UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
       For the quarterly period ended December 31, 1998

[ ]  TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
      For the Transition Period from _______________ TO _______________.

                                    333-59133
                            (Commission File Numbers)

                              V3 SEMICONDUCTOR INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                                             <C> 
                  DELAWARE                                                      3674
         (State or other jurisdiction of                                        (Primary Standard Industrial
         incorporation or organization)                                         Classification Code Number)
</TABLE>



                               250 Consumers Road
                               North York, Ontario
                                 Canada M2J 4V6
                    (Address of principal executive offices)

                                 (416) 497-8884
              (Registrants' telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

     Indicate by check mark whether the  Registrants  (1) have 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
Registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days. YES [ X ] NO[ ]

     As of February 12, 1999,  5,471,628  shares of Common Stock, par value $.01
per share, of V3 Semiconductor, Inc. were issued and outstanding.



<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>                                                                                 <C>
Consolidated  Balance Sheet as of December 31, 1998 and September 30, 1998 ......   3

Consolidated Statement of Operations for the three months ended December 31, 1998
 and December 31, 1997 ..........................................................   4

Consolidated Statement of Stockholders' Equity for the period ended
 December 31, 1998 ..............................................................   5

 Consolidated Statement of Cash Flows for the period ended December 31, 1998
  and December 31, 1997..........................................................   6

Notes to Consolidated Financial Statements ......................................   7-8

</TABLE>
                                        2


<PAGE>
                             V3 SEMICONDUCTOR, INC.
               Consolidated Statements of Operations - unaudited
                       (Stated in United States dollars)

<TABLE>
<CAPTION>

                                                                     December 31,    September 30,
                                                                         1998            1998
                                                                      (unaudited)



Assets

Current assets:
<S>                                                                   <C>            <C>        
     Cash and cash equivalents ....................................   $ 4,586,705    $ 4,821,556
     Accounts receivable, net of allowance for doubtful
       accounts of $15,511; $15,533 at September 30, 1998 .........       791,824        754,119
     Inventories ..................................................       153,039        168,490
     Prepaid expenses .............................................        22,980         39,694
                                                                        5,554,548      5,783,859
Capital assets ....................................................       453,868        420,794

                                                                      $ 6,008,416    $ 6,204,653
Liabilities and Shareholders' Equity

Current liabilities:
     Accounts payable .............................................   $   361,812    $   576,055
     Accrued liabilities ..........................................        25,605         64,777
     Capital taxes payable ........................................         4,022          4,940
     Deferred revenue .............................................       105,249        105,394
                                                                          496,688        751,166



Shareholders' equity:
     Capital stock:
         Preferred shares:
              Authorized 10,000,000; no shares issued
                and outstanding ...................................          --             --
         Special shares:
              Authorized 3,400,000; 46,368 shares issued and
                outstanding at December 31, 1998; 46,368
                shares issued and outstanding at September 30, 1998           124            124
         Common shares:
              Authorized 50,000,000; 5,471,628 shares issued and
                outstanding at December 31, 1998; 5,471,628
                issued and outstanding at September 30, 1998 ......         5,472          5,472
         Additional paid-in capital ...............................     6,050,500      6,050,500
                                                                        6,056,096      6,056,096


     Cumulative translation adjustment ............................        11,720         15,728
     Deficit ......................................................      (556,088)      (618,337)
                                                                        5,511,728      5,453,487

                                                                      $ 6,008,416    $ 6,204,653

</TABLE>




          See accompanying notes to consolidated financial statements.

                                        3

<PAGE>
                             V3 SEMICONDUCTOR, INC.
               Consolidated Statements of Operations - unaudited
                       (Stated in United States dollars)

<TABLE>
<CAPTION>
                                            Three months ended
                                           December 31,
                                              1998          1997





<S>                                        <C>          <C>       
Sales ..................................   $1,379,237   $  829,410
Cost of goods sold .....................      385,648      296,008
                                              993,589      533,402

Other income ...........................       65,749       42,440

Expenses:
     Selling, general and administrative      650,285      289,135
     Research and development ..........      257,351       58,135
     Depreciation and amortization .....       27,632       27,008
     Rent and utilities ................       33,870       21,218
     Bank charges and interest .........          951        2,063
                                              970,089      397,559

Income (loss) before income taxes ......       89,249      178,283

Income taxes:
     Current ...........................       27,000       57,000
     Deferred ..........................         --           --
                                               27,000       57,000



Net income (loss) ......................   $   62,249   $  121,283

Net income (loss) per share:
     Basic .............................   $     0.01   $     0.03
     Diluted ...........................         0.01         0.03
</TABLE>

          See accompanying notes to consolidated financial statements.


                                        4


<PAGE>
                             V3 SEMICONDUCTOR, INC.
     Consolidated Statements of Changes in Shareholders' Equity - unaudited
                       (Stated in United States dollars)

<TABLE>
<CAPTION>
                                                                     Additional 
                                                                     Paid-In     Total share                             Total    
                                                                     capital     capital and   Retained                  share-
                                                                     special      additional   earnings     Cumulative   holders
                               Special shares     Common shares      shares and      paid-in   (accumulated translation  equity
                             Shares  Par value   Shares   Par value  common shares   capital   deficit)     adjustment   (deficit)


                                                                                     
<S>                <C> <C>      <C>      <C>     <C>        <C>       <C>         <C>          <C>           <C>          <C>       
Balance, September 30, 1998     46,368   $ 124   5,471,628  $5,472    $6,050,500  $6,056,096   $(618,337)    $15,728      $5,453,487

Changes during the period:
Net income                        -        -          -       -         -            -             62,249       -             62,249
Translation adjustment            -        -          -       -         -            -               -         (4,008)       (4,008)

Balance, December 31, 1998      46,368   $ 124   5,471,628   $5,472   $6,050,500   $6,056,096   $(556,088)    $11,720     $5,511,728
</TABLE>






          See accompanying notes to consolidated financial statements.


                                        5


<PAGE>
                             V3 SEMICONDUCTOR, INC.
               Consolidated Statements of Cash Flows - unaudited
                       (Stated in United States dollars)

<TABLE>
<CAPTION>
                                                                 Three months ended
                                                                      December 31,
                                                            1998                   1997





Operating activities:
<S>                                                          <C>                     <C>        
     Net income (loss) ...................................   $    62,249             $   121,283
     Add items not involving cash:
         Depreciation and amortization ...................        27,632                  27,008
         Deferred revenue ................................          (145)                 13,333
     Changes in working capital balances
         Accounts receivable .............................       (37,705)               (408,610)
         Income taxes ....................................          (918)                   --
         Inventories .....................................        15,451                  (2,524)
         Prepaid expenses ................................        16,714                  11,722
         Accounts payable ................................      (214,243)                (55,108)
         Accrued liabilities .............................       (39,172)                (27,160)
     Total cash provided by (used by) operating activities      (170,137)               (320,056)

Investing activities:
     Additions to capital assets .........................       (60,706)                 (9,311)
     Total cash used by investing activities .............       (60,706)                 (9,311)

Financing activities:
     Repayment of bank term loan .........................          --                   (16,476)
     Repayment of obligation under capital lease .........          --                    (2,182)
     Total cash provided by (used by) financing activities          --                   (18,658)

Increase (decrease) in cash and cash equivalents .........      (230,843)               (348,025)

Effect of currency translation adjustments on cash .......        (4,008)                 14,364

Cash and cash equivalents, beginning of period ...........     4,821,556                 558,676

Cash and cash equivalents, end of period .................   $ 4,586,705             $   225,015

Cash paid for:
     Interest ............................................   $       270             $     1,331

</TABLE>



          See accompanying notes to consolidated financial statements.


                                        6


<PAGE>
                             V3 SEMICONDUCTOR, INC.
           Notes to Consolidated Statements of Cash Flows - unaudited
                       (Stated in United States dollars)

Three months ended December 31, 1998

1.     Basis of presentation:


          In the opinion of  management,  the unaudited  consolidated  financial
     statements of V3  Semiconductor,  Inc. (the Company)  included  herein have
     been  prepared on a consistent  basis with the  September  30, 1998 audited
     consolidated  financial  statements  and include all material  adjustments,
     consisting of normal recurring adjustments, necessary to fairly present the
     information set forth therein. These interim financial statements should be
     read in  conjunction  with the  September  30,  1998  audited  consolidated
     financial statements and notes thereto. The Company's results of operations
     for the first  fiscal  quarter of 1999 are not  necessarily  indicative  of
     future operating results.


          The  preparation of financial  statements in conformity with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that effect the amounts  reported in the financial  statements
     and accompanying  notes.  Actual results could differ materially from those
     estimates.

2. Earnings per share:


          Net income per share has been  calculated  using the weighted  average
     number of common and special shares outstanding during the periods. Special
     shares  have  been  included  in the  weighted  average  number  of  shares
     outstanding  as the special shares are  exchangeable  into common shares of
     the Company.

          Application  of the  provisions  of Statement of Financial  Accounting
     Standards No. 128 results in  disclosure of two income per share  measures,
     basic and assuming dilution,  on the face of the consolidated  statement of
     income.

                                        7


<PAGE>
                             V3 SEMICONDUCTOR, INC.
           Notes to Consolidated Statements of Cash Flows - unaudited
                       (Stated in United States dollars)

Three months ended December 31, 1998


The  reconciliation  of shares used to calculate basic and diluted  earnings per
share is as follows:
<TABLE>
<CAPTION>
                                                                               Three months ended       
                                                                                 December 31,
                                                                                 1998               1997



<S>                                                                             <C>              <C>          
       Net income                                                               $      62,249    $     121,283

       Shares used in basic earnings per share computations
         Weighted average common and special shares outstanding                     5,517,996        4,135,238

       Effect of dilutive securities:
         Dilutive shares contingently
         issuable upon the exercise
         of stock options and warrants                                                548,483          417,985

       Shares assumed to have been 
         purchased for treasury with 
         assumed  proceeds from the 
         exercise of stock options and
         warrants                                                                    (442,062)        (329,559)

Average shares outstanding
       - assuming dilution                                                          5,624,417        4,223,664
</TABLE>


                                        8


<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

          The  statements  contained in this Report that are not  historical are
     forward-looking  statements,  including  statements regarding the Company's
     expectations,  intentions,  beliefs or  strategies  regarding  the  future.
     Forward-  looking  statements  include the Company's  statements  regarding
     liquidity,  anticipated cash needs and availability and anticipated expense
     levels. All forward-looking statements included in this Report are based on
     information  available to the Company on the date  hereof,  and the Company
     assumes no obligation to update any such forward-looking  statement.  It is
     important to note that the Company's actual results could differ materially
     from those in such forward-looking statements.  Additionally, the following
     discussion and analysis  should be read in  conjunction  with the Financial
     Statements  and notes  thereto  appearing  elsewhere  in this  Report.  The
     discussion is based upon such financial statements which have been prepared
     in accordance with U.S.  Generally Accepted  Accounting  Principles and are
     presented in United States dollars ($).

General

          The Company designs and markets high  performance  peripheral and core
     silicon  products for the Embedded Systems market.  The Company's  products
     are co-peripherals to microprocessors manufactured by third parties such as
     Intel Corporation,  Motorola Corporation,  International  Business Machine,
     Hitachi Semiconductor of America, Quantum Effect Design, Texas Instruments,
     Integrated  Device  Technology and Advanced  Micro  Devices.  The principal
     product  lines fall into  three  categories:  Burst  DRAM and SDRAM  Memory
     Controllers  (BMC, PDC and SDC families),  System  Controllers (SSC and USC
     families) and PCI Bridge Controllers (PSC, PBC, EPC, USC and HPC families).
     These  products  are used in  applications  such as servers,  communication
     routers, data switches,  mass storage controllers,  modems,  facsimiles and
     imaging  equipment,   telecommunications  switching  equipment,  networking
     controllers, instrumentation, industrial tools and consumer appliances.


                                        9


<PAGE>
Results of Operations

Overview

          The following table sets forth for the periods indicated certain items
     in the  Company's  Consolidated  Statement  of  Operations  expressed  as a
     percentage of sales:
<TABLE>
<CAPTION>

                                                                                       Three months ended
                                                                                            December 31,
                                                                                     1998              1997

<S>                                                                                  <C>               <C>   
Sales                                                                                100.0%            100.0%
     ---------------------------------------------------------------------------
Gross Profit                                                                          72.0              64.3
            --------------------------------------------------------------------
Other Income                                                                           4.8               5.1
            --------------------------------------------------------------------
R&D Expenditures                                                                      20.6              13.9
                ----------------------------------------------------------------


Selling, General & Administrative                                                     51.6              40.8
                                 -----------------------------------------------
Net Income                                                                             4.6              14.6
          ----------------------------------------------------------------------
</TABLE>

     (1) The R&D  expenditures  are expressed before applying R&D tax credits of
$27,000 in the first three  months of fiscal 1999 and $57,000 in the first three
months of fiscal 1998

Three month periods ended December 31, 1998 and December 31, 1997.

Sales

          Sales for the three month  period ended  December  31, 1998  increased
     $549,827 to $1,379,237,  a 66.3% increase over sales of $829,410 during the
     three  month  period  ended  December  31,  1997.  The sales  increase  was
     attributable  to an increase in the number of design wins in general and an
     increase in the number of design wins shipping in production volumes. Sales
     of the  core  BMC,  PBC  and SSC  devices  increased  by  90%,  54% and 78%
     respectively and sales of the newer EPC devices increased 2,217%.

Gross Profit

          Gross profit was  $993,589  for the three month period ended  December
     31,  1998,  an $460,187  or 86.3%  increase  over gross  profit of $533,402
     during the three month  period ended  December  31, 1997.  The increase was
     predominantly due to increased sales and reduced product costs.  During the
     first three months of fiscal 1999, gross profit margins, as a percentage of
     sales,  were 72.0%,  compared to 64.3% in the first three  months of fiscal
     1998.  As a result of cost  reductions  the gross margin of the BMC devices
     were  increased from 64.3% to 72.0% and the gross margin of the PBC devices
     were  increased from 65.8% to 71.6%.  As the number of volume  transactions
     increase, gross margin is expected to level off and decline slightly.

Other Income

          Included  in other  income are  royalty  income,  consulting  fees and
     interest income totaling  $65,749 in the first three months of fiscal 1999,
     an  increase  of $23,309 or 54.9%  compared  to $42,440 in the first  three
     months of fiscal 1998.

                                       10
<PAGE>
          In the three month period ended  December  31,  1998,  royalty  income
     decreased  by $11,894 or 46.9% to $13,454  compared to $25,348 in the three
     months ended  December  31,  1997.  During the first three months of fiscal
     1998 the Company  received $16,676 in consulting fees for work performed on
     the behalf of non-related companies. The Company did not receive consulting
     fees in the first three months of fiscal 1999. In the first three months of
     fiscal 1999  interest  income  increased by $51,878 or 12,470.7% to $52,294
     compared to $416 in the first three months of fiscal 1998. In 1998 the main
     source of interest  income was  generated  from  investing the funds raised
     from the private placement in short-term interest bearing notes.

          During the three month period ended  December 31, 1998,  other income,
     as a percentage of sales, were 4.8% compared to 5.1% during the three month
     period ended December 31, 1997.

Research & Development ("R&D") Expenditures

          R&D  expenditures  increased  by 147.0% to $284,351 in the first three
     months of fiscal  1999,  from  $115,135 in the first three months of fiscal
     1998,  before applying R&D tax credits of $27,000 in the first three months
     of fiscal 1999 and $57,000 in the first three  months of fiscal  1998.  The
     increase in R&D  expenditures  was due  predominately to an increase in R&D
     personnel that resulted in an increase in R&D wages of 181.9%.

Net Income for the period

          Net income for the three months ended December 31, 1998 was $62,249, a
     decrease of $59,034 or 47.9%,  compared  to net income of $121,283  for the
     three months ended  December 31, 1997.  In the first three months of fiscal
     1999, selling,  general and administrative  expense increased by 110.0%, or
     $373,314, to $712,738, as compared to $339,424 in the first three months of
     fiscal 1998, as a result of substantial increases in non-R&D wages, selling
     commissions  paid to  manufacturers  sales  representatives,  promotion and
     advertising expenses, and professional fees.

Liquidity and Capital Resources

          The Company's cash and cash  equivalents  decreased from $4,821,556 on
     September  30, 1998 to  $4,586,705  on December 31, 1998.  During the first
     quarter  of 1999  cash  used by  operating  activities  was  $170,137.  The
     principle use of cash was to reduce  accounts  payable by $214,243,  reduce
     accrued  liabilities  by $39,172 and to  increase  accounts  receivable  by
     $37,705. The principle source of cash was from net income of $62,249.  Cash
     used by  investing  activities  was $60,706 as a result of the  purchase of
     computer  equipment  and  software  used to run the  business  and  develop
     products. Net cash flow used after all activities was $230,843.

          The Company  believes that its existing cash, cash flow generated from
     operations  and the  funds  available  under  the  line of  credit  will be
     sufficient  to meet the  Company's  capital,  operating  and  research  and
     development  requirements for at least the next 12 months.  However,  there
     can be no assurance  that events in the future will not require the Company
     to seek  additional  capital  sooner or, if so required,  that such capital
     will be available on terms  favorable or acceptable  to the Company,  if at
     all.


                                       11
<PAGE>
Year 2000

          The Company's  review of its own  operating  systems does not indicate
     any Year 2000 problems.  However,  the Company is highly dependent on third
     party  vendors.  Failures and  interruptions,  if any,  resulting  from the
     inability of certain  computing  systems of third party vendors,  including
     the  Company's  clearing  broker  to  recognize  the Year 2000  could  have
     material adverse effect on the Company's  results of operations.  There can
     be no  assurance  that the Year 2000 issue can be  resolved  by any of such
     third  parties  prior to the upcoming  change in the century.  Although the
     Company may incur  substantial  costs,  particularly  costs  resulting from
     increased charges by its third party service providers, as a result of such
     third party service providers  correcting Year 2000 issues,  such costs are
     not sufficiently certain to estimate at this time.


                                       12


<PAGE>
                                     PART II
                                OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds
         None

Item 3.  Defaults Upon Senior Securities
         None

Item 4.  Submission of Matters to a Vote of Security Holders
         None

Item 5.  Other Information
         None

Item 6.  Exhibits and Reports on Form 8-K

  (a)  Exhibits

         Exhibit 27: Financial Data Schedule

  (b)  Reports on Form 8-K

       The  Company  did not file any  reports on Form 8-K during the nine month
       period ended December 31, 1998.

                                       13


<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                          V3 SEMICONDUCTOR, INC.


Date: February 12, 1999                            By:        /s/Carl Mitchell
                                                    ----------------------------
                                                    Carl Mitchell, Secretary and
                                                     Principal Financial Officer

                                       14


<PAGE>