UNITED STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON, D.C.
20549
  FORM
10-Q
  (Mark
One)
  x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT
OF 1934
  FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2009.
  COMMISSION
FILE NUMBER 000-10690
  LAPIS
      TECHNOLOGIES, INC.(Exact
      Name of Registrant as Specified in its
Charter)
 
 Delaware
                
                27-0016420(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (I.R.S.
      Employer
                  Identification
      No.)
 
 19
      W 34 Street, Suite 1008, New York, NY 10001(Address
      of principal executive offices)(Zip
code)
  Issuer's
telephone number: (212) 937-3580
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o     No
o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer o
                  Accelerated
      filer oNon-accelerated
      filer o
                  Smaller
      reporting company x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o    
No x
 
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of June 30, 2009, there were 6,483,000
outstanding shares of the Registrant's Common Stock, $.001 par
value.
  
  TABLE OF CONTENTS
  PagePART
      I - FINANCIAL INFORMATIONItem
      1.
                                    Financial
      Statements
                                    3Item
      2.
                                    Management’s
      Discussion and Analysis or Plan of Operation
                                    9Item
      3.
                                    Quantitative and
      Qualitative Disclosures About Market Risk
                                    12Item
      4T.
                                    Controls
      and Procedures
                                    12PART
      II - OTHER INFORMATIONItem
      1.
                                    Legal
      Proceedings
                                    13Item
      1A.
                                    Risk
      Factors
                                    13Item
      2.
                                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                                    13Item
      3.
                                    Defaults
      Upon Senior Securities
                                    13Item
      4.
                                    Submission
      of Matters to a Vote of Security Holders
                                    13Item
      5.
                                    Other
      Information
                                    13Item
      6.
                                    Exhibits
                                    13SIGNATURES
                                    14
  2
 
 PART
I - FINANCIAL INFORMATION
  Item 1.  Financial
Statements.
  LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEET(In
      Thousands, Except Share
Amounts)
  ASSETSJune
      30,
                        
                        
                        December
      31,2009
                        
                        
                        2008(Unaudited)Current
      Assets:Cash
      and cash equivalents
                        
                        $
                        711
                        
                        
                        $
                        763Accounts
      receivable
                        
                        
                        3,386
                        
                        
                        
                        4,884Inventories
                        
                        
                        3,970
                        
                        
                        
                        4,305Prepaid
      expenses and other current assets
                        
                        
                        87
                        
                        
                        
                        91Due
      from stockholder
                        
                        
                        -
                        
                        
                        
                        -Total
      current assets
                        
                        
                        8,154
                        
                        
                        
                        10,043Property
      and equipment, net
                        
                        
                        172
                        
                        
                        
                        202Deferred
      income taxes
                        
                        
                        19
                        
                        
                        
                        20$
                        8,345
                        
                        
                        $
                        10,265LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent  Liabilities:Bank
      line of credit
                        
                        $
                        541
                        
                        
                        $
                        1,248Short
      term bank loans
                        
                        
                        3,926
                        
                        
                        
                        4,124Current
      portion of term loans
                        
                        
                        -
                        
                        
                        
                        197Accounts
      payable and accrued expenses
                        
                        
                        1,902
                        
                        
                        
                        2,660Due
      to stockholder
                        
                        
                        -
                        
                        
                        
                        79Due
      to affilliates
                        
                        
                        79
                        
                        
                        
                        13Income
      taxes payable
                        
                        
                        44
                        
                        
                        
                        16Total
      current liabilities
                        
                        
                        6,492
                        
                        
                        
                        8,337Term
      loans, net of current portion
                        
                        
                        -
                        
                        
                        
                        52Severance
      payable
                        
                        
                        185
                        
                        
                        
                        190Total
      liabilities
                        
                        
                        6,677
                        
                        
                        
                        8,579Commitments
      and contingenciesMinority
      interest
                        
                        
                        549
                        
                        
                        
                        501Stockholders'
      Equity:Preferred
      stock; $.001 par value, 5,000,000  shares authorized, none
      issued
                        
                        
                        -
                        
                        
                        
                        -Common
      stock; $.001 par value, 100,000,000 shares authorized,
      6,483,000shares
      issued and outstanding
                        
                        
                        6
                        
                        
                        
                        6Additional
      paid-in capital
                        
                        
                        78
                        
                        
                        
                        78Accumulated
      other comprehensive income (loss)
                        
                        
                        65
                        
                        
                        
                        108Retained
      Earnings
                        
                        
                        970
                        
                        
                        
                        993Total
      stockholders' equity
                        
                        
                        1,119
                        
                        
                        
                        1,185$
                        8,345
                        
                        
                        $
                        10,265
   The
accompanying notes are an integral part of these financial
statements.
  3
  LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARY
 CONSOLIDATED
STATEMENTS OF INCOME
 (In
Thousands, Except Earnings Per Share and Share Amounts)
  Six
      Months Ended
                                                      
                                                      
                                                      Three
      Months EndedJune 30,
                                                      
                                                      
                                                      June 30,2009
                                                      
                                                      
                                                      2008
                                                      
                                                      
                                                      2009
                                                      
                                                      
                                                      2008Sales
                                                      
                                                      $
                                                      4,332
                                                      
                                                      
                                                      $
                                                      5,345
                                                      
                                                      
                                                      
                                                      2,213
                                                      
                                                      
                                                      $
                                                      2,944Cost
      of sales
                                                      
                                                      
                                                      3,269
                                                      
                                                      
                                                      
                                                      4,170
                                                      
                                                      
                                                      
                                                      1,693
                                                      
                                                      
                                                      
                                                      2,263Gross
      profit
                                                      
                                                      
                                                      1,063
                                                      
                                                      
                                                      
                                                      1,175
                                                      
                                                      
                                                      
                                                      520
                                                      
                                                      
                                                      
                                                      681Operating
      expenses:Research
      and development expenses
                                                      
                                                      
                                                      64
                                                      
                                                      
                                                      
                                                      54
                                                      
                                                      
                                                      
                                                      43
                                                      
                                                      
                                                      
                                                      32Selling
      expenses
                                                      
                                                      
                                                      50
                                                      
                                                      
                                                      
                                                      15
                                                      
                                                      
                                                      
                                                      25
                                                      
                                                      
                                                      
                                                      8General
      and administrative
                                                      
                                                      
                                                      618
                                                      
                                                      
                                                      
                                                      1,060
                                                      
                                                      
                                                      
                                                      314
                                                      
                                                      
                                                      
                                                      505Total
      operating expenses
                                                      
                                                      
                                                      732
                                                      
                                                      
                                                      
                                                      1,129
                                                      
                                                      
                                                      
                                                      382
                                                      
                                                      
                                                      
                                                      545Income
      from operations
                                                      
                                                      
                                                      331
                                                      
                                                      
                                                      
                                                      46
                                                      
                                                      
                                                      
                                                      138
                                                      
                                                      
                                                      
                                                      136Other
      income (expense):Interest
      expense, net
                                                      
                                                      
                                                      (140
                                                      )
                                                      
                                                      
                                                      (245
                                                      )
                                                      
                                                      
                                                      (61
                                                      )
                                                      
                                                      
                                                      (128
                                                      )Income
      (loss) before provision for income taxes and minority
    interest
                                                      
                                                      
                                                      191
                                                      
                                                      
                                                      
                                                      (199
                                                      )
                                                      
                                                      
                                                      77
                                                      
                                                      
                                                      
                                                      8Provision
      for income taxes
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Minority
      interest
                                                      
                                                      
                                                      56
                                                      
                                                      
                                                      
                                                      17
                                                      
                                                      
                                                      
                                                      28
                                                      
                                                      
                                                      
                                                      24Net
      income (loss)
                                                      
                                                      
                                                      135
                                                      
                                                      
                                                      
                                                      (216
                                                      )
                                                      
                                                      
                                                      49
                                                      
                                                      
                                                      
                                                      (16
                                                      )Other
      comprehensive (loss) income, net of taxesForeign
      translation (loss) gain
                                                      
                                                      
                                                      275
                                                      
                                                      
                                                      
                                                      (11
                                                      )
                                                      
                                                      
                                                      593
                                                      
                                                      
                                                      
                                                      (113
                                                      )Comprehensive
      (loss) income
                                                      
                                                      $
                                                      410
                                                      
                                                      
                                                      $
                                                      (227
                                                      )
                                                      
                                                      $
                                                      642
                                                      
                                                      
                                                      $
                                                      (129
                                                      )Basic
      net income (loss) per share
                                                      
                                                      $
                                                      0.02
                                                      
                                                      
                                                      $
                                                      (0.03
                                                      )
                                                      
                                                      $
                                                      0.01
                                                      
                                                      
                                                      $
                                                      (0.00
                                                      )Basic
      weighted average common shares outstanding
                                                      
                                                      
                                                      6,483,000
                                                      
                                                      
                                                      
                                                      6,483,000
                                                      
                                                      
                                                      
                                                      6,483,000
                                                      
                                                      
                                                      
                                                      6,483,000
     4
  LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARY
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (In
Thousands)
 Six
      Months EndedJune 30,2009
                                      
                                      
                                      2008Cash
      flows from operating activities:Net
      income
                                      
                                      $
                                      135
                                      
                                      
                                      $
                                      (216
                                      )Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation
      and amortization
                                      
                                      
                                      43
                                      
                                      
                                      
                                      40Minority
      interest
                                      
                                      
                                      48
                                      
                                      
                                      
                                      65Gain
      on sale of property and equipment
                                      
                                      
                                      
                                      
                                      
                                      
                                      -Deferred
      income tax
                                      
                                      
                                      1
                                      
                                      
                                      
                                      (3
                                      )Change
      in operating assets and liabilities:
                                      
                                      
                                      
                                      
                                      
                                      
                                      -Accounts
      receivable
                                      
                                      
                                      1,498
                                      
                                      
                                      
                                      (450
                                      )Inventories
                                      
                                      
                                      335
                                      
                                      
                                      
                                      (647
                                      )Prepaid
      expenses and other current assets
                                      
                                      
                                      4
                                      
                                      
                                      
                                      20Accounts
      payable and accrued expenses
                                      
                                      
                                      (879
                                      )
                                      
                                      
                                      473Income
      tax payable
                                      
                                      
                                      28
                                      
                                      
                                      
                                      (2
                                      )Severence
      payable
                                      
                                      
                                      (5
                                      )
                                      
                                      
                                      26-Net
      cash provided by (used in) operating activities
                                      
                                      
                                      1,208
                                      
                                      
                                      
                                      (694
                                      )Cash
      flows from investing activities:Purchase
      of property and equipment
                                      
                                      
                                      (13
                                      )
                                      
                                      
                                      (45
                                      )Increase
      in due to affilliates
                                      
                                      
                                      (50
                                      )
                                      
                                      
                                      (23
                                      )Increase
      in due to stockholder
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (16
                                      )-Net
      cash used in investing activities
                                      
                                      
                                      (63
                                      )
                                      
                                      
                                      (84
                                      )Cash
      flows from financing activities:Increase
      (decrease) in bank line of credit, net
                                      
                                      
                                      (707
                                      )
                                      
                                      
                                      (168
                                      )Proceeds
      from long term debt
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,407Repayment
      of long-term debt
                                      
                                      
                                      (447
                                      )
                                      
                                      
                                      (2,214
                                      )-Net
      cash (used in) provided by financing activities
                                      
                                      
                                      (1,154
                                      )
                                      
                                      
                                      1,025-Effects
      of exchange rates on cash
                                      
                                      
                                      (43
                                      )
                                      
                                      
                                      192-Increase
      (decrease) in cash
                                      
                                      
                                      (52
                                      )
                                      
                                      
                                      439Cash,
      beginning of period
                                      
                                      
                                      763
                                      
                                      
                                      
                                      133-Cash,
      end of period
                                      
                                      $
                                      711
                                      
                                      
                                      $
                                      572Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
                                      
                                      $
                                      140
                                      
                                      
                                      $
                                      245Income
      taxes
                                      
                                      $
                                      686
                                      
                                      
                                      $
                                      16
    5
  LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (In
Thousands, Except Per Share Amounts)
 JUNE 30,
2009
 
 
 NOTE 1 -
DESCRIPTION OF BUSINESS
 
 Lapis
Technologies, Inc. (the “Company”) was incorporated in the State of Delaware on
January 31, 2002.  The Company was originally named Enertec
Electronics, Inc. and on April 23, 2002 changed its name to Opal Technologies,
Inc. which changed its name to Lapis Technologies, Inc. on October 3,
2002.  The Company’s operations are conducted through its wholly-owned
Israeli Subsidiary, Enertec Electronics Ltd. (“Enertec”) and its majority owned
Israeli subsidiary Enertec Systems 2001 LTD (“Systems”).  Enertec is
engaged in the manufacturing, distribution and marketing of electronic
components and products relating to power supplies, converters and related power
conversion products, automatic test equipment, simulators and various military
and airborne systems, within the State of Israel.
 
 NOTE 2 –
BASIS OF PRESENTATION AND CONSOLIDATION
 
 The
accompanying unaudited consolidated financial statements and related footnotes
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial statements and pursuant to
the rules and regulations of the Securities and Exchange Commission for Form
10-Q.  Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  For
further information read the financial statements and footnotes thereto included
in the Company's Annual Report to be filed in accordance with the rules and
regulations of the Securities and Exchange Commission on Form 10-K for the year
ended December 31, 2008.  The results of operations for the six and
three months ended June 30, 2009 are not necessarily indicative of the operating
results that may be expected for the year ending December 31, 2009.
 
 The
accompanying financial statements include the accounts of the Company and their
ownership interest in its subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Stock
based compensation
 
 The
Company has adopted Statement of Financial Accounting Statement (“SFAS”) No.
148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS
148”).  SFAS 148 amends SFAS No. 123 “Accounting for Stock-Based
Compensation” (“SFAS 123”), and provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation.  The Company has adopted the fair value method
of accounting as discussed in SFAS 123 as of January 1,
2003.  Accordingly, stock options, when issued, will be recorded in
accordance with the terms of that document.
 
 Use of
Estimates
 
 The
preparation of consolidated 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 the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.
 
 6
 
 LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (In
Thousands, Except Per Share Amounts)
 JUNE 30,
2009
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
Accounting Pronouncements
 
 In
July 2006, the FASB issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – An Interpretation of FASB Statement 109,” (“FIN
48”). FIN 48 prescribes a comprehensive model as to how a company should
recognize, measure, present and disclose in its financial statements uncertain
tax positions that the company has taken or expects to take on a tax return. The
adoption of FIN 48 is effective January 1, 2007. The Company has determined
there will be no effect on their financial statements.
 
 In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for us beginning
July 1, 2007. The cumulative effect of the application of this consensus on
prior period results should be recognized through a cumulative-effect adjustment
to retained earnings as of the beginning of the year of adoption. Elective
retrospective application is also permitted. The application of this consensus
won‘t have a material impact on our financial statements.
 
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and
132(R),” (“FAS 158”). Among other things, FAS 158 requires companies to
prospectively recognize a net liability or asset and to report the funded status
of their defined benefit pension and other postretirement benefit plans on their
balance sheets, with an offsetting adjustment to accumulated other comprehensive
income; such recognition will not affect the Company’s statement of income. The
adoption of FAS 158 is effective for the year ending December 31, 2006. The
Company has determined there will be no effect on their financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—Including an Amendment of FASB
Statement No. 115.” This Standard allows entities to voluntarily choose, at
specified election dates, to measure many financial assets and financial
liabilities (as well as certain non-financial instruments that are similar to
financial instruments) at fair value. The election is made on an
instrument-by-instrument basis and is irrevocable. If the fair value option is
elected for an instrument, the Statement specifies that all subsequent changes
in fair value for that instrument shall be reported in earnings. SFAS No. 159 is
effective for ATMI beginning on January 1, 2008. We are currently
evaluating the impact this new Standard could have on our financial position and
results of operations.
 
 In
December 2007 the FASB issued SFAS No. 160 “Non-controlling Interests in
Consolidated Financial Statements”. FAS 160 seeks to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements by establishing
accounting and reporting standards. This statement is effective for fiscal years
beginning after December 15, 2008. The Company has not yet determined what the
effect will be, if any, on their financial statements.
 
 
 7
  LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (In
Thousands, Except Per Share Amounts)
 JUNE 30,
2009
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
Accounting Pronouncements
  Management  does  not  believe  that  any
other recently  issued,  but  not  yet
effective accounting  pronouncements, if adopted, would have a
material effect on the accompanying consolidated financial
statements.
 
 NOTE 4 –
PROVISION FOR INCOME TAXES –
 
 The
income tax expense for the six and three months ended  June 30, 2009
is based upon the income tax laws of Israel. Israeli tax law does not allow a
parent company to offset its’ income with losses from any of its
subsidiaries.
    8
 
 Item 2.  Management’s Discussion and Analysis
or Plan of Operation.
  This
Report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue," the negative of
such terms, or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially from those in the
forward-looking statements as a result of various important factors. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, such should not be regarded as a representation by Lapis
Technologies, Inc., or any other person, that such forward-looking statements
will be achieved. The business and operations of Lapis Technologies, Inc. and
its subsidiaries are subject to substantial risks, which increase the
uncertainty inherent in the forward-looking statements contained in this Report.
Because these forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including our
plans, objectives, expectations and intentions and other factors discussed under
"Risk Factors," included in our Registration Statement on Form 10-K for the year
ended December 31, 2008 filed with the Securities and Exchange Commission on
March 31, 2009.
 
 The
following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
Report.
 
 Overview.
 
 We were
formed in Delaware on January 31, 2002 under the name Enertec Electronics, Inc.
and have filed two certificates of amendment changing our name to Opal
Technologies, Inc. and then to Lapis Technologies, Inc. We conduct operations in
Israel through our wholly owned subsidiary, Enertec Electronics Limited
("Enertec Electronics"), an Israeli corporation formed on December 31, 1991, and
Enertec Systems 2001 LTD ("Enertec Systems"), an Israeli corporation formed on
August 28, 2001, of which we have a 73% equity interest. We are manufacturers
and distributors of various military and airborne systems, simulators, automatic
test equipment (ATE), electronic components and products related to power
supplies, converters and other power conversion products.
 
 Liquidity
and Capital Resources
 
 As of
June 30, 2009 our cash balance was $711,000 as compared to $572,000 at June 30,
2008. Total current assets at June 30, 2009 were $8,154,000 as compared to
$10,986,000 at June 30, 2008. The decrease in current assets is mainly due to
the decrease in accounts receivables and inventories.
  Our
accounts receivables at June 30, 2009 were $3,386,000 as compared to $5,864,000,
at June 30, 2008. This change in accounts receivable is primarily due to
decrease in sales, improved payment terms from our customers and increase in
USD/shekel exchange rate. The USD/Shekel exchange rate increased by 16.9%, from
3.352 as of June 30, 2008 to 3.919 as of June 30 2009.
  As of
June 30, 2009 our working capital was $1,853,000 as compared to $1,578,000 at
June 30, 2008. The increase in the working capital is due primarily to asmallerdecrease in
current assets than thedecrease in
current liabilities.
  There was
no current portion of short-term loans at June 30, 2009 as compared to $224,000
at June 30, 2008. Our total short-term loans amounted to $3,926,000 for the six
month period ended June 30, 2009 as compared to $5,155,000 for the
six-month period ended June 30, 2008.
  As of
June 30, 2009, our total bank debt was $4,467,000 as compared to $6,741,000 at
the end of June 30, 2008. These funds were borrowed as follows:
  $3,926,000
as various short term bank loans due through 2010 and $541,000 using our
bank lines of credit. As a result we decreased the amount borrowed for the
six months ended June 30, 2009 by $2,274,000 compared to the same period
in 2008. The decrease in bank debt  is mainly due to the decrease
in accounts receivables and the increase in USD/Shekel exchange rate since the
loans are in shekels. The USD/Shekel exchange rate increased by 16.9%,
from  3.352 as of June 30, 2008 to 3.919 as of June 30
2009.
  9
  There are
no other lines of credit available to us to refinance our short-term bank loans.
Additionally, we currently do not have any other sources of financing available
to us for refinancing our short-term loans. As of June 30, 2009, we are current
with all of our bank debt and compliant with all the terms of our bank
debt.
  Financing Needs
 
 Although
we currently do not have any material commitments for capital expenditures, we
expect our capital requirements to increase over the next several years as we
continue to develop and test our suite of products, increase marketing and
administration infrastructure, and embark on developing in-house business
capabilities and facilities. Our future liquidity and capital funding
requirements will depend on numerous factors, including, but not limited to, the
levels and costs of our research and development initiatives, the cost of hiring
and training additional sales and marketing personnel to promote our products
and the cost and timing of the expansion of our marketing efforts.
 
 Based on
our current business plan, we anticipate that our existing cash balances and
cash generated from future sales will be sufficient to permit us to conduct our
operations and to carry out our contemplated business plans for the next twelve
months. However, management may undertake additional debt or equity financings
to better enable Lapis to grow and meet its future operating and capital
requirements. Currently, the only external sources of liquidity are our banks,
and we may seek additional financing from them or through securities offerings
to expand our operations, using new capital to develop new products, enhance
existing products or respond to competitive pressures. There is no assurance
that the company will be able to raise additional funds.
 
 Results
of Operations
 
 Three
and Six Months Ended June 30, 2009 Compared to Three and Six Months Ended June
30, 2008
  Revenues
for the three and six months ended June 30, 2009 were $2,213,000 and $4,332,000
respectively as compared to  $2,944,000 and $5,345,000, for the three
and six  months ended June 30, 2008, respectively. This represents a
decrease of  $731,000 or 24.8 % for the quarter ended June 30,
2009 and a decrease of $1,013,000 or 19%, for the six months ended June 30,
2009, when compared to the same periods of 2008.  The decrease in
revenues for the three months and the six months period ended June 30, 2009 as
compared to the same period of 2008 is mainly the result of the decrease in the
revenues of the commercial business and the increase in USD/Shekel exchange rate
since the sales are in shekels. The average USD/Shekel exchange rate increased
by 15.5% from 3.522 for the six months period ended June 2008 to 4.068 for the
period ended June 2009.
 
 Gross
profit totaled approximately $520,000 for the quarter ended June 30, 2009 and
$1,063,000 for the six months ended June 30, 2009.  For the three and
six months ended June 30, 2008, gross profit totaled  $681,000
and $1,175,000 respectively. Comparing the three-month period ended June 30,
2009 to the same period of 2008, gross profit decreased by approximately
$161,000, or 23.6 %. For the six-month period ended June 30, 2009, gross profit
decreased approximately $112,000, or 9.5%, compared to the same period of
2008. The decrease in gross profits is primarily due to the decrease in
sales.
 
 Gross
profit as a percentage of sales was 23.5% for the three-month period ended June
30, 2009 compared to 23.1% for the same period of 2008 and for the
six-month period ended June 30, 2008, was  24.5% as compared to 22%
for the same period of 2008.
 
 The  minor
increase  in gross profit as a percentage of sales for the three-month
period ended June 30, 2009 as compared to the same period of 2008 is a result of
lower cost of sales and higher  profit margins for some projects in
the military field delivered during the second quarter.
  10
  The
increase in gross profit as a percentage of sales for the six-month period
ended June 30, 2009 as compared to the same period of 2008 is mainly a result of
the increase in sales of serial production products in the military field during
the first quarter of 2009. Serial production products have lower production
cost.
 
 For the
three months and six months ended June 30, 2009, operating expenses
totaled $382,000 and $732,000 respectively.  This was a decrease
of $163,000 (29.9%) and $397,000 (35.2%) when compared to the three and
six-month periods ended June 30, 2008.  The decrease in operating
expenses for the six-month period as compared to the same period of 2008 is
attributable mainly to the decrease in General & Administrative
expenses.
 
 Research
and Development expenses increased by $11,000 for the three months period
and by $10,000 for the six months period ended June 30, 2009 as compared to the
same period in 2008. The increase in Research and Development expenses for the
three month and six months periods ended June 30, 2009 as compared to the same
period in 2008 is mainly the result of the increased manpower resources
allocated to R&D during the second quarter of 2009 in order to acquire
technical capabilities in the testing of the new generation of
missiles.
 
 Selling
expenses increased by $17,000 and $35,000 for the three months and six months
period ended June 30, 2009 as compared to the same period in 2008. The increase
in selling expenses during 2009 as compared to 2008 is due mainly to our
increased marketing efforts in order to maintain our market share in the
commercial field which became much more competitive during the last
year.
 
 The
General & Administrative expenses decreased by $191,000 and $442,000 for the
three months and six months period ended June 30, 2009 as compared to the same
period in 2008. The decrease is mainly due to the decrease in the professional
services and the increase in the USD/Shekel exchange rate since the G&A
expenses are in Shekels.
 
 Our net
profit was $49,000 in the three months ended June 30, 2009 and $135,000 in the
six months ended June 30, 2009. This compares to net loss of $16,000 in the
three months ended June 30, 2008 and $216,000 in the six months ended June 30,
2008. This represents an increase in net income of $65,000, or 406%,
comparing the three months ended June 30, 2009 to the three months ended June
30, 2008, and an increase in net income of  $351,000, or 162.5 %,
comparing the six months ended June 30, 2009 to the six months ended June 30,
2008.
 
 The
increase in the net profit for the three-month period ended June 30, 2009 was
mainly due to the decrease interest expenses. The decrease in the gross profit
was partly offset by the decrease in operating expenses.
 
 The
increase in the net profit for the three-month and the six month period
ended June 30, 2009 was mainly due to the decrease in the operating and interest
expenses partly offset by the decrease in gross profit and the increase in the
minority interest.
 
 As of June 30, 2009, we had 2 customers
that accounted for approximately 65.3% of the accounts receivable. For the six
months ended June 30, 2009, approximately 70.7% of our sales were to 2
customers.
 
 Research
and Development Costs
 
 Research
and development costs are part of operating expenses. Research and development
costs for the three and six months ended June 30, 2009 were $43,000 and $
64,000, respectively. Research and development costs for the three and six
months ended June 30, 2008 were $32,000 and $54,000, respectively.
 
 Off-Balance
Sheet Arrangements
 
 We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, and results of
operations, liquidity or capital expenditures.
  11
 
 Critical
Accounting Policies
 
 Concentration
of Credit Risk - Concentrations of credit risk with respect to trade receivables
are limited to customers dispersed primarily across Israel. All trade
receivables are concentrated in the manufacturing and distribution of electronic
components segment of the economy; accordingly the Company is exposed to
business and economic risk. Although the Company does not currently foresee a
concentrated credit risk associated with these trade receivables, repayment is
dependent upon the financial stability of this segment of the
economy.
 
 Revenue
Recognition and Customer Deposits - Revenue is recorded as product is shipped,
the price has been fixed or determined, collectibility is reasonably assured and
all material specific performance obligations have been completed. The product
sold by the Company is made to the specifications of each customer; sales
returns and allowances are allowed on a case-by-case basis, are not material to
the financial statements and are recorded as an adjustment to sales. Cash
payments received in advance are recorded as customer deposits.
 
 Revenue
relating to service is recognized on the straight-line basis over the life of
the agreement, generally one year.  For the three months ended June
30, 2009 revenue relating to service contracts were less than one percent of net
sales.
 
 Financial
Instruments - The carrying amounts of financial instruments, including cash and
cash equivalents, accounts receivable, bank line of credit, short term bank
loans and accounts payable and accrued expenses approximate fair value at June
30, 2009 because of the relatively short maturity of the instruments. The fair
value of due from stockholder is not practical to estimate without incurring
excessive cost and is carried at cost at June 30, 2009.  The carrying
value of the long-term debt approximate fair value at June 30, 2009 based upon
debt terms available for companies under similar terms.
 
 Foreign
Currency Translation - Lapis Technologies, Inc. has one wholly owned subsidiary,
Enertec Electronics Limited, an Israeli corporation, and one majority owned
subsidiary, Enertec Systems 2001 Ltd., an Israeli corporation. The assets and
liabilities of the foreign subsidiaries are translated at current exchange rates
and related revenues and expenses at average exchange rates in effect during the
periods reported. Resulting translation adjustments, if material, are recorded
as a separate component of accumulated other comprehensive income or
loss.
 
 Item 3. Quantitative and Qualitative
Disclosures About Market Risk.
 
 N/A.
 
 Item 4T.  Controls and
Procedures.
 
 Evaluation
of Disclosure Controls and Procedures
 
 Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to
ensure that information required to be disclosed by the Company in the reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported, within the time specified in the Security and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the issuer's
management, including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
  Pursuant
to Rule 13a-15(b) under the Exchange Act the Company carried out an evaluation
with the participation of the Company’s management, including Harry Mund, the
Company’s Chief Executive Officer (“CEO”) and Miron Markovitz, the Company’s
Chief Financial Officer (“CFO”), of the effectiveness of the Company’s
disclosure controls and procedures (as defined under Rule 13a-15(e) under the
Exchange Act) as of the period ended June 30, 2009.  Based upon that
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act, is recorded,
processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated
to the Company’s management, including the Company’s CEO and CFO, as
appropriate, to allow timely decisions regarding required
disclosure.
 
 12
 
 Changes
in internal controls
  Our
management, with the participation our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in our
internal controls over financial reporting occurred during the Quarter ended
June 30, 2009.  Based on that evaluation, our CEO and CFO
concluded that no change occurred in the Company's internal controls over
financial reporting during the quarter ended June 30, 2009 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
controls over financial reporting.
 
 
 PART
II- OTHER INFORMATION
 
 Item
1. Legal Proceedings.
 
 We are
not a party to any pending legal proceeding, nor is our property the subject of
a pending legal proceeding, that is not in the ordinary course of business or
otherwise material to the financial condition of our business. None of our
directors, officers or affiliates is involved in a proceeding adverse to our
business or has a material interest adverse to our business.
 
 Item
1A. Risk Factors.
 
 N/A.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
 N/A.
 
 Item
3. Defaults Upon Senior Securities.
 
 N/A.
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 N/A.
 
 Item
5. Other Information.
 
 Not
applicable.
 
 Item 6. Exhibits.
 
 Exhibit
      Number
                  
                  Description31.1
                  
                  Certification
      by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act31.2
                  
                  Certification
      by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act32.1
                  
                  Certification
      by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code32.2
                  
                  Certification
      by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code
  13
 
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 LAPIS
      TECHNOLOGIES, INC.Date:
      August 18, 2009
                By:
                /s/  Harry
      MundHarry
      MundChief
      Executive Officer (Principal Executive Officer), President
                  and
      Chairman of the BoardDate:
      August 18,  2009
                By:
                /s/  Miron
      MarkovitzMiron
      MarkovitzChief
      Financial Officer, Chief Accounting
                  Officer
      and Director
   14