plan for Nonemployee
Directors,  each  director  who  is  not  otherwise  an  employee of the Company
receives  annually, on the first business day following the annual shareholders'
meeting  or,  if  earlier, on September 1, an option to purchase 5,000 shares of
common stock.  The exercise price for the option equals the fair market value of
the  stock on the date of grant.  Each option becomes exercisable on the earlier
of  the  date of the next annual shareholders' meeting or one year from the date
of  grant  and  is  exercisable  for  a period of four years thereafter.  During
fiscal  2004,  options to purchase 15,000 shares at $2.91 per share were awarded
to  nonemployee  directors  pursuant  to  this  Plan.

CODE OF ETHICS

     The  Company has adopted a code of ethics applicable to its chief executive
officer  and  senior  financial officers.  The code is available at no charge by
request  to  the  Company  in  writing,  to  the  attention  of the Comptroller.
Additionally,  the  code  is  filed  with  the  Securities


                                        6

and Exchange Commission as an exhibit to the Company's Report on Form 10-KSB for
the  fiscal  year  ended  March  31,  2004  and  is  available  on  our  website
(www.apaoptics.com).
 -----------------

NOMINATION OF DIRECTOR CANDIDATES

     Effective  May  27,  2004,  the  Board  of  Directors  appointed a standing
nominating  committee  for  selection  of  nominees for election to the Board of
Directors.  The  committee's  charter  is  available  on  our  website
(www.apaoptics.com) or by request in writing to the Company, to the attention of
 -----------------
the  Comptroller.

     The  nominating  committee  determines  the required selection criteria and
qualifications  of  director nominees based upon the needs of the Company at the
time  nominees  are  considered.  In  general,  at  a  minimum, a candidate must
possess the ability to apply good business judgment and must be in a position to
properly  exercise  his  or  her  duties  of loyalty and care.  In addition, the
committee  evaluates  candidates  based  on financial literacy, knowledge of the
Company's  industry  or other background relevant to the Company's needs, status
as  a shareholder in the Company, "independence" for purposes of compliance with
the  rules  of  the SEC and the Nasdaq Stock Market ("Nasdaq"), and willingness,
ability, and availability for service.  Candidates will be preferred who hold an
established  executive  level  position  in  business,  finance, law, education,
research  or  government.  When  current  Board  members  are  considered  for
nomination  for  reelection,  the  nominating  committee  also  takes  into
consideration  their  prior  APA  Board  contributions,  performance and meeting
attendance  records.

     The  nominating  committee has not utilized the services of any third party
search  firm  to  assist  in  the  identification  or evaluation of Board member
candidates.  However,  the  committee  may  engage a third party to provide such
services  in  the  future,  as  it deems necessary or appropriate at the time in
question.

     The  nominating  committee  will consider qualified candidates for possible
nomination that are submitted by our shareowners.  Shareholders who wish to make
such  a  submission  may  do  so  by  sending  the  following information to the
nominating  committee  c/o  APA Optics, Inc., Attn: Comptroller, at the Company:
(1)  name  of  the  candidate  and  a  brief biographical sketch and resume; (2)
contact  information for the candidate and a document evidencing the candidate's
willingness  to serve as a director if elected; (3) a signed statement as to the
submitting  shareholder's  current  status  as an owner and the number of shares
currently  held.  Nominations are further subject to the requirements of Section
2.14-a  of  the  Company's  Bylaws.  Our  Bylaws  are  available  on our website
(www.apaoptics.com) or by request in writing to the Company (Attn: Comptroller).
 -----------------

     This  information will be evaluated against the criteria established by the
committee  and  the specific needs of the Company at that time.  Based upon such
preliminary assessment, candidate(s) who appear best suited to meet the needs of
the  Company  may be invited to participate in a series of interviews, which are
used  as  a  further  means of evaluating potential candidates.  On the basis of
information  learned  during  this  process,  the committee will determine which
nominee(s)  to  propose  for election at the next annual meeting.  The committee
will  use the same process for evaluating all nominees, regardless of the source
of  the  nomination.


                                        7

     No  candidates  for director nominations were submitted to the committee by
any  shareholders  in connection with the 2004 annual meeting.  Any shareholders
desiring to present a nomination for consideration by the Committee prior to our
2005  annual  meeting  must  do  so  at  least  90  days  prior  to the one year
anniversary  of  this  year's  annual  meeting (i.e. 90 days prior to August 19,
2005),  as  required  by  Section  2.14-a  of  our  Bylaws.

SHAREHOLDER COMMUNICATION WITH THE BOARD

     We  do  not  have a formal procedure for shareholder communication with our
Board  of  Directors.  Any  matter intended for the Board, or for any individual
member  or  members  of  the Board, should be directed to our Comptroller at the
Company  address  with  a request to forward the same to the intended recipient.
All  such  communications  will  be  forwarded  unopened.

     We  encourage all incumbent directors, as well as all nominees for election
as  director,  to  attend  the  annual  meeting  of shareholders.  All incumbent
directors  and  nominees  attended  the  annual  meeting  in  August  2003.

                             EXECUTIVE COMPENSATION

     Summary  Compensation  Table.  The  following  table  sets  forth  certain
information  regarding  compensation  paid  during each of our last three fiscal
years  to  our  chief  executive  officer and our other executive officers whose
annualized  compensation  in  fiscal  2004  (based on salary and bonus) exceeded
$100,000  (the  "Named  Executive  Officers").



                                               Annual Compensation
Name                                 Fiscal  ------------------------     All Other
Principal Positions                   Year     Salary        Bonus      Compensation
-----------------------------------  ------  -----------  -----------  --------------
                                                           

Anil K. Jain                           2004  $   183,600           0   $       8,084
     President and Chief Executive     2003  $   186,831           0   $       5,506
     Officer                           2002  $   179,790  $20,000 (1)  $    8,758 (2)

Cheri B. Podzimek(3)                   2004  $    78,208           0   $       711(4)
     President, APACN


(1)  Bonus  for  fiscal  year  2001,  paid  in  fiscal  year  2002.
(2)  Consists of Company contribution on Dr. Jain's behalf to 401(k) plan and an
     auto  allowance.
(3)  Ms. Podzimek joined the Company on June 27, 2003.  Information in the table
     reflects  compensation  for the period from June 27, 2003 through March 31,
     2004.
(4)  Consists  of  Company contribution on Ms. Podzimek's behalf to 401(k) plan.


     Change  of  Control  Arrangement.  We  have  an agreement with Anil K. Jain
providing  for  certain  benefits  in  the  event  of a change in control of the
Company.  If,  following  a change in control (as defined in the agreement), Dr.
Jain's  employment  is  terminated  within  36 months other than for "cause" (as
defined)  or as a result of his retirement, disability, or death, or if Dr. Jain
terminates  his  employment  for  "good reason" (as defined), he is to receive a
lump  sum  payment  equal  to  two  and one-half times his annualized includable
compensation  for  the  base


                                        8

period  (as  defined in Section 280G(d) of the Internal Revenue Code of 1986, as
amended).  "Good  reason"  includes  certain  changes  in  Dr.  Jain's  duties,
responsibilities,  status,  salary,  benefits,  and  other  similar terms of his
employment  made without his consent.  A "change in control" for purposes of the
agreement includes a consolidation or merger of the Company in which the Company
is  not  the  continuing or surviving corporation, any sale, lease, exchange, or
transfer  of  all or substantially all of the assets of the Company, approval by
the  shareholders  of any plan or proposal for liquidation or dissolution of the
Company,  the  acquisition by any person (as such term is used in Sections 13(d)
and  14(d)(2)  of the Securities Exchange Act of 1934, as amended) of beneficial
ownership  of 30% or more of the Company's outstanding common stock, or a change
in  the  board  of directors of the Company during any period of two consecutive
years  such that individuals who at the beginning of such period constituted the
entire  Board  of  Directors cease for any reason to constitute a majority (with
certain  exceptions).

     In  addition,  we  have  an agreement with Dr. Jain providing that upon the
occurrence  of  a  change in control, in conjunction with a change in Dr. Jain's
current  position,  other  than by voluntary resignation, Dr. Jain will have the
option  to  request  the  Company to purchase from him a number of shares of his
common  stock  equal  to  up  to  4%  of  the shares of common stock outstanding
immediately  prior  to  the  change in control at a price per share equal to the
highest  per  share price paid in connection with the change in control event or
the  highest  price paid in the public market within the twelve months preceding
Dr.  Jain's  exercise  of  the option.  This option is effective for a period of
twelve  months  after  the  change  in  control.

OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information concerning individual grants:



-------------------------------------------------------------------------------------------
                                      Individual Grants                      Grant Date
                                                                               Value
------------------------------------------------------------------------  -----------------
                                   Percent of
                                      Total
                                    Options/
                      Number of       SARs
                     Securities    Granted to
                     Underlying     Employees   Exercise of
                    Options/SARs    in Fiscal    Base Price   Expiration     Grant Date
Name                 Granted (#)      Year         ($/Sh)        Date      Present Value $
------------------  -------------  -----------  ------------  ----------  -----------------
                                                           
Cheri B.  Podzimek         35,000          25%          2.55    10/30/09  $      56,350 (1)
-------------------------------------------------------------------------------------------


(1)  Based upon the Black Scholes valuation method.  Assumptions used include an
expected term of 5 years, risk-free interest rate of 3.3%, dividend yield of
zero, and historical volatility of 75%.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table provides information relating to option exercises during
fiscal 2004 and the number and value of shares of common stock subject to
options held by the Named Executive Officers as of March 31, 2004.


                                        9



                                                  Number of Shares Underlying      Value of Unexercised In-the-
                                                 Unexercised Options at Fiscal     Money Options at Fiscal Year
                                                           Year-End                             End
                                                -------------------------------  --------------------------------
                     Shares
                   Acquired on
Name                Exercise    Value Realized   Exercisable     Unexercisable     Exercisable     Unexercisable
-----------------  -----------  --------------  --------------  ---------------  ----------------  --------------
                                                                                 

Anil K. Jain               -0-             -0-             -0-              -0-               -0-             -0-
Cheri B. Podzimek          -0-             -0-             -0-           35,000               -0-             -0-



REPORT OF THE COMPENSATION COMMITTEE

     Compensation  Policy.  In  determining the Company's executive compensation
policy  and  levels,  the  compensation  committee  seeks  to attract and retain
qualified  executive  officers,  motivate  executive  officers  to  improve  the
Company's  performance,  and  reward  executive  officers  for  individual
contributions  to  the  achievement  of  the Company's business objectives.  The
committee attempts to achieve these goals by combining annual base salaries with
bonuses  based  on  corporate  performance  and  on the achievement of specified
performance  objectives.  The  compensation  committee  believes  that  cash
compensation in the form of salary and bonus provides executives with short-term
rewards  for  success  in  operations.  The compensation committee also believes
that long-term compensation through the award of stock options encourages growth
in  management stock ownership which leads to expansion of management's stake in
the  long-term  performance  and  success  of  the  Company.

     Base  Salary.  In  determining  the  base  salary  of each of the executive
officers, the Company relies on information regarding salaries paid to executive
officers  with comparable responsibilities employed by companies with comparable
businesses  and  also  takes  into  account the Company's cash needs.  In fiscal
2004,  there  were  no  increases  in the base salary of the executive officers.

     Bonuses.  Annual  incentives  for the Chief Executive Officer and the other
executive officers are intended to reward the attainment of annually established
goals  in  various  areas  over  which  the  individual  officer has significant
influence  or  control,  including  product  development, product manufacturing,
sales  levels  and  others.  No  bonuses were paid to the executive officers for
fiscal 2003 and no determination has been made to date for fiscal  2004.

     Stock  Options.  To  date,  because  the  Chief  Executive  Officer  owns a
significant  percentage  of  the  Company's outstanding common stock, he has not
been  awarded options.  Options have been awarded to other management employees.

     Compensation  of  Chief  Executive  Officer.  The  compensation  committee
believes that the compensation of the Chief Executive Officer should reflect the
Company's  performance.  In fiscal 2004, the annual base salary of the Company's
Chief  Executive  Officer  was not increased and remained at $183,600.  No bonus
was  paid  to  the  Chief Executive Officer for fiscal 2003 and no determination
has been made to date for  fiscal  2004.

     Section  162 Limitation.  The compensation committee has considered whether
any  revisions  to  the Company's executive compensation policy may be necessary
due  to  provisions  of


                                       10

Section  162  of  the  Internal  Revenue  Code,  which  limits to $1,000,000 the
deductibility  of  compensation  paid  to certain executives.  It is the current
policy  of  the  compensation  committee  to  maximize, to the extent reasonably
possible,  the  Company's  ability  to  obtain  a  corporate  tax  deduction for
compensation  paid to executive officers of the Company to the extent consistent
with  the  best  interest  of  the  Company  and  its  shareholders.

   Ronald G. Roth, Chairman     John G. Reddan     Stephen A. Zuckerman, M.D.

                      Members of the Compensation Committee

STOCK PERFORMANCE GRAPH

     The  following  performance graph compares the cumulative total returns for
the  Company's common stock, The Nasdaq Stock Market (U.S.) Index and The Nasdaq
Non-Financial  Index  for the period from March 31, 1999 through March 31, 2004.
The  comparison  assumes  $100 was invested in the Company's Common Stock and in
each  index  at  the  beginning  of  the  period  and reinvestment of dividends.


                                [GRAPHIC OMITTED]


                                       11



                             CUMULATIVE TOTAL RETURN

                       BASE LINE
                       ----------------------------------------------
                         3/99      3/00    3/01   3/02   3/03   3/04
                                              

APA Optics, Inc.          100.00  419.64  125.90  38.71  19.00  35.57
Nasdaq Stock Market       100.00  215.25   77.53  60.69  49.47  82.63
(U.S.)
Nasdaq Non-Financial      100.00  207.54   80.00  81.00  58.17  87.85


                     CERTAIN RELATIONSHIPS AND TRANSACTIONS

     Lease  for Company Facility.  We have leased our principal executive office
and  manufacturing  facility  in  Blaine,  Minnesota since December 1, 1984 from
Jain-Olsen  Properties,  a partnership consisting of Anil K. Jain and Kenneth A.
Olsen  (who are officers, directors, and principal shareholders of the Company).
Certain  terms  of  the  lease  are  set  forth  in Note K of Notes to Financial
Statements  included  in our 2004 Annual Report, which is being distributed with
this  Proxy  Statement.  The  lease  expires  on  November  30,  2004 but can be
extended  for  at  least  another  five  years.  As  of  the  date of this Proxy
Statement,  the  Company  intends  to extend the lease, with certain amendments,
including  options  to  extend  through November 30, 2019.  We made rent and tax
payments  under  the  lease  of  $149,549  and $138,142 to Jain-Olsen Properties
during fiscal 2004 and 2003, respectively, and we are obligated to make payments
in  fiscal  2005  of $102,477 in rent and taxes for the remainder of the current
lease term ending November 30, 2004.  We believe the current lease terms and the
proposed  amended  lease terms are at least as favorable to us as terms we could
have  negotiated  with  an  unrelated  third  party.

     Key  Man  Insurance.  We  maintain  key  man  insurance  in  the  amount of
$2,000,000  on  the  life of Anil K. Jain, who is a director and officer.  Up to
$500,000 of the proceeds of the policy is intended to be used to purchase shares
of  our  common  stock  owned  by  the  insured  at  the request of the personal
representative  of the insured's estate.  The per share price for the repurchase
will  be  the  fair market value of the common stock as of the date of the event
triggering  the  repurchase.

     Split  Dollar  Insurance.  In November 1989, we adopted a split dollar life
insurance  plan  (the  "1989  Plan") for the benefit of Anil K. Jain.  Under the
terms  of  the  1989  Plan, we pay the premiums on a $5 million insurance policy
(the  "Policy")  on the lives of Dr. Jain and his spouse.  The Policy is a whole
life,  joint  and  survivor  policy,  on  which  all premiums are paid by us and


                                       12

income  is  imputed  to  Dr.  Jain  in  an amount equal to the term rate for his
insurance  as  established  by  the insurer.  No premium payments have been made
since  January  1996.

     The Policy is owned by the Jain Children's Irrevocable Trust dated November
28,  1989  (the "Trust").  The 1989 Plan is designed so that we will recover all
premium  payments  and  advances made by us on account of the Policy held by the
Trust.  Our  interest  in  the  premium  payments  and  advances is secured by a
collateral  assignment  of the Policy.  Upon the death of the last to die of Dr.
Jain  and  his spouse, we will be reimbursed from the insurance proceeds paid to
the  Trust in an amount equal to the total premiums and advances made by us.  In
the  event the trustee of the Trust surrenders the Policy for its cash surrender
value at some date in the future, we will be reimbursed for the premiums paid on
the  Policy.

     Kenneth Olsen Severance Arrangement.  Kenneth Olsen, secretary, former vice
president,  and  a  member of the Board of Directors of the Company, reduced his
hours  of  work  to 20 hours/week beginning June 1, 2003.  During this time, Mr.
Olsen  maintained all the benefits he otherwise participated in with the Company
as  of June 1, 2003.  The Company retained the right to recall him for increased
or  full  time  work at any time in future, if needed.  In consideration of this
right  to  recall,  the  Company  guaranteed  at  least 20 hours/week work until
December  31,  2003,  resulting in proportional adjustments (actual hours vs. 40
hours/week)  in  compensation.  Commencing  January  1,  2004,  the terms of Mr.
Olsen's  employment  are  as  follows:

     -    Fifteen  (15)  months  of  full  time  salaried  employment  (pay rate
          equivalent  to  pay rate prior to this agreement, which is $96,900 per
          year).  During the term of this agreement, he will be available to APA
          and  will  not  be  employed  elsewhere.  He  also  has  the option to
          voluntarily  resign from his employment and take any unused portion of
          the  compensation  under  the  employment package as a lump sum, if he
          chooses.

     -    Mr.  Olsen will not be provided any benefits at the Company's expense.
          However,  he  may  participate in any standard benefit provided by the
          Company  electing  to  so participate and by providing for a deduction
          from  his  compensation for the cost of the benefit or reimbursing the
          full  amount  of  expenses  incurred  by  the Company in providing the
          designated  benefits.

     -    Mr.  Olsen  will be entitled to the balance of any unpaid compensation
          as  a severance package if his employment is terminated by the Company
          prior  to  March  31,  2005  for  any  reason  other than a just cause
          involving  misconduct  of  Mr.  Olsen.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based  solely  upon  a  review  of  Forms 3, 4 and 5 and amendments thereto
furnished  to  the  Company and any written representations that no Forms 5 were
required,  the  Company  believes  that  all reports required to be filed by its
officers,  directors, and greater than 10% beneficial shareholders under Section
16(a)  of  the  Exchange  Act were timely filed, except for the following items.
Stephen  A.  Zuckerman, a director, filed a report on Form 4, after the required
filing date, with respect to a purchase of shares of common stock by his spouse.
Dr.  Zuckerman  disclaims beneficial ownership of such shares. Director options,
issued  annually  after  the  annual


                                       13

shareholders  meeting,  were granted on August 22, 2003 but were not reported on
Form  4  until September 3, 2003, for directors Dr. Stephen Zuckerman and Ronald
Roth,  and  September  4,  2003  for  Jack  Reddan.

                RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

REPORT OF AUDIT COMMITTEE

     The  Audit  Committee  of  the  Board  of  Directors  is comprised of three
nonemployee  directors.  All  members are independent as defined under the rules
of  The  Nasdaq  Stock  Market.

     The  Audit Committee held 3 meetings during fiscal 2004.  The meetings were
designed  to  facilitate and encourage communication between the Audit Committee
and the internal auditors and the Company's independent auditors, Grant Thornton
LLP.

     During  these  meetings,  the  Audit  Committee  reviewed and discussed the
audited  financial  statements  with  management  and  the  auditors.

     The  discussions  with  the  auditors also included the matters required by
Statement  on  Auditing  Standards No. 61 (Communication with Audit Committees).
The  auditors  also  provided to the Audit Committee the written disclosures and
the  letter  regarding  their  independence  as  required  by  the  Independence
Standards  Board  Standard  No.  1.  This  information  was  discussed  with the
auditors.

     Based on these discussions, the Audit Committee recommended to the Board of
Directors  that the audited financial statements for the fiscal year ended March
31,  2004  be  included  in  the  Company's  annual  report  on  Form  10-K.

    Ronald G. Roth         John G. Reddan         Stephen A. Zuckerman, M.D.

                         Members of the Audit Committee

INDEPENDENT AUDITORS' FEES

     The  firm  of  Grant  Thornton  LLP,  independent  accountants, audited our
financial  statements  for  the years ending March 31, 2004, 2003 and 2002.  Our
audit  committee has appointed them to serve as our auditors for the fiscal year
ending  March  31,  2005.  Representatives of Grant Thornton LLP are expected to
attend  the annual meeting to answer any questions and will have the opportunity
to  make  a  statement  if  they  wish.

     The following table presents fees for professional services rendered for
the two most recent fiscal years.


                                       14



                                             2004          2003
                                            -------       -------
                                                    
     Audit fees (1)                         $62,400       $39,110
     Audit-related fees (2)                 $ 7,308       $ 7,450
     Tax fees
          Tax returns and compliance        $ 8,900       $ 5,560
          Other tax (3)                     $ 7,500       $   775

________________________

(1)  Audit  fees  include  fees  billed for 2003, fees billed and expected to be
     billed  for  2004  by Grant Thornton LLP for professional services rendered
     for  the  audit  of  our  annual  financial  statements,  the review of our
     financial  statements  included  in  our  reports on Form 10-Q, services in
     connection  with registration statements filed with the SEC, and accounting
     consultations  necessary  for  the rendering of an opinion on our financial
     statements.

(2)  Audit-related  services include due diligence and other acquisition-related
     services.

(3)  Other  tax  services  include  acquisition-related  tax  structuring,  tax
     planning,  state  tax  planning  and  other  tax  consultation.


     Our  Audit  Committee  must pre-approve all audit services, engagement fees
and  terms,  and  all permitted non-audit engagements, subject to the de minimus
exceptions  permitted pursuant to the Securities Exchange Act of 1934.  Pursuant
to  its  pre-approval  policy,  the Audit Committee has authorized management to
engage  Grant  Thornton  for  tax  planning  and  preparation  and filing of the
company's  tax  returns.

                                 PROPOSAL NO. 2
                                 CHANGE OF NAME

     Subject  to  ratification  by  the shareholders, our Board of Directors has
voted  to  change  the  name  of  the  Company  from  "APA Optics, Inc." to "APA
Enterprises,  Inc."  The  name change is intended to reflect the diversification
of  the  Company's  business into several operating divisions.  There will be no
change  in  the  Company's Nasdaq trading symbol as a result of the name change.

                                  OTHER MATTERS

     We  are  not aware that any matter other than those described in the Notice
of  Meeting  will  be  presented  for action at the meeting.  If, however, other
matters do properly come before the meeting, it is the intention of Messrs. Jain
and  Olsen  (the  persons  named  as  proxies)  to  vote  the  proxied shares in
accordance  with  their  best  judgment  on  such  matters.

                  SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING

     The Company's 2005 Annual Meeting of Shareholders is expected to be held on
or  about  August  18, 2005, and proxy materials in connection with that meeting
are expected to be mailed on or about July 11, 2005.  In order to be included in
the Company's proxy materials for the 2004 Annual Meeting, shareholder proposals
prepared  in  accordance with the proxy rules must be received by the Company on
or  before  March  14,  2005.

     In  addition,  pursuant  to  the  Company's Bylaws, a shareholder must give
notice  to  the  Company prior to May 20 2005 of any nominations for director or
any proposal which such shareholder intends to raise at the 2005 Annual Meeting.
If  the  Company  receives  notice  of  such


                                       15

nomination  or  proposal  on  or after May 20, 2005, such nomination or proposal
will  not  be  considered  at  the  annual  meeting.

     Additionally,  if  the  Company  receives  notice of a shareholder proposal
after  May  25, 2005, it will be considered untimely pursuant to SEC Rules 14a-4
and  14a-5(e),  and  the  persons named in the proxies solicited by the Board of
Directors  for  the  2005 Annual Meeting may exercise discretionary voting power
with  respect  to  the  proposal.

                             ADDITIONAL INFORMATION

     A  copy  of  the Company's Report to Shareholders for the fiscal year ended
March  31,  2004, accompanies this Notice of Annual Meeting and Proxy Statement.

     THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K  (EXCLUSIVE  OF EXHIBITS) FOR THE FISCAL YEAR ENDED MARCH 31, 2004, TO EACH
PERSON  WHO  IS  A SHAREHOLDER OF THE COMPANY, UPON RECEIPT OF A WRITTEN REQUEST
FOR  SUCH  REPORT.  SUCH  REQUESTS  SHOULD  BE  SENT  TO:

                                APA OPTICS, INC.
                             Attention: Comptroller
                               2950 N.E. 84th Lane
                            Blaine, Minnesota  55449


                                        By Order of the Board of Directors


                                        Kenneth A. Olsen
                                        Secretary

July 12, 2004


                                       16

                                APA OPTICS, INC.
                                      PROXY
                ANNUAL MEETING OF SHAREHOLDERS - AUGUST 19, 2004

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The  undersigned hereby appoints Anil K. Jain and Kenneth A. Olsen, or either of
them,  proxies  or proxy, with full power of substitution, to vote all shares of
Common  Stock  of  APA  Optics,  Inc.  (the  "Company") which the undersigned is
entitled  to  vote  at the 2004 Annual Meeting of Shareholders to be held at the
Four  Points  Sheraton, 1330 Industrial Boulevard, Minneapolis, Minnesota 55431,
August  19,  2004,  at  3:30 p.m., Central Daylight Time, and at any adjournment
thereof, as directed below with respect to the proposals set forth below, all as
more  fully described in the Proxy Statement, and upon any other matter that may
properly  come  before  the  meeting  or  any  adjournment  thereof.

     1.   ELECTION  OF  DIRECTORS:

          FOR  all  nominees  listed          WITHHOLD  AUTHORITY  to  vote  for
          below  (except as marked to         all nominees listed below  [ ]
          the  contrary  below)  [ ]

   Anil K. Jain, Kenneth A. Olsen, John G. Reddan, Ronald G. Roth and Stephen A.
                                    Zuckerman

(INSTRUCTION:  TO  WITHHOLD  AUTHORITY  FOR  ANY  INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S  NAME  IN  THE  SPACE  PROVIDED  BELOW.)

          ___________________________________________________________

     2.   CHANGE OF NAME OF COMPANY:

          [ ]  FOR       [ ]  AGAINST       [ ]  ABSTAIN

     3.   Upon  such  other  matters  as  may  properly come before the meeting.

The  power  to  vote  granted by this Proxy may be exercised by Anil K. Jain and
Kenneth A. Olsen, jointly or singly, or their substitute(s), who are present and
acting  at  said  Annual Meeting or any adjournment of said Annual Meeting.  The
undersigned hereby revokes any and all prior proxies given by the undersigned to
vote  at  this  Annual  Meeting.

THIS  PROXY WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDER'S INSTRUCTIONS.  IF
THE  SHAREHOLDER  EXECUTES  THIS  PROXY  BUT DOES NOT PROVIDE INSTRUCTIONS, THIS
PROXY  WILL  BE  VOTED  FOR  THE  ELECTION  OF  THE  PROPOSED  DIRECTORS.

It  is urgent that each shareholder complete, date, sign, and mail this Proxy as
soon  as  possible.  Your  vote  is  important!



                                   Dated and Signed ________________, 2004


                                   _____________________________________
                                   Signature of Shareholder(s)


                                   _____________________________________
                                   Signature of Shareholder(s)

     Please  sign  as  your  name(s)  appears  above.  When signing as attorney,
     executor,  administrator,  trustee,  guardian,  authorized  officer  of  a
     corporation,  or  partner  of a partnership, please provide the name of the
     entity  on  whose  behalf  you  are  signing  and  your  title.

                    PLEASE DO NOT FORGET TO DATE THIS PROXY.


                                        2