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 MARCH 31, 2009.




COMMISSION
FILE NUMBER 000-10690




LAPIS
TECHNOLOGIES, INC.





(Exact
Name of Registrant as Specified in its Charter)





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





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




Issuer's
telephone number: (212) 937-3580




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes o     No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o
              Smaller
      reporting company x




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




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of April 30, 2009, there were 6,483,000
outstanding shares of the Registrant's Common Stock, $.001 par
value.












TABLE
OF CONTENTS





PagePART
      I - FINANCIAL INFORMATIONItem 1.       Financial Statements
                            
                            
                            3Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations
                            
                            
                            9Item 3.       Quantitative and Qualitative Disclosures about
      Market Risk
                            
                            
                            11Item
      4T.Controls and
      Procedures
                            
                            
                            11PART II - OTHER INFORMATIONItem 1.       Legal Proceedings
                            
                            
                            12Item
      1A.    Risk
      Factors
                            
                            
                            12Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds
                            
                            
                            12Item 3.       Defaults Upon Senior Securities
                            
                            
                            12Item 4.       Submission of Matters to a Vote of Security Holders
                            
                            
                            12Item 5.       Other Information
                            
                            
                            12Item 6.       Exhibits
                            
                            
                            12SIGNATURES
                            
                            
                            13









PART
I - FINANCIAL INFORMATION


Item 1.  Financial
Statements.





LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEET


(In
Thousands, Except Share Amounts)





March
      31,2009(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                              
                              $
                              778Accounts
      receivable
                              
                              
                              3,410Inventories
                              
                              
                              3,851Prepaid
      expenses and other current assets
                              
                              
                              48Due
      from stockholder
                              
                              
                              -Total
      current assets
                              
                              
                              8,087Property
      and equipment, net
                              
                              
                              170Deferred
      income taxes
                              
                              
                              18$
                              8,275LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent  Liabilities:Bank
      line of credit
                              
                              $
                              896Short
      term bank loans
                              
                              
                              3,812Current
      portion of term loans
                              
                              
                              -Accounts
      payable and accrued expenses
                              
                              
                              1,867Due
      to stockholder
                              
                              
                              -Due
      to affilliates
                              
                              
                              79Income
      taxes payable
                              
                              
                              -Total
      current liabilities
                              
                              
                              6,654Term
      loans, net of current portion
                              
                              
                              1Severance
      payable
                              
                              
                              173Total
      liabilities
                              
                              
                              6,828Commitments
      and contingenciesMinority
      interest
                              
                              
                              495Stockholders'
      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
                              
                              
                              6Additional
      paid-in capital
                              
                              
                              78Accumulated
      other comprehensive income (loss)
                              
                              
                              (210Retained
      Earnings
                              
                              
                              1,078Total
      stockholders' equity
                              
                              
                              952$
                              8,275




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)





Three
      Months EndedMarch 31,2009
                
                
                2008Sales
                
                $
                2,119
                
                
                $
                2,401Cost
      of sales
                
                
                1,576
                
                
                
                1,907Gross
      profit
                
                
                543
                
                
                
                494Operating
      expenses:Research
      and development expenses
                
                
                21
                
                
                
                22Selling
      expenses
                
                
                25
                
                
                
                7General
      and administrative
                
                
                304
                
                
                
                555Total
      operating expenses
                
                
                350
                
                
                
                584Income
      from operations
                
                
                193
                
                
                
                (90
                )Other
      income (expense):Interest
      expense, net
                
                
                (79
                )
                
                
                (117
                )Income
      (loss) before provision for income taxes and minority
    interest
                
                
                114
                
                
                
                (207
                )Provision
      for income taxes
                
                
                
                
                
                
                -Minority
      interest
                
                
                28
                
                
                
                (7
                )Net
      income (loss)
                
                
                86
                
                
                
                (200
                )Other
      comprehensive (loss) income, net of taxesForeign
      translation (loss) gain
                
                
                (318
                )
                
                
                102Comprehensive
      (loss) income
                
                $
                (232
                )
                
                $
                (98
                )Basic
      net income (loss) per share
                
                $
                0.01
                
                
                $
                (0.03
                )Basic
      weighted average common shares outstanding
                
                
                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)





Three
      Months EndedMarch 31,2009
                
                
                2008Cash
      flows from operating activities:Net
      income
                
                $
                86
                
                
                $
                (200
                )Adjustments
      to reconcile net income to net cash   provided by (used in)
      operating activities:Depreciation
      and amortization
                
                
                34
                
                
                
                32Minority
      interest
                
                
                (6
                )
                
                
                20Gain
      on sale of property and equipment
                
                
                
                
                
                
                -Deferred
      income tax
                
                
                2
                
                
                
                (1
                )Change
      in operating assets and liabilities:Accounts
      receivable
                
                
                1,474
                
                
                
                193Inventories
                
                
                454
                
                
                
                (544
                )Prepaid
      expenses and other current assets
                
                
                43
                
                
                
                (12
                )Accounts
      payable and accrued expenses
                
                
                (911
                )
                
                
                443Income
      tax payable
                
                
                (16
                )
                
                
                (2
                )Severence
      payable
                
                
                (17
                )
                
                
                14Net
      cash provided by (used in) operating activities
                
                
                1,143
                
                
                
                (57
                )Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                (2
                )
                
                
                (38
                )Increase
      in due to affilliates
                
                
                (39
                )
                
                
                (19
                )Increase
      in due to stockholder
                
                
                (13
                )
                
                
                (107
                )Net
      cash used in investing activities
                
                
                (54
                )
                
                
                (164
                )Cash
      flows from financing activities:Increase
      (decrease) in bank line of credit, net
                
                
                (664
                )
                
                
                36Proceeds
      from long term debt
                
                
                -
                
                
                
                1,282Repayment
      of long-term debt
                
                
                (248
                )
                
                
                (912
                )Net
      cash (used in) provided by financing activities
                
                
                (912
                )
                
                
                406Effects
      of exchange rates on cash
                
                
                (162
                )
                
                
                203Increase
      (decrease) in cash
                
                
                15
                
                
                
                388Cash,
      beginning of period
                
                
                763
                
                
                
                133Cash,
      end of period
                
                $
                778
                
                
                $
                521Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
                
                $
                79
                
                
                $
                117Income
      taxes
                
                $
                6
                
                
                $
                10




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)
 MARCH 31,
2009
 
 NOTE 1 -
DESCRIPTION OF BUSINESS
 
 Lapis
Technologies, Inc. (the “Company”) was incorporated in the State of Delaware on
January 31, 2002.  The Company was originally named Enertec
Electronics, Inc. and on April 23, 2002 changed its name to Opal Technologies,
Inc. which changed its name to Lapis Technologies, Inc. on October 3,
2002.  The Company’s operations are conducted through its wholly-owned
Israeli Subsidiary, Enertec Electronics Ltd. (“Enertec”) and its majority owned
Israeli subsidiary Enertec Systems 2001 LTD (“Systems”).  Enertec is
engaged in the manufacturing, distribution and marketing of electronic
components and products relating to power supplies, converters and related power
conversion products, automatic test equipment, simulators and various military
and airborne systems, within the State of Israel.
 
 NOTE 2 –
BASIS OF PRESENTATION AND CONSOLIDATION
 
 The
accompanying unaudited consolidated financial statements and related footnotes
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial statements and pursuant to
the rules and regulations of the Securities and Exchange Commission for Form
10-Q.  Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  For
further information read the financial statements and footnotes thereto included
in the Company's Annual Report to be filed in accordance with the rules and
regulations of the Securities and Exchange Commission on Form 10-K for the year
ended December 31, 2008.  The results of operations for the three
months ended March 31, 2009 are not necessarily indicative of the operating
results that may be expected for the year ending December 31, 2009.
 
 The
accompanying financial statements include the accounts of the Company and their
ownership interest in its subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Stock
based compensation
 
 The
Company has adopted Statement of Financial Accounting Statement (“SFAS”) No.
148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS
148”).  SFAS 148 amends SFAS No. 123 “Accounting for Stock-Based
Compensation” (“SFAS 123”), and provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation.  The Company has adopted the fair value method
of accounting as discussed in SFAS 123 as of January 1,
2003.  Accordingly, stock options, when issued, will be recorded in
accordance with the terms of that document.
 
 Use of
Estimates
 
 The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.
 
 6
 
 LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (In
Thousands, Except Per Share Amounts)
 MARCH 31,
2009
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
Accounting Pronouncements
 
 In
July 2006, the FASB issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – An Interpretation of FASB Statement 109,” (“FIN
48”). FIN 48 prescribes a comprehensive model as to how a company should
recognize, measure, present and disclose in its financial statements uncertain
tax positions that the company has taken or expects to take on a tax return. The
adoption of FIN 48 is effective January 1, 2007. The Company has determined
there will be no effect on their financial statements.
 
 In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for us beginning
July 1, 2007. The cumulative effect of the application of this consensus on
prior period results should be recognized through a cumulative-effect adjustment
to retained earnings as of the beginning of the year of adoption. Elective
retrospective application is also permitted. The application of this consensus
won‘t have a material impact on our financial statements.
 
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106
and 132(R),” (“FAS 158”). Among other things, FAS 158 requires companies to
prospectively recognize a net liability or asset and to report the funded
status of their defined benefit pension and other postretirement benefit plans
on their balance sheets, with an offsetting adjustment to accumulated other
comprehensive income; such recognition will not affect the Company’s
statement of income. The adoption of FAS 158 is effective for the year
ending December 31, 2006. The Company has determined there will be
no effect on their financial statements.
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—Including an Amendment of FASB
Statement No. 115.” This Standard allows entities to voluntarily choose, at
specified election dates, to measure many financial assets and financial
liabilities (as well as certain non-financial instruments that are similar to
financial instruments) at fair value. The election is made on an
instrument-by-instrument basis and is irrevocable. If the fair value option is
elected for an instrument, the Statement specifies that all subsequent changes
in fair value for that instrument shall be reported in earnings. SFAS No. 159 is
effective for ATMI beginning on January 1, 2008. We are currently
evaluating the impact this new Standard could have on our financial position and
results of operations.
 
 In
December 2007 the FASB issued SFAS No. 160 “Non-controlling Interests in
Consolidated Financial Statements”. FAS 160 seeks to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements by establishing
accounting and reporting standards. This statement is effective for fiscal years
beginning after December 15, 2008. The Company has not yet determined what the
effect will be, if any, on their financial statements.
 
 7
 
 LAPIS
TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (In
Thousands, Except Per Share Amounts)
 MARCH 31,
2009
 
 NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
Accounting Pronouncements
 
 Management
does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material
effect on the accompanying consolidated financial statements.
 
 NOTE 4 –
PROVISION FOR INCOME TAXES –
 
 The
income tax expense for the three months ended March 31, 2009 is based upon the
income tax laws of Israel. Israeli tax law does not allow a parent company to
offset its’ income with losses from any of its subsidiaries.
  8




Item 2.  Management’s Discussion and Analysis
of Financial Condition and Results 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 statements should not be regarded as a representation by Lapis
Technologies, Inc., or any other person, that such forward-looking statements
will be achieved. The business and operations of Lapis Technologies, Inc. and
its subsidiaries are subject to substantial risks, which increase the
uncertainty inherent in the forward-looking statements contained in this Report.
Because these forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including our
plans, objectives, expectations and intentions and other factors discussed under
"Risk Factors," included in our Registration Statement on Form 10-K filed with
the Securities and Exchange Commission on March 31, 2009.





The
following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
Report.





Overview.





We were
formed in Delaware on January 31, 2002 under the name Enertec Electronics, Inc.
and have filed two certificates of amendment changing our name to Opal
Technologies, Inc. and then to Lapis Technologies, Inc. We conduct operations in
Israel through our wholly owned subsidiary, Enertec Electronics Limited
("Enertec Electronics"), an Israeli corporation formed on December 31, 1991, and
Enertec Systems 2001 LTD ("Enertec Systems"), an Israeli corporation formed on
August 28, 2001, of which we have a 73% equity interest. We are manufacturers
and distributors of various military and airborne systems, simulators, automatic
test equipment (ATE), electronic components and products related to power
supplies, converters and other power conversion products.







Liquidity
and Capital Resources





As of
March 31, 2009, our cash balance was $778,000 as compared to $521,000 at March
31, 2008. Total current assets at March 31, 2009 were $8,087,000 as compared to
$10,220,000 at March 31, 2008.  The decrease in current assets is
mainly due to the decrease in accounts receivable and inventories partly offset
by the increase in cash balance.





Our
accounts receivable at March 31, 2009 was $3,410,000 as compared to $5,221,000
at March 31, 2008. The change in accounts receivable is primarily due to
improved payment terms of several orders and the increase in USD/Shekel exchange
rate since most of the receivables are in Shekels. The USD/Shekel exchange rate
increased by 17.94% from 3.535 as of March 31, 2008 to 4.188 as of March 31,
2009.





As of
March 31, 2009 our working capital was $1,433,000 as compared to $1,610,000 at
March 31, 2008. The decrease in working capital is mainly due to a larger
decrease in current assets than the decrease in current
liabilities.





There was
no current portion of long-term debt at March 31, 2009 as compared to $217,000
as of March 31, 2008.





At March
31, 2009 our total bank debt was $4,709,000 as opposed to $6,122,000 at the end
of March 31, 2008. These funds were borrowed as follows: $3,812,000 as various
short term bank loans due through 2010, $1,000 of long term debt due through
2010 and $896,000 using our bank lines of credit. As a result, we decreased the
amount borrowed for the three-month period ended March 31, 2009 by $1,413,000.
The decrease in bank debt is mainly due to the decrease in accounts receivable
and the increase in USD/Shekel exchange rate since the loans are in Shekels. The
USD/Shekel exchange rate increased by 17.94% from 3.535 as of March 31, 2008 to
4.188 as of March 31, 2009.





As of
March 31, 2009, we are current with all of our bank debt and compliant with all
the terms of our bank debt.


9


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
Months Ended March 31, 2009 Compared to Three Months Ended March 31,
2008





Revenues
for the three months ended March 31, 2009 were $2,119,000 as compared to
$2,401,000 for the three months ended March 31, 2008.  This represents
a decrease of $282,000 or 11.7% comparing the two periods. The decrease in
revenue for the three months ended March 31, 2009 is mainly the result of the
increase in USD/Shekel exchange rate. The average USD/Shekel exchange rate
increased by 12% from 3.623 as of March 31, 2008 to 4.058 as of March 31, 2009.
The increase in the revenues of the military business was offset by the decrease
in the revenues in the commercial field.




Gross
profit increased by $49,000 or 9.9%, to $543.000 for the three months ended
March 31, 2009 as compared to $494,000 for the three months ended March 31,
2008. The increase in gross profit is primarily the result of  a higher
decrease in cost of sales as compared to the decrease in sales.




Gross
profit as a percentage of sales for the three months ended March 31, 2009 was
25.6% as compared to 20.6% for the three month ended March 31, 2008. The
increase in gross profit as a percentage of sales is mainly a result of the
increase in sales of serial productionproducts in the military
field. Serial production products have higher profit margin.





For the
three months ended March 31, 2009, Selling, General and Administrative expenses
totaled $350,000.  This was a decrease of $234,000 or 40.1% as
compared to the same period 2008. The decrease in selling, general and
administrative expenses is mainly a result of the decrease in professional
services expenses and the increase in USD/Shekel exchange rate.





For the three months ended March 31,
2008, Research and Development expenses were $21,000 as compared to $22,000 for
the three months ended March 31, 2008. This represents a decrease of $1,000 or
4.5% comparing the two periods. The decrease in R&D expenses for the three
months ended March 31, 2009 is primarily the result oftheincrease in USD/Shekel exchange
rate.





Interest
expense was $79,000 and $117,000 for the three months ended March 31, 2009 and
2008, respectively. This was a decrease of $38,000, or 32.5%. The main reason
for this decrease was the decrease in total bank debt and the decrease in the
interest rate.





Our net
profit was $86,000 for the three months ended March 31, 2009 compared to a
net loss of $200,000 for the three months ended March 31, 2008. The
increase in profitability for the three months ended March 31, 2009 is mainly
due to the increase in the gross profit and the decrease in the operating
expenses and of the interest expenses.





At March
31, 2009, we had two customers that accounted for approximately 64.2% of
accounts receivable. For the three-month periods ended March 31, 2009 and 2008
approximately 70.0% and 52.4% of our sales were to two customers,
respectively.


10


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.




Critical
Accounting Policies





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





Revenue
Recognition and Customer Deposits - Revenue is recorded as product is shipped,
the price has been fixed or determined, collectibility is reasonably assured and
all material specific performance obligations have been completed. The product
sold by the Company is made to the specifications of each customer; sales
returns and allowances are allowed on a case-by-case basis, are not material to
the financial statements and are recorded as an adjustment to sales. Cash
payments received in advance are recorded as customer deposits.





Revenue
relating to service is recognized on the straight-line basis over the life of
the agreement, generally one year.  For the three months ended March
31, 2009 revenue relating to service contracts were less than one percent of net
sales.





Financial
Instruments - The carrying amounts of financial instruments, including cash and
cash equivalents, accounts receivable, bank line of credit, short term bank
loans and accounts payable and accrued expenses approximate fair value at March
31, 2009 because of the relatively short maturity of the instruments. The fair
value of due from stockholder is not practical to estimate without incurring
excessive cost and is carried at cost at March 31, 2009. The carrying value of
the long-term debt approximate fair value at March 31, 2009 based upon debt
terms available for companies under similar terms.





Foreign
Currency Translation - Lapis Technologies, Inc. has one wholly owned subsidiary,
Enertec Electronics Limited, an Israeli corporation, and one majority owned
subsidiary, Enertec Systems 2001 Ltd., an Israeli corporation. The assets and
liabilities of the foreign subsidiaries are translated at current exchange rates
and related revenues and expenses at average exchange rates in effect during the
periods reported. Resulting translation adjustments, if material, are recorded
as a separate component of accumulated other comprehensive income or
loss.





Item 3. Quantitative and Qualitative
Disclosures about Market Risk.





N/A.





Item 4T.  Controls and
Procedures.





Evaluation
of Disclosure Controls and Procedures




Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act of 1934, as amended (the “Exchange Act”) that is designed to ensure
that information required to be disclosed by the Company in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time specified in the Security and Exchange Commission's
rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuer's management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.




Pursuant
to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation
with the participation of the Company’s management, including Harry Mund, the
Company’s Chief Executive Officer (“CEO”) and Miron Markovitz, the Company’s
Chief Financial Officer (“CFO”), of the effectiveness of the Company’s
disclosure controls and procedures (as defined under Rule 13a-15(e) under the
Exchange Act) as of the period ended March 31, 2009.  Based upon that
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act, is recorded,
processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated
to the Company’s management, including the Company’s CEO and CFO, as
appropriate, to allow timely decisions regarding required
disclosure.


11


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 March 31,  2009.  Based on that evaluation, our CEO and CFO
concluded that no change occurred in the Company's internal controls over
financial reporting during the quarter ended March 31, 2009 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
controls over financial reporting.





PART
II- OTHER INFORMATION





Item
1. Legal Proceedings.




We are
not a party to any pending legal proceeding, nor is our property the subject of
a pending legal proceeding, that is not in the ordinary course of business or
otherwise material to the financial condition of our business. None of our
directors, officers or affiliates is involved in a proceeding adverse to our
business or has a material interest adverse to our business.





Item
1A. Risk Factors.





N/A.





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





N/A.





Item
3. Defaults Upon Senior Securities.





N/A.




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





N/A.





Item
5. Other Information.





Not
applicable.




Item 6.
Exhibits.





Exhibit
                Number
              
              Description31.1
              
              Certification
      by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act31.2
              
              Certification
      by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
      of the Exchange Act32.1
              
              Certification
      by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code32.2
              
              Certification
      by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
      of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
      United States Code




12


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:
      May 15, 2009
              By:
              /s/  Harry MundHarry
      MundChief Executive Officer (principal executive
      officer), Presidentand
      Chairman of the BoardDate:
      May 15,  2009
              By:
              /s/  Miron
MarkovitzMiron
      MarkovitzChief
      Financial Officer, Chief AccountingOfficer
      and Director




13