**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, 2008.**




*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 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 filero
            Accelerated
                fileroNon-accelerated
                filero
            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




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS**


**DURING
      THE PRECEDING FIVE YEARS**




Indicate
      by check mark whether the registrant filed all documents and reports required
      to
      be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
      of securities under a plan confirmed by a court. Yes o No o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: As of August 7, 2008, there were 6,483,000
      outstanding shares of the Registrant's Common Stock, $.001 par
      value.








**TABLE
      OF CONTENTS**





**Page****PART
                I - FINANCIAL INFORMATION**Item 1.       Financial Statements
            3Item 2.       Management’s Discussion and Analysis or Plan of Operation
            9Item 3.       Controls and Procedures
            13**PART II - OTHER INFORMATION**Item 1.       Legal Proceedings
            13Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds
            13Item 3.       Defaults Upon Senior Securities
            14Item 4.       Submission of Matters to a Vote of Security Holders
            14Item 5.       Other Information
            15Item 6.       Exhibits
            15**SIGNATURES**
            15





2




**PART
      I - FINANCIAL INFORMATION**


**Item
      1.**  **Financial
      Statements.**


**LAPIS
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEET**
 **(In
        Thousands, Except Share Amounts)**
 
 June 30,
              
              December 31,2008
              
              2007(unaudited)**ASSETS**Current
                  Assets:Cash
                  and cash equivalents
              
              $
              572
              
              $
              133Accounts
                  receivable
              
              
              5,864
              
              
              5,414Inventories
              
              
              4,382
              
              
              3,736Prepaid
                  expenses and other current assets
              
              
              98
              
              
              118Due
                  from stockholder
              
              
              70
              
              
              49Total
                  current assets
              
              
              10,986
              
              
              9,450Property
                  and equipment, net
              
              
              272
              
              
              267Deferred
                  income taxes
              
              
              23
              
              
              20$
              11,281
              
              $
              9,737**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  Liabilities:Bank
                  line of credit
              
              $
              1,194
              
              $
              1,362Short
                  term bank loans
              
              
              5,155
              
              
              3,907Current
                  portion of term loans
              
              
              224
              
              
              200Accounts
                  payable and accrued expenses
              
              
              2,733
              
              
              2,361Due
                  to stockholderDue
                  to affilliates
              
              
              102
              
              
              (97
              )Income
                  taxes payable
              
              
              -
              
              
              2Total
                  current liabilities
              
              
              9,408
              
              
              7,735Term
                  loans, net of current portion
              
              
              168
              
              
              247Severance
                  payable
              
              
              202
              
              
              176Total
                  liabilities
              
              
              9,778
              
              
              8,158Commitments
                  and contingenciesMinority
                  interest
              
              
              513
              
              
              448Stockholders'
                  Equity:Preferred
                  stock; $.001 par value, 5,000,000 shares authorized, none
                  issued
              
              
              -Common
                  stock; $.001 par value, 100,000,000 shares authorized, 6,483,000
                  shares
                  issued and outstanding
              
              
              6
              
              
              6Additional
                  paid-in capital
              
              
              78
              
              
              78Accumulated
                  other comprehensive loss
              
              
              182
              
              
              92Retained
                  Earnings
              
              
              724
              
              
              955Total
                  stockholders' equity
              
              
              990
              
              
              1,131$
              11,281
              
              $
              9,737
 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 30,2008
              
              2007
              
              2008
              
              2007Sales
              
              
              5,345
              
              $
              4,134
              
              
              2,944
              
              
              2,277Cost
                  of sales
              
              
              4,170
              
              
              3,192
              
              
              2,263
              
              
              1,793Gross
                  profit
              
              
              1,175
              
              
              942
              
              
              681
              
              
              484Operating
                  expenses:Research
                  and development expenses
              
              
              54
              
              
              199
              
              
              32
              
              
              30Selling
                  expenses
              
              
              15
              
              
              127
              
              
              8
              
              
              124General
                  and administrative
              
              
              1,060
              
              
              643
              
              
              505
              
              
              350Total
                  operating expenses
              
              
              1,129
              
              
              969
              
              
              545
              
              
              504Income
                  from operations
              
              
              46
              
              
              (27
              )
              
              136
              
              
              (20
              )Other
                  income (expense):Other
                  income
              
              
              
              
              
              -
              
              
              
              
              
              -Interest
                  expense, net
              
              
              (245
              )
              
              (195
              )
              
              (128
              )
              
              (104
              )Income
                  (loss) before provision for income taxes and minority
                  interest
              
              
              (199
              )
              
              (222
              )
              
              8
              
              
              (124
              )Provision
                  for income taxes
              
              
              
              
              
              -
              
              
              
              
              
              (37
              )Minority
                  interest
              
              
              17
              
              
              (52
              )
              
              24
              
              
              7Net
                  income (loss)
              
              
              (216
              )
              
              (170
              )
              
              (16
              )
              
              (94
              )Other
                  comprehensive (loss) income, net of taxesForeign
                  translation (loss) gain
              
              
              (11
              )
              
              (9
              )
              
              (113
              )
              
              5Comprehensive
                  (loss) income
              
              $
              (227
              )
              $
              (179
              )
              $
              (129
              )
              $
              (89
              )Basic
                  net income (loss) per share
              
              $
              (0.03
              )
              $
              (0.03
              )
              $
              (0.00
              )
              $
              (0.01
              )Basic
                  weighted average common shares outstanding
              
              
              6,483,000
              
              
              6,483,000
              
              
              6,483,000
              
              
              6,483,000
  The
        accompanying notes are an integral part of these financial
        statements.
  4
 
 **LAPIS
        TECHNOLOGIES, INC. AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(In
        Thousands)**
 
 Six Months EndedJune 30,2008
              
              2007Cash
                  flows from operating activities:Net
                  income
              
              $
              (216
              )
              $
              (170
              )Adjustments
                  to reconcile net income to net cash provided by (used in) operating
                  activities:Depreciation
                  and amortization
              
              
              40
              
              
              48Minority
                  interest
              
              
              65
              
              
              (52
              )Gain
                  on sale of property and equipment
              
              
              
              
              
              -Deferred
                  income tax
              
              
              (3
              )
              
              1Change
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (450
              )
              
              942Inventories
              
              
              (647
              )
              
              (570
              )Prepaid
                  expenses and other current assets
              
              
              20
              
              
              (33
              )Accounts
                  payable and accrued expenses
              
              
              473
              
              
              (460
              )Income
                  tax payable
              
              
              (2
              )
              
              (2
              )Severence
                  payable
              
              
              26
              
              
              (1
              )Customer
                  deposits
              
              
              -
              
              
              -Net
                  cash provided by (used in) operating activities
              
              
              (694
              )
              
              (297
              )Cash
                  flows from investing activities:Proceeds
                  from the sale of property & equipment
              
              
              -
              
              
              -Purchase
                  of property and equipment
              
              
              (45
              )
              
              (31
              )Increase
                  in due to affilliates
              
              
              (23
              )
              
              (80
              )Increase
                  in due to stockholder
              
              
              (16
              )
              
              (41
              )Net
                  cash used in investing activities
              
              
              (84
              )
              
              (152
              )Cash
                  flows from financing activities:Increase
                  in bank line of credit, net
              
              
              (168
              )
              
              (352
              )Proceeds
                  from long term debt
              
              
              3,407
              
              
              3,807Repayment
                  of long-term debt
              
              
              (2,214
              )
              
              (2,937
              )Net
                  cash (used in) provided by financing activities
              
              
              1,025
              
              
              518Effects
                  of exchange rates on cash
              
              
              192
              
              
              4Increase
                  (decrease) in cash
              
              
              439
              
              
              73Cash,
                  beginning of period
              
              
              133
              
              
              7Cash,
                  end of period
              
              $
              572
              
              $
              80Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for:Interest
              
              $
              245
              
              $
              195Income
                  taxes
              
              $
              16
              
              $
              17
 The
          accompanying notes are an integral part of these financial
          statements.
  5
  LAPIS
        TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (In
        Thousands, Except Per Share Amounts)
 JUNE
        30,
        2008
 
 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-KSB for the year ended December 31, 2007.
        The
        results of operations for the six and three months ended June 30, 2008 are
        not
        necessarily indicative of the operating results that may be expected for
        the
        year ending December 31, 2008.
 
 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,
        2008
  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,
        2008
 
 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, 2008 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.
  NOTE
        5 –
SALE OF THE COMPANY
  On
        February 28, 2008 the Company entered into an agreement with an Israeli Company
        that currently trades on the Tel Aviv Stock Exchange. Under this agreement
        Lapis
        will exchange approximately 75,000,000 of its shares (92% based upon the
        current
        outstanding amounts) in exchange for approximately 4,500,000 shares of Star
        Night Technologies Ltd. In addition, the Company’s chief executive officer has
        been granted certain options to sell his Lapis shares to Star Night under
        certain circumstances.
 
 The
        agreement also calls for the sale of the Company’s wholly owned subsidiary, as
        well as the subsidiary’s own majority owned subsidiary. The result of these
        transactions will be the ownership of approximately 4,500,000 shares of Star
        Night Technologies, Ltd.
 
 For
        further information please refer to Form 8-K filed with the Securities and
        Exchange Commission on March 5, 2008 which is incorporated by reference into
        this filing
  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-KSB filed
      with
      the Securities and Exchange Commission on March 31, 2008.





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 relating to power
      supplies, converters and related power conversion products.




9




On
      February 28, 2008, we entered into an agreement for the issue and sale of shares
      in Lapis Technologies, Inc. and the transfer of shares of Star Night
      Technologies Ltd. to us (the “Lapis SPA”), with Harry Mund, and Mordechai
      Solomon (the “Investor”). Mr. Mund is the Company’s chief executive officer,
      director, and majority stockholder. The Lapis SPA will close (subject to
      fulfillment or waiver of certain closing conditions or the waiver thereof prior
      to closing, as well as the performance of certain covenants by the parties
      that
      include, *inter
      alia* ,
      the
      receipt of a fairness opinion) 21 days following the date on which an
      information statement on Schedule 14C under the Securities Exchange Act of
      1934,
      as amended, is mailed to stockholders of the Company (the “Closing Date”), which
      closing shall occur concurrently with that of the Systems SPA (defined below)
      and the Electronics SPA (defined below). Pursuant to the Lapis SPA, we agreed
      to
      issue to the Investor, on the Closing Date, 75,129,500 shares of the Company’s
      common stock, representing 92% of the Company’s issued and outstanding shares on
      a fully diluted basis. The Investor agreed to transfer to the Company, on the
      Closing Date, 4,539,557 shares in Star Night Technologies Ltd., a company traded
      on the Tel Aviv Stock Exchange, held by the Investor in person.




In
      addition, pursuant to the Lapis SPA, the Investor agreed to grant to Mr. Mund
      an
      option (the “Mund Option”), exercisable by Mr. Mund in his sole discretion, to
      sell to the Investor, Mr. Mund’s 4,750,000 shares of the Company’s common stock
      (the “Option Shares”). The Mund Option will be exercisable during a period of 90
      calendar days immediately following the first anniversary of the Closing Date
      (with respect to 50% of the Option Shares, at an exercise price of US $0.5434
      per share, subject to adjustment in the event of stock splits, stock dividends,
      and similar transactions) and/or the second anniversary of the Closing Date
      (with respect to all of the Option Shares, at an exercise price of US $0.6038
      per share, subject to adjustment in the event of stock splits, stock dividends,
      and similar transactions). The Mund Option is subject to the aggregate value
      of
      the Option Shares being no higher than US $2,868,000, subject to certain
      adjustments, for a period of 65 consecutive calendar days commencing 120 days
      after the Closing Date (so long as Mr. Mund may sell his shares pursuant to
      Rule
      144 under the Securities Act of 1933, as amended (the “Securities Act”)) during
      a period of 65 consecutive calendar days during a period of 24 months following
      the Closing Date.





In
      connection with the Lapis SPA, on February 28, 2008, our indirect wholly owned
      subsidiary, Enertec Management Ltd. (“Enertec Management”) (which we own through
      its direct wholly owned subsidiary Enertec Electronics Ltd.), entered into
      an
      agreement for the sale and purchase of Enertec Systems 2001 Ltd. (the “Systems
      SPA”), with Harry Mund, and S.D.S. (Star Defense Systems) Ltd., a company traded
      on the Tel Aviv Stock Exchange (“S.D.S.”) whose majority stockholder is
      Mordechai Solomon. The Systems SPA will close on the Closing Date concurrently
      with the Lapis SPA and the Electronics SPA (defined below). Pursuant to the
      Systems SPA, Etertec Management and Mr. Mund agreed to sell, and S.D.S. agreed
      to purchase, on the Closing Date, an aggregate of 251,000 shares of Enertec
      Systems 2001 Ltd. (“Enertec Systems”), representing all of the issued and
      outstanding capital stock of Enertec Systems, for an aggregate purchase price
      of
      US $1,500,000. The 251,000 shares to be sold pursuant to the Systems SPA
      represent 67,770 shares to be sold by Mr. Mund and 183,230 shares to be sold
      by
      Enertec Management.





In
      connection with the Lapis SPA and the Systems SPA, we also entered into, on
      February 28, 2008, an agreement with Mund Holdings Ltd., a company owned by
      Harry Mund (the “Electronics SPA”). The Electronics SPA will close on the
      Closing Date concurrently with the Lapis SPA and the Systems SPA. Pursuant
      to
      the Electronics SPA, we agreed to sell, and Mund Holdings Ltd. agreed to
      purchase, on the Closing Date, NIS (New Israeli Shekel) 100 divided into 100
      shares of NIS 1 each, of Enertec Electronics Ltd. (“Enertec Electronics”),
      representing all of the issued and outstanding capital stock of Enertec
      Electronics, for a purchase price of US $250,000.





Our
      issuance of shares of common stock to Mr. Solomon under the Lapis SPA will
      be
      made pursuant to the exemption from registration requirements under Regulation
      D
      and/or Regulation S of the Securities Act of 1933, as amended (the “Securities
      Act”). No form of general solicitation or general advertising was conducted in
      connection with the issuance. The certificates representing the shares will
      contain restrictive legends preventing the sale, transfer of such shares unless
      registered under the Securities Act or pursuant to an exemption therefrom.
      Mr.
      Mordechai is an “accredited investor” as defined under Regulation D and/or is
      not a “U.S. Person” as defined under Regulation S.





*Liquidity
      and Capital Resources*





As
      of
      June 30, 2008 our cash balance was $572,000 as compared to $80,000 at June
      30,
      2007. Total current assets at June 30, 2008 were $10,986,000 as compared to
      $7,824,000 at June 30, 2007. The increase in current assets is mainly due to
      the
      increase in accounts receivables and inventories.





Our
      accounts receivables at June 30, 2008 were $5,864,000 as compared to $3,735,000,
      at June 30, 2007. This change in accounts receivable is primarily due to
      increase in sales.





As
      of
      June 30, 2008 our working capital was $1,578,000 as compared to $1,176,000
      at
      June 30, 2007. The increase in the working capital is due primarily to a greater
      increase in current assets than the increase in current
      liabilities.





The
      current portion of our short-term loans at June 30, 2008 totaled $224,000 as
      compared to$ 181,000 at June 30, 2008. Our total short-term loans amounted
      to
      $5,155,000 for the six month period ended June 30, 2008 as compared to
      $2,944,000 for the six-month period ended June 30, 2007.




10




As
      of
      June 30, 2008, our total bank debt was $6,741,00 as opposed to $4,576,000 at
      the
      end of June 30, 2007. These funds were borrowed as follows:





$5,379,000
      which includes the current portion of long term debt, as various short term
      bank
      loans due through 2009, $168,000 of long term debt due through March 2010 and
      $1,194,000 using our bank lines of credit. As a result we increased the amount
      borrowed for the six months ended June 30, 2008 by $2,165,000 compared to the
      same period in 2007. The increase in bank debt is mainly due to the increase
      in
      accounts receivables, the increase in inventories and work in process and the
      decrease in USD/Shekel exchange rate since the loans are in shekels. The
      USD/Shekel exchange rate decreased by 21.11% from 4.249 as of June 30, 2007
      to
      3.352 as of June 30 2008.





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, 2008, 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,
      other than as described in this report, 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.





**Results
      of Operations.**





**Three
      and Six Months Ended June 30, 2008 Compared to Three and Six Months Ended June
      30, 2007**





Revenues
      for the three and six months ended June 30, 2008 were $2,944,000 and $5,345,000
      respectively as compared to $2,277,000 and $4,134,000, for the three and six
      months ended June 30, 2007, respectively. This represents an increase of
      $667,000 or 29.3 % for the quarter ended June 30, 2008 and an increase of
      $1,211,000 or 29.3 %, for the six months ended June 30, 2008, when compared
      to
      the same periods of 2007. The increase of 29.3 % in revenues for the
      three-months and the six months period ended June 30, 2008 as compared to the
      same period of 2007 is mainly the result of the increase in the revenues of
      the
      military business and the decrease in USD/Shekel exchange rate since the sales
      are in shekels. The average USD/Shekel exchange rate decreased by 15.1% from
      4.150 for the six months period ended June 2007 to 3.522 for the period ended
      June 2008.





Gross
      profit totaled approximately $681,000 for the quarter ended June 30, 2008 and
      $1,175,000 for the six months ended June 30, 2008. For the three and six months
      ended June 30, 2007, gross profit totaled $484,000 and $ 942,000 respectively.
      Comparing the three-month period ended June 30, 2008 to the same period of
      2007,
      gross profit increased by approximately $197,000, or 40.7 %. For the six-month
      period ended June 30, 2008, gross profit increased approximately $233,000,
      or
      24.7 %, compared to the same period of 2007. The increase in gross profits
      is
      primarily due to the increase in sales.





Gross
      profit as a percentage of sales was 23.1 % for the three-month period ended
      June
      30, 2008 as compared to 21.3% for the same period of 2007 and for the six-month
      period ended June 30, 2008, was 22 % as compared to 22.8% for the same period
      of
      2007.




The
      increase in gross profit as a percentage of sales for the three-month period
      ended June 30, 2008 as compared to the same period of 2007 is a result of lower
      cost of sales and higher profit margins for some projects in the military field
      delivered during the second quarter.





The
      decrease in gross profit as a percentage of sales for the six-month period
      ended
      June 30, 2008 as compared to the same period of 2007 is due to the lower profit
      margins during the first quarter of 2008 as compared to the first quarter of
      2007.





For
      the
      three months and six months ended June 30, 2008, operating expenses totaled
      $545,000 and $1,129,000 respectively. This was an increase of $41,000 (8.1
      %)
      and $160,000 (16.5 %) when compared to the three and six-month periods ended
      June 30, 2007. The increase in operating expenses for the six-month period
      as
      compared to the same period of 2007 is attributable mainly to the increase
      in
      General & Administrative expenses partly offset by the decrease in research
      and development and selling expenses.




11




Research
      and Development expenses increased by $ 2,000 for the three months period and
      decreased by $145,000 for the six months period ended June 30, 2008 as compared
      to the same period in 2007. The decrease in Research and Development expenses
      for the six months period ended June 30, 2008 as compared to the same period
      in
      2007 is the result of the decrease in R&D expenses during the first quarter
      of 2008 as compared to the first quarter of 2007 due to more manpower resources
      allocated during this period to the fulfillment of the increased number of
      orders received.





Selling
      expenses decreased by $116,000 and $ 112,000 for the three months and six months
      period ended June 30, 2008 as compared to the same period in 2007. The decrease
      in selling expenses during 2008 as compared to 2007 is due mainly to our
      increased marketing efforts in particular in the second quarter of 2007, in
      order to maintain our market share in the commercial field which became much
      more competitive during the last year. During 2008 we allocated less human
      resources in selling efforts and more in engineering and production of the
      increased number of orders received.





The
      General & Administrative expenses increased by $155,000 and $417,000 for the
      three months and six months period ended June 30,2008 as compared to the same
      period in 2007. The increase is mainly due to the increase in the professional
      services and the decrease in the USD/Shekel exchange rate since the G&A
      expenses are in Shekels.





Our
      net
      loss was $16,000 in the three months ended June 30, 2008 and $216,000 in the
      six
      months ended June 30, 2008. This compares to net loss of $94,000 in the three
      months ended June 30, 2007 and $ 170,000 in the six months ended June 30, 2007.
      This represents an increase in net income of $ 78,000, or 83 %, comparing the
      three months ended June 30, 2008 to the three months ended June 30, 2007, and
      a
      decrease in net income of $46,000, or 27.1 %, comparing the six months ended
      June 30, 2008 to the six months ended June 30, 2007.





The
      decrease in the net loss for the three-month period ended June 30, 2008 was
      mainly due to the increase in the gross profit partly offset by the increase in
      the operating and interest expenses.





The decrease in the profitability for the six month period ending June 30,
      2008
      was mainly due to the decrease in profitability for first quarter of 2008 as
      compared to the first quarter of 2007 mainly due to the increase in the
      operating expenses.




As
      of
      June 30, 2008, we had 2 customers that accounted for approximately 71.3% of
      the
      accounts receivable. For the six months ended June 30, 2008, approximately
      76.4%
      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, 2008 were **$** 32,000
      and $ 54,000, respectively. Research and development costs for the three and
      six
      months ended June 30, 2007 were $30,000 and $199,000, 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.




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, collectability 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, 2008
      revenue relating to service contracts was 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, 2008 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, 2008. The carrying value
      of
      the long-term debt approximate fair value at June 30, 2008 based upon debt
      terms
      available for companies under similar terms.




12




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) 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 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, 2008. Based upon that evaluation,
      the Company’s CEO and CFO 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.




**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, 2008.  Based on that evaluation, our Chief Executive Officer
      and our Chief Financial Officer concluded that no change occurred in the
      Company's internal controls over financial reporting during the 2008 Quarter
      ended June 30, 2008 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.**





On
      February 28, 2008, we entered into an agreement for the issue and sale of shares
      in Lapis Technologies, Inc. and the transfer of shares of Star Night
      Technologies Ltd. to us (the “Lapis SPA”), with Harry Mund, and Mordechai
      Solomon (the “Investor”). Mr. Mund is the Company’s chief executive officer,
      director, and majority stockholder. The Lapis SPA will close (subject to
      fulfillment or waiver of certain closing conditions or the waiver thereof prior
      to closing, as well as the performance of certain covenants by the parties
      that
      include, *inter
      alia* ,
      the
      receipt of a fairness opinion) 21 days following the date on which an
      information statement on Schedule 14C under the Securities Exchange Act of
      1934,
      as amended, is mailed to stockholders of the Company (the “Closing Date”), which
      closing shall occur concurrently with that of the Systems SPA (defined below)
      and the Electronics SPA (defined below). Pursuant to the Lapis SPA, we agreed
      to
      issue to the Investor, on the Closing Date, 75,129,500 shares of the Company’s
      common stock, representing 92% of the Company’s issued and outstanding shares on
      a fully diluted basis. The Investor agreed to transfer to the Company, on the
      Closing Date, 4,539,557 shares in Star Night Technologies Ltd., a company traded
      on the Tel Aviv Stock Exchange, held by the Investor in person.




13




Our
      issuance of shares of common stock to Mr. Solomon under the Lapis SPA will
      be
      made pursuant to the exemption from registration requirements under Regulation
      D
      and/or Regulation S of the Securities Act of 1933, as amended (the “Securities
      Act”). No form of general solicitation or general advertising was conducted in
      connection with the issuance. The certificates representing the shares will
      contain restrictive legends preventing the sale, transfer of such shares unless
      registered under the Securities Act or pursuant to an exemption therefrom.
      Mr.
      Mordechai is an “accredited investor” as defined under Regulation D and/or is
      not a “U.S. Person” as defined under Regulation S.





**Item
      3. Defaults Upon Senior Securities.**





Not
      applicable.




**Item
      4. Submission of Matters to a Vote of Security Holders.**





On
      Feb
      28,2008, a shareholder holding more than 50% of our issued and outstanding
      common stock approved the execution of an agreement between us, Star Night
      Technologies, Ltd, Harry Mund (our chief executive officer, director and
      majority shareholder) and Mordechai Solomon. Pursuant to this agreement we
      shall
      issue and sale of shares in Lapis Technologies, Inc. and the transfer of shares
      of Star Night Technologies Ltd. to the Company (the “Lapis SPA”), with Harry
      Mund and Mordechai Solomon (the “Investor”). Mr. Mund is the Company’s chief
      executive officer, director, and majority stockholder. The Lapis SPA will close
      (subject to fulfillment or waiver of certain closing conditions, and the
      performance of certain covenants by the parties prior to closing, including, *inter
      alia* ,
      the
      receipt of a fairness opinion) 21 days following the date on which an
      information statement on Schedule 14C under the Securities Exchange Act of
      1934,
      as amended, is mailed to stockholders of the Company (the “Closing Date”), which
      closing shall occur concurrently with that of the Systems SPA (defined below)
      and the Electronics SPA (defined below). Pursuant to the Lapis SPA, the Company
      agreed to issue to the Investor, on the Closing Date, 75,129,500 shares of
      the
      Company’s common stock, representing 92% of the Company’s issued and outstanding
      shares on a fully diluted basis. The Investor agreed to transfer to the Company,
      on the Closing Date, 4,539,557 shares in Star Night Technologies Ltd., a company
      traded on the Tel Aviv Stock Exchange, held by the Investor in person. We filed
      a preliminary information statement with the Securities and Exchange Commission
      and are in the process of responding to comments responding to comments received
      from the Securities and Exchange Commission.





In
      addition, pursuant to the Lapis SPA, the Investor agreed to grant to Mr. Mund
      an
      option (the “Mund Option”), exercisable by Mr. Mund in his sole discretion, to
      sell to the Investor, Mr. Mund’s 4,750,000 shares of the Company’s common stock
      (the “Option Shares”). The Mund Option will be exercisable during a period of 90
      calendar days immediately following the first anniversary of the Closing Date
      (with respect to 50% of the Option Shares, at an exercise price of US $0.5434
      per share, subject to adjustment in the event of stock splits, stock dividends,
      and similar transactions) and/or the second anniversary of the Closing Date
      (with respect to all of the Option Shares, at an exercise price of US $0.6038
      per share, subject to adjustment in the event of stock splits, stock dividends,
      and similar transactions). The Mund Option is subject to the aggregate value
      of
      the Option Shares being no higher than US $2,868,000, subject to certain
      adjustments, for a period of 65 consecutive calendar days commencing 120 days
      after the Closing Date (so long as Mr. Mund may sell his shares pursuant to
      Rule
      144 under the Securities Act of 1933, as amended (the “Securities Act”)) during
      a period of 65 consecutive calendar days during a period of 24 months following
      the Closing Date.





In
      connection with the Lapis SPA, on February 28, 2008, the Company’s indirect
      wholly owned subsidiary, Entertec Management Ltd. (“Entertec Management”) (which
      the Company owns through its direct wholly owned subsidiary Entertec Electronics
      Ltd.), entered into an agreement for the sale and purchase of Entertec Systems
      2001 Ltd. (the “Systems SPA”), with Harry Mund, and S.D.S. (Star Defense
      Systems) Ltd., a company traded on the Tel Aviv Stock Exchange (“S.D.S.”) whose
      majority stockholder is Mordechai Solomon. The Systems SPA will close on the
      Closing Date concurrently with the Lapis SPA and the Electronics SPA (defined
      below). Pursuant to the Systems SPA, Entertec Management and Mr. Mund agreed
      to
      sell, and S.D.S. agreed to purchase, on the Closing Date, an aggregate of
      251,000 shares of Entertec Systems 2001 Ltd. (“Enterec Systems”), representing
      all of the issued and outstanding capital stock of Entertec Systems, for an
      aggregate purchase price of US $1,500,000. The 251,000 shares to be sold
      pursuant to the Systems SPA represent 67,770 shares to be sold by Mr. Mund
      and
      183,230 shares to be sold by Entertec Management.





In
      connection with the Lapis SPA and the Systems SPA, the Company also entered
      into, on February 28, 2008, an agreement with Mund Holdings Ltd., a company
      owned by Harry Mund (the “Electronics SPA”). The Electronics SPA will close on
      the Closing Date concurrently with the Lapis SPA and the Systems SPA. Pursuant
      to the Electronics SPA, the Company agreed to sell, and Mund Holdings Ltd.
      agreed to purchase, on the Closing Date, NIS (New Israeli Shekel) 100 divided
      into 100 shares of NIS 1 each, of Entertec Electronics Ltd. (“Entertec
      Electronics”), representing all of the issued and outstanding capital stock of
      Entertec Electronics, for a purchase price of US $250,000.




14




The
      Company’s issuance of shares of common stock to Mr. Solomon under the Lapis SPA
      will be made pursuant to the exemption from registration requirements under
      Regulation D and/or Regulation S of the Securities Act of 1933, as amended
      (the
“Securities Act”). No form of general solicitation or general advertising was
      conducted in connection with the issuance. The certificates representing the
      shares will contain restrictive legends preventing the sale, transfer of such
      shares unless registered under the Securities Act or pursuant to an exemption
      therefrom. Mr. Mordechai is an “accredited investor” as defined under Regulation
      D and/or is not a “U.S. Person” as defined under Regulation S.





**Item
      5. Other Information.**





Not
      applicable.




**Item
      6. Exhibits.**





**Exhibit
                Number**
            
            **Description**


10.1
            
            Agreement
                for the Issue and Sale of Shares in Lapis Technologies, Inc. and
                the
                Transfer of Shares in Star Night Technologies, Ltd., dated February
                28,
                2008, by and between Lapis Technologies, Inc., Harry Mund and Mordechai
                Solomon *10.2
            
            Agreement
                for the Sale and Purchase of Entertec Systems 2001 Ltd., dated February
                28, 2008, by and between Entertec Management Ltd., Harry Mund and
                S.D.S.
                (Star Defense Systems) Ltd. *10.3
            
            Agreement,
                dated February 28, 2008, by and between Lapis Technologies, Inc.
                and Mund
                Holdings Ltd. *31.1
            
            Certification
                by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
                of the Exchange Act.31.2
            
            Certification
                by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
                of the Exchange Act.32.1
            
            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 Code.32.2
            
            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.





*
      Incorporated by reference to the Company’s Current Report on Form 8-K, filed
      with the SEC on March 5, 2008.





**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 13, 2008
            By:
            /s/ 
                Harry MundHarry
                MundChief Executive Officer (principal executive), President
              and
                Chairman of the BoardDate:
                August 13, 2008
            By:
            /s/ 
                Miron MarkovitzMiron
                MarkovitzChief
                Financial Officer, Chief Accounting
              Officer
                and Director




15