**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-Q**




(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934FOR
                THE QUARTERLY PERIOD ENDED MARCH 31, 2008o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT~FOR
                THE TRANSITION PERIOD FROM __________ TO __________COMMISSION
                FILE NUMBER ________________




**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. 34th Street, Suite 1008, New York, NY 10001**


(Address
      of principal executive offices, Zip Code)





**(212)
      937-3580**


(Registrant’s
      telephone number, including area code)





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





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


Large
                  accelerated filero
              Accelerated
                  fileroNon-accelerated
                  filero
              Smaller
                  reporting companyx





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




The
      number of shares of registrant’s common stock outstanding, as of May 1, 2008 was
      6,483,000








**TABLE
      OF CONTENTS**




**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.Financial
                Statements
            3Item
                2.Management’s
                Discussion and Analysis or Plan of Operation
            10Item
                3.Quantitative and
                Qualitative Disclosures About Market Risk
            13Item
                4.Controls and
                Procedures
            13**PART
                II - OTHER INFORMATION**13Item
                1.Legal
                Proceedings
            13Item
                2.Unregistered Sales of
                Equity Securities and Use of Proceeds
            13Item
                3.Defaults Upon Senior
                Securities
            13Item
                4.Submission of Matters
                to a Vote of Security Holders
            13Item
                5.Other
                Information
            13Item
                6.Exhibits
            13**SIGNATURES**
            14


2




**PART
      I - FINANCIAL INFORMATION**




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


3





**LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEET**


**(In
      Thousands, Except Share Amounts)**





March 31,2008**ASSETS**Current
                Assets:Cash
                and cash equivalents
            
            $
            521Accounts
                receivable
            
            
            5,221Inventories
            
            
            4,280Prepaid
                expenses and other current assets
            
            
            130Due
                from stockholder
            
            
            68Total
                current assets
            
            
            10,220Property
                and equipment, net
            
            
            273Deferred
                income taxes
            
            
            21$
            10,514**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Bank
                line of credit
            
            $
            1,398Short
                term bank loans
            
            
            4,294Current
                portion of term loans
            
            
            217Accounts
                payable and accrued expenses
            
            
            2,803Due
                to stockholder
            
            
            -Due
                to affilliates
            
            
            (102
            )Income
                taxes payable
            
            
            -Total
                current liabilities
            
            
            8,610Term
                loans, net of current portion
            
            
            213Severance
                payable
            
            
            190Total
                liabilities
            
            
            9,013Commitments
                and contingenciesMinority
                interest
            
            
            468Stockholders'
                Equity:Preferred
                stock; $.001 par value, 5,000,000 shares authorized, none
                issued
            
            
            -Common
                stock; $.001 par value, 100,000,000 shares authorized,
                5,483,000shares
                issued and outstanding
            
            
            6Additional
                paid-in capital
            
            
            78Accumulated
                other comprehensive loss
            
            
            193Retained
                Earnings
            
            
            756Total
                stockholders' equity
            
            
            1,033$
            10,514





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


4





**LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF INCOME**


**(In
      Thousands, Except Earnings Per Share and Share Amounts)**





Three
                Months EndedMarch
                31,2008
            
            2007Sales
            
            $
            2,401
            
            $
            1,857Cost
                of sales
            
            
            1,907
            
            
            1,399Gross
                profit
            
            
            494
            
            
            458Operating
                expenses:Research
                and development expenses
            
            
            22
            
            
            169Selling
                expenses
            
            
            7
            
            
            3General
                and administrative
            
            
            555
            
            
            293Total
                operating expenses
            
            
            584
            
            
            465Income
                from operations
            
            
            (90
            )
            
            (7
            )Other
                income (expense):Interest
                expense, net
            
            
            (117
            )
            
            (91
            )Income
                (loss) before provision for income taxes and minority
                interest
            
            
            (207
            )
            
            (98
            )Provision
                for income taxes
            
            
            -
            
            
            37Minority
                interest
            
            
            (7
            )
            
            (59
            )Net
                income (loss)
            
            
            (200
            )
            
            (76
            )Other
                comprehensive (loss) income, net of taxesForeign
                translation (loss) gain
            
            
            102
            
            
            (14
            )Comprehensive
                (loss) income
            
            $
            (98
            )
            $
            (90
            )Basic
                net income (loss) per share
            
            $
            (0.03
            )
            $
            (0.01
            )Basic
                weighted average common shares outstanding
            
            
            6,483,000
            
            
            6,483,000





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


5





**LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(In
      Thousands)**





Three
                Months EndedMarch
                31,2008
            
            2007Cash
                flows from operating activities:Net
                income
            
            $
            (200
            )
            $
            (76
            )Adjustments
                to reconcile net income to net cash provided by (used in) operating
                activities:Depreciation
                and amortization
            
            
            32
            
            
            29Minority
                interest
            
            
            20
            
            
            (54
            )Gain
                on sale of property and equipment
            
            
            -
            
            
            -Deferred
                income tax
            
            
            (1
            )
            
            -Change
                in operating assets and liabilities:Accounts
                receivable
            
            
            193
            
            
            351Inventories
            
            
            (544
            )
            
            (141
            )Prepaid
                expenses and other current assets
            
            
            (12
            )
            
            1Accounts
                payable and accrued expenses
            
            
            443
            
            
            (447
            )Income
                tax payable
            
            
            (2
            )
            
            40Severence
                payable
            
            
            14
            
            
            -Net
                cash provided by (used in) operating activities
            
            
            (57
            )
            
            (297
            )Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            (38
            )
            
            (31
            )Increase
                in due to affilliates
            
            
            (19
            )
            
            2Increase
                in due to stockholder
            
            
            (107
            )
            
            (24
            )Net
                cash used in investing activities
            
            
            (164
            )
            
            (53
            )Cash
                flows from financing activities:Increase
                in bank line of credit, net
            
            
            36
            
            
            (500
            )Proceeds
                from long term debt
            
            
            1,282
            
            
            1,227Repayment
                of long-term debt
            
            
            (912
            )
            
            (319
            )Net
                cash (used in) provided by financing activities
            
            
            406
            
            
            409Effects
                of exchange rates on cash
            
            
            203
            
            
            14Increase
                (decrease) in cash
            
            
            388
            
            
            72Cash,
                beginning of period
            
            
            133
            
            
            7Cash,
                end of period
            
            $
            521
            
            $
            79Supplemental
                disclosure of cash flow information:Cash
                paid during the period for:Interest
            
            $
            117
            
            $
            91Income
                taxes
            
            $
            10
            
            
            -





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


6


LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(In
      Thousands, Except Per Share Amounts)


MARCH
      31,
      2008





NOTE
      1 -
      DESCRIPTION OF BUSINESS





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





NOTE
      2 -
      BASIS OF PRESENTATION AND CONSOLIDATION





The
      accompanying unaudited consolidated financial statements and related footnotes
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America for interim financial statements and pursuant
      to
      the rules and regulations of the Securities and Exchange Commission for Form
      10-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, 2007. The
      results of operations for the three months ended March 31, 2008 are not
      necessarily indicative of the operating results that may be expected for the
      year ending December 31, 2008.





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





NOTE
      3 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Stock
      based compensation





The
      Company has adopted Statement of Financial Accounting Statement (“SFAS”) No.
      148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS
      148”). SFAS 148 amends SFAS No. 123 “Accounting for Stock-Based Compensation”
(“SFAS 123”), and provides alternative methods of transition for a voluntary
      change to the fair value based method of accounting for stock-based employee
      compensation. The Company has adopted the fair value method of accounting as
      discussed in SFAS 123 as of January 1, 2003. Accordingly, stock options, when
      issued, will be recorded in accordance with the terms of that
      document.





Use
      of
      Estimates





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and the disclosure of contingent assets and liabilities
      at the date of the financial statements and revenues and expenses during the
      reporting period. Actual results could differ from those
      estimates.


7


LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(In
      Thousands, Except Per Share Amounts)


MARCH
      31,
      2008





NOTE
      3 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Recent
      Accounting Pronouncements





In
      July 2006, the FASB issued Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes - An Interpretation of FASB Statement 109,” (“FIN
      48”). FIN 48 prescribes a comprehensive model as to how a company should
      recognize, measure, present and disclose in its financial statements uncertain
      tax positions that the company has taken or expects to take on a tax return.
      The
      adoption of FIN 48 is effective January 1, 2007. The Company has determined
      there will be no effect on their financial statements.




In
      June 2006, the FASB ratified the Emerging Issues Task Force
      (“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
      Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
      Issue No. 06-2 requires companies to accrue the costs of compensated
      absences under a sabbatical or similar benefit arrangement over the requisite
      service period. EITF Issue No. 06-2 is effective for us beginning
      July 1, 2007. The cumulative effect of the application of this consensus on
      prior period results should be recognized through a cumulative-effect adjustment
      to retained earnings as of the beginning of the year of adoption. Elective
      retrospective application is also permitted. The application of this consensus
      won‘t have a material impact on our financial statements.





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and
      132(R),” (“FAS 158”). Among other things, FAS 158 requires companies to
      prospectively recognize a net liability or asset and to report the funded status
      of their defined benefit pension and other postretirement benefit plans on
      their
      balance sheets, with an offsetting adjustment to accumulated other comprehensive
      income; such recognition will not affect the Company’s statement of income. The
      adoption of FAS 158 is effective for the year ending December 31, 2006. The
      Company has determined there will be no effect on their financial
      statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
      for Financial Assets and Financial Liabilities—Including an Amendment of FASB
      Statement No. 115.” This Standard allows entities to voluntarily choose, at
      specified election dates, to measure many financial assets and financial
      liabilities (as well as certain non-financial instruments that are similar
      to
      financial instruments) at fair value. The election is made on an
      instrument-by-instrument basis and is irrevocable. If the fair value option
      is
      elected for an instrument, the Statement specifies that all subsequent changes
      in fair value for that instrument shall be reported in earnings. SFAS No. 159
      is
      effective for ATMI beginning on January 1, 2008. We are currently
      evaluating the impact this new Standard could have on our financial position
      and
      results of operations.





In
      December 2007 the FASB issued SFAS No. 160 “Non-controlling Interests in
      Consolidated Financial Statements”. FAS 160 seeks to improve the relevance,
      comparability, and transparency of the financial information that a reporting
      entity provides in its consolidated financial statements by establishing
      accounting and reporting standards. This statement is effective for fiscal
      years
      beginning after December 15, 2008. The Company has not yet determined what
      the
      effect will be, if any, on their financial statements.


8


LAPIS
      TECHNOLOGIES, INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(In
      Thousands, Except Per Share Amounts)


MARCH
      31,
      2008





NOTE
      3 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Recent
      Accounting Pronouncements





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





NOTE
      4 –
PROVISION FOR INCOME TAXES -




The
      income tax expense for the three months ended March 31, 2008 is based upon
      the
      income tax laws of Israel. Israeli tax law does not allow a parent company
      to
      offset its’ income with losses from any of its subsidiaries.




NOTE
      5 –
SALE OF THE COMPANY





On
      February 28, 2008 the Company entered into an agreement with an Israeli Company
      that currently trades on the Tel Aviv Stock Exchange. Under this agreement
      Lapis
      will exchange approximately 75,000,000 of its shares (92% based upon the current
      outstanding amounts) in exchange for approximately 4,500,000 shares of Star
      Night Technologies Ltd. In addition, the Company’s chief executive officer has
      been granted certain options to sell his Lapis shares to Star Night under
      certain circumstances.





The
      agreement also calls for the sale of the Company’s wholly owned subsidiary, as
      well as the subsidiary’s own majority owned subsidiary. The result of these
      transactions will be the ownership of approximately 4,500,000 shares of Star
      Night Technologies, Ltd.





For
      further information please refer to Form 8-K filed with the Securities and
      Exchange Commission on March 5, 2008 which is incorporated by reference into
      this filing


9


**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.





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





**Overview**





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





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




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





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


10


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





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





*Liquidity
      and Capital Resources*





As
      of
      March 31, 2008 our cash balance was $521,000 as compared to $79,000 at March
      31,
      2007. Total current assets at March 31, 2008 were $10,220,000 as compared to
      $7,934,000 at March 31, 2007. The increase in current assets is mainly due
      to
      the increase in cash balance, accounts receivable and inventories.





Our
      accounts receivable at March 31, 2008 was $5,221,000 as compared to $4,326,000
      at March 31, 2007. The change in accounts receivable is primarily due to the
      increase in sales.





As
      of
      March 31, 2008 our working capital was $1,610,000 as compared to $1,210,000
      at
      March 31, 2007. The increase in working capital is mainly due to a larger
      increase in current assets than the increase in bank line of credit and in
      short
      term loans and the increase in accounts payable and accrued
      expenses.





The
      current portion of long-term debt at March 31, 2008 was $217,000 as compared
      to
      $186,000 as of March 31, 2007.





At
      March
      31, 2008 our total bank debt was $6,122,000as opposed to $4,565,000 at the
      end
      of March 31, 2007. These funds were borrowed as follows: $4,511,000 which
      includes the current portion of long term debt as various short term bank loans
      due through 2008, $213,000 of long term debt due through 2010 and $1,398,000
      using our bank lines of credit. As a result we increased the amount borrowed
      for
      the three-month period ended March 31, 2008 by $ 1,557,000.The increase in
      bank
      debt is mainly due to the increase in accounts receivable and the decrease
      in
      USD/Shekel exchange rate since the loans are in Shekels. The USD/Shekel exchange
      rate decreased by 16.94% from 4.155 as of March 31, 2007 to 3.553 as of March
      31, 2008.





As
      of
      March 31, 2008, we are current with all of our bank debt and compliant with
      all
      the terms of our bank debt.





*Financing
      Needs*




Although
      we currently do not have any material commitments for capital expenditures,
      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, 2008 Compared to Three Months Ended March 31,
      2007**





Revenues
      for the three months ended March 31, 2008 were $2,401,000 as compared to
      $1,857,000 for the three months ended March 31, 2007. This represents an
      increase of $544,000 or 29.3% comparing the two periods. The increase in revenue
      for the three months ended March 31, 2008 is mainly the result of the increase
      in the revenues of the military business and the decrease in USD/Shekel exchange
      rate.





11


The
      average USD/Shekel exchange rate decreased by 16.34% from 4.215 as of March
      31
      ,2007 to 3.623 as of March 31, 2008.





Gross
      profit increased by $36,000 or 7.86%, to $494,000 for the three months ended
      March 31, 2008 as compared to $458,000 for the three months ended March 31,
      2007. The increase in gross profit is primarily the result of the increase
      in
      sales.




Gross
      profit as a percentage of sales for the three month ended March 31, 2008 was
      20.6% as compared to 24.7% for the three month ended March 31, 2007. The
      decrease in gross profit as a percentage of sales is a result of higher
      percentage increase in cost of sale as compared to the percentage increase
      in
      sales due to the increase in wages and other Shekel related expenses. In the
      commercial field the decrease in gross profit as a percentage of sales is also
      a
      result of narrowing profit margin due to higher cost of sales involved in the
      increasing volume of customized products in order to allow us to maintain our
      market share.





For
      the
      three months ended March 31, 2008, Selling, General and Administrative expenses
      totaled $562,000. This was an increase of $266,000 or 89.9% as compared to
      the
      same period 2007. The increase in selling, general and administrative expenses
      is mainly a result of the increase in professional services expenses and the
      decrease in USD/Shekel exchange rate.





For
      the
      three months ended March 31, 2008, Research and Development expenses decreased
      to $22,000 as compared to $169,000 for the three months ended March 31, 2007.
      This represents a decrease of $147,000 or 87% comparing the two periods. The
      decrease in R&D expenses for the three months ended March 31, 2008 is
      primarily the result of more manpower resources during this period being
      allocated to the fulfillment of the increased number of orders received,
      resulting in the increase in sales and in the work in process.





Interest
      expense was $117,000and $91,000 for the three months ended March 31, 2008 and
      2007, respectively. This was an increase of $26,000, or 28.57%. The main reason
      for this increase was the increase in total bank debt.





Our
      net
      loss was **$** 200,000 **** for
      the
      three months ended March 31, 2008 compared to a net loss of **$** 76,000 **** for
      the
      three months ended March 31, 2007. The decrease in profitability for the three
      months ended March 31, 2008 is mainly due to the increase of $119,000 in the
      operating expenses and of the interest expenses, partly offset by the increase
      in the gross profit.





At
      March
      31, 2008, we had two customers that accounted for approximately 65% of accounts
      receivable. For the three-month periods ended March 31, 2008 and 2007
      approximately 52.4% and 56.8% of our sales were to two customers,
      respectively.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, and results
      of
      operations, liquidity or capital expenditures.




**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, 2008
      revenue relating to service contracts was less than one percent of net
      sales.





Financial
      Instruments - The carrying amounts of financial instruments, including cash
      and
      cash equivalents, accounts receivable, bank line of credit, short term bank
      loans and accounts payable and accrued expenses approximate fair value at March
      31, 2008 because of the relatively short maturity of the instruments. The fair
      value of due from stockholder is not practical to estimate without incurring
      excessive cost and is carried at cost at March 31, 2008. The carrying value
      of
      the long-term debt approximate fair value at March 31, 2008 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.


12


**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**





N/A.





**Item
      4T.**  **Controls
      and Procedures.**





a)
            Based
                on an evaluation of our disclosure controls and procedures (as defined
                in
                Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934,
                as
                amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15,
                as of
                March 31, 2008, our Chief Executive Officer and Chief Financial Officer
                have concluded that our disclosure controls and procedures were effective
                in ensuring 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. Our Chief Executive Officer and Chief
                Financial Officer also concluded that, as of March 31, 2008, our
                disclosure controls and procedures were effective in ensuring that
                information required to be disclosed by us in the reports that we
                file or
                submit under the Exchange Act is accumulated and communicated to
                our
                management, including our Chief Executive Office and Chief Financial
                Officer, to allow timely decision regarding required
                disclosure.





b)
            Changes
                in Internal Controls. During the quarter ended March 31, 2008, there
                were
                no changes in our internal control s over financial reporting identified
                in connection with the evaluation required by paragraph (d) of Rule
                13a-15
                or Rule 15d-15 that has materially affected, or is reasonably likely
                to
                materially affect, our internal control over financial
                reporting.




**PART
      II**





**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.**





Not
      applicable.





**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**


10.1
            
            Agreement
                for the Issue and Sale of Shares in Lapis Technologies, Inc. and
                the
                Transfer of Shares in Star Night Technologies, Ltd., dated February
                28,
                2008, by and between Lapis Technologies, Inc., Harry Mund and Mordechai
                Solomon *10.2
            
            Agreement
                for the Sale and Purchase of Entertec Systems 2001 Ltd., dated February
                28, 2008, by and between Entertec Management Ltd., Harry Mund and
                S.D.S.
                (Star Defense Systems) Ltd. *10.3
            
            Agreement,
                dated February 28, 2008, by and between Lapis Technologies, Inc.
                and Mund
                Holdings Ltd. *31.1
            
            Certification
                by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
                of the Exchange Act.31.2
            
            Certification
                by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
                of the Exchange Act.32.1
            
            Certification
                by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
                of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of
                the
                United States Code.32.2
            
            Certification
                by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
                of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of
                the
                United States Code.


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


13


**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 14, 2008
            By:
            /s/ Harry
                MundHarry
                MundChief
                Executive Officer, President
              and
                Chairman of the BoardDate:
                May 14, 2008
            By:
            /s/ Miron
                MarkovitzMiron
                MarkovitzChief
                Financial Officer, Chief Accounting
              Officer
                and Director


14