SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549

FORM 10-K/A
(Amendement No.1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 25, 2004

Commission File Number 1-8048

TII NETWORK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
                                    Delaware                                                               66-0328885            
                              (State or other jurisdiction of                                                (I.R.S. Employer Identification No.)
                               incorporation or organization)

1385 Akron Street, Copiague, New York 11726
(Address of principal executive offices) (Zip Code)

                                (631) 789-5000                                
(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock. $.01 par value
Series D Junior Participating Preferred Stock Purchase Rights

         Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X]

        The aggregate market value of the voting stock of the registrant outstanding as of December 26, 2003, the last business day of the registrant's most recently completed second quarter, held by non-affiliates of the registrant was approximately $22.7 million. While such market value excludes the market value of shares that may be deemed beneficially owned by executive officers and directors, this should not be construed as indicating that all such persons are affiliates.

        The number of shares of the Common Stock of the registrant outstanding as of September 20, 2004 was 11,907,784.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement relating to its 2004 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

EXPLANATORY NOTE

         The purpose of this Amendment is to revise the cover page of the report to indicate that the Registrant is not an accelerated filer and to correct the dates in the column headings of, and properly align the caption "Current Liabilities" in, the Consolidated Balance Sheets contained in Item 8, Financial Statements and Supplemental Data, in the Company's Annual Report on Form 10-K for the year ended June 25, 2004 due to inadvertent errors that occurred in Edgarizing the Report.

ITEM 8. Financial Statements and Supplemental Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and StockholdersTII
Network Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of TII Network Technologies, Inc. and Subsidiary as of June 25, 2004 and June 27, 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three year period ended June 25, 2004. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule for each of the years in the three year period ended June 25, 2004. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TII Network Technologies, Inc. and Subsidiary as of June 25, 2004 and June 27, 2003, and the results of their operations and their cash flows for each of the years in the three year period ended June 25, 2004 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP             

Melville, New York
August 30, 2004

TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

	June 25, 2004			June 27, 2003
ASSETS
Current Assets:
Cash and cash equivalents	$	4,164		$	772
Accounts receivable, net		3,435			2,521
Inventories		5,405			5,905
Other current assets		374			354
Total current assets		13,378			9,552
Property, plant and equipment, net		3,947			5,035
Other assets		477			514
Total Assets	$	17,802		$	15,101
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt	$	--		$	26
Accounts payable and accrued liabilities		2,341			1,291
Total current liabilities		2,341			1,317
Long-term debt		--			13
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $1.00 per share; 1,000,000 shares authorized;
Series D Junior Participating; no shares outstanding		--			--
Common stock, par value $.01 per share; 30,000,000 shares authorized;
11,925,421 shares issued and 11,907,784 shares outstanding as of June
25, 2004 and 11,699,921 shares issued and 11,682,284 shares
outstanding as of June 27, 2003		119			117
Additional paid-in capital		37,992			37,867
Accumulated deficit		(22,369	)		(23,932	)
		15,742			14,052
Less: 17,637 common treasury shares, at cost;		(281	)		(281	)
Total stockholders' equity		15,461			13,771
Total Liabilities and Stockholders' Equity	$	17,802		$	15,101

See notes to consolidated financial statements

TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

	Fiscal Year Ended
	June 25, 2004			June 27, 2003			June 28, 2002
Net sales	$	28,485		$	24,073		$	29,801
Cost of sales		19,877			18,274			24,493
Gross profit		8,608			5,799			5,308
Operating expenses:
Selling, general and administrative		5,669			5,454			8,702
Research and development		1,357			1,342			1,755
Impairment of long-lived assets		--			--			1,716
Total operating expenses		7,026			6,796			12,173
Operating earnings (loss)		1,582			(997	)		(6,865	)
Interest expense		(14	)		(41	)		(70	)
Interest income		32			17			8
Other income		23			13			106
Earnings (loss) before income taxes		1,623			(1,008	)		(6,821	)
Provision for income taxes		60			--			--
Net earnings (loss)		1,563			(1,008	)		(6,821	)
Excess of carrying value over consideration to repurchase
preferred stock		--			--			280
Net earnings (loss) attributable to common stockholders	$	1,563		$	(1,008	)	$	(6,541	)
Net earnings (loss) attributable to common stockholders
per common share:
Basic	$	0.13		$	(0.09	)	$	(0.56	)
Diluted	$	0.12		$	(0.09	)	$	(0.56	)
Weighted average common shares outstanding:
Basic		11,820			11,682			11,682
Diluted		12,715			11,682			11,682

See notes to consolidated financial statements

TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)

	Common Stock Shares		Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit			Treasury Stock			Total Stockholders' Equity
Balance June 29, 2001		11,682,284	$	117	$	37,491	$	(16,103	)	$	(281	)	$	21,224
Repurchase of Series C
preferred stock		--		--		376		--			--			376
Net loss for the year		--		--		--		(6,821	)		--			(6,821	)
Balance June 28, 2002		11,682,284		117		37,867		(22,924	)		(281	)		14,779
Net loss for the year		--		--		--		(1,008	)		--			(1,008	)
Balance June 27, 2003		11,682,284		117		37,867		(23,932	)		(281	)		13,771
Exercise of stock options		225,500		2		125		--			--			127
Net earnings for the year		--		--		--		1,563			--			1,563
Balance June 25, 2004		11,907,784	$	119	$	37,992	$	(22,369	)	$	(281	)	$	15,461

See notes to consolidated financial statements

TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Fiscal Year Ended
	June 25, 2004			June 27, 2003			June 28, 2002
Cash Flows from Operating Activities:
Net earnings (loss)	$	1,563		$	(1,008	)	$	(6,821	)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization		1,056			1,115			1,402
Provision for inventory write-downs		--			--			1,915
Loss (gain) on disposal of capital assets		512			(212	)		1,637
Changes in operating assets and liabilities:
Accounts receivable		(914	)		997			3,672
Inventories		500			1,457			4,523
Other assets		(19	)		(87	)		(144	)
Accounts payable and accrued liabilities		1,050			(1,969	)		(3,239	)
Net cash provided by operating activities		3,748			293			2,945
Cash Flows from Investing Activities:
Capital expenditures, net of proceeds from dispositions		(444	)		(244	)		(266	)
Net proceeds from sale of condominiums		--			329			130
Net cash (used in) provided by investing activities		(444	)		85			(136	)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options		127			--			--
Repurchase of Series C preferred stock		--			--			(1,200	)
Net repayments of borrowings under revolving credit facility		--			(455	)		(721	)
Repayment of debt and obligations under capital leases		(39	)		(19	)		(253	)
Net cash provided by (used in) financing activities		88			(474	)		(2,174	)
Net increase (decrease) in cash and cash equivalents		3,392			(96	)		635
Cash and cash equivalents, at beginning of year		772			868			233
Cash and cash equivalents, at end of year	$	4,164		$	772		$	868
Non-cash investing and financing activities:
Issuance of warrants as partial consideration for repurchase
of Series C preferred stock	$	--		$	--		$	96
Acquisition of equipment under capital leases	$	--		$	24		$	--
Cash paid during the year for interest	$	14		$	41		$	71
Cash paid during the year for income taxes	$	60		$	--		$	--

See notes to consolidated financial statements

TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – Description of Business and Summary of Significant Accounting Policies

Business: TII Network Technologies, Inc. and subsidiary (together, the “Company”) design, produce and market lightning and surge protection products, network interface devices (“NIDs”), station electronics and other products principally to the Telco industry.

Fiscal Year: The Company reports on a 52-53 week fiscal year ending on the last Friday in June. Fiscal 2004, 2003 and 2002 contained 52 weeks.

Principles of Consolidation: The consolidated financial statements include the accounts of TII Network Technologies, Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

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 revenues and expenses during the reporting period. Actual results could differ from such estimates.

Cash Equivalents: All highly liquid investments with an original maturity at the time of purchase of three months or less are considered cash equivalents.

Inventories: Inventories (materials, direct labor and applicable overhead expenses) are stated at the lower of cost or market, on the first-in, first-out basis.

Property, Plant and Equipment: Property, plant and equipment is recorded at cost and depreciated on the straight-line method over the estimated useful life of the related asset (generally between 5 and 10 years). Leasehold improvements are amortized on a straight-line basis over the term of the respective leases or over their estimated useful lives, whichever is shorter.

Revenue Recognition: The Company’s net sales are derived from the sale of its products. The Company does not provide any services to its customers. Product sales are recorded when there is persuasive evidence of the arrangement, usually a customer purchase order, the products are shipped and title passes to the customer and the fee is fixed and determinable and probable of collection. Once a product is shipped, the Company has no acceptance or other post-shipment obligations and product returns and warranty costs have historically been insignificant.

Other Assets: Included in other assets at June 25, 2004 and June 27, 2003 are $207,000 and $243,000, respectively, of patent costs, net of accumulated amortization, deemed recoverable by the Company, which are amortized on a straight-line basis over the lesser of the life of the related product or the patent. Also included is the cash surrender value of key-man life insurance of approximately $145,000 at both June 25, 2004 and June 27, 2003. Amortization of patent costs was $36,000, $36,000 and $101,000 for fiscal 2004, 2003 and 2002, respectively.

Long-Lived Assets: The Company reviews long-lived assets, such as fixed assets to be held and used or disposed of, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows undiscounted and without interest is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

As a result of a decline in sales due to a telecommunications downturn, in the fourth quarter of fiscal 2002 the Company took additional actions to reduce costs and improve operating efficiencies. Included in these actions was the further downsizing of the Company’s Puerto Rico operations with the objective of creating a quick-response, low-cost assembly and specialty gas tube manufacturing operation and the further expansion of the Company’s outsourcing strategy. These actions, combined with the consolidation of certain functional departments and management responsibilities into the Company’s New York headquarters, resulted in additional workforce reductions and the reevaluation of the Company’s property, plant and equipment, whereby the Company retained only those assets consistent with this strategy. At the same time, the Company discontinued its Digital Closet product line. As a result, the Company performed a review of the recoverability of its property, plant and equipment and recorded an impairment charge of $1,716,000 in fiscal 2002, primarily for machinery and equipment, molds and computer equipment that would no longer be used.

Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

Net Earnings (Loss) Per Common Share: Basic net earnings (loss) per share is computed based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of common shares outstanding increased by dilutive common stock options and warrants. In fiscal 2004, certain options and warrants were excluded from the calculation of diluted earnings per share since their effect was anti-dilutive as their exercise prices were greater than the average market price of the Company’s common stock for the year. Since the Company incurred losses in fiscal 2003 and fiscal 2002 all securities exercisable for the Company’s common stock were anti-dilutive in those years. The following table summarizes all outstanding securities that were exercisable for the Company’s common stock.

	June 25, 2004				June 27, 2003			June 28, 2002
	Quantity		Exercise Price		Quantity		Exercise Price	Quantity		Exercise Price
Stock option plans (a)(d)		2,998,650		$1.68		3,363,350	$  1.53		3,420,341	$  1.79
Investor Option		--		--		100,000	2.50		100,000	2.50
Warrants (b)		2,214,000		2.79		2,214,000	2.79		2,214,000	2.79
Unit Purchase Options (b)		414,000		2.69		414,000	2.69		414,000	2.69
Warrant (c)(d)		750,000		1.00		750,000	1.00		750,000	1.00
		6,376,650				6,841,350			6,898,341

(a) Weighted average exercise price of outstanding stock options at year-end.

(b) In June 2000, the Company completed a private placement of 1,800,000 units, each unit consisting of one share of common stock and one warrant to purchase one share of common stock, at $2.79 per share. In connection with this private placement, the Company issued to certain employees of the placement agent 414,000 Unit Purchase Options (“UPO”) with an exercise price of $2.69 per UPO. Each UPO consists of one share of common stock and one warrant to purchase one share of common stock at $2.79 per share.

(c) This warrant was issued in June 2002 as partial consideration to repurchase all outstanding convertible preferred stock.

(d) Included in the diluted earnings per share calcuation for fiscal 2004 were 1,604,400 stock options and 750,000 warrants outstanding at June 25, 2004, which resulted in an aggregate of 895,120 incremental shares under the treasury stock method.

Fair Value of Financial Instruments: The carrying amounts of cash and cash equivalents, receivables and other current assets, accounts payable and accrued liabilities approximate fair value because of the short-term nature of these instruments.

Stock Based Compensation: The Company applies the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” in accounting for its stock option plans. The exercise price of all options granted under all the plans has equaled at least the market value of the common stock on the dates of grants. Accordingly, no compensation expense has been recognized for options granted to employees or directors with an exercise price at least equal to the market value of the underlying common stock at the date of grant.

The Company has adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” If the Company had elected to recognize stock-based compensation cost based on the fair value of the options granted at grant date, as prescribed by SFAS No. 123, the Company’s net earnings (loss) and net earnings (loss) per share would have been the pro forma amounts as indicated in the table below.

	Fiscal Year Ended
	June 25, 2004		June 27, 2003			June 28, 2002
Net earnings (loss):
As reported	$	1,563,000	$	(1,008,000	)	$	(6,821,000	)
Deduct: Total stock-based compensation
expense using fair value method		528,000		506,000			841,000
Pro forma	$	1,035,000	$	(1,514,000	)	$	(7,662,000	)
Basic net earnings (loss) per share:
As reported	$	0.13	$	(0.09	)	$	(0.56	)
Proforma	$	0.09	$	(0.13	)	$	(0.63	)
Diluted net earnings (loss) per share:
As reported	$	0.12	$	(0.09	)	$	(0.56	)
Pro forma	$	0.08	$	(0.13	)		(0.63	)

The weighted average fair values of options granted were determined based on the Black-Scholes option-pricing model, utilizing the following assumptions:

	June 25, 2004			June 27, 2003			June 28, 2002
Expected term		5	Years		5	Years		5	Years
Interest rate		3	.8%		3	.3%		3	.1%
Volatility		84	.0%		60	.5%		88	.1%
Dividends			0%			0%			0%
Weighted average fair value of options granted	$	1	.69	$	0	.17		$  0	.44

Comprehensive Income (Loss): Comprehensive income (loss) equaled the net earnings (loss) for each of the years in the three year period ended June 25, 2004.

Segment Information: The Company utilizes the “management” approach prescribed in Statement of Financial Accounting Standard (SFAS) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” to assess its segments. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. SFAS No. 131 also requires disclosures about products and services, geographic areas and major customers. The Company has evaluated the provisions of SFAS No. 131 and, based on the management approach, has determined that its operating decisions and performance measures are geared towards one segment. The Company however, has disclosed the geographic and major customers’ requirements of SFAS No. 131. See Note 7.

NOTE 2 — Operations Re-alignments

In the third quarter of fiscal 2001, management committed to a restructuring plan to expand the Company’s outsourcing strategy with contract manufacturers to produce a substantial portion of the remaining components and subassemblies that the Company was then still manufacturing. Included in that plan were workforce and production facility reductions related to manufacturing activities conducted in Puerto Rico that were outsourced. Included in the fiscal 2001 net re-alignment of operations charge was $300,000 for employee termination benefits for a workforce reduction of 70 employees and $300,000 for a lease commitment for excess manufacturing space, of which $76,000 and $261,000 respectively were unpaid as of June 29, 2001. During the fourth quarter of fiscal 2002, management down-sized the Company’s operations in Puerto Rico and eliminated certain functions in Puerto Rico that were consolidated with those in New York, which resulted in a charge for the impairment of long-lived assets of $1.7 million and severance costs of $416,000. In addition, the Company recorded a $1.9 million inventory write-down comprised of $716,000 for a discontinued product line, $775,000 for specialized products related to discontinued orders and $424,000 for components of products that were then outsourced. Since the end of fiscal 2002, the Company has not had similar write-downs of inventory.

In the quarter ended December 27, 2002, the Company incurred severance costs of $343,000 related to employee terminations, which were fully paid by the end of fiscal 2003 in accordance with the employee severance agreements.

The corresponding cash activity for the three fiscal years ended June 25, 2004 and the remaining allowance balances that are reflected in accrued liabilities in the accompanying consolidated balance sheets, are as follows:

	Fixed Asset Write-downs			Inventory Write-down			Employee Termination Benefits			Lease Commitment			Total
Balance June 29, 2001	$	--		$	--		$	76,000		$	261,000		$	337,000
Fiscal 2002 asset write-downs
and severance costs		1,716,000			1,915,000			416,000			--			4,047,000
Non-cash activity		(1,716,000	)		(1,915,000	)		--			--			(3,631,000	)
Cash payments during fiscal 2002		--			--			(209,000	)		(63,000	)		(272,000	)
Balance June 28, 2002		--			--			283,000			198,000			481,000
Fiscal 2003 severance costs		--			--			343,000			--			343,000
Cash payments during fiscal 2003		--			--			(626,000	)		(63,000	)		(689,000	)
Balance June 27, 2003		--			--			--			135,000			135,000
Cash payments during fiscal 2004		--			--			--			(63,000	)		(63,000	)
Balance June 25, 2004	$	--		$	--		$	--		$	72,000		$	72,000

NOTE 3 — Long-Term Debt and Borrowings Under Revolving Credit Facility:

        The composition of long-term debt is as follows:

	June 25, 2004		June 27, 2003
Obligations under capital leases, bearing interest from 8.0% to 11.0%, secured by
assets with a net book value of $32,000 at June 27, 2003	$	--	$	31,000
Installment notes payable through 2004, bearing interest from 8.0% to 8.75%		--		8,000
		--		39,000
Current portion of long-term debt		--		(26,000	)
	$	--	$	13,000

        The Company has a credit facility that enables it to have up to $3.0 million of borrowings outstanding at any one time, limited by a borrowing base equal to 85% of eligible accounts receivable, subject to certain reserves. Outstanding borrowings under the credit facility will bear interest at a specified bank’s prime rate (4.0% at June 25, 2004) plus 1%, but never less than 5% per annum, and the Company is also required to pay an annual facility fee of 3/4 of 1% of the maximum amount of the credit facility. At June 25, 2004, the borrowing base was $2.9 million and there were no borrowings outstanding. The credit facility has a scheduled term (ending September 2004) and is automatically renewed for successive two year periods but may be terminated by the lender at any time on 60 days notice, or the Company on 60 days notice prior to the end of the initial term or any renewal term. The credit facility is guaranteed by the Company’s subsidiary and is secured by a lien and security interest against substantially all of the assets of the Company. The credit facility requires, among other things, that the Company maintain a consolidated tangible net worth of at least $12.0 million and working capital of at least $6.0 million. The credit facility also prohibits, without the lender’s consent, the payment of cash dividends, significant changes in management or ownership of the Company, business acquisitions, the incurrence of additional indebtedness, other than lease obligations for the purchase of equipment, and the guarantee of the obligations of others.

NOTE 4 — Income Taxes

        The provision for income taxes of $60,000 in fiscal 2004 primarily consisted of Federal alternative minimum taxes (AMT), due to the limitations on the use of net operating loss carryforwards for the AMT. The tax effects of temporary differences and net operating loss and credit carryforwards that give rise to the net deferred tax assets (liabilities) are as follows:

	June 25, 2004			June 27, 2003
Inventory	$	147,000		$	149,000
Accounts receivable		34,000			34,000
Property, plant and equipment		(72,000	)		1,792,000
Accrued expenses		181,000			169,000
Federal net operating loss carryforwards		12,342,000			12,920,000
Business credit carryforwards		531,000			497,000
		13,163,000			15,561,000
Less: valuation allowance		(13,163,000	)		(15,561,000	)
	$	-		$	-

        At June 25, 2004, for U.S. Federal income tax purposes, the Company had net operating loss carryforwards of approximately $36,300,000, which expire from 2005 to 2023, a portion of which are subject to Section 382 limitations. At June 25, 2004 and June 27, 2003, the Company has provided a valuation allowance against all its net deferred tax assets due to the uncertainty of realizing any future benefits there from. If all deferred tax assets are realized in the future, $115,000 of the benefit would increase additional paid-in capital.

NOTE 5 — Common Stock, Stock Options and Warrants:

         Stock Option Plans: The Company’s 1995 Stock Option Plan and 1998 Stock Option Plan permit each of the Board of Directors and the Compensation Committee of the Board of Directors to grant, until September 2005 and October 2008, respectively, options to employees (including officers and directors who are employees) and consultants covering 1,250,000 and 2,500,000 shares, respectively, of common stock. The Board of Directors or the Compensation Committee determines vesting periods, option terms, which may not exceed 10 years, and exercise prices. At June 25, 2004, options to purchase 801,700 and 1,621,950 shares were outstanding under the 1995 Plan and 1998 Plan, respectively. Additionally, 23,000 options are outstanding under the Company’s 1986 Stock Option Plan, although no further options may be granted under that plan.

        On December 3, 2003, the Company’s shareholders approved the 2003 Non-Employee Director Stock Option Plan (the “2003 Plan”), which expires on September 23, 2013 and replaced the Company’s 1994 Non-Employee Director Stock Option Plan on December 4, 2003. As of June 25, 2004 there were 552,000 options outstanding under these plans. The 2003 Plan provides for the grant of options to purchase up to 500,000 shares of common stock to non-employee directors of the Company. On the date a person initially becomes an outside director, that individual is granted an option to purchase 24,000 shares under the 2003 Plan. At each annual shareholders meeting at which directors are elected, each outside director in office after the meeting is automatically granted an option to purchase 5,000 shares plus additional specified shares for serving on Board committees or as chairperson of a committee. Options granted under the 2003 Plan must have an exercise price equal to the market value of the common stock on the date of grant. All options granted under the 2003 Plan have a term of ten years and are exercisable on the date of grant, except the initial option grant to new outside directors vests equally over three years.

        The exercise price of all options granted under all the plans has equaled at least the market value of the common stock on the dates of grants.

        Certain information relating to the employee stock option plans and the non-employee director plan for the years ended June 25, 2004, June 27, 2003, and June 28, 2002 follows:

	Fiscal Year Ended
	June 25, 2004					June 27, 2003					June 28, 2002
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding at beginning of year		3,363,350		$	1.53		3,420,341		$	1.79		3,263,241		$	1.90
Granted		180,000			2.49		590,000			0.32		280,000			0.63
Exercised		(225,500	)		0.56		--			--		--			--
Canceled or expired		(319,200	)		1.36		(646,991	)		1.80		(122,900	)		1.97
Outstanding at end of year		2,998,650		$	1.68		3,363,350		$	1.53		3,420,341		$	1.79
Options exercisable at end of    period		2,554,150					2,193,390					2,062,358
Shares available for future grant     at end of period		1,690,650					1,053,450					1,018,459

         The following is additional information relating to options outstanding as of June 25, 2004:

Exercise Price Range	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Number of Options Exercisable		Weighted Average Exercise Price
$0.29 - $1.50		1,068,000	$	0.70	7.	0		711,500	$	0.75
1.51 -   2.00		856,400		1.62	4.	7		800,400		1.61
2.01 -   2.50		831,250		2.31	4.	6		799,250		2.31
2.51 -   8.25		243,000		4.04	6.	5		243,000		4.04
		2,998,650	$	1.68	5.	7		2,554,150	$	1.82

          Other Options and Warrants Outstanding:

        In June 2000, the Company completed a private placement of 1,800,000 units at $1.75 per unit, each unit consisting of one share of common stock and one warrant to purchase one share of common stock, for net proceeds of $2,527,000. Each warrant entitles its holder to purchase, until December 8, 2004, one share of common stock at an exercise price of $2.79. In connection with this private placement, the Company issued to certain employees of the placement agent 414,000 Unit Purchase Options (UPO). Each UPO can be exercised at an exercise price of $2.69 per UPO until December 8, 2004. Each UPO consists of one share of common stock and one warrant to purchase one share of common stock at $2.79 until December 8, 2004. Both the warrants and UPOs are subject to possible adjustment of the number of shares issuable upon their exercise and their exercise prices if certain events occur.

        In June 2002, the Company issued a warrant to purchase 750,000 shares of common stock in connection with its repurchase of its Series C Convertible Preferred Stock (See Note 6).

NOTE 6 — Preferred Stock

        The Company is authorized to issue up to 1,000,000 shares of Preferred Stock in series, with each series having such powers, rights, preferences, qualifications and restrictions as determined by the Board of Directors.

         Series C Convertible Preferred Stock: In January 1998, the Company completed a private placement of 5,000 shares of Series C Convertible Preferred Stock (the “Series C Preferred Stock”) and warrants to purchase an aggregate of 200,000 shares of its common stock at an exercise price of $7.03 per share, all of which warrants expired unexercised on January 25, 2001, for an aggregate purchase price of $5.0 million. The Series C Preferred Stock bore no dividends and were convertible into shares of the Company’s common stock at a conversion price equal to the lower of $5.58 per share or 95% of the average of the closing bid prices of the Company’s common stock during the ten consecutive trading days immediately preceding the conversion date of the Series C Preferred Stock. The Series C Preferred Stock was redeemable at the option of the holders at a price equal to $1,150 per share in certain events, including the failure of the Company to maintain the listing of the Company’s common stock on the Nasdaq National Market. Because the Series C Preferred Stock had conditions for redemption that were not solely within the control of the Company, they were classified outside of stockholders’ equity.

         On June 21, 2002, the Company repurchased the remaining 1,626 shares of outstanding Series C Preferred Stock in exchange for $1.2 million in cash and a warrant to purchase 750,000 shares of common stock at $1.00 per share exercisable until June 2005. Costs associated with the transaction were $50,000. The fair value of the warrant was $96,000 based on the Black Scholes option-pricing model. The excess of the carrying value of the Series C Preferred Stock of $1,626,000 over the fair value of the consideration paid to repurchase the Series C Preferred Stock and costs of the transaction, amounting to $280,000, was recorded as an increase to additional paid-in capital.

         Series D Junior Participating Preferred Stock: In May 1998, the Company adopted a Stockholder Rights Plan providing for the distribution to the Company’s stockholders of one Right (“Right”) for each share of the Company’s common stock issued and outstanding at the opening of business on May 21, 1998 (the “Distribution Date”) and each subsequent share of common stock issued. Each Right entitles the registered holder of a share of common stock to purchase from the Company 1/1000 of a share of Series D Junior Participating Preferred Stock of the Company, at a price of $30 per Right (the “Purchase Price”), subject to adjustment. The Rights have a term of ten years, have no voting power or rights to dividends, are not detachable and not separately transferable from the Company’s common stock until they become exercisable. In general, the Rights become exercisable following an announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) owns, or the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning, at least 20% of the Company’s outstanding common stock. If any person becomes an Acquiring Person by acquiring beneficial ownership of at least 20% of the Company’s common stock, each outstanding Right (other than those owned by an Acquiring Person) will “flip in” and become a right to buy, at the Purchase Price, that number of shares of common stock of the Company that will have a market value of two times the Purchase Price. After a person becomes an Acquiring Person (but before such Acquiring Person owns 50% or more of the outstanding common stock), the Company may permit each Right (other than those owned by an Acquiring Person) to be exchanged, without payment of the Purchase Price, for one share of common stock. If (i) the Company is acquired in a merger or other business combination transaction and the Company does not survive or the Company merges, consolidates or engages in a share exchange with another person and does survive but all or part of its stock is changed or (ii) at least 50% of the Company’s assets or earning power is sold or transferred, then each outstanding Right will “flip over” and become a right to buy, at the Purchase Price, that number of shares of common stock of the acquiring company that will have a market value of two times the Purchase Price. The Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right at any time prior to the time a person acquires beneficial ownership of at least 20% of the Company’s common stock and, if certain conditions are met, within ten days following the time a person has acquired 20% or more of the common stock.

NOTE 7 — Significant Customers, Export Sales and Geographical Segments
Significant Customer: The following customers accounted for 10% or more of the Company's consolidated net sales during one or more of theyears presented below:

	Fiscal Year Ended
	June 25, 2004			June 27, 2003	June 28, 2002
Verizon Corporation		53	%	58%	57%
Tyco Electronics Corporation		13	%	7%	11%
Telco Sales, Inc.		11	%	10%	6%

        As of June 25, 2004, two customers accounted for 47% and 19% of accounts receivable and as of June 27, 2003 two customers accounted for approximately 63% and 11% of accounts receivable.

Export Sales: For each of the three years ended June 25, 2004, export sales were less than 10% of consolidated net sales.

Geographical Segments: The Company does not have any operating facilities or producing assets outside the United States and Puerto Rico; however, certain equipment owned by the Company is utilized by the Company’s outsource manufacturers in Asia. The net book value of such equipment held by the Company’s outsource manufacturers was approximately $1.8 million and $2.5 million at June 25, 2004 and June 27, 2003, respectively. Consequently, the Company’s operations located in Puerto Rico and New York are managed as one geographic segment.

        On May 3, 2000, the Company entered into an agreement with a contract manufacturer in Asia to outsource the manufacture of certain of its gas tubes used in its products. The agreement is for ten years, but may be terminated by either party after four years with one year’s advance notice. On November 24, 1998 the Company entered into an agreement with an indefinite term with another contract manufacturer in Asia, to manufacture and supply products to the Company. These two suppliers produce a significant amount of the Company’s products that it sells to its customers. On December 18, 2003, the Company entered into an agreement that expires in June 2009 with another contract manufacturer in Asia, to manufacture and supply products to the Company.

NOTE 8 — Commitments, Contingencies and Related Party Transactions

        The Company had an agreement with David Garwood, a member of the Board of Directors, to provide strategic planning consulting services from April 1, 2002 to its expiration in March 31, 2003 at $10,000 per quarter.

        The Company leases real property and equipment under various leases with terms expiring through April 2006. The leases require minimum annual rentals, exclusive of real property taxes, of approximately $126,000 and $73,000 in fiscal years 2005 and 2006 respectively. Substantially all of the real property leases contain escalation clauses related to increases in property taxes.

        The Company has financed its annual insurance renewal through its broker with a balance outstanding as of June 25, 2004 of $210,000, which is to be paid in equal installments from July 2004 to January 2005 plus interest at 5.25% per annum.

        Since 1982, the Company has leased equipment from PRC Leasing, Inc., a corporation owned by Alfred J. Roach, the Chairman of the Board of Directors of the Company. The rent paid under this annually renewable lease was $50,000. The lease expired on July 18, 2004 and was not renewed by the Company. Rent expense under the lease was $50,000, $50,000 and $139,000 in fiscal 2004, 2003 and 2002, respectively.

        The Company leases two houses near the Company’s Copiague, New York facility from Timothy J. Roach, President and Chief Executive Officer of the Company, at an aggregate annual rental of $31,000. The Company also bears insurance and maintenance costs which approximate $14,000 per year. The houses are used by the Chairman of the Board and other executives, directors and employees when visiting the Company’s New York facility.

NOTE 9 – Employee Benefits

        The Company has a defined contribution plan which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. The plan covers substantially all U.S. and Puerto Rico employees who meet the eligibility requirements and requires the Company to match employees’ contributions up to specified limitations and subject to certain vesting schedules. The matching expense for the Company was $20,000, $21,000, and $26,000 for the fiscal years ended June 25, 2004, June 27, 2003 and June 28, 2002, respectively.

        The Company does not provide its employees any other post-retirement or post-employment benefits, except discretionary severance payments upon termination of employment.

NOTE 10 — Supplemental Consolidated Balance Sheet Information

	June 25, 2004			June 27, 2003
Accounts receivable:
Trade accounts receivable	$	3,521,000		$	2,618,000
Other receivables		14,000			3,000
Less: allowance for doubtful accounts		(100,000	)		(100,000	)
	$	3,435,000		$	2,521,000
Inventories, net:
Raw materials and subassemblies	$	1,487,000		$	2,135,000
Work in progress		175,000			381,000
Finished goods		3,743,000			3,389,000
	$	5,405,000		$	5,905,000
Property, plant and equipment:
Machinery and equipment	$	7,090,000		$	7,564,000
Leasehold improvements		5,000			449,000
Office fixtures, equipment and other		215,000			393,000
		7,310,000			8,406,000
Less: accumulated depreciation		(3,363,000	)		(3,371,000	)
	$	3,947,000		$	5,035,000
Accounts payable and accrued liabilities:
Accounts payable	$	643,000		$	229,000
Accrued payroll, bonus and vacation		945,000			362,000
Accrued legal and other professional fees		212,000			134,000
Other accrued expenses		541,000			566,000
	$	2,341,000		$	1,291,000

NOTE 11 — Quarterly Financial Data (Unaudited)

        The following table reflects the unaudited quarterly results of the Company for the fiscal years ended June 25, 2004 and June 27, 2003:

Quarter Ended	Net sales		Gross profit		Operating earnings (loss)			Net earnings (loss)			Diluted net earnings (loss) per share(a)
2004 Fiscal Year
September 27, 2003	$	9,211,000	$	2,787,000	$	915,000		$	913,000		$	0.08
December 26, 2003		7,001,000		2,069,000		309,000			320,000			0.02
March 26, 2004		6,038,000		1,935,000		218,000			217,000			0.02
June 25, 2004		6,235,000		1,817,000		140,000			113,000			0.01
2003 Fiscal Year
September 27, 2002	$	7,074,000	$	1,844,000	$	52,000		$	61,000		$	0.01
December 28, 2002		5,536,000		1,172,000		(723,000	)		(730,000	)		(0.06	)
March 28, 2003		5,006,000		1,087,000		(451,000	)		(443,000	)		(0.04	)
June 27, 2003		6,457,000		1,696,000		125,000			104,000			0.01

_________________

(a)         The sum of the unaudited quarterly income (loss) per share amounts do not always equal the annual amount reported because the per share amounts are computed independently for each quarter and the year based on the weighted average common and common equivalent shares outstanding in each period.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused the amendment to the Report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 30, 2004

/s/ Timothy J. Roach                             
Timothy J. Roach                                 
President                                              
(Principal Executive Officer)