**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 MARCH 31, 2007





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


FOR
      THE
      TRANSITION PERIOD FROM __________ TO _________


COMMISSION
      FILE NUMBER ______________________________





**LAPIS
      TECHNOLOGIES, INC.**


(Name
      of
      small business issuer in its charter)





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





**19
      W. 34** **TH** **Steet, Suite 1008**


**New
      York, New York 10001**


(Address
      of principal executive offices)





Issuer’s
      telephone Number: **(212)
      937-3580**





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





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: As of May 14, 2007, the issuer had 5,483,000
      outstanding shares of Common Stock ,
      $.0001
      par value per share.





Transitional
      Small Business Disclosure Format (check one): Yes o No x







**LAPIS
      TECHNOLOGIES, INC.**


**MARCH
      31, 2007 QUARTERLY REPORT ON FORM 10-QSB**


**TABLE
      OF CONTENTS**







**Page****PART
                I - FINANCIAL INFORMATION**Item
                1. Financial Statements
            3Item
                2. Management’s Discussion and Analysis or Plan of
                Operation
            9Item
                3. Controls and Procedures
            11**PART
                II - OTHER INFORMATION**Item
                1. Legal Proceedings
            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
            12**SIGNATURES**
            13







2
 
 **PART
          I - FINANCIAL INFORMATION**
 
 **Item
                  1.**
                **Financial
                    Statements.**


**LAPIS
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEET**
 **(In
        Thousands, Except Share Amounts)**
  **ASSETS**March
                  31,2007Current
                  Assets:Cash
                  and cash equivalents
              
              $
              79Accounts
                  receivable
              
              
              4,326Inventories
              
              
              3,110Prepaid
                  expenses and other current assets
              
              
              405Due
                  from stockholder
              
              
              14Total
                  current assets
              
              
              7,934Property
                  and equipment, net
              
              
              302Deferred
                  income taxes
              
              
              22$
              8,258**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  Liabilities:Bank
                  line of credit
              
              $
              1,006Short
                  term bank loans
              
              
              3,005Current
                  portion of term loans
              
              
              186Accounts
                  payable and accrued expenses
              
              
              2,291Due
                  to stockholder
              
              
              -Due
                  to affilliates
              
              
              198Income
                  taxes payable
              
              
              38Total
                  current liabilities
              
              
              6,724Term
                  loans, net of current portion
              
              
              368Severance
                  payable
              
              
              85Total
                  liabilities
              
              
              7,177Commitments
                  and contingenciesMinority
                  interest
              
              
              262Stockholders'
                  Equity:Preferred
                  stock; $.001 par value, 5,000,000 shares authorized, none issued
              
              
              -Common
                  stock; $.001 par value, 100,000,000 shares authorized, 6,483,000shares
                  issued and outstanding
              
              
              6Additional
                  paid-in capital
              
              
              78Accumulated
                  other comprehensive loss
              
              
              (137
              )Retained
                  Earnings
              
              
              872Total
                  stockholders' equity
              
              
              819$
              8,258


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
                  31,2007
              
              2006Sales
              
              
              1,857
              
              $
              1,994Cost
                  of sales
              
              
              1,399
              
              
              1,394Gross
                  profit
              
              
              458
              
              
              600Operating
                  expenses:Research
                  and development expenses
              
              
              169
              
              
              70Selling
                  expenses
              
              
              3
              
              
              27General
                  and administrative
              
              
              293
              
              
              279Total
                  operating expenses
              
              
              465
              
              
              376Income
                  from operations
              
              
              (7
              )
              
              224Other
                  income (expense):Interest
                  expense, net
              
              
              (91
              )
              
              (87
              )Income
                  (loss) before provision for income taxes and minority interest
              
              
              (98
              )
              
              137Provision
                  for income taxes
              
              
              37
              
              
              56Minority
                  interest
              
              
              (59
              )
              
              18Net
                  income (loss)
              
              
              (76
              )
              
              63Other
                  comprehensive (loss) income, net of taxesForeign
                  translation (loss) gain
              
              
              (14
              )
              
              (16
              )Comprehensive
                  (loss) income
              
              $
              (90
              )
              $
              47Basic
                  net income (loss) per share
              
              $
              (0.01
              )
              $
              0.01Basic
                  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
                  31,2007
              
              2006Cash
                  flows from operating activities:Net
                  income
              
              
              (76
              )
              $
              63Adjustments
                  to reconcile net income to net cashprovided
                  by (used in) operating activities:Depreciation
                  and amortization
              
              
              29
              
              
              21Minority
                  interest
              
              
              (54
              )
              
              15Gain
                  on sale of property and equipment
              
              
              -
              
              
              -Deferred
                  income tax
              
              
              -
              
              
              -Change
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              351
              
              
              43Inventories
              
              
              (141
              )
              
              109Prepaid
                  expenses and other current assets
              
              
              1
              
              
              (286
              )Accounts
                  payable and accrued expenses
              
              
              (447
              )
              
              (309
              )Income
                  tax payable
              
              
              40
              
              
              -Customer
                  deposits
              
              
              -
              
              
              -Net
                  cash provided by (used in) operating activities
              
              
              (297
              )
              
              (344
              )Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              (31
              )
              
              (16
              )Increase
                  in due to affilliates
              
              
              2
              
              
              -Increase
                  in due to stockholder
              
              
              (24
              )
              
              2Net
                  cash used in investing activities
              
              
              (53
              )
              
              (14
              )Cash
                  flows from financing activities:Increase
                  in bank line of credit, net
              
              
              (500
              )
              
              344Proceeds
                  from long term debt
              
              
              1,227
              
              
              760Repayment
                  of long-term debt
              
              
              (319
              )
              
              (794
              )Net
                  cash (used in) provided by financing activities
              
              
              409
              
              
              311Effects
                  of exchange rates on cash
              
              
              14
              
              
              (16
              )Increase
                  (decrease) in cash
              
              
              72
              
              
              (63
              )Cash,
                  beginning of period
              
              
              7
              
              
              78Cash,
                  end of period
              
              $
              79
              
              $
              15Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for:Interest
              
              $
              91
              
              $
              34Income
                  taxes
              
              $
              0
              
              $
              51


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,
        2007
 
 
 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, 2006.
        The
        results of operations for three months ended March 31, 2007 are not necessarily
        indicative of the operating results that may be expected for the year ending
        December 31, 2007.
 
 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,
        2007
 
 NOTE
        3 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
        Accounting Pronouncements
  In
        December 2004, FASB issued Statement No. 123 (revised 2004), “Share-Based
        Payment” (SFAS 123 (revised 2004), effective for public entities that file as
        small business issuers as of the beginning of the first interim or annual
        reporting period that begins after December 15, 2005. This Statement is a
        revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation,”
and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,”
and its related implementation guidance. SFAS 123 (revised 2004) eliminates
        the
        alternative to use Opinion No. 25’s intrinsic value method of accounting that
        was provided in Statement 123 as originally issued. Under Opinion 25, issuing
        stock options to employees generally resulted in recognition of no compensation
        cost. This Statement requires entities to recognize the cost of employee
        services received in exchange for awards of equity instruments based on the
        grant-date fair value of those awards (with limited exceptions). Recognition
        of
        that compensation cost helps users of financial statements to better understand
        the economic transactions affecting an entity and to make better resource
        allocation decisions. The Company is required to adopt Statement 123 (revised
        2004) as of January 1, 2006, and does not expect this statement to have a
        material effect on its results of operations.
 
 In
        May
        2005, FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - a
        Replacement of APB Opinion No. 20 (Accounting Changes) and FASB No. 3 (Reporting
        Accounting Changes in Interim Financial Statements),” that changes requirements
        for the accounting for and reporting of a change in accounting principle.
        This
        Statement requires retrospective application to prior periods’ financial
        statements of changes in accounting principle unless it is impracticable
        to
        determine either the period-specific effects or the cumulative effect of
        the
        change. When it is impracticable to determine the period-specific effects
        of an
        accounting change on one or more individual prior periods presented, this
        Statement requires that the new accounting principle be applied to the balances
        of assets
 and
        liabilities as of the beginning of the earliest period for which retrospective
        application is practicable and that a corresponding adjustment be made to
        the
        opening balance of retained earnings (or other appropriate components of
        equity
        or net assets in the statement of financial position) for that period rather
        than being reported in an income statement. When it is impracticable to
        determine the cumulative effect of applying a change in accounting principle
        to
        all prior periods, this Statement requires that the new accounting principle
        be
        applied as if it were adopted prospectively from the earliest date practicable.
 
 Statement
        154 is effective for accounting changes and error corrections made in fiscal
        years beginning after December 15, 2005 (calendar year 2006). Early adoption
        is
        permitted.
 
 
 7
  LAPIS
        TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (In
        Thousands, Except Per Share Amounts)
 MARCH
        31,
        2007
 
 NOTE
        3 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Recent
        Accounting Pronouncements
  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.
  NOTE
        4 -
        PROVISION FOR INCOME TAXES -
  The
        income tax expense for the three months ended March 31, 2007 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 it’s subsidiaries.




8


**Item
                2.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation.**





The
      following discussion contains forward-looking statements that are subject to
      significant risks and uncertainties about us, our current and planned projects,
      our current and proposed marketing and sales, and our projected results of
      operations. There are several important factors that could cause actual results
      to differ materially from historical results and percentages and results
      anticipated by the forward-looking statements. The Company has sought to
      identify the most significant risks to its business, but cannot predict whether
      or to what extent any of such risks may be realized nor can there be any
      assurance that the Company has identified all possible risks that might arise.
      Investors should carefully consider all of such risks before making an
      investment decision with respect to the Company's stock. The following
      discussion and analysis should be read in conjunction with the financial
      statements of the Company and notes thereto. This discussion should not be
      construed to imply that the results discussed herein will necessarily continue
      into the future, or that any conclusion reached herein will necessarily be
      indicative of actual operating results in the future. Such discussion represents
      only the best present assessment from our Management.





**Overview**





We
      were
      formed in Delaware on January 31, 2002 under the name Enertec Electronics,
      Inc.
      and have filed two certificates of amendment changing our name to Opal
      Technologies, Inc. and then to Lapis Technologies, Inc. We conduct operations
      in
      Israel through our wholly owned subsidiary, Enertec Electronics Limited
      ("Enertec Electronics"), an Israeli corporation formed on December 31, 1991,
      and
      Enertec Systems 2001 LTD ("Enertec Systems"), an Israeli corporation formed
      on
      August 28, 2001, of which we have a 73% equity interest. Enertec Electronics
      is
      a distributor of electronic components and products relating to power supplies,
      converters and related power conversion products and test equipment. Enertec
      Systems designs, develops and manufactures test systems, airborne, shipborne,
      and land electronic equipment, as well as various other military electronic
      products for manufacturers of defense systems in accordance with their
      specifications.





**Liquidity
      and Capital Resources**





As
      of
      March 31, 2007 our cash balance was $79,000 as compared to $15,000 at March
      31,
      2006. Total current assets at March 31, 2007 were $7,934,000 as compared to
      $6,672,000 at March 31, 2006. The increase in current assets is mainly due
      to
      the increase in accounts receivables and inventories.





Our
      accounts receivable at March 31, 2007 was $4,326,000 as compared to $3,669,000
      at March 31, 2006. The change in accounts receivable is primarily due to the
      decrease in USD/Shekel exchange rate since the accounts receivable are in
      Shekels. The USD/Shekel exchange rate decreased by 10.9% from 4.665 as of March
      2006 to 4,155 as of March 2007.





As
      of
      March 31, 2007 our working capital was $1,210,000 as compared to $1,742,000
      at
      March 31, 2006. The decrease in working capital is mainly due to increase of
      short term loans and decrease of long term loans and decrease in prepaid
      expenses and other current assets.





The
      current portion of long-term debt at March 31, 2007 was $186,000 compared to
      $358,000 as of March 31, 2006.





At
      March
      31, 2007 our
      total
      bank debt was $4,565,000 as opposed to $3,616,000 at the end of March 31, 2006.
      These funds were borrowed as follows: $3,191,000 which includes the current
      portion of long term debt, as various short term bank loans due through 2007,
      $368,000 of long-term debt due through March 2010 and $1,006,000_using our
      bank
      lines of credit. As a result we increased the amount borrowed for the
      three-months ended March 31, 2007 by $ 949,000.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 10.9% from 4.665 as of March 2006 to 4,155 as of March
      2007.





There
      are
      no other lines of credit available to refinance our short term bank loans.
      Additionally, we currently do not have any other sources of financing available
      to us for refinancing our short term loans. As of March 31, 2007 we are current
      with all of our bank debt and compliant with all the terms of our bank
      debt.





9


**Financings**





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. 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. At the present time,
      we
      do not have definitive plans to seek additional financing.








**Results
      of Operations**





**Three
      Months Ended March 31, 2007 Compared to Three Months Ended March 31,
      2006**





Revenues
      for the three months ended March 31, 2007 were $1,857,000
      as compared
      to $1,994,000 for the three months ended March 31, 2006. This represents a
      decrease of $137,000 or 6.9% comparing the two periods. The decrease in revenue
      for the three months ended March 31, 2007 is primarily the result of focusing
      on
      several long term defense projects with scheduled deliveries during the years
      2007-2009.





Gross
      profit decreased by $142,000 or 23.7%, to $458,000 for the three months ended
      March 31, 2007 as compared to $600,000 for the three months ended March 31,
      2006. The decrease in gross profit is primarily the result of decrease in the
      sales.





Gross
      profit as a percentage of sales for the three month ended March 31, 2007 was
      24.7 % as compared to 30.1 % for the three month ended March 31, 2006. The
      decrease in gross profit as a percentage of sales is a result of increase in
      cost of sales due to our work done on the design of several long term orders
      for
      military products scheduled for deliveries during the next years.





For
      the
      three months ended March 31, 2007, Selling, General and Administrative expenses
      totaled $465,000. This was an increase of $ 89,000, or 23.7% as compared to
      the
      same period 2006. The increase in selling, general and administrative expenses
      is mainly a result of the increase in the R&D expenses.





For
      the
      three months ended March 31, 2007, Research and Development expenses increased
      to $169,000 as compared to $70,000 for the three months ended March 31, 2006.
      This represents an increase $99,000 or 141.4 % comparing the two periods. The
      increase in R&D expenses for the three months ended March 31, 2007 is
      primarily the result of our continuous strategic move to develop new
      technologies for defense products, in particular simulators for ballistic
      missiles.,





Interest
      expense was $91,000 and $87,000 for the three months ended March 31, 2007 and
      2006, respectively. This was an increase of $4,000 or 4.6%. The main reason for
      this increase was the increase in total bank debt.





Our
      net
      loss was **$** 76,000 **** for
      the
      three months ended March 31, 2007 compared to a net income of $63,000 for the
      three months ended March 31, 2006. The decrease in profitability for the three
      months ended March 31, 2007 was due to the decrease of $142,000 in the gross
      profit, an increase of $99,000 in Research & Development expenses partly
      compensated by a decrease of $ 77,000 in the minority interest.





At
      March
      31, 2007, we had two customers that accounted for approximately 58% of accounts
      receivable. For the three-month periods ended March 31, 2007 and 2006,
      approximately 56.8% and 59.2% 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, 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.




*Research
      and Development Costs* -
      Research and development costs are charged to general and administrative expense
      in the accompanying statement of income and consist mainly of salaries. Research
      and development cost for the 3 months ended March 31, 2007 and 2006 were
      approximately $169,000 and $70,000, respectively.




*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 2007 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 2007. The carrying value of the long-term debt
      approximate fair value at March 2007 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 year. Resulting
      translation adjustments, if material, are recorded as a separate component
      of
      accumulated other comprehensive income or loss.




**Item
              3.**
            **Controls
                and Procedures.**




*(a)
      Evaluation of disclosure controls and procedures.*




Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
      as
      of March 31, 2007. In designing and evaluating the disclosure controls and
      procedures, management recognizes that any controls and procedures, no matter
      how well designed and operated, can provide only reasonable assurance of
      achieving the desired control objectives. In addition, the design of disclosure
      controls and procedures must reflect the fact that there are resource
      constraints and that management is required to apply its judgment in evaluating
      the benefits of possible controls and procedures relative to their
      costs.





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Based
      on our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures are designed at a
      reasonable assurance level and are effective to provide reasonable assurance
      that information we are required to disclose in reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms, and that such information is accumulated and communicated to our
      management, including our chief executive officer and chief financial officer,
      as appropriate, to allow timely decisions regarding required
      disclosure.




*(b)
      Changes in internal control over financial reporting.*




We regularly
      review our system of internal control over financial reporting and make changes
      to our processes and systems to improve controls and increase efficiency, while
      ensuring that we maintain an effective internal control environment. Changes
      may
      include such activities as implementing new, more efficient systems,
      consolidating activities, and migrating processes.




There
      were no changes in our internal control over financial reporting that occurred
      during the period covered by this Quarterly Report on Form 10-QSB that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.





**PART
      II**





**Item
              1.**
            **Legal
                Proceedings.**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have, individually
      or in the aggregate, a material adverse affect on our business, financial
      condition or operating results.





**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**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 and 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.




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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, 2007
            By:
            /s/
                Harry MundHarry
                MundChief
                Executive Officer





Date:
                May 14, 2007
            By:
            /s/
                Miron MarkovitzMiron
                MarkovitzChief
                Financial Officer andPrincipal
                Accounting Officer






13