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: June 30, 2004

                                       OR

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

              For the transition period from ________ to __________

                  Commission file number ______________________

                            LAPIS TECHNOLOGIES, INC.
                      ------------------------------------

                      (Exact name of small business issuer
                          as specified in its charter)

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

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

                    Issuer's telephone number (212) 937-3580

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

As of August 15th, 2004 there were 5,483,000 shares of the  registrant's  common
stock, par value $0.001, issued and outstanding.

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

<PAGE>

                            LAPIS TECHNOLOGIES, INC.
                  June 30, 2004 QUARTERLY REPORT ON FORM 10-QSB

                                TABLE OF CONTENTS

                                                                          PAGE
Special Note Regarding Forward Looking Statements

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Balance Sheet as of March 31, 2004                             1

Consolidated Statements of Income for the three months ending
March 31, 2004 and 2003                                                     2

Consolidated Statements of Cash Flows for the three months ending
March 31, 2004 and 2003                                                     3

Notes to Consolidated Financial Statements
4

Item 2.  Management's Discussion and Analysis or Plan of Operations         5

Item 3.  Controls and Procedures
8

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  8

Item 2.  Changes in Securities                                              9

Item 3.  Defaults Upon Senior Securities                                    9

Item 4.  Submission of Matters to a Vote of Security Holders                9

Item 5.  Other Information                                                  9

Item 6.  Exhibits and Reports on Form 8-K                                   9

SIGNATURES                                                                  11


<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                     ASSETS
                                                                                    June 30,
                                                                                     2004
                                                                                    -------
<S>                                                                                 <C>
Current Assets:
    Cash and cash equivalents                                                       $    40
    Accounts receivable                                                               2,228
    Inventories                                                                       2,127
    Prepaid expenses and other current assets                                           171
    Due from stockholder                                                                328
                                                                                    -------

      Total current assets                                                            4,894

Property and equipment, net                                                             471
Due from affiliates                                                                      22
Deferred income taxes                                                                    20
                                                                                    -------
                                                                                    $ 5,407
                                                                                    =======
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current  Liabilities:
    Bank line of credit                                                             $   538
    Short term bank loans                                                             1,938
    Current portion of long term loans                                                  150
    Accounts payable and accrued expenses                                             1,147
    Income taxes payable                                                                153
                                                                                    -------

      Total current liabilities                                                       3,926

Long term loans, net of current portion                                                 295
Severance payable                                                                        58
                                                                                    -------

        Total liabilities                                                             4,279
                                                                                    -------

    Commitments and contingencies

Minority interest                                                                       294

Stockholders' Equity:
    Preferred stock; $.001 par value, 5,000,000 shares authorized, none issued
    Common stock; $.001 par value, 100,000,000 shares authorized, 5,483,000              --
      shares issued and outstanding                                                       5
    Additional paid-in capital                                                           78
    Accumulated other comprehensive loss                                               (101)
    Retained Earnings                                                                   852
                                                                                    -------

      Total stockholders' equity                                                        834
                                                                                    -------

                                                                                    $ 5,407
                                                                                    =======
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       1
<PAGE>

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

<TABLE>
<CAPTION>
                                                               Six Months Ended                   Three Months Ended
                                                                   June 30,                            June 30,
                                                               ----------------                   ------------------
                                                             2004             2003              2004              2003
                                                         -----------       -----------       -----------       -----------
<S>                                                      <C>               <C>               <C>               <C>
Sales                                                    $     2,688       $     2,985       $     1,567       $     1,755
Cost of sales                                                  1,532             1,805               774             1,051
                                                         -----------       -----------       -----------       -----------

    Gross profit                                               1,156             1,180               793               704
                                                         -----------       -----------       -----------       -----------
Operating expenses:
    Selling expenses                                               7                17                 5                (5)
    General and administrative                                   649               598               397               264
                                                         -----------       -----------       -----------       -----------

      Total operating expenses                                   656               615               402               259
                                                         -----------       -----------       -----------       -----------

    Income from operations                                       500               565               391               445
                                                         -----------       -----------       -----------       -----------

Other income (expense):
    Interest expense, net                                       (118)             (173)              (45)             (108)
                                                         -----------       -----------       -----------       -----------

    Income before provision for income taxes and
    minority interest                                            382               392               346               337

    Provision for income taxes                                    42                89                33                47
    Minority interest                                            135                88               126               115
                                                         -----------       -----------       -----------       -----------

Net income                                                       205               215               187               175

Other comprehensive (loss) income, net of taxes
    Foreign translation (loss) gain                              (38)               55                 5                51
                                                         -----------       -----------       -----------       -----------

Comprehensive (loss) income                              $       167       $       270       $       192       $       226
                                                         ===========       ===========       ===========       ===========


Basic net loss per share                                 $      0.04       $      0.04       $      0.03       $      0.03
                                                         ===========       ===========       ===========       ===========

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

    The accompanying notes are an integral part of these financial statements


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                      Six Months Ended
                                                                                         June 30,
                                                                                     ----------------
                                                                                    2004           2003
                                                                                   -------       -------
<S>                                                                                <C>           <C>
Cash flows from operating activities:
    Net income                                                                     $   205       $   215
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                                                   69            61
        Minority interest                                                              141            88
        Deferred income tax                                                              1            (2)
    Change in operating assets and liabilities:
      Accounts receivable                                                              772          (238)
      Inventories                                                                     (511)         (138)
      Prepaid expenses and other current assets                                         49             8
      Accounts payable and accrued expenses                                           (487)         (454)
      Income tax payable                                                               (39)           93
      Customer deposits                                                                 --          (212)
      Severance payable                                                                  1            (1)
                                                                                   -------       -------

Net cash provided by (used in) operating activities                                    201          (580)
                                                                                   -------       -------

Cash flows from investing activities:
    Purchase of property and equipment                                                 (14)          (56)
    (Increase) decrease in due from stockholder                                       (153)           25
    (Increase) decrease in due from affiliates                                          39             1
                                                                                   -------       -------

Net cash used in investing activities                                                 (128)          (30)
                                                                                   -------       -------

Cash flows from financing activities:
    Increase (decrease) in bank line of credit, net                                   (392)         (534)
    Proceeds from long term debt                                                     1,907         2,577
    Repayment of long-term debt                                                     (1,711)       (1,705)
                                                                                   -------       -------

Net cash (used in) provided by financing activities                                   (196)          338
                                                                                   -------       -------

Effects of exchange rates on cash and cash equivalents                                 (18)           10
                                                                                   -------       -------

Increase (decrease) in cash                                                           (141)         (262)
Cash, beginning of period                                                              181           313
                                                                                   -------       -------

Cash, end of period                                                                $    40       $    51
                                                                                   =======       =======

Supplemental disclosure of cash flow information:
    Cash paid during the period for:
      Interest                                                                     $   118       $   173
                                                                                   =======       =======
      Income taxes                                                                 $    21       $    16
                                                                                   =======       =======
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       3
<PAGE>


                    LAPIS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In Thousands, Except Per Share Amounts)
                                  JUNE 30, 2004

NOTE 1 - DESCRIPTION OF BUSINESS

     Lapis Technologies, Inc. (the "Company") was incorporated in the State of
     Delaware on January 31, 2002. The Company was originally named Enertec
     Electronics, Inc. and on April 23, 2002 changed its name to Opal
     Technologies, Inc. which changed its name to Lapis Technologies, Inc. on
     October 3, 2002. The Company's operations are conducted through its
     wholly-owned Israeli Subsidiary, Enertec Electronics Ltd. ("Enertec") and
     its majority owned Israeli subsidiary Enertec Systems 2001 LTD ("Systems").
     Enertec is engaged in the manufacturing, distribution and marketing of
     electronic components and products relating to power supplies, converters
     and related power conversion products, automatic test equipment, simulators
     and various military and airborne systems, within the State of Israel.

NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION

     The accompanying unaudited consolidated financial statements and related
     footnotes have been prepared in accordance with accounting principles
     generally accepted in the United States of America for interim financial
     statements and pursuant to the rules and regulations of the Securities and
     Exchange Commission for Form 10-QSB. Accordingly, they do not include all
     of the information and footnotes required by accounting principles
     generally accepted in the United States of America for complete financial
     statements. In the opinion of management, all adjustments (consisting of
     normal recurring accruals) considered necessary for a fair presentation
     have been included. For further information read the financial statements
     and footnotes thereto included in the Company's Annual Report to be filed
     in accordance with the rules and regulations of the Securities and Exchange
     Commission on Form 10-KSB for the year ended December 31, 2003. The results
     of operations for the six-months ended June 30, 2004 are not necessarily
     indicative of the operating results that may be expected for the year
     ending December 31, 2004.

     The accompanying financial statements include the accounts of the Company
     and their ownership interest in its subsidiaries. All significant
     intercompany balances and transactions have been eliminated in
     consolidation.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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.

     Recent Accounting Pronouncements

     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.


                                       4
<PAGE>

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

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

      We had seven  distribution  agreements  as of June 30, 2004. In the second
quarter of 2004, we received several large orders in the commercial and military
domains.  Within the commercial arena we received a preliminary  order for 6,200
units of a  customized  ATX power  supply  which  should  generate  revenues  of
approximately  $210,000 as of June 30th 2004  revenues of $74,000  have  already
been received.  Another customer ordered 1,000 high voltage power supplies which
should generate  revenues of approximately  $95,000 nearly all of which has been
received,  $94,000  as of the end of the  second  quarter.  We expect to receive
follow up orders for additional  units from this client by the fourth quarter of
2004.  In addition,  we have  received an order for 200  customized  compact PCI
power supplies which should generate revenues of approximately  $56,000,  so far
$14,000 has been  received.  We have also  recently  received an order for 1,100
power supplies for Voice Over IP products which  generated  revenues of $33,000,
with an additional  $27,000  expected  over the next two  quarters.  This is our
first entry into the IP Telephony industry, a burgeoning and fast growing sector
of the  technology  industry,  and one in which  we  expect  to take a  dominant
position in the market going forward.

      In the second  quarter of 2004,  we  received  an order for 250  redundant
power  supplies,  which is expected to result in $55,000 in sales,  and an order
for 400 units  for  standard  military  converters  that will add an  additional
$75,000 to the top line.

      We are trying to capitalize on our customer  loyalty by  introducing  more
products in  different  divisions of the same  company,  and it  represents  our
success in cross  marketing of new products  within the same customer  base. For
example  previous orders for ATE for fighter  airplanes flight computers has led
to orders for similar equipment for helicopters with an expected delivery in the
last quarter of 2004.


                                       5
<PAGE>

      Within  the  military  arena,  we  received  an  initial  order  for a new
innovative small size airborne power supply for infrared payloads.  This 10 unit
order is expected to be followed by a much larger  order over the next 24 months
at an average price of $3,000. The first two units have been delivered at a cost
of  $37,000.  Enertec  Systems  2001 has also  received  an order  for 113 Power
Distribution  Units, of military grade, with expected total revenues of $420,000
to be delivered  over the next 4 years.  In addition to this,  $187,000 worth of
ATE equipment has been ordered for the maintenance of infrared payload,  3 ATE's
for air to air missiles,  at a cost of $67,000 per unit, and an ATE for avionics
at a unit price of $ 35,000.

      The following  presents certain  historical  financial  information of the
operations of the Company.  This financial  information  includes the results of
the Company for the three and six months ended June 30, 2003  compared  with the
results of the Company for the three and six months ended June 30, 2004.

Results of Operations

Revenues

      Revenues for the three and six months ended June 30, 2004 were  $1,567,000
and  2,688,000,  respectively,  as compared to $1,755,000 and $2,985,000 for the
three and six months  ended  June 30,  2003,  respectively.  This  represents  a
decrease of  $188,000,  or 11%,  for the three  months ended June 30, 2004 and a
decrease  of  $297,000,  or 10%,  for the six months  ended  June 30,  2004 when
compared to the same period of 2003.  This  decrease in revenue is a result of a
lower number of orders for military systems  received due to end-of-year  budget
cuts of the Israeli MOD (Ministry of Defense) which effects the revenues for the
three and six month ended June 30, 2004. In the commercial sector,  until end of
2003  there  was a big  drop in  local  and  worldwide  sales.  During  2004 the
commercial  market has starting to pick up but even in the second quarter,  many
of our  customers  are still using parts from their  inventory and therefore the
impact of the market pick-up has not yet been felt, and the growth in the market
has not yet translated to growth in sales.  The impact of the government cuts at
the end of the year usually lasts two to three  quarters  since the average lead
time for a  military  ATE is 6-10  months.  There  has also  been a delay in new
orders for the Arrow project, since the customer has been involved preparing the
Aug 2004 USA tests which have been very  successful.  Being the main provider of
ATE and  support  systems  for this  project  we believe  new  orders  should be
generated soon.

Gross Profit

      Gross  profit  totaled  approximately  $793,000 for the three months ended
June 30, 2004 and $1,156,000 for the six months June 30, 2004. For the three and
six months ended June 30, 2003,  gross profit totaled  $704,000 and  $1,180,000,
respectively.  Comparing the three-month  period ended June 30, 2004 to the same
period of 2003, gross profit increased  approximately  $89,000,  or 13%. For the
six-month  period ended June 30,  2004,  gross  profit  decreased  approximately
$24,000,  or 2%,  compared  to the same  period of 2003.  The  increase in gross
profit for the three months ended June 30, 2004 is primarily the result of a few
orders  with  lower cost of sales.  In the second  quarter of 2004 we focused on
those projects with higher profit margins, resulting in slightly lower revenues,
but higher net income and profit margin.

      The minor  decrease in gross profit for the six months ended June 30, 2004
is primarily the result of lower  revenues for the last six months and therefore
lower gross profit.

Selling, General and Administrative Expenses

      For the three months and six months ended June 30, 2004, selling,  general
and administrative  expenses totaled $402,000 and $656,000,  respectively.  This
was an increase of $143,000  (55%) and $41,000 (7%) when  compared to the three-
and six-month periods ended June 30, 2003. The increase in selling,  general and
administrative  expenses for the three months ended June 2004 is attributable to
the  re-assignment  of some of the  engineering  staff  amounting to $110,000 to
support  an  increased  sales  effort.  Sales of  military  ATE's  require  high
technical personnel and so we utilized some engineers to promote our products to
this  market.  This was possible  since  during the second  quarter we had fewer
projects which required heavy engineering resources.


                                       6
<PAGE>

      Approximately $33,000 of the increase in SG and A was due to the increased
cost of the professional  services legal and accounting  associated with being a
public  company.  For the six months ended June 2004, the increase is mainly due
to the increase of the cost of the professional services as previously detailed.

Other Income and Expenses

      Net interest expense was approximately  $45,000 and $118,000 for the three
and six months ended June 30, 2004,  respectively.  For the three and six months
ended  June  30,  2003,   net  interest   expense  was  $108,000  and  $173,000,
respectively.  This  represents a decrease of $63,000  (58%) and $55,000  (32%),
when  comparing  the  three and six  months  ended  June 30,  2004 with the same
periods  of  2003.  The  decrease  in net  interest  expense  is due to a couple
reasons:  (a) a decrease in the total debt by 11.7% to the banks by $388,000 was
partially due to 10% lower revenues a slight  lowering of overall debt using our
cash flow, and (b) the lower interest rates in Israel during the 6 months period
ending June 2004 as compared with the prior year period, the monetary prime rate
in  Israel  was 6%  average  for the first 6 months  of 2004 as  compared  to 9%
average for the first 6 months of 2003.

Provision for income taxes

      For the three and six months ended June 30, 2004, our provision for income
taxes was $33,000 and  $42,000.  This  represents  a nominal  decrease  over the
provision  for income  taxes for the three  months and six months ended June 30,
2003,  $47,000,  and $89,000  respectively.  This adjustment reflects the actual
updated  income  taxes.  At end of June 2003 the  provision for taxes of Enertec
Systems did not take in  consideration  the tax exempt  status that  allowed tax
free income  above  approx  $330,000.  As of Dec 2003 the  financials  have been
adjusted to reflect this tax exempt status.

Liquidity and Capital Resources

Cash and Working Capital

      As of June 30,  2004,  the Company had  approximately  $40,000 of cash and
cash equivalents on hand and $968,000 of working capital. as compared to $51,000
of cash and cash  equivalents on hand and $541,000 of working  capital for the 6
months  prior.  The increase in working  capital is due to a decrease in current
liabilities.

      The Company  currently  plans to use the cash  balance and cash  generated
from operations for increasing the Company's working capital reserves and, along
with  additional  debt  financing,  for new product  development and building up
inventory,  hiring  more sales  staff and  funding  advertising  and  marketing.
Management  believes that the current cash on hand and additional  cash expected
from operations in fiscal 2004 will be sufficient to cover the Company's working
capital requirements for fiscal 2004.

Capital Expenditures

      The Company did not incur any expenditures for capital  improvements as of
June 30, 2004 and  management  does not  currently  anticipate  any  significant
capital expenditures during the next six to twelve months.

Financing Transactions

      As of June 30,  2004,  the  Company's  total  bank debt was  approximately
$2,921,000 as compared with  approximately  $3,309,000 as of June 30, 2003. This
decrease of approximately  $388,000 (11.7%) was due to a lowered  financing need
since the  volume of new orders  for the six month  period  ended June 2004 were
lower than the same  comparative  period for the prior  year.  These  funds were
borrowed as follows: $1,938,000 as various short-term loans due through February
2005;  $295,000  of long  term debt due  through  December  2007,  and $ 538,000
borrowed as lines of credit.  The current  portion of long-term debt at June 30,
2004 consisted of $150,000 due February 2005.


                                       7
<PAGE>

Cash Flows

      Net cash provided by operating  activities was approximately  $201,000 for
the six  months  ended  June 30,  2004  compared  to net cash used in  operating
activities  of $580,000  for the same period of 2003.  The net cash  provided by
operating  activities  for the six months ended June 30, 2004 was  primarily the
result of approximately  $772,000 of net cash receipts from accounts  receivable
offset by additional purchases of inventory of approximately $511,000.

      Net cash used in  financing  activities  for the six months ended June 30,
2004 was approximately $196,000, as compared with net cash provided by financing
activities of approximately  $338,000 for the same period of 2003. This decrease
is due to the Company  reducing its total debt for the six months ended June 30,
2004 as compared to obtaining  additional  debt during the six months ended June
30, 2003.

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 principal
executive officer and principal 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 principal executive officer and principal
financial  officer  concluded  that our  disclosure  controls and procedures are
effective  to ensure  that  information  required to be  disclosed  by us in the
reports that we file or submit  under the  Exchange Act is recorded,  processed,
summarized and reported  within the time periods  specified in the  Commission's
rules and forms.  There was no significant change in our internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the evaluation.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

      On  4/16/2002  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,  in the
amount of $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 will file answering affidavits
in response.


                                       8
<PAGE>

ITEM 2. CHANGES IN SECURITIES

         Not applicable.

ITEM 3. DEFAULTS IN SENIOR SECURITIES

         Not applicable.

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

         Not applicable.

ITEM 5. OTHER INFORMATION

         Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         a) Exhibits:

<TABLE>
<CAPTION>
Exhibit Number                                        Description
--------------------------------------------------------------------------------------------------------------------
<S>                   <C>
3.1                   Certificate of Incorporation of Enertec Electronics, Inc. filed January 31, 2002*
3.2                   Certificate of Amendment of Enertec Electronics, Inc. filed April 23, 2002*
3.3                   Certificate of Amendment of Opal Technologies, Inc. filed October 17, 2002*
3.4                   By-Laws of Lapis Technologies, Inc.*
4.1                   Specimen Common Stock Certificate**
10.1                  Stock Option Plan of 2002*
10.2                  An Agreement for an Unprotected Tenancy, dated in June 2002 between Amnoni Brothers - Carmiel
                      Transporters Ltd. and Enertec Systems Ltd.**
10.3                  Lease Agreement dated October 31, 2002 between Mund Holdings Ltd., and Enertec Electronics
                      Ltd.**
10.4                  Manufacturer's Representative Agreement dated December 20, 1988 between Cytec Corporation and
                      Enertec International.**
10.5                  Exclusive Distribution Agreement dated June 26, 2002 between Gaia Converter by the Company
                      Enertec  (Israel) Gaia Converter Sa and Enertec Electronics Ltd.**
10.6                  Annual Agreement dated February 05, 2001 between BigBand Networks Ltd. and Enertec Electronics
                      Ltd.**
10.7                  Supply Agreement between Enertec Ltd.  and The Israeli Aeronautical Industries Ltd.**
10.8                  Distributor Agreement dated January 1, 1998 between Christie Electric Corp.  and Enertec
                      Electronics Ltd.**
10.9                  Sale Representative Agreement dated July 6, 1998 between EMCO High Voltage Co.  and Enertec
                      International.**
31.1                  Certification by Harry Mund, Chief Executive Officer, pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.***
31.2                  Certification by Miron Markovitz, Chief Financial Officer, pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.***
32.1                  Certification by Harry Mund, Chief Executive Officer, pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.***
32.2                  Certification by Miron Markovitz, Chief Financial Officer, pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.***
</TABLE>

* Previously filed with Amendment No. 2 to the Form SB-2 registration statement
filed with the Securities and Exchange Commission on May 14, 2003, and
incorporated herein by reference.
** Previously filed with Amendment No. 1 to the Form SB-2 registration statement
filed with the Securities and Exchange Commission on February 11, 2003, and
incorporated herein by reference.
*** Filed herewith.


                             9
<PAGE>

      b) Reports on Form 8-K:

      On July 6, 2004, the Company filed a Form 8-K reporting a change in the
Company's certifying accountant effective April 1, 2004 from Rogoff & Company,
P.C. to Gvilli & Co., C.P.A.


                             10
<PAGE>

                         SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
12th day of August 2004.

                                  Lapis Technologies, Inc.


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


                                  By: /s/ Miron Markovitz
                                      -----------------------------------------
                                      Miron Markovitz, Chief Financial Officer,
                                      Chief Accounting Officer and Director


                               11