UNITED STATES
                       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 SEPTEMBER 30, 2005

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

             FOR THE TRANSITION PERIOD FROM __________ TO __________
             COMMISSION FILE NUMBER ________________________________

                            LAPIS TECHNOLOGIES, INC.
                            ------------------------
                 (Name of small business issuer in its charter)

          Delaware                                         27-0016420
          --------                                         ----------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

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

                    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
[_]

      Indicate  by check mark  whether  the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

                      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 November 11, 2005, the
issuer had 6,483,000 outstanding shares of Common Stock, $.001 par value.

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


<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                         PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements..............................................   1
Item 2.   Management's Discussion and Analysis or Plan of Operation.........   6
Item 3.   Controls and Procedures...........................................  10

                       PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.................................................  10
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.......  10
Item 3.   Defaults Upon Senior Securities...................................  11
Item 4.   Submission of Matters to a Vote of Security Holders...............  11
Item 5.   Other Information.................................................  11
Item 6.   Exhibits..........................................................  11

SIGNATURES..................................................................  12


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      (In Thousands, Except Share Amounts)

                                     ASSETS
                                                               September 30,
                                                                   2005
                                                               -------------
Current Assets:
    Cash and cash equivalents                                  $         106
    Accounts receivable                                                2,865
    Inventories                                                        2,465
    Prepaid expenses and other current assets                            652
    Due from stockholder                                                  --
                                                               -------------

      Total current assets                                             6,088

Property and equipment, net                                              336
Deferred income taxes                                                     18
                                                               -------------

                                                               $       6,442
                                                               =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current  Liabilities:
    Bank line of credit                                        $       1,277
    Short term bank loans                                              1,724
    Current portion of term loans                                        143
    Accounts payable and accrued expenses                              1,365
    Income taxes payable                                                 232
                                                               -------------
      Total current liabilities                                        4,741

Term loans, net of current portion                                       128
Severance payable                                                         56
                                                               -------------

      Total liabilities                                                4,925
                                                               -------------
    Commitments and contingencies

Minority interest                                                        395

Stockholders' 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
    Additional paid-in capital                                            78
    Accumulated other comprehensive loss                                (130)
    Retained Earnings                                                  1,168
                                                               -------------

      Total stockholders' equity                                       1,122
                                                               -------------

                                                               $       6,442
                                                               =============

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


                                       1
<PAGE>

                     LAPIS TECHNOLOGIES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
           (In Thousands, Except Earnings Per Share and Share Amounts)

                                                        Nine Months Ended
                                                          September 30,
                                                   --------------------------
                                                      2005           2004
                                                   -----------    -----------
Sales                                              $     4,571    $     4,084
Cost of sales                                            2,906          2,375
                                                   -----------    -----------

   Gross profit                                          1,665          1,709
                                                   -----------    -----------

Operating expenses:
   Research and development                                203            100
   Selling expenses                                         67             31
   General and administrative                              914            913
                                                   -----------    -----------

     Total operating expenses                            1,184          1,044
                                                   -----------    -----------

   Income from operations                                  481            665
                                                   -----------    -----------

Other income (expense):
   Interest expense, net                                  (182)          (180)
                                                   -----------    -----------

   Income before provision for income
     taxes and minority interest                           299            485

   Provision for income taxes                               66             71
   Minority interest                                       (55)          (147)
                                                   -----------    -----------

Net income                                                 178            267

Other comprehensive (loss) income, net of taxes
   Foreign translation (loss) gain                         (72)           (43)
                                                   -----------    -----------

Comprehensive (loss) income                        $       106    $       224
                                                   ===========    ===========


Basic net loss per share                           $      0.03    $      0.05
                                                   ===========    ===========

Basic weighted average common shares outstanding     5,706,443      5,483,000
                                                   ===========    ===========

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


                                       2
<PAGE>

                     LAPIS TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

                                                              Nine Months Ended
                                                                September 30,
                                                             ------------------

                                                               2005       2004
                                                             -------    -------
Cash flows from operating activities:
    Net income                                               $   178    $   267
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                            120        103
        Minority interest                                         23        153
        Gain on sale of property and equipment                    --         (9)
        Forgiveness of indebtedness                             (115)        --
        Deferred income tax                                        2         --
    Change in operating assets and liabilities:
      Accounts receivable                                       (321)       635
      Inventories                                               (191)      (499)
      Prepaid expenses and other current assets                 (293)       (36)
      Accounts payable and accrued expenses                     (142)      (515)
      Income tax payable                                          53        (48)
      Customer deposits and other current liabilities             74          1
                                                             -------    -------

Net cash provided by (used in) operating activities             (612)        52
                                                             -------    -------
Cash flows from investing activities:
    Purchase of property and equipment                           (42)        (3)
    Increase in due from stockholder                             348       (158)
    (Increase) decrease in due from affiliates                     1         48
                                                             -------    -------
Net cash used in investing activities                            307       (113)
                                                             -------    -------
Cash flows from financing activities:
    Increase in bank line of credit, net                         575       (254)
    Proceeds from long term debt                               2,306      3,403
    Repayment of long-term debt                               (2,522)    (3,198)
                                                             -------    -------
Net cash (used in) provided by financing activities              359        (49)
                                                             -------    -------
Effects of exchange rates on cash                                (72)       (15)
                                                             -------    -------
Increase (decrease) in cash                                      (18)      (125)
Cash, beginning of period                                        124        181
                                                             -------    -------
Cash, end of period                                          $   106    $    56
                                                             =======    =======
Supplemental disclosure of cash flow information:
    Cash paid during the period for:
      Interest                                               $   182    $   118
                                                             =======    =======
      Income taxes                                           $    59    $    21
                                                             =======    =======
Supplemental information on non-cash activities:
    Purchase of additional interest in subsidiary
      for stock                                              $ 1,050    $    --
                                                             =======    =======

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


                                       3
<PAGE>

                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In Thousands, Except Per Share Amounts)
                               SEPTEMBER 30, 2005

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, 2004.
      The results of operations for the six and three months ended June 30, 2005
      are not  necessarily  indicative  of the  operating  results  that  may be
      expected for the year ending December 31, 2005.

      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.


                                       4
<PAGE>

                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In Thousands, Except Per Share Amounts)
                               SEPTEMBER 30, 2005

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.

NOTE 4 - PROVISION FOR INCOME TAXES -

      The income tax  expense  for the six months  ended June 30,  2005 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 - INVESTMENT IN SUBSIDIARY-

      In July, the Company received clearance from the Israeli tax department to
      proceed  with the  acquisition  of an  additional  18% interest in Enertec
      Systems, increasing its' ownership to 73%. The Company exchanged 1,000,000
      of its shares for the 18%. The Company's  quoted market price was $1.05 as
      of the date of the transfer.

                                       5
<PAGE>

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-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 have a 73%  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.

Liquidity and Capital Resources

      Our cash balance at September 30, 2005 has  increased by $50,000  compared
to the cash balance at September  30, 2004,  with cash and cash  equivalents  of
$106,000 as of September  30, 2005  compared to $56,000 at  September  30, 2004.
Total  current  assets at  September  30,  2005 were  $6,088,000  as compared to
$5,144,000 at September 30, 2004.  The increase in current  assets is mainly due
to an increase in accounts receivable and inventory.

      Our accounts receivable at September 30, 2005 was $2,865,000,  as compared
to  $2,373,000  at September  30, 2004.  This change in accounts  receivable  is
primarily  due to higher  sales for the first nine months of 2005 as compared to
the same period in 2004 and longer payment terms for some of the orders.

      As of September 30, 2005 our working capital was $1,347,000 as compared to
$1,040,000  at  September  30,  2004.  The  increase  of $307,000 in the working
capital is primarily due to an increase in accounts receivable.

      Bank debt  shifts  between  lines of  credit,  to short or long term loans
depending on the interest rates at various  periods of time and cash flow income
projections.  The current  portion of our long-term  loans at September 30, 2005
totaled  $143,000  compared  to  $151,000  at  September  30,  2004.  Our  other
short-term  loans  amounted  to  $1,724,000  for  the  nine-month  period  ended
September 30, 2005 as compared to $1,996,000 at September 30, 2004.

                                       6
<PAGE>

      As of September 30, 2005, our total bank debt was $3,272,000 as opposed to
$3,084,000  at the end of  September  30,  2004.  These  funds were  borrowed as
follows:

      $1,867,000  includes  the  current  portion of  long-term  debt as various
short-term bank loans due through September 2006, $128,000 of long-term debt due
through  May 2009 and  $1,277,000  borrowed  using our bank lines of credit.  We
increased  the amount  borrowed for the nine months ended  September 30, 2005 by
$188,000  (6.1%) from  $3,084,000 as of September 30, 2004. The increase in bank
debt is mainly due to an increased  need for working  capital for  financing the
higher  volume of sales,  financing of increased  raw  materials  and  inventory
related to the increased volume of new orders received and higher R&D expenses.

      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
September 30, 2005 we are current with all of our bank debt and  compliant  with
all the terms of our bank debt.

Financing Needs

      Although we  currently do not have any  material  commitments  for capital
expenditures,  we expect our  capital  requirements  to  increase  over the next
several years as we continue to develop and test our suite of products, increase
marketing and administration  infrastructure,  and embark on developing in-house
business  capabilities and facilities.  Our future liquidity and capital funding
requirements will depend on numerous factors, including, but not limited to, the
levels and costs of our research and development initiatives, the cost of hiring
and training  additional  sales and marketing  personnel to promote our products
and the cost and timing of the expansion of our marketing efforts.

      Based on our current  business plan, we anticipate  that our existing cash
balances and cash generated from future sales will be sufficient to permit us to
conduct our operations and to carry out our contemplated  business plans for the
next twelve months. However,  management may undertake additional debt or equity
financings  to better  enable  Lapis to grow and meet its future  operating  and
capital requirements.  Currently, the only external sources of liquidity are our
banks,  and we may seek  additional  financing  from them or through  securities
offerings to expand our  operations,  using new capital to develop new products,
enhance existing products or respond to competitive pressures.

Results of Operations

Three and Nine Months Ended September 30, 2005 Compared to Three and Nine Months
Ended September 30, 2004

      Revenues  for the three and nine  months  ended  September  30,  2005 were
$1,040,000,  and  $4,571,000,   respectively,  as  compared  to  $1,396,000  and
$4,084,000 for the three and nine months ended September 30, 2004, respectively.
This  represents  a  decrease  of  $356,000,  or 25.5%,  for the  quarter  ended
September  30,  2005 and an increase of  $487,000,  or 12%,  for the nine months
ended  September  30,  2005,  when  compared  to the same  period for 2004.  The
increase in revenues  for the nine months  ended  September  30, 2005 versus the
same period for the prior year is mainly due to the increase in the revenues for
the first six months of 2005 as compared to the first six months of 2004, partly
offset by the  decrease  in sales of third  quarter of 2005 as  compared  to the
third  quarter of 2004.  The reason for the  increase in the first six months of
2005 is that  during  the fourth  quarter of 2004 and the first  quarter of 2005
Enertec  Systems  introduced  several  new  products  in the  military  division
resulting  in higher  sales  during  the first  quarter of 2005,  a trend  which
continued  during  the second  quarter  of 2005.  In  addition  to this  Enertec
Electronics, the commercial division, experienced higher sales due to the rising
international  demand for high tech products which impacted Enertec Electronics'
customer  base and as a result a higher  demand for  Enertec  Electronics  Power
Supplies.

      The  decrease in the sales of the third  quarter of 2005 as compared  with
the third quarter of 2004 is mainly due to several  large orders with  long-term
delivery  and  significant  design and tooling  periods.  The  delivery of these
orders  will  take  place  during  the last  quarter  of 2005 and the  following
quarters of 2006. These orders commenced  production during the third quarter of
2005 and are  reflected in the increase in work in process and  inventory  which
increased  by  approximately  $250,000  during  the third  quarter  of 2005.  In
addition to this we  invested  heavily in  marketing,  the result of which was a
significant  increase in the backlog of orders to about $5,350,000 at the end of
September  30 2005  as  compared  with  approximately  $2,510,000  at the end of
September 30 2004, but also diverted some  resources away from immediate  sales.
Furthermore as a result of  fluctuations in the exchange rate between the United
States Dollar and the Israeli  Shekel a loss of $40,000 was  calculated  for the
third quarter ended September 30 2005 as compared with the same prior quarter.


                                       7
<PAGE>

      Gross  profit  totaled  approximately   $227,000  for  the  quarter  ended
September 30, 2005 and  $1,665,000  for the nine months  September 30, 2005. For
the three and nine  months  ended  September  30,  2004,  gross  profit  totaled
$483,000 and  $1,709,000,  respectively.  Comparing the three month period ended
September  30,  2005 to the same  period  of 2004,  gross  profit  decreased  by
approximately  $256,000,  or 53%. For the nine-month  period ended September 30,
2005, gross profit decreased  approximately  $44,000,  or 2.6%,  compared to the
same period of 2004.  The  decrease  in gross  profit is due to the focus in the
last couple of quarters on projects with higher cost of sales resulting in lower
profit  margins.  In  addition,  during  the third  quarter of 2005 we had lower
revenues  than for the same  period in 2004,  due mainly to work in process  for
several large orders  utilizing new  technology  for delivery  during the fourth
quarter of 2005 and during 2006.  As is typical with  products in early stage of
production, the profits are lower than for repeat orders for the same product.

      Gross profit as a percentage of sales was 21.8% for the three-month period
ended  September  30,  2005 as compared to 34.6% for the same period of 2004 and
for the  nine-month  period ended  September 30, 2005,  was 36.4% as compared to
41.8% for the same period of 2004.  The decrease in gross profit as a percentage
of sales is a result of: lower gross profit  margin as compared to 2004 and long
term projects with higher design and tooling costs.

      Total  operating  expenses are  comprised of R&D,  selling and general and
administrative  expenses.  Historically R&D costs were included into the cost of
sales.  However in the third  quarter of 2005 R&D costs were  re-classified  and
shown  separately as a part of the operating  expenses.  2004's  financials have
been re-classified accordingly to allow comparison.

      For the three months and nine months ended  September 30, 2005,  operating
expenses totaled $358,000 and $1,184,000,  respectively. This was an increase of
$40,000  (12.6%) and $140,000  (13.4%) when compared to the three and nine-month
periods  ended  September 30, 2004.  The increase in operating  expenses for the
nine-month  period is  attributable  mainly to the  increase  of $103,000 in R&D
costs and $36,000 in selling expenses, as compared to the same period of 2004.

      The  increase in  operating  expenses  for the  three-month  period  ended
September 30, 2005 is attributable mainly to an increase of $59,000 in R&D costs
and approximately  $14,000 in selling expenses,  partly offset by a reduction in
G&A cost.  The  increase  in  selling  expenses  is a result of our  efforts  to
introduce new product lines in the marketplace.

      Net income for the three months ended September 30, 2005 was ($83,000) and
$178,000 in the nine months  ended  September  30,  2005.  This  compares to net
income of $62,000 in the three months ended  September  30, 2004 and $267,000 in
the nine  months  ended  September  30,  2004.  The  decrease  in net  income by
$145,000,  or 234%,  comparing the three months ended  September 30, 2005 to the
three months ended  September  30, 2004 was mainly due to a decrease of $256,000
in the gross profit and an increase of $40,000 in operating expenses offset by a
decrease of $30,000 in provision  for income taxes and a decrease of $122,000 in
the  minority  interest.  The  decrease  in net  income  by  $89,000,  or 33.3%,
comparing  the nine months  ended  September  30, 2005 to the nine months  ended
September 30, 2004 was due to a decrease of $44,000 in gross profit, an increase
of $140,000 in the  operating  expenses,  offset by a decrease of $92,000 in the
minority interest.

      For the three and nine months ended  September  30, 2005,  provisions  for
income taxes was ($1,000) and $66,000, respectively. This represents a decreased
provision for income taxes for the three months ended  September 30, 2005 versus
the same prior period for 2004 of $30,000 and a decreased  provision  for income
taxes for nine months  ended  September  30, 2005 for the same prior  period for
2004 of $5,000.  The reason for the  decrease  in income tax  provision  for the
third  quarter  of 2005 as  compared  to the same  period  in 2004 is due to the
combination of the decrease in sales for the quarter,  the decrease in the gross
profit for the quarter,  and the increase in operating expenses for the quarter.
This  resulted  in a decrease  in income  for the  quarter  and a  corresponding
reduction in our provision for taxes.


                                       8
<PAGE>

      Enertec  Electronics  derives its revenues from the  commercial  arena and
from standard  military power supplies that it sells to the military industry as
well as a few residual ATE orders for the military  industry  that were received
in 2002 that have  recurring  revenues and delivery  dates out into 2005.  Going
forward when we refer to commercial revenues we will be referring exclusively to
Enertec Electronics' commercial business and when we refer to military business,
we refer to Enertec  Systems 2001 and the residual  military  orders referred to
above within Enertec Electronics.

      As of  September  30,  2005,  we had  two  customers  that  accounted  for
approximately  55% of  the  accounts  receivable.  For  the  nine  months  ended
September 30, 2005, approximately 47% of our sales were to two customers.

Research and Development Costs

      Research and  development  costs in the  accompanying  statement of income
consist  of  salaries.  Research  and  development  costs for the three and nine
months  ended  September  30,  2005 were  $89,000  and  $203,000,  respectively.
Research and development costs for the three and nine months ended September 30,
3004 were $30,000 and $100,000,  respectively. The increased R&D cost is related
to the costs of developing  several new technologies  such as driver modules for
airborne  lasers,  power  distribution  modules for naval  applications  and new
technologies for integrated testing solutions of ballistic missiles.

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,
results of operations, liquidity or capital expenditures.

Critical Accounting Policies

      Concentration of Credit Risk - Concentrations  of credit risk with respect
to trade receivables are limited to customers dispersed primarily across Israel.
All trade  receivables are concentrated in the manufacturing and distribution of
electronic  components  segment of the  economy;  accordingly  we are exposed to
business and economic risk.  Although we do not currently foresee a concentrated
credit risk associated with these trade receivables, repayment is dependent upon
the financial stability of this segment of the economy.

      Revenue Recognition and Customer Deposits - Revenue is recorded as product
is shipped, the price has been fixed or determined, collectibility is reasonably
assured and all material specific  performance  obligations have been completed.
The product sold by us 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 and nine months
ended September 30, 2005 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 September  30, 2005  because of the  relatively  short  maturity of the
instruments.

      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 year.  Resulting  translation  adjustments,  if material,  are
recorded as a separate  component of accumulated other  comprehensive  income or
loss.


                                       9
<PAGE>

Item 3. Controls and Procedures.

      As of the end of the  period  covered  by this  report,  we  conducted  an
evaluation,  under  the  supervision  and with the  participation  of our  chief
executive  officer and chief  financial  officer of our disclosure  controls and
procedures  (as defined in Rule  13a-15(e)  and Rule  15d-15(e)  of the Exchange
Act).  Based  upon  this  evaluation,  our  chief  executive  officer  and chief
financial  officer  concluded  that our  disclosure  controls and procedures are
effective to ensure that all  information  required to be disclosed by us in the
reports that we file or submit under the  Exchange Act is: (1)  accumulated  and
communicated to our management,  including our chief executive officer and chief
financial officer,  as appropriate to allow timely decisions  regarding required
disclosure;  and (2) recorded,  processed,  summarized and reported,  within the
time periods specified in the Commission's  rules and forms. There was no change
in our internal  controls or in other  factors that could affect these  controls
during our last fiscal  quarter that has materially  affected,  or is reasonably
likely to materially affect, our internal control over financial reporting.

                                     PART II

Item 1. Legal Proceedings.

      Except as described below, we are not subject to any pending or threatened
legal  proceedings,  nor is our property the subject of a pending or  threatened
legal proceeding. 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.

      On April 16, 2002, Orckit Communications brought an action in the Tel Aviv
District Court against Gaia  Converter,  a French company and Alcyon  Production
Systems,  also a French company and a subcontractor  of Gaia Converter,  seeking
$1,627,966,  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.  Enertec  Electronics  was  joined in the  action as a local
Israeli distributor of the Gaia Converter  products.  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 response to
this claim 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.  Neither
Gaia  Converter  nor Alcyon  Production  Systems  have filed a response  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. Enertec Electronics is defending and is continuing to
defend this action vigorously and we do not believe that it will have a material
adverse  impact on our  business.  Orkit has filed  affidavits  setting  out the
evidence  supporting their allegations and Enertec has filed affidavits  setting
out the evidence supporting its defense. The case has been scheduled for hearing
in June of 2006

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

      On February 22, 2005, we agreed to issue 1 million  shares of common stock
to Zvika Avni,  Chief Operating  Officer of Enertec Systems Ltd. which is one of
our majority owned subsidiaries, as consideration for the transfer of 18% of the
outstanding shares of Enertec Systems Ltd. to Enertec Management Limited, one of
our wholly owned  subsidiaries.  Completion  of the  transaction  was subject to
receipt  of a tax  exemption  (of a taxable  event) by the  Israeli  Income  Tax
Authority, which exemption was received in July 2005.

      We own  100% of the  issued  and  outstanding  capital  stock  of  Enertec
Electronics Limited, which owns 100% of the issued and outstanding capital stock
of  Enertec  Management  Limited.  After  completion  of the above  transaction,
Enertec Management Limited owns 73% of the outstanding  capital stock of Enertec
Systems Ltd.  The  remaining  27% of the  outstanding  capital  stock of Enertec
Systems Ltd. is owned by Harry Mund, our Chairman of the Board,  Chief Executive
Officer,  President  and  Secretary.  Issuance of the shares of common  stock to
Zvika Avni will be made pursuant to the exemption from registration requirements
under Regulation S or Regulation D,  promulgated  pursuant to the Securities Act
of 1933, as amended.


                                       10
<PAGE>

Item 3. Defaults Upon Senior Securities.

      Not applicable.

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

      Not applicable.

Item 5. Other Information.

      Not applicable.

Item 6. Exhibits.

Exhibit
Number                Description
-------   ----------------------------------------------------------------------

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.



                                       11
<PAGE>

                                   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.


Dated:   November 14, 2005               By: /s/ Harry Mund
                                             -----------------------------------
                                             Harry Mund
                                             Chief Executive Officer,
                                             President and Chairman of the Board



Dated:   November 14, 2005               By: /s/ Miron Markovitz
                                             -----------------------------------
                                             Miron Markovitz
                                             Chief Financial Officer,
                                             Chief Accounting
                                             Officer and Director


                                       12