SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------
                                            

                                   F O R M 6-K

           REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
                15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

                                For the month of
                                  November 2004

                       RADA ELECTRONIC INDUSTRIES LIMITED
                              (Name of Registrant)


                 7 Giborei Israel Street, Netanya 42504, Israel
                     (Address of Principal Executive Office)

                  Indicate by check mark whether the registrant files or will 
file annual reports under cover of Form 20-F or Form 40-F.

                           Form 20-F   X    Form 40-F __          

                  Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):__

                  Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):__

                  Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.

                                   Yes __ No X

                  If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-___________
                                                                               

         This Form 6-K is being incorporated by reference into the Company's
Form F-3 Registration Statements File Nos. 333-12074, 333-115598 and
333-117954.





                         RADA ELECTRONIC INDUSTRIES LTD.





6-K Items

     1.   Consolidated  Financial Statements of RADA Electronic  Industries Ltd.
          as of September 30, 2004 and  Management's  Discussion and Analysis of
          Financial  Condition  and  Results of  Operations  for the nine months
          ended September 30, 2004.
                                                                            



                                                                          ITEM 1











                   RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY


                        CONSOLIDATED FINANCIAL STATEMENTS


                            AS OF SEPTEMBER 30, 2004


                                 IN U.S. DOLLARS


                                    UNAUDITED




                                      INDEX


                                                                         Page
                                                                     -----------
 
 Condensed Consolidated Balance Sheets                                    1

 Condensed Consolidated Statements of Operations                          2

 Condensed Statements of Changes in Shareholders' Equity                  3

 Condensed Consolidated Statements of Cash Flows                         4-5

 Notes to Condensed Consolidated Financial Statements                    6-9




                       - - - - - - - - - - - - - - - -





                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data



                                                                         September 30,   December 31,
                                                                  Note       2004            2003
                                                                 ------- ------------    ------------
                                                                          (unaudited)
                                                                                 
    ASSETS
 CURRENT ASSETS:
   Cash and cash equivalents                                              $    1,908      $      467
   Trade receivables (net of allowance for doubtful accounts
    of $ 214 at September 30, 2004 and December 31, 2003)                      4,678           3,496
   Other receivables and prepaid expenses                                        352             250
   Costs and estimated earnings in excess of billings on
   uncompleted contracts                                            3            201             176
   Inventories                                                      4          1,560             873
                                                                         ------------    ------------
 Total current assets                                                          8,699           5,262
 -----                                                                   ------------    ------------
  LONG-TERM RECEIVABLES AND DEPOSITS:
   Long-term receivables                                                       1,014             990
   Long-term restricted cash                                                   1,090               -
   Leasing deposits                                                               86              71
   Severance pay fund                                                          1,638           1,511
                                                                         ------------    ------------
 Total long-term receivables and deposits                                      3,828           2,572
 -----                                                                   ------------    ------------

 PROPERTY AND EQUIPMENT, NET                                                   4,381           4,728
                                                                         ------------    ------------
 OTHER ASSETS:
   Intangible assets, net                                                      1,780           1,987
   Deferred charges, net                                                          63               -
                                                                         ------------    ------------
 Total other assets                                                            1,843           1,987
 -----                                                                   ------------    ------------
 Total assets                                                             $   18,751      $   14,549
 -----                                                                   ============    ============

    LIABILITIES AND SHAREHOLDERS' EQUITY

 CURRENT LIABILITIES:
   Short-term bank credit and loans                                       $      400      $    1,123
   Trade payables                                                                582             640
   Other payables and accrued expenses                                         3,795           3,317
   Deferred revenues                                                             814           1,062
   Billings in excess of costs and estimated earnings on
    uncompleted contracts                                           3          1,450           1,836
                                                                         ------------    ------------
 Total current liabilities                                                     7,041           7,978
 -----                                                                   ------------    ------------

 LONG-TERM LIABILITIES:
   Convertible note                                                            2,562               -
   Long-term loans                                                                 -           1,220
   Accrued severance pay                                                       2,127           2,048
                                                                         ------------    ------------
 Total long-term liabilities                                                   4,689           3,268
 -----                                                                   ------------    ------------
 CONTINGENCIES, COMMITMENTS AND CHARGES

 MINORITY INTERESTS                                                              407             425
                                                                         ------------    ------------
 SHAREHOLDERS' EQUITY:                                              5
   Share capital
      Ordinary shares of NIS 0.005 par value - Authorized:
        45,000,000 shares at September 30, 2004 and
        December 31, 2003; Issued and outstanding: 20,417,446
        and 18,510,716 shares at September 30, 2004 and
        December 31, 2003, respectively                                          110             108
   Additional paid-in capital                                                 61,845          59,139
   Warrants                                                                    1,957           1,405
   Accumulated deficit                                                       (57,298)        (57,774)
                                                                         ------------    ------------
 Total shareholders' equity                                                    6,614           2,878
 -----                                                                   ------------    ------------
 Total liabilities and shareholders' equity                               $   18,751      $   14,549
 -----                                                                    ============    ============


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       1

                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data



                                         
                                         Nine months ended       Three months ended      Year ended    
                                           September 30,            September 30,         December   
                                      ------------------------ ------------------------     31,                    
                                Note     2004       2003*)        2004        2003          2003
                                ----------------- ------------ ----------- ------------ -------------
                                                        (unaudited)
                                      -------------------------------------------------
                                                                              
 Revenues:                        6
   Products                           $    8,372  $    4,806   $    3,162  $    1,921   $   8,977
   Services                                2,286       2,515          578         853       3,338
                                      ----------- ------------ ----------- ------------ -------------
                                          10,658       7,321        3,740       2,774      12,315
                                      ----------- ------------ ----------- ------------ -------------
 Cost of revenues:
   Products                                6,579       4,323        2,219       1,639       6,933
   Services                                1,192       1,439          319         495       2,659
                                      ----------- ------------ ----------- ------------ -------------
                                           7,771       5,762        2,538       2,134       9,592
                                      ----------- ------------ ----------- ------------ -------------
 Gross profit                              2,887       1,559        1,202         640       2,723
                                      ----------- ------------ ----------- ------------ -------------
 Operating expenses:
   Marketing, selling, general
    and administrative expenses            2,125       1,981          747         674       2,698
                                      ----------- ------------ ----------- ------------ -------------
 Operating income (loss)                     762        (422)         455         (34)         25
 Financial income (expenses),
  net                                       (321)        733         (149)        964         708
 Other income (expenses), net                 17         (79)           7        (141)         (2)
                                      ----------- ------------ ----------- ------------ -------------
                                             458         232          313         789         731
 Minority interests in losses
  of subsidiary                               18          29            -          22          27
                                      ----------- ------------ ----------- ------------ -------------
 Net income                           $      476  $      261   $      313  $      811   $     758
                                      =========== ============ =========== ============ =============
 Earnings per share:
   Basic net earnings per share       $     0.02  $     0.01   $     0.02  $     0.04   $    0.04
                                      =========== ============ =========== ============ =============
   Diluted net earnings  per
   share                              $     0.02  $     0.01   $     0.01  $     0.04   $    0.04
                                      =========== ============ =========== ============ =============




*) Reclassified



The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       2


                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

STATEMENTS OF CHANGES IN SHARHOLDERS' EQUITY
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share data




                               Number of                 Additional                               Total
                                Ordinary      Share       paid-in                 Accumulated  shareholders'
                                 shares      capital      capital      Warrants      deficit      equity
                               -----------  ----------   ----------    ---------   ----------- ------------
                                                                                    
Balance at January 1, 2003   18,510,716          108       58,785          124      (58,532)          485

  Adjustment of accrual
   for issuance expenses              -            -          354            -            -           354
  Fair value of warrants
   issued in connection
   with settlement of
   debt, net *)                       -            -            -        1,267            -         1,267
  Fair value of warrants
   issued to suppliers                -            -            -           14            -            14
  Net income                          -            -            -            -          758           758
                             ----------   ----------   ----------   ----------   ----------    ----------
Balance at
  December 31,               18,510,716          108       59,139        1,405      (57,774)        2,878
  Issuance of Ordinary
   shares, net **)            1,864,313            2        2,624            -        2,626
  Issuance of warrants                -            -            -          552            -           552
  Beneficial conversion
    feature on 
    convertible note                  -            -           53            -            -            53


  Exercise of options            42,417           29            -            -           29
  Net income                          -            -            -            -          476           476
                             ----------   ----------   ----------   ----------   ----------    ----------
Balance at September 30,
   2004 (unaudited)          20,417,446   $      110   $   61,845   $    1,957   $  (57,298)   $    6,614
                             ==========   ==========   ==========   ==========   ==========    ==========





*)    Net of issuance expenses of approximately $ 38 ended December 31, 2003.
**)   Net of issuance expenses of approximately $ 95 ended September 30, 2004.






The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.




                                       3




                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. dollars in thousands




                                                                       Nine months ended
                                                                          September 31
                                                                  -----------------------------
                                                                       2004           2003
                                                                  -------------- --------------
                                                                            (unaudited)
                                                                   ---------------------------
                                                                                
  Cash flow from operating activities:
  ------------------------------------
    Net income                                                        $     476      $     261
    Adjustments required to reconcile net income to net cash
     provided by  operating activities:
     Gain on extinguishment of debt                                           -         (1,013)
     Depreciation and amortization                                          751          1,007
     Minority interests in losses of subsidiary                             (18)           (29)
     Accrued interest and translation differences on long-term
       receivables                                                          (24)           (82)
     Decrease (increase) in trade receivables, net                       (1,182)            58
     Increase in other receivables and prepaid expenses                    (102)          (405)
     Increase in inventories                                               (687)           (17)
     Decrease (increase)in costs and estimated earnings in
       excess of billings, net                                             (411)         1,933
     Decrease in trade payables                                             (73)           (78)
     Increase in other payables and accrued expenses                        478             63
     Decrease in deferred revenues                                         (248)          (181)
     Accrued severance pay, net                                             (48)          (196)
                                                                    ------------   ------------
  Net cash provided by operating activities                              (1,088)         1,321
                                                                    ------------   ------------
  Cash flow from investing activities:
  ------------------------------------
    Investment in long term restricted cash                              (1,090)             -
    Purchase of property and equipment                                     (187)           (47)
    Payment of leasing deposits                                             (15)             -
                                                                    ------------   ------------
   Net cash used in investing activities                                 (1,292)           (47)
                                                                    ------------   ------------
  Cash flow from financing activities:
  ------------------------------------
    Proceeds from issuance of shares, net                                 2,636              -
    Proceeds from issuance of convertible note, net                       2,494              -
    Issuance of warrants                                                    552              -
    Decrease in short-term bank credits and loans, net                   (1,943)        (1,155)
    Beneficial conversion feature on convertible note                        53              -
    Exercise of options                                                      29              -
                                                                    ------------   ------------
  Net cash provided by (used in) financing activities                     3,821         (1,155)
                                                                    ------------   ------------
  Increase in cash and cash equivalents                                   1,441            119
  Cash and cash equivalents at the beginning of the year                    467            570
                                                                    ------------   ------------
  Cash and cash equivalents at the end of the year                    $   1,908      $     689
                                                                    ============   ============


                                        4


                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY
                                                                             
STATEMENTS OF CASH FLOWS (Cont.)
--------------------------------------------------------------------------------
U.S. dollars in thousands


                                                                Nine months ended
                                                                    September 31
                                                           ----------------------------
                                                               2004           2003
                                                           -------------  -------------
                                                                     (unaudited)
                                                             --------------------------
                                                                        
  Non-cash transactions:
  ----------------------

    Fair value of warrants issued in connection with
     settlement of debt                                        $      -       $  1,453
                                                             ===========    ===========

    Adjustment of accrual for issuance expenses                $      -       $    355
                                                             ===========    ===========

  Supplemental disclosures of cash flow activities:
  -------------------------------------------------
    Net cash paid during the year for:
     Income taxes                                              $      2       $      2
                                                             ===========    ===========
     Interest                                                  $    183       $    206
                                                             ===========    ===========









The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.


                                       5




                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED STATEMENTS                                            
--------------------------------------------------------------------------------
U.S. dollars in thousands


NOTE 1:- GENERAL

          a.   RADA  Electronic  Industries  Ltd., an Israeli  corporation  (the
               "Company") is engaged in the development,  manufacturing and sale
               of Automated Test Equipment ("ATE") products,  avionics equipment
               and aviation data acquisition and debriefing systems.

          b.   The  Company  operates  a test  and  repair  shop  using  its ATE
               products  in  Beijing,   China  through  its  80%  owned  Chinese
               subsidiary,  Beijing Huari Aircraft  Components  Maintenance  and
               Services Co. Ltd. ("CACS" or "subsidiary").  CACS was established
               with a third party, which owns the remaining 20% equity interest.

          c.   The  accompanying   unaudited  interim   consolidated   financial
               statements  have  been  prepared  in  accordance  with  generally
               accepted accounting principles for interim financial information.
               Accordingly,   they  do  not  include  all  the  information  and
               footnotes  required by generally accepted  accounting  principles
               for complete financial statements.  In the opinion of management,
               all  adjustments   (consisting  of  normal  recurring   accruals)
               considered  necessary for a fair presentation have been included.
               Operating  results for the nine months ended  September 30, 2004,
               are not necessarily  indicative of the results of operations that
               may be expected for the year ended December 31, 2004.


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

          The significant  accounting  policies  applied in the annual financial
          statements  of  the  Company  as of  December  31,  2003  are  applied
          consistently in these financial statements.

          a.   Use of estimates:

               The  preparation  of  financial  statements  in  conformity  with
               generally accepted  accounting  principles requires management to
               make estimates and assumptions  that affect the amounts  reported
               in  the  financial  statements  and  accompanying  notes.  Actual
               results could differ from those estimates.

          b.   For  further  information,  refer to the  consolidated  financial
               statements as of December 31, 2003.

          c.   Accounting for share based compensation:

               The Company  account for share based  compensation  for employees
               using  the  intrinsic   value  method   presented  in  Accounting
               Principles  Board (APB)  Statement No. 25,  Accounting  for Stock
               Issued to Employees, and related interpretations, and comply with
               the  disclosure  provisions  of  SFAS  No.  123,  Accounting  for
               Stock-Based  Compensation,  and with the disclosure provisions of
               SFAS No. 148, Accounting for Stock-Based  Compensation-Transition
               and Disclosure Amendment of SFAS No. 123.

               Pro forma information  regarding the Company's net income and net
               earnings  per  share is  required  by SFAS  No.  123 and has been
               determined as if the Company had accounted for its employee stock
               options under the fair value method prescribed by SFAS No. 123.

                                       6



                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED STATEMENTS                                                
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

               If  deferred  compensation  had been  determined  under the above
               mentioned  fair value method,  the effect on the Company's  share
               based  compensation  cost,  net income and net earnings per share
               would have been immaterial for all the reported periods.

NOTE 3:- CONTRACTS IN PROGRESS

          Amounts  included in the financial  statements,  which relate to costs
          and estimated earnings in excess of billings on uncompleted  contracts
          are  classified  as current  assets.  Billings  in excess of costs and
          estimated earnings on uncompleted  contracts are classified as current
          liabilities. Summarized below are the components of the amounts:

          a.   Costs and estimated earnings in excess of billings on uncompleted
               contracts



                                                                   September 30,   December 31,
                                                                       2004              2003
                                                                   --------------   --------------
                                                                    (unaudited)
                                                                   --------------

                                                                                      
               Costs incurred on uncompleted contracts              $    5,295       $      862
               Estimated earnings                                          607              324
                                                                   --------------   --------------

                                                                         5,902            1,186
               Less - billings and progress payments                     5,701            1,010
                                                                   --------------   --------------
                                                                    $      201       $      176
                                                                   ==============   ==============


          b.   Billings in excess of costs and estimated earnings on uncompleted
               contracts:



                                                                   September 30,      December 31,
                                                                       2004              2003
                                                                   --------------   --------------
                                                                    (unaudited)

                                                                                        
              Costs incurred on uncompleted contracts               $      2,468     $      3,711
              Estimated earnings                                             957            1,019
                                                                   --------------   --------------
                                                                           3,425            4,730
              Less - billings and progress payments                        4,875            6,566
                                                                   --------------   --------------
                                                                    $      1,450     $      1,836
                                                                   ==============   ==============


                                        7




                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED STATEMENTS                                             
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 4:- INVENTORIES

                                                 September 30,      December 31,
                                                     2004             2003
                                                 -------------    -------------
  
            Raw materials and components           $      902       $      668
            Work in progress                              451              112
            Finished goods                                207              93
                                                 -------------    -------------
                                                   $    1,560       $      873
                                                 =============    =============


NOTE 5:- PRIVATE PLACEMENT

          On July 12,  2004,  The Company  concluded a private  placement of 1.8
          million of ordinary  shares.  The purchase  price was $1.60 per share.
          The Company  also  granted the  investors a right to purchase up to an
          aggregate of 1.1 million additional ordinary shares at $2.10 per share
          issuable  upon the  exercise of  additional  investment  rights  which
          expire 24 months  following  the  effective  date of the  registration
          statement.  In  addition,  The  Company  issued an  aggregate  of $3.0
          million  principal amount of convertible  notes. The convertible notes
          will mature in three years, bear interest at a rate of six month LIBOR
          plus 2.5% and are convertible at the investors' option at a conversion
          price of $2.10 per share. The Company  recorded the convertible  notes
          in its fair value and the remaining balance will be amortized over the
          period of three years. In addition, the Company granted the purchasers
          of the  convertible  notes a right to purchase up to an  aggregate  of
          937,500  additional  ordinary  shares at $2.50 per share issuable upon
          the exercise of warrants which expire on January 12, 2010.

                                        8




                              RADA ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED STATEMENTS                                               
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 6:- GEOGRAPHIC INFORMATION


          a.   In accordance  with Statement of Financial  Accounting  Standards
               No. 131 "Disclosures  About Segments of an Enterprise and Related
               Information",  the  Company  is  organized  and  operates  as one
               business  segment,  which  develops,  manufactures  and sells ATE
               products,  avionics  equipment and aviation data  acquisition and
               debriefing systems.

          b.   Revenues by geographic areas:

               Revenues are attributed to geographic  area based on the location
               of the end customers as follows:

                                        Nine months ended           Year ended
                                    --------------------------    --------------
                                          September 30,            December 31,
                                    --------------------------    --------------
                                       2004           2003             2003
                                    -----------    -----------    --------------

               North America         $   2,656       $  2,624       $    5,115
               Europe                    2,810            604            3,436
               Israel                    2,931          2,049            3,224
               Others                    2,261          2,044              540
                                    -----------    -----------    --------------
               Total                 $  10,658       $  7,321       $   12,315
                                    ===========    ===========    ==============



                                     9





Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations
--------------------------------------------------------------------------------

     This  information   should  be  read  in  conjunction  with  the  condensed
consolidated financial statements and notes included in Item 1 of Part I of this
Quarterly  Report and the audited  financial  statements  and notes  thereto and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  for the year ended  December  31, 2003  contained in our 2003 Annual
Report on Form 20-F. The discussion and analysis which follows may contain trend
analysis and other forward-looking  statements within the meaning of Section 21E
of the  Securities  Exchange  Act of 1934 which  reflect our current  views with
respect  to future  events  and  financial  results.  These  include  statements
regarding our earnings, projected growth and forecasts, and similar matters that
are not historical facts.

     We  remind   shareholders  that   forward-looking   statements  are  merely
predictions  and therefore are  inherently  subject to  uncertainties  and other
factors  that could  cause the future  results to differ  materially  from those
described in the forward-looking statements.

Overview

     We develop,  manufacture  and sell  automated  test  equipment and avionics
products for military and commercial use mainly in Israel, Europe and the United
States.  Until  December 31, 2001 we also sold aircraft  spare parts through our
subsidiary, Jetborne International, but this business was discontinued following
the sale of our holdings in Jetborne.  We also provide test and repair  services
using our CATS(R) testers and test program sets through our Chinese  subsidiary,
CACS. In addition,  we provide  manufacturing  services to third parties engaged
mainly in the avionics market.

     In March  2002,  we sold,  effective  December  31,  2001,  our 75%  equity
interest in Jetborne to ILI Aviation Ltd., a private  company  registered  under
the laws of the Marshall  Islands.  ILI undertook to cause  Jetborne to repay us
all  outstanding  inter-company  loan  balances  plus  interest  and  additional
royalties whereby the repayment will be made in accordance with a schedule based
on a percentage of actual sales of Jetborne's inventory on hand on the effective
date of the  agreement.  All payments due to us under the agreement must be paid
no later than the tenth anniversary of the agreement. Based on our assessment of
the  collectibility  of this debt we recorded an allowance  for the full balance
due to us under the agreement.

Critical Accounting Policies

     Our critical accounting  policies,  including the assumptions and judgments
underlying  them,  are  disclosed  in the  notes to our  consolidated  financial
statements.  These  policies  have been  consistently  applied  in all  material
respects and address such matters as revenue  recognition.  While the  estimates
and judgments  associated with the application of these policies may be affected
by different  assumptions or conditions,  we believe the estimates and judgments
associated with the reported amounts are appropriate in the circumstances.

     The significant  accounting  policies listed in Note 2 of our  consolidated
financial  statements  that we  believe  are the most  critical  to aid in fully
understanding and evaluating our

                                       10




financial  condition  and results of our  operations  under  generally  accepted
accounting principles are discussed below.

     Intangible  Assets.  Costs of producing our TPS software library,  which is
integrated with our test station, incurred subsequent to achieving technological
feasibility, were capitalized according to FASB No. 86 "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed" and are amortized
over the estimated useful life of the product.  We assess the  recoverability of
these  intangible  assets at each  balance  sheet  date by  determining  whether
unamortized  capitalized  costs do not  exceed the net  realizable  value of the
software.  Net  realizable  value is the estimated  future gross revenues from a
product  reduced by the  estimated  future costs of  disposing of that  product,
including  costs of  performing  maintenance  and customer  support  required to
satisfy  our  obligations  set forth at the time of sale.  The use of  different
assumptions  with respect to the  expected  cash flows from our assets and other
economic  variables,   primarily  the  discount  rate,  may  lead  to  different
conclusions  regarding the  recoverability of our assets' carrying values and to
the potential need to record an impairment loss for our intangible assets.

     Impairment of Long-Lived  Assets.  We are required to assess the impairment
of long-lived  assets on an annual basis,  and potentially  more frequently when
events or changes in  circumstances  indicate that the carrying value may not be
recoverable  in accordance  with  Statement of Financial  Accounting  Standards,
("SFAS")  No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets." We assess the  impairment  of our assets  based on a number of factors,
including  any  significant  changes in the manner of our use of the  respective
assets or the strategy of our overall business and significant negative industry
or economic trends.  Upon  determination that the carrying value of a long-lived
asset may not be  recoverable,  based  upon a  comparison  of fair  value to the
carrying amount of the asset, an impairment charge is recorded.  We measure fair
value  based on the  projected  future  undiscounted  cash flows  expected to be
generated by the respective asset.  Under different  assumptions with respect to
the recoverability of our long-lived assets, our determination may be different,
which may negatively affect our financial position and results of operations.

     Share-Based Compensation. We account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board ("APB") opinion
No. 25, "Accounting for Stock Issues to Employees," and related interpretations.
Under APB 25,  compensation  cost is  measured  as the  excess,  if any,  of the
closing  market price of our stock at the date of grant over the exercise  price
of the option granted. We recognize compensation cost for stock options, if any,
ratably over the vesting period. We account for warrants issued to non-employees
in accordance  with the provisions of SFAS No. 123,  "Accounting for Stock-Based
Compensation."  We use the Black- Scholes option pricing model to value warrants
granted to non-employees.

     Revenue  Recognition.  Our  revenues  are derived  primarily  from sales of
automated test equipment and avionics products. Revenues from sales of automated
test equipment and avionics products are recognized upon delivery of merchandise
or performance of services.  Revenues from sales of other products are generally
recognized  upon shipment of the product.  Revenues from services are recognized
upon performance of the services.  Revenues from long-term fixed price contracts
are recognized by the percentage-of-completion method. We apply this method when
the total of the costs of the contract can reasonably be estimated. Revenues


                                       11



ascribed to each period  represent  costs incurred  during the period,  with the
addition of estimated earnings accrued,  based on the extent of progress towards
completion  during the period.  The  percentage-of-completion  is determined for
each  contract  at the  rate  that  costs  incurred  to date  bear to the  total
estimated cost to be incurred over the duration of each contract. With regard to
contracts  on which a loss is  anticipated,  a provision  is made for the entire
amount of the estimated loss.  Contracts are considered to be 100% complete when
the customer accepts the project and when the project is delivered,  or when the
project  complies with performance  specifications,  depending upon the specific
situation.   Revenues  from  test  and  repair   services  are  recognized  upon
performance of the maintenance services.

     Revenues from certain  arrangements may include multiple  elements within a
single contract.  Our accounting policy complies with the revenue  determination
requirements  set forth in EITF 00-21,  relating to the  separation  of multiple
deliverables into individual accounting units with determinable fair values. Our
arrangements are accounted for as one unit of accounting.

     Fair Value of Warrants.  In September  2003, we finalized an agreement with
Bank Hapoalim B.M. and Bank Leumi Le Israel B.M., or our Banks,  to  restructure
$3,451,000  of our debt to them.  Pursuant to the  agreement,  we paid the Banks
$1,100,000  on account of our debt to them and they forgave  $1,100,000  in debt
and agreed to accept  warrants to purchase  3,781,995  of our  ordinary  shares,
exercisable  at par value per  share,  to  purchase  ordinary  shares in lieu of
$1,251,000 of debt.  This  transaction  was recorded in accordance with FASB No.
15, "Accounting by Debtors and Creditors for Troubled Debt  Restructurings." The
warrants  issued to the Banks were  recorded  at fair value  using the Black and
Scholes  pricing  model,  since we do not  believe  that the market  price of an
ordinary  share on on the date of  consummation  reflects  fair value.  The fair
value of the  warrants  was  based  on the  value  of an  ordinary  share at the
consummation  date of the  transaction,  based on a  valuation  of the  warrants
prepared  by  an  external   valuation  expert.   The  difference   between  the
consideration  paid to the  Banks  and  the  carrying  amount  of the  debt  was
recognized as a gain on restructuring of debt, net of issuance expenses.

Significant Expenses

     Cost of Revenues.  Cost of revenues  consists  primarily  of  manufacturing
costs,  depreciation of fixed assets,  software  development  costs,  impairment
losses on long-lived assets and amortization of capitalized software.

     Research  and  Development  Expenses.  Research  and  development  expenses
consist  primarily  of  salaries  of  employees  and  subcontractors  engaged in
on-going  research  and  development  activities  and  other  related  expenses.
Research and development expenses are expensed as incurred.

     Marketing,  Selling,  General and  Administrative  Expenses.  Marketing and
Selling  expenses  consist   primarily  of  expenses  for  sales  and  marketing
personnel,   sales   commissions,   marketing   activities,   public  relations,
promotional materials,  travel expenses and trade show exhibit expenses. General
and  administrative  expenses consist primarily of salaries and related expenses
for  executive,   accounting,   administrative  personnel,   professional  fees,
provisions for doubtful accounts, and other general corporate expenses.


                                       12



     Financial Income  (Expenses),  Net.  Financial expenses consist of interest
and bank expenses and currency  remeasurement losses.  Financial income consists
of interest on cash and cash equivalent balances,  currency  remeasurement gains
and gain on restructuring of debt.

     Other  Expenses,  Net.  Other  expenses,  net relate  primarily to items of
income or expenses outside our ordinary course of business.

Nine Months Ended  September 30, 2004 Compared with Nine Months Ended  September
30, 2003

     Revenues.  Our revenues increased 46% to $ 10.65 million in the nine months
ended  September 30, 2004 from $7.32 million in the nine months Ended  September
30, 2003. The increase in our revenues is primarily attributable to the increase
of revenues from the sale of GDS and DAS to Smiths Aerospace  Electronic Systems
for the PM-V  Program and sale of FACE systems to the  Portuguese  Air Force and
the U.S.  NAVY.  We expect  that this  growth  rate will  continue in the fourth
quarter of 2004 and that the growth will be  generated  primarily  from sales of
our traditional products.

     Cost of Revenues.  Cost of revenues  increased  35% to $7.77 million in the
nine months ended September 30, 2004 from $5.76 million in the nine months Ended
September 30, 2003. the increase is mainly due to increased revenues.

     Gross Profit. Our gross profit increased 85% to approximately $2.88 million
in the nine  months  ended  September  30,  2004 from $1.55  million in the nine
months ended September 30, 2003. Our profit margin  increased to 27% in the nine
months ended  September 30, 2004 from 21% in the nine months ended September 30,
2003. The improved margins reflects our reaching a sales level that provides for
better  utilization  of our fixed  overhead  costs.  Our margins  should improve
further with better utilization of our manufacturing facilities.

     Marketing,   Selling,  General  and  Administrative  Expenses.   Marketing,
selling,  general and  administrative  expenses increased 7% to $2.12 million in
the nine months ended  September  30, 2004 from $1.98 million in the nine months
ended September 30, 2003. We are continuing our costs savings  measures,  but we
have  increased  our sales  efforts in our  current and new  markets,  which has
resulted in increased marketing and selling expenses .

     Financial Income (Expenses),  Net. Our financial expense,  net was $321,000
in the nine months ended  September 30, 2004. In the nine months ended September
30, 2003 we had financial  income of $733,000.  Our financial income in 2003 was
primarily attributable to an approximate $1 million gain on our restructuring of
debt with our banks.

Liquidity and Capital Resources

     As of September  30, 2004 we did not have any bank debt.  At September  30,
2004, we had working capital  surplus of $150,000 and cash and cash  equivalents
of $1.9 million.

                                       13




     In the third quarter of 2004,  we raised $5.88 million from  investors in a
private  placement.  The  investment  consisted of $3.0  million in  convertible
debentures  and $2.88  million of equity.  The price of the equity was $1.60 per
share,  and the  convertible  debentures can be converted at $2.10 per share. In
addition,  the  investors  have an Additional  Investment  Right (AIR) to invest
$2.31  million  at $2.10 per  share,  and $2.34  million  upon the  exercise  of
warrants at an exercise price of $2.50 per share.

     We had capital  expenditures of $187,000 in the nine months ended September
30, 2004. We currently do not have any significant  capital spending or purchase
commitments.

     Net cash used in  operating  activities  was $11 million in the nine months
ended September 30, 2004. This was  attributable  primarily to our net income of
$0.5 million,  an increase in trade receivables of approximately $1.1 million, a
decrease in deferred revenues of approximately $0.2 million, which was offset in
part  by  depreciation  and  amortization  of  $0.7  million,   an  increase  in
inventories of approximately $0.7 million and an increase in costs and estimated
earnings in excess of billings on uncompleted  contracts,  net of  approximately
$0.4 million.

     Net cash used in investing  activities was  approximately  $1.3 million for
the nine months ended September 30, 2004,  mainly due to investment in long term
restricted cash of $1.1 million.

     Net cash generated from financing  activities was $3.8 million for the nine
months  ended  September  30,  2004,  mainly  due to the  net  proceeds  of $5.7
million(net)  from  issuance  of our shares and  convertible  notes in a private
placement and repayment of $1.9 million of short term bank debt.

     We have been dependent in recent years on receiving  financial support from
our principal shareholders.  We cannot assure that they will continue to provide
us with funds when requested, and that such funds, if any, will be sufficient to
finance our operations.  The failure of our principal  shareholders or other new
investors to provide us with the necessary financing may result in a significant
scale  back or  elimination  of some  aspects  of our  operations.  Based on our
current financial  condition,  the anticipated  continued financial support from
our  shareholders  and existing and  anticipated  shipments in the  remainder of
2004, we anticipate  that our capital  resources will be adequate to satisfy our
working capital and capital expenditure requirements until December 31, 2005. We
may need to raise additional funds thereafter.

     As of September  30, 2004 there were  19,486,838  warrants  outstanding  to
purchase 19,486,838 of our ordinary shares. Of such warrants, 3,781,991 warrants
have an exercise  price of (par value) per share,  13,667,347  warrants  have an
exercise price of $2.00 per share,  1,100,000 warrants have an exercise price of
$2.1 per share and 937,500  warrants have an exercise  price of $2.50 per share.
To the extent any  warrants  are  exercised  the  proceeds  will be added to our
working capital.

Off-Balance Sheet Arrangements

     We are not a party  to any  material  off-balance  sheet  arrangements.  In
addition,  we have no  unconsolidated  special purpose  financing or partnership
entities that are likely to create material contingent obligations.

                                       14



Tabular Disclosure of Contractual Obligations

     The following  table  summarizes our minimum  contractual  obligations  and
commercial  commitments,  as of September 30, 2004 and the effect we expect them
to have on our liquidity and cash flow in future periods.



      Contractual Obligations                             Payments due by Period
---------------------------------      ------------------------------------------------------------
                                                    Less than                  3-5        More than 
                                         Total        1 year     1-3 Years    Years        5 years  
                                       ----------   ---------   ----------    -----       ---------
                                                                               
Long-term debt obligations.......      $2,562,000       -       $2,562,000      -            -
Capital (finance) lease
    obligations..................          -            -           -           -            -
                                           -
Operating lease obligations......        $338,000     $270,000     $68,000      -            -
Other long-term liabilities
reflected on the company's balance
sheet under U.S. GAAP ...........          -            -           -           -            -
Total............................      $2,900,000     $270,000  $2,630,000      -            -



     In  addition,  we have  long-term  liabilities  for  severance  pay that is
calculated  pursuant to Israeli  severance pay law  generally  based on the most
recent salary of the employees  multiplied by the number of years of employment,
as of the balance sheet date.  Employees are entitled to one month's  salary for
each year of  employment  or a portion  thereof.  As of  September  30, 2004 our
severance pay liability was $2.1 million.



                                       15





                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.



                                            Rada Electronic Industries Ltd.
                                                    (Registrant)



                                            By: /s/Herzle Bodinger        
                                                ------------------
                                                Herzle Bodinger, Chairman




Date: November 15, 2004