U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)
     [X]     QUARTERLY  REPORT  UNDER  SECTION  13  OR  15(d)  OF  THE
             SECURITIES  EXCHANGE  ACT  OF  1934

          FOR  THE  QUARTERLY  PERIOD  ENDED:  March  31,  2004

          OR

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

              For the transition period from ________ to __________


                  Commission file number ______________________


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


            DELAWARE                                            27-0016420
 ------------------------------                            --------------------
  (State  or  other  jurisdiction                              (IRS  Employer
of  incorporation or organization)                           Identification No.)


                          19 W. 34th Street, Suite 1008
                               New York, NY, 10001
                    (Address of principal executive offices)
                                   (Zip Code)


                    Issuer's telephone number (212) 937-3580

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past  90  days.
Yes  [X]    No  [  ]

As of May 14, 2004 there were 5,483,000 shares of the registrant's common stock,
par  value  $0.001,  issued  and  outstanding.

Transitional  Small  Business  Disclosure  Format  (check  one):
Yes  [  ]    No  [X]


<PAGE>

<TABLE>
<CAPTION>
                                     LAPIS TECHNOLOGIES, INC.
                          March 31, 2004 QUARTERLY REPORT ON FORM 10-QSB

<S>                                                                                             <C>
TABLE OF CONTENTS

Special Note Regarding Forward Looking Statements                                                 3

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements                                                                     4

Consolidated Balance Sheet as of March 31, 2004                                                   4

Consolidated Statements of Income for the three months ending March 31, 2004 and 2003             5

Consolidated Statements of Cash Flows for the three months ending March 31, 2004 and 2003         6

Notes to Consolidated Financial Statements                                                        7

Item 2.  Management's Discussion and Analysis or Plan of Operations                               9

Item 3.  Controls and Procedures                                                                 13

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                       13
Item 2.  Changes in Securities                                                                   14
Item 3.  Defaults in Senior Securities                                                           14
Item 4.  Submission of Matters to a Vote of Security Holders                                     14
Item 5.  Other Information                                                                       14
Item 6.  Exhibits and Reports on Form 8-K                                                        15

</TABLE>


                                        2
<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     To  the  extent  that the information presented in this Quarterly Report on
Form  10-QSB  for  the  quarter  ended  March  31,  2004,  discusses  financial
projections,  information  or  expectations  about  our  products or markets, or
otherwise  makes  statements  about  future  events,  such  statements  are
forward-looking.  We  are making these forward-looking statements in reliance on
the  safe  harbor  provisions of the Private Securities Litigation Reform Act of
1995.  Although  we  believe  that  the  expectations  reflected  in  these
forward-looking  statements  are  based  on  reasonable assumptions, there are a
number  of  risks  and  uncertainties  that could cause actual results to differ
materially  from such forward-looking statements.  These risks and uncertainties
are  described,  among  other  places in this Quarterly Report, in "Management's
Discussion  and  Analysis  or  Plan  of  Operations."

     In  addition,  we  disclaim  any  obligations to update any forward-looking
statements  to  reflect events or circumstances after the date of this Quarterly
Report.  When  considering  such  forward-looking statements, you should keep in
mind  the  risks  referenced  above  and the other cautionary statements in this
Quarterly  Report.

                                        3
<PAGE>

<TABLE>
<CAPTION>
                          LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEET
                            (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                           ASSETS

                                                                                 March 31,
                                                                                   2004
                                                                                -----------
<S>                                                                             <C>
 Current Assets:
   Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .  $       48
   Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,232
   Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,937
   Prepaid expenses and other current assets . . . . . . . . . . . . . . . . .         264
   Due from stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . . .         315
                                                                                -----------

     Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . .       4,796

 Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . .         483
 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .          20
                                                                                -----------

                                                                                $    5,299
                                                                                ===========


                           LIABILITIES AND STOCKHOLDERS' EQUITY

 Current  Liabilities:
   Bank line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    1,126
   Short term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,228
   Current portion of term loans . . . . . . . . . . . . . . . . . . . . . . .         140
   Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . .       1,480
   Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .         119
                                                                                -----------

     Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . .       4,093

 Term loans, net of current portion. . . . . . . . . . . . . . . . . . . . . .         340
 Severance payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          57
                                                                                -----------

       Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .       4,490
                                                                                -----------

   Commitments and contingencies

 Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         167

 Stockholders' Equity:
   Preferred stock; $.001 par value, 5,000,000  shares authorized, none issued           -
   Common stock; $.001 par value, 100,000,000 shares authorized, 5,483,000
     shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . .           5
   Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . .          78
   Accumulated other comprehensive loss. . . . . . . . . . . . . . . . . . . .        (106)
   Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         665
                                                                                -----------

     Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . .         642
                                                                                -----------

                                                                                $    5,299
                                                                                ===========
</TABLE>

The  accompanying  notes  are  an  integral  part of these financial statements.


                                        4
<PAGE>

<TABLE>
<CAPTION>
                          LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF INCOME
                 (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND SHARE AMOUNTS)

                                                                      Three Months Ended
                                                                           March 31,
                                                                   ------------------------
                                                                      2004         2003
                                                                   -----------  -----------
<S>                                                                <C>          <C>
 Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    1,121   $    1,230
 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . .         758          754
                                                                   -----------  -----------

   Gross profit . . . . . . . . . . . . . . . . . . . . . . . . .         363          476
                                                                   -----------  -----------

 Operating expenses:
   Selling expenses . . . . . . . . . . . . . . . . . . . . . . .           2           22
   General and administrative . . . . . . . . . . . . . . . . . .         252          334
                                                                   -----------  -----------

     Total operating expenses . . . . . . . . . . . . . . . . . .         254          356
                                                                   -----------  -----------

   Income from operations . . . . . . . . . . . . . . . . . . . .         109          120
                                                                   -----------  -----------

 Other income (expense):
   Interest expense, net. . . . . . . . . . . . . . . . . . . . .         (73)         (65)
                                                                   -----------  -----------

   Income before provision for income taxes and minority interest          36           55

   Provision for income taxes . . . . . . . . . . . . . . . . . .           9           42
   Minority interest. . . . . . . . . . . . . . . . . . . . . . .          (9)          27
                                                                   -----------  -----------

 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . .          18           40

 Other comprehensive (loss) income, net of taxes
   Foreign translation (loss) gain. . . . . . . . . . . . . . . .         (43)           4
                                                                   -----------  -----------

 Comprehensive (loss) income. . . . . . . . . . . . . . . . . . .  $      (25)  $       44
                                                                   ===========  ===========


 Basic net loss per share . . . . . . . . . . . . . . . . . . . .  $     0.00   $     0.01
                                                                   ===========  ===========

 Basic weighted average common shares outstanding . . . . . . . .   5,483,000    5,483,000
                                                                   ===========  ===========
</TABLE>

The  accompanying  notes  are  an  integral  part of these financial statements.


                                        5
<PAGE>

<TABLE>
<CAPTION>
                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (IN THOUSANDS)

                                                      Three Months Ended
                                                           March 31,
                                                      ------------------
                                                        2004      2003
                                                      --------  --------
<S>                                                   <C>       <C>
 Cash flows from operating activities:
   Net income. . . . . . . . . . . . . . . . . . . .  $    18   $    40
   Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Depreciation and amortization . . . . . . . .       31       104
       Minority interest . . . . . . . . . . . . . .       15       (27)
       Deferred income tax . . . . . . . . . . . . .       (1)        -
   Change in operating assets and liabilities:
     Accounts receivable . . . . . . . . . . . . . .      760       169
     Inventories . . . . . . . . . . . . . . . . . .     (338)     (151)
     Prepaid expenses and other current assets . . .      (34)       58
     Accounts payable and accrued expenses . . . . .     (178)     (316)
     Income tax payable. . . . . . . . . . . . . . .        5        27
     Customer deposits . . . . . . . . . . . . . . .        -       (54)
                                                      --------  --------

 Net cash provided by (used in) operating activities      278      (150)
                                                      --------  --------

 Cash flows from investing activities:
   Purchase of property and equipment. . . . . . . .        -       (43)
   Increase in due from stockholder. . . . . . . . .     (140)      (60)
                                                      --------  --------

 Net cash used in investing activities . . . . . . .     (140)     (103)
                                                      --------  --------

 Cash flows from financing activities:
   Increase in bank line of credit, net. . . . . . .      204        45
   Proceeds from long term debt. . . . . . . . . . .      950     1,207
   Repayment of long-term debt . . . . . . . . . . .   (1,421)   (1,096)
                                                      --------  --------

 Net cash (used in) provided by financing activities     (267)      156
                                                      --------  --------

 Effects of exchange rates on cash . . . . . . . . .       (4)        1
                                                      --------  --------

 Increase (decrease) in cash . . . . . . . . . . . .     (133)      (96)
 Cash, beginning of period . . . . . . . . . . . . .      181       313
                                                      --------  --------

 Cash, end of period . . . . . . . . . . . . . . . .  $    48   $   217
                                                      ========  ========

 Supplemental disclosure of cash flow information:
   Cash paid during the period for:
     Interest. . . . . . . . . . . . . . . . . . . .  $    73   $    65
                                                      ========  ========
     Income taxes. . . . . . . . . . . . . . . . . .  $    15   $    12
                                                      ========  ========
</TABLE>

The  accompanying  notes  are  an  integral  part of these financial statements.


                                        6
<PAGE>

                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In Thousands, Except Per Share Amounts)
                                 MARCH 31, 2004


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-QSB.  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-KSB for the year ended December
31,  2003.  The  results of operations for the three-months ended March 31, 2004
are not necessarily indicative of the operating results that may be expected for
the  year  ending  December  31,  2004.

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.


                                        7
<PAGE>

                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In Thousands, Except Per Share Amounts)
                                 MARCH 31, 2004


NOTE  3  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  continued

Recent  Accounting  Pronouncements

In  December 2003 the FASB issued SFAS No. 132 (revised) "Employers' Disclosures
about  Pensions and Other Post Retirement Benefits," that improves the financial
statement  disclosures  for  defined  benefit  plans.  The  revision changes the
existing  disclosure requirements for pensions by requiring company's to provide
more  details  about their plan assets, benefit obligations, cash flows, benefit
costs  and  other  relevant  information.  The  Company  does not have a defined
benefit  pension  plan  so the adoption of this statement will have no effect on
the  Company's  financial  position  or  results  of  operations.

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


                                        8
<PAGE>

ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

        Certain  statements  in  this  Quarterly  Report  on Form 10-QSB, or the
Report,  are  "forward-looking  statements."  These  forward-looking  statements
include,  but  are  not  limited  to,  statements  about  the plans, objectives,
expectations  and  intentions  of  Lapis  Technologies,  Inc  ("Lapis"  or  the
"Company"),  a  Delaware corporation and its subsidiaries (collectively referred
to  in  this  report  as "we," "us" or "our" ) and other statements contained in
this  Report  that  are not historical facts. Forward-looking statements in this
Report  or  hereafter  included in other publicly available documents filed with
the  Securities  and  Exchange  Commission,  or  the  Commission, reports to our
stockholders  and  other  publicly available statements issued or released by us
involve  known  and  unknown  risks, uncertainties and other factors which could
cause  our  actual results, performance (financial or operating) or achievements
to  differ  from  the  future  results,  performance (financial or operating) or
achievements  expressed  or  implied  by  such  forward-looking statements. Such
future  results  are  based  upon management's best estimates based upon current
conditions  and the most recent results of operations. When used in this Report,
the words "expect, "anticipate," "intend," "plan," "believe," "seek," "estimate"
and  similar  expressions  are  generally  intended  to identify forward-looking
statements.  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-SB  filed with the Securities and Exchange Commission on
March  26,  2004.

     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 own a 55% equity interest.  Enertec
Electronics  is  a  manufacturer  and  distributor  of electronic components and
products  relating  to  power  supplies, converters and related power conversion
products,  automatic  test  equipment (ATE), simulators and various military and
airborne  systems.  Enertec  Electronics  maintains  two  divisions, the Systems
Division  and  the  Electronics Division. The Systems Division designs, develops
and  manufactures  test systems for electronics manufacturers in accordance with
their  specifications. The Electronics Division markets and distributes the test
systems,  power supplies and other electronic components manufactured by us, and
by  other  manufacturers  who  engage  us  to  distribute  their  products.


                                        9
<PAGE>

     The  Company had seven distribution agreements as of March 31, 2004. In the
first  quarter  of  2004,  we  received  several  large orders in the commercial
and military domain. Within the commercial arena we received a preliminary order
for  6,200 units of a customized ATX power supply which should generate revenues
of  approximately  $210,000.  Another  customer ordered 1,000 high voltage power
supplies  which should generate revenues of approximately $95,000.  We expect to
receive  follow  up  orders  for additional units from this client by the fourth
quarter  of  2004.  In  addition,  we  have received an order for 200 customized
compact  PCI  power  supplies  which  should  generate revenues of approximately
$56,000.  We  have  also recently received an order for 1,100 power supplies for
Voice  Over IP products which should generate approximately $61,000 in revenues.
This  is  our  first entry into the IP Telephony industry, a burgeoning and fast
growing  sector of the technology industry, and one in which we expect to take a
dominant  position  in  the  market  going  forward.

     Within  the  military arena, we received our first order for test equipment
of  the  helicopters'  flight computer for $240,000. We anticipate this customer
ordering  additional  units  at  a cost of $90,000 per unit over the next twelve
months.  This  is  an important order for us. We are trying to capitalize on our
customer loyalty by introducing more products in different divisions of the same
company, and it represents our success in cross marketing of new products within
the  same  customer  base. In addition to the flight computer testing equipment,
this  customer  also  paid  approximately $325,000 for a test system to test all
stages  of  the  Arrow missile. We anticipate them ordering several more systems
over  the  next year. Another military customer ordered an Automatic Test System
to test the flight computer of the F16 aircraft which is anticipated to generate
revenues  of $245,000. We received a first order for a new innovative small size
airborne  power  supply for infrared payloads. This 10 unit order is expected to
be  followed  by a much larger order over the next 24 months at an average price
of  $3,000.

     The  following  presents  certain  historical  financial information of the
operations  of  the  Company. This financial information includes the results of
the  Company  for  the  three months ended March 31, 2003 and the results of the
Company  for  the  three  months  ended  March  31,  2004.

Results  of  Operations

Revenues

     Revenues  for the three months ended March 31, 2004 decreased approximately
$109,000,  or  8.9% to approximately $1,121,000, as compared to revenues for the
three  months ended March 31, 2003 of approximately $1,230,000. This decrease in
revenue  is  a  result of a lower number of orders for military systems received
during  the  last  quarter of 2003 due to end-of-year budget cuts of the Israeli
MOD  (Ministry  of Defense) this fourth quarter order delay affects the revenues
in  the  first  quarter  of  the  following  year.


                                       10
<PAGE>

Gross  Profit

     Gross  profit  totaled  approximately  $363,000 for the three months ending
March 31, 2004, as compared to approximately $476,000 for the three months ended
March  31,  2003.  This  decrease  of  approximately $113,000, or 23.7% in gross
profit  is  primarily the result of lower revenues for the quarter and therefore
lower  gross  profit.  The  gross  profit as a percentage of sales for the three
months ended March 31, 2004 was 32.4%, as compared to 38.7% for the three months
ended  March  31, 2003. This decrease in the gross profit percentage is a result
of lower introductory prices of several large orders in order to gain a foothold
in  the  market  for  the  new products that were being launched, while we don't
anticipate  higher  per  unit prices of these new products as the sales increase
the  gross  profit  should  increase since there are many fixed costs associated
with  a  new  product  launch that will be spread over a larger amount of units.

Selling,  General  and  Administrative  Expenses

     For  the  three  months  ended  March  31,  2004,  selling,  general  and
administrative  expenses  decreased  approximately  $102,000  to  approximately
$254,000  (22.7% of revenues) from approximately $356,000 (28.9% of revenues)for
the  same  prior year period. The decrease in selling general and administrative
expenses  is  attributable  to several areas: a decrease in administration staff
payroll  and  related  benefits  of  approximately  $29,000  and  a  decrease in
depreciation and amortization expenses of $73,000. In addition, there has been a
slight  decrease  in research and development costs of approximately $10,000 for
the  three months ended March 31, 2004 where research and development costs were
approximately  $25,000  compared  to  approximately $35,000 for the three months
ended  March  31,  2003.

Other  Income  and  Expenses

     Interest  income  and expense, net - Net interest expense was approximately
$73,000  and  approximately  $65,000  for the three month period ended March 31,
2004  and 2003, respectively. The increase of approximately $8,000 is due to the
increase  of  principal  balances  due.  The Company plans to continue to borrow
funds  on a short term basis to fund the Company's growth, as required, into the
foreseeable  future.

Provision  for  income  taxes

     For  the  three  months ended March 31, 2004 our provision for income taxes
decreased  approximately  $33,000 or 78.6% from approximately $9,000 as compared
to  $42,000 for the three months ended March 31, 2003. This decrease is due to a
lower  net  income  before  taxes  for  the three months ended March 31, 2004 as
compared to the three months ended March 31, 2003. The reasons for this decrease
have  been  enumerated  above.


                                       11
<PAGE>

Liquidity  and  Capital  Resources

Cash  and  Working  Capital

     As  of  March 31, 2004, the Company had approximately $48,000 cash and cash
equivalents on hand as compared to approximately $216,000 at March 31, 2003. The
Company  currently  plans  to  use  the  cash  balance  and  cash generated from
operations for increasing the Company's working capital reserves and, along with
additional  debt  financing,  for  new  product  development  and  building  up
inventory,  hiring  more  sales  staff  and  funding  advertising and marketing.
Management  believes  that the current cash on hand and additional cash expected
from operations in fiscal 2004 will be sufficient to cover the Company's working
capital  requirements  for  fiscal  2004.

     As  of  March  31,  2004,  the Company had working capital of approximately
$703,000  as  compared  with  approximately  $234,000 for the same period in the
prior  year,  this  is  an  increase  of  approximately $469,000 or 200.4%. This
increase  is  mainly  due to an increase in accounts receivable to approximately
$2,232,000  as  of March 31,2204 as compared with approximately $1,823,000 as of
March  31,2003.

Capital  Expenditures

     The  Company  did not incur any expenditures for capital improvements as of
March  31,2004 as compared with approximately $43,000 for the same period in the
prior  year.  The  Company currently does not anticipate any significant capital
expenditures  during  the  next  six  to  twelve  months.

Financing  Transactions

     For  the  three  months  ended  March  31,  2004  our  total  bank debt was
approximately  $2,834,000  as compared with approximately $2,869,000 as of March
31,  2003.  This  decrease  of approximately $35,000 (1.2%) was due to a lowered
financing  need  since  the  new  orders in the first quarter 2004 were slightly
lower  then  the  same  comparative quarter for the prior year. These funds were
borrowed as follows: $1,368,000 as various short term loans due through February
2005;  $340,000  of  long  term  debt  due through December 2007, and $1,126,000
borrowed  as lines of credit. The current portion of long-term debt at March 31,
2004  consisted  of  $140,000  due  February  2005.

Cash  Flows

     Net  cash  provided  by operating activities was approximately $278,000 for
the  three  months  ended  March 31, 2004 compared to net cash used in operating
activities  of $150,000 for the same prior year period. The net cash provided by
operating activities for the three months ended March 31, 2004 was primarily the
result  of  approximately $760,000 of net cash receipts from accounts receivable
offset  by  additional  purchases  of  inventory of approximately $338,000 and a
reduction in the Companys accounts payable and accrued expenses of approximately
$178,000.

     Net  cash used in financing activities for the three months ended March 31,
2004 was approximately $267,000, as compared with net cash provided by financing
activites  of approximately $156,000 for the same prior year period.  The change
is  due  to the Company reducing its total debt for the three months ended March
31,  2004 as compared to obtaining additional debt during the three months ended
March  31,  2003.


                                       12
<PAGE>

PLAN  OF  OPERATIONS

     We  anticipate  that  we  will require approximately $240,000 over the next
twelve  months  in  order  to  carry  out  the  plan  of  operations for Enertec
Electronics  and Enertec Systems 2001. This amount is comprised of the following
amounts:

1.  We  anticipate  that  we  will  spend  approximately  $  30,000  to fund the
acquisition  of inventory for new standard test systems and power supplies to be
used  for  demonstrations  to  potential  customers  and for the introduction of
prototypes  for  new  customers  projects.

2.  We  expect  to  spend  up  to $100,000 to research and develop new products.

3.  In  additions  the  Company  plans to increase its sales staff by two people
which  will cost $80,000 and the technical staff by three for an additional cost
of  $120,000  for  three  more  engineers.

4.  The  Company  will  utilize  $30,0000  to  bid  on  new  contracts preparing
presentations  of new systems and preparing the technical and budgetary proposal
for  some  large  defense  bids.

ITEM  3.     CONTROLS  AND  PROCEDURES

     Our  principal  executive officer and principal financial officer evaluated
the  effectiveness of our disclosure controls and procedures (as defined in Rule
13a-14(c)  under  the  Securities  Exchange  Act  of  1934) as of the end of the
quarter ended March 31, 2004.  Based on this evaluation, our principal executive
officer  and  principal  financial  officer have concluded that our controls and
procedures  are effective in providing reasonable assurance that the information
required  to  be  disclosed in this report is accurate and complete and has been
recorded, processed, summarized and reported within the time period required for
the  filing  of  this  report.  Subsequent to the date of this evaluation, there
have  not  been  any  significant  changes  in  our internal controls or, to our
knowledge,  in  other  factors  that  could  significantly  affect  our internal
controls.

PART  II  -  OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

     We  are  not subject to any pending or threatened legal proceedings, except
for  the  lawsuit  described  below.


                                       13
<PAGE>

     Orckit  Communications  brought  an  action  in the Tel Aviv District Court
against  Gaia  Converter,  a  company  for which we act as sales representative,
Alcyon  Production  Systems,  a  subcontractor  of  Gaia  Converter, and Enertec
Electronics,  alleging  that  the DC converters supplied to it by Gaia Converter
were  defective  and  caused  Orckit  to replace the converters at a substantial
financial  expense.  Gaia  Converter has advised us that the converters in issue
were  free  from  any and all defects and were in good working order and that it
was  the  faulty  performance of Orckit's product into which the converters were
incorporated  that  caused  them  to  fail at a greater rate than anticipated by
Orckit.  Enertec  Electronics  filed  a  defense to this claim on the basis that
there  is  no  cause  of  action  against  it,  as  among  other things, Enertec
Electronics  is  merely the local Israeli sales representative of Gaia Converter
and  did not make any implied or express representations or warranties to Orckit
regarding  the  suitability  of  the  converters  or  otherwise, nor was Enertec
Electronics  required  to  do  so  by law.  Technical specifications required by
Orckit for the converters were determined and communicated directly by Orckit to
Gaia  Converter  and  all  other  communications  regarding  the converters were
directly  between  Orckit  and  Gaia  Converter.  Moreover,  Orckit  conducted a
qualification  test  of  the converters and confirmed to Gaia Converter that the
converters complied with their requirements subsequent to such testing.  Enertec
Electronics has had initial informal discussions with Orkit Communications about
removing  Enertec  Electronics  as  a  Defendant  in  the  action.  Neither Gaia
Converter nor Alcyon Production Systems have filed a defense to this action, and
consequently  Orkit Communications requested and obtained default judgments from
the  Tel  Aviv  District Court against both Gaia Converter and Alcyon Production
Systems.  The  granting of these judgments render the continuation of the action
against  Enertec Electronics highly improbable.  However, if the proceedings are
continued,  Enertec  Electronics intends to defend this action vigorously and we
do  not  believe  that  it  will have a material adverse impact on our business.

ITEM  2.     CHANGES  IN  SECURITIES

Not  applicable.

ITEM  3.     DEFAULTS  IN  SENIOR  SECURITIES

Not  applicable.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

Not  applicable.

ITEM  5.     OTHER  INFORMATION

Not  applicable.


                                       14
<PAGE>

ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

a)     Exhibits:  None
b)     Reports  on  Form  8-K:  None

                                       15
<PAGE>

                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act of 1934, as amended, the Registrant has duly caused this report to
be  signed  on its behalf by the undersigned, thereunto duly authorized, on this
24th  day  of  May  2004.


                                        Lapis  Technologies,  Inc.

                                        By: /s/ Harry Mund
                                            ------------------------------------
                                            Harry Mund, Chief Executive Officer,
                                            President, and Chairman of the Board


     The  undersigned,  the Chief Financial Officer of the Registrant, certifies
that  this  report  complies  with  all of the requirements of section 13(a) and
15(d)  of  the  Exchange Act and the information contained in this report fairly
presents,  in  all  material  respects,  the  financial condition and results of
operations  of  the  Registrant.

Date:  May  24th,  2004

                                          /s/ Miron Markovitz
                                          --------------------------------------
                                          Miron Markovitz
                                          Chief Financial and Accounting Officer
                                           and Director


                                       16
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