U.S. 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 SEPTEMBER 30, 1998.

[_]       Transition report pursuant to Section 13 or 15 (d) of the Securities
          Exchange Act of 1934 
          For the transition period from _____________ to _____________.

          Commission file number 0-29624

                             SCNV ACQUISITION CORP.
        (Exact Name of Small Business Issuer as Specified in its Charter)

               Delaware                                  90-0194786
     (State or other Jurisdiction of        (I.R.S. Employer Identification No.)
     Incorporation or Organization)

             Omer Industrial Park, P.O. Box 3026, Omer, Israel 84965
                    (Address of Principal Executive Offices)

                              (011) 972-7-690-0950
                 (Issuer's Telephone Number including area code)


              ____________________________________________________
              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)

Check whether the issuer:  (1) filed all reports required to be filed by section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes [X]   No  [_]


  As of November 14, 1998, there were 2,082,088 shares of the issuer's Common
                               Stock outstanding

Transitional Small Business Disclosure Format (check one):

Yes [_]   No  [X]

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES
                        QUARTER ENDED SEPTEMBER 30, 1998
                                   FORM 10-QSB

                                      INDEX



                                                                          Page
                                                                          ----

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated  Balance  Sheet as of  September  30,  1998
         (Unaudited)........................................................1

         Consolidated  Statements  of  Operations  For the  Three
         Months ended  September  30, 1998 and September 30, 1997
         (Unaudited)........................................................2

         Consolidated   Statement  of  Changes  in  Shareholders'
         Equity For the Three Months ended September 30, 1998 
         (Unaudited)........................................................3

         Consolidated  Statement  of Cash  Flows  For  the  Three
         Months ended September 30, 1998 (Unaudited)........................4

         Notes to Unaudited Consolidated Financial Statements...............5

Item 2.  Management's Discussion and Analysis of Financial Condition
                  And Results of Operations ................................6

Part II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds.........................11

Item 6.  Exhibits and Reports on Form 8-K..................................11



                               -ii-

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  September 30, 1998
                                                                  ------------------
<S>                                                                   <C>        
ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                        $ 3,081,048
     Short-term investments                                               685,648
     Trade receivables                                                      6,565
     Other receivables and prepaid expenses                                81,516
                                                                      -----------
        Total current assets                                            3,854,777
                                                                      -----------

FIXED ASSETS
     Cost                                                                 273,828
     Less - accumulated depreciation                                     (132,568)
                                                                      -----------
         Total fixed assets                                               141,260
                                                                      -----------
         Total assets                                                 $ 3,996,037
                                                                      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Sundry payables and accrued expenses                             $   210,333
                                                                      -----------
         Total current liabilities                                        210,333
                                                                      -----------

LONG TERM LIABILITIES
     Long term loan                                                       200,000
     Accrued severance pay                                                 95,582
                                                                      -----------
         Total long term liabilities                                      295,582
                                                                      -----------
         Total liabilities                                                505,915
                                                                      -----------

SHAREHOLDERS' EQUITY
     Share capital
       Preferred stock $.01 par value, 1,000,000 shares authorized;            --
         none issued and outstanding
       Common stock $.01 par value, 10,000,000 shares authorized;
         2,082,088 shares issued and outstanding                           20,821
     Additional paid-in-capital                                         7,558,663
     Accumulated deficit                                               (4,089,362)
                                                                      -----------
         Total shareholders' equity                                     3,490,122
                                                                      -----------
         Total liabilities and shareholders' equity                   $ 3,996,037
                                                                      ===========
</TABLE>

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


                                        1

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                   For the three months ended
                                                          September 30,

                                                      1998             1997
                                                  -----------      -----------
                                                                   (pro forma)
REVENUES

     Sales                                        $       189      $     3,327
     Contract services                                    684            4,016
                                                  -----------      -----------
         Total revenues                                   873            7,343
                                                  -----------      -----------

COSTS AND EXPENSES
     Research and development costs                   145,205           67,178
     Cost of merchandise purchased                        168            2,613
     Marketing expenses                                67,673            7,964
     General and administrative expenses              127,743           84,581
                                                  -----------      -----------
         Total costs and expenses                     340,789          162,336
                                                  -----------      -----------

         Loss before one-time charge                 (339,916)        (154,993)

     One-time charge of acquired research and
       development in process                      (3,772,054)              --
                                                  -----------      -----------

         Operating Loss                            (4,111,970)        (154,993)

FINANCING INCOME, NET                                  22,608            2,974
                                                  -----------      -----------

         Net loss                                 $(4,089,362)     $  (152,019)
                                                  ===========      ===========

Net loss per common share                         $     (1.96)     $     (0.15)
                                                  ===========      ===========
Weighted average number of common shares
  outstanding                                       2,082,088        1,041,044
                                                  ===========      ===========


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

                                        2

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF CHANGES
                             IN SHAREHOLDERS' EQUITY
                                   (Unaudited)


<TABLE>
<CAPTION>
                                        Number of           Share           Additional           Accumulated
                                         Shares            Capital        Paid-In-Capital          Deficit            Total
                                       -----------       -----------      ---------------        -----------       -----------
<S>                                      <C>             <C>                <C>                <C>               <C>        
Balance as of July 1, 1998                 541,343       $     5,413        $     2,179                 --       $     7,592

Shares issued in connection with 
 the initial public offering             1,041,044            10,411          4,688,201                 --         4,698,612

Shares issued to Bayou in 
 connection with the acquisition 
 of subsidiary                             499,701             4,997          2,868,283                 --         2,873,280

Net Loss                                        --                --                 --         (4,089,362)       (4,089,362)
                                       -----------       -----------        -----------        -----------       -----------

Balance as of September 30, 1998         2,082,088       $    20,821        $ 7,558,663        $ 4,089,362       $ 3,490,122
</TABLE>


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

                                        3

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (Unaudited)


                                                                For the three
                                                                months ended
                                                                September 30
                                                                    1998
                                                                -----------
CASH FLOW FROM OPERATING ACTIVITIES
     Net loss                                                   $(4,089,362)
     Adjustments to reconcile net loss to net cash used
      in operating activities                                     3,985,443
                                                                -----------
         Net cash used in operating activities                     (103,919)
                                                                -----------

CASH FLOW FROM INVESTING ACTIVITIES
     Acquisition of subsidiary, net of cash required                (49,699)
     Investment in equipment                                        (40,874)
     Short-term investments                                        (685,648)
     Proceeds from sale of fixed assets                               5,708
                                                                -----------
         Net cash used in investing activities                     (770,513)
                                                                -----------

CASH FLOW FROM FINANCING ACTIVITIES
     Proceeds from initial public offering                        4,698,612
     Short term borrowings, net                                    (743,132)
                                                                -----------
         Net cash provided by financing activities                3,955,480
                                                                -----------

INCREASE IN CASH AND CASH EQUIVALENTS                             3,081,048
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF THE PERIOD                                                          --
                                                                -----------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD              $ 3,081,048
                                                                ===========

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED
     IN OPERATING ACTIVITIES
     Items not involving cash flows:
         Depreciation                                           $     8,108
         Severance pay                                               74,140
         Loss on sale of equipment                                      836
         Acquired research and development in process             3,772,054
     Changes in operating assets and liabilities:
         Decrease in receivables and prepaid expenses               625,115
         Decrease in sundry payables and accrued expenses          (494,810)
                                                                -----------
                                                                $ 3,985,443
                                                                ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES
     Shares issued as consideration for acquisition
         of subsidiary                                          $ 2,873,280
                                                                ===========




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

                                        4

<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

General

The financial statements as of and for the three months ended September 30, 1998
are unaudited;  however in the opinion of management all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair presentation of the
financial  statements  for the  interim  period  have been made.  The  financial
statements  have been prepared in a manner  consistent with the 10-KSB filed for
the fiscal year ended June 30, 1998 and should be read in connection  with those
financial  statements.  The comparative pro forma financial  information for the
three  months  ended  September  30,  1997  pertain to the pro forma  results of
operations of SCNV  Acquisition  Corp. (the  "Company") and Solmecs  Corporation
N.V. and its wholly-owned subsidiary Solmecs (Israel) Ltd. ("Solmecs") as if the
combination described below had been effective as of July 1, 1997. The unaudited
pro forma consolidated  statement of operations is not necessarily indicative of
what the actual  results of  operations  of the Company would have been assuming
the  combination  had been  completed as of July 1, 1997,  nor is it necessarily
indicative of the results of operations for future periods.

Initial Public Offering

The  Company  was  organized  under the laws of the State of Delaware on May 19,
1997 to acquire Solmecs and select, develop and commercially exploit proprietary
technologies, in various stages of development, invented primarily by scientists
who have recently  immigrated to Israel from, and by scientists and institutions
in, Russia and other countries that formerly comprised the Soviet Union. On July
8,  1998 the  Company  consummated  an  Initial  Public  Offering  (the  "Public
Offering") in which  1,041,044  Units,  comprised of 1,041,044  shares of Common
Stock and 1,041,044 redeemable Common Stock purchase warrants  ("Warrants") were
sold to the  public at $5.75 per  Unit.  Each  Warrant  entitles  the  holder to
purchase one share of Common Stock at a price of $7.50, subject to adjustment in
certain  circumstances,  at any time during the four-year period commencing June
29,  1999.  The  net  proceeds  from  the  Public  Offering  were  approximately
$4,700,000.

Acquisition of Solmecs

Simultaneously with the consummation of the Public Offering the Company acquired
all of the issued and outstanding  capital stock of Solmecs (the  "Acquisition")
in  consideration  for 499,701  shares of the  Company's  common stock issued to
Bayou International Ltd. ("Bayou"),  the parent of Solmecs.  The Acquisition has
been  accounted for as a purchase.  The excess of purchase price over fair value
of assets  acquired of $3,772,054  has been  reflected as acquired  research and
development in process and fully expensed at the date of the Acquisition.


                                        5

<PAGE>

Item 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Safe Harbor  Statement  Under The Private  Securities  Litigation  Reform Act of
1995:

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements.  Certain  information  included in this Report
contains  statements that are  forward-looking,  such as statements  relating to
plans for future activities. Such forward-looking information involves known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such forward-looking  statements made by or on the behalf of the Company.  These
risks, uncertainties and factors include, but are not limited to, those relating
to the Company's growth strategy,  the ability to hire and retain key personnel,
uncertainty  of feasibility of the Company's  technologies,  the  acquisition of
Solmecs  Corporation N.V. and its subsidiary,  relationships with and dependence
on third-party equipment manufacturers and suppliers,  uncertainties relating to
business  and  economic  conditions  in markets in which the  Company  operates,
uncertainties relating to government and regulatory policies and other political
risks, expansion and other activities of competitors,  protection of patents and
other proprietary rights and the general condition of the economy and its effect
on the securities markets. The words "believe", "expect", "anticipate", "intend"
and "plan" and similar expressions identify forward-looking statements.  Readers
are cautioned not to place undue reliance on these  forward-looking  statements,
which speak only as of the date the statement was made.

General

The  Company  was  organized  to  select,   develop  and  commercially   exploit
proprietary technologies,  in various stages of development,  invented primarily
by scientists who have recently immigrated to Israel from, and by scientists and
institutions  in, Russia and other countries that formerly  comprised the Soviet
Union. In furtherance of this goal, the Company acquired Solmecs,  a Netherlands
Antilles  company,  the  operations  of which are located in Israel,  which owns
certain technologies developed by such scientists in the past and actively seeks
to identify such technologies for exploitation.  The technologies of Solmecs and
technologies  identified by Solmecs for  exploitation  are in various  stages of
development and include  technologies  that have begun to be  commercialized  as
well as technologies  that the Company believes are ready for  commercialization
in the near future.  The Company itself was organized in May 1997 and, since its
inception,   the  Company  has  been  engaged   principally  in   organizational
activities,  including developing a business plan, matters related to the Public
Offering and negotiating an agreement relating to the Acquisition.

The Company  expects to manufacture and market certain  technologies  which have
been  identified  by Solmecs and shown to be  commercially  viable,  such as hot
water tank display control systems,  photo-voltaic  cells and plasma  chemically
treated extra smooth rubber  gaskets.  The Company  further intends to offer its
engineering  services to industry  and  research  institutions  in the fields of
LMMHD power technology and liquid metal  engineering.  To date,  Solmecs has not
generated  significant  revenues and the Company does not expect to generate any
meaningful  revenues for the foreseeable future and until such time, if ever, as
it  successfully  commercializes  one or more of  Solmecs'  existing  or  future
technologies  or sells  proprietary  rights  relating to one or more of Solmecs'
existing or future technologies. Although the LMMHD power technology has been in
development since the late 1970's, it has not yet reached commercialization.  In
order to achieve  commercialization  of such  technology,  the  Company  will be
required to build a commercial scale  demonstration  plant, which will require a
significant capital expenditure. The Company intends to commence building such a
plant  within  the next few years,  provided  that it will be able to obtain the
necessary funds for such project.  The Company has incurred  significant  losses
since its  inception,  resulting  in an  accumulated  deficit of  $4,089,362  at
September 30, 1998. The rate of loss is expected to continue for the foreseeable
future  and  until  such  time,  if  ever,  as the  Company  is able to  achieve
sufficient   levels  of  revenue  from  the  commercial   exploitation   of  its
technologies to support its operations.

The  Company  intends to  implement  a  four-step  process  with  respect to the
development   of   proprietary   technologies   which  it  has   identified  for
exploitation. Initially the Company,


                                        6

<PAGE>

through its scientific,  engineering and administrative  personnel, will seek to
identify and analyze a number of proposed  advanced  technologies with potential
commercial viability. The Company will then assess the costs of further research
and  development   (including  the  building  and  testing  of  prototypes,   if
indicated),  seek to obtain intellectual property rights in viable technologies,
develop a business plan detailing the exploitation of such technologies from the
research and development phase through product  commercialization,  develop and,
in some instances, implement financing strategies to further such business plan,
and suggest and, in some cases, assemble a team of scientists and engineers most
suitable for  implementation  of such  business  plan.  Upon  completion  of the
business  development plan for each project, the Company may seek to manufacture
and  market  the  project  itself,  enter  into  strategic  alliances  for  such
commercialization,  or sell or license the proprietary  information and know-how
to third parties in consideration of technology transfer or license fees.

Completion of the research,  development and  commercialization of the Company's
technologies  or any potential  application  of such  technologies  will require
significant   additional   effort,   resources  and  time,   including   funding
substantially  greater than is currently available to the Company. Such research
and development  efforts remain subject to all of the risks  associated with the
development  of new  products  based on emerging  and  innovative  technologies,
including, without limitation, unanticipated technical or other problems and the
possible  insufficiency  of the funds  allocated to complete  such  development,
which could result in delay of research or development or substantial  change or
abandonment of research and development activities.

Results of Operations

The consolidated  statement of operations and other financial and operating data
for the three  month  period  ended  September  30,  1998 are  derived  from the
unaudited  financial  statements of the Company included  elsewhere herein.  The
unaudited pro forma  consolidated  statement of  operations  for the three month
period ended September 30, 1997  represents the adjustments  made to present the
combined financial position of the Company and Solmecs as if the Acquisition had
been effective as of July 1, 1997.  Such pro forma  information  gives effect to
the payment of $30,000 to officers in connection with employment agreements.

Three Months Ended September 30, 1998 Compared with Pro Forma Three Months
Ended September 30, 1997

Total Revenues.  Total revenues decreased by $6,470 or 88% to $873 for the three
months ended  September  30, 1998  compared to $7,343 for the three months ended
September  30, 1997.  The decrease is  attributable  to the decrease in sales of
photovoltaic cells and panels.

Research and  Development  Costs.  Research and  development  costs increased by
$78,027 or 116% to $145,205  for the three  months  ended  September  30,  1998,
compared to $67,178 for the three months ended  September 30, 1997. The increase
is primarily due to (i) the


                                        7

<PAGE>

increase in salaries due to the employment of additional  scientific  personnel,
(ii) the hiring of additional  consultants for new projects feasibility testing,
and  (iii)  the  increase  in rent  fees  associated  with  the  leasing  of new
facilities in Omer Industrial Park.

Costs of  Merchandise  Purchased.  Due to the decrease of sales of  photovoltaic
cells and panels, costs of merchandise  purchased decreased by $2,445 or 94%, to
$168 for the three months ended  September  30, 1998,  from $2,613 for the three
months ended September 30, 1997.

Marketing,   General  and  Administrative  Expenses.   Marketing,   general  and
administrative  expenses increased by $102,871 or 111% to $195,416 for the three
months ended  September  30,  1998,  as compared to $92,545 for the three months
ended September 30, 1997. This increase is primarily attributable to (i) foreign
travel related to the marketing and implementation of the new technologies, (ii)
salaries and related expenses resulting from the hiring of additional  personnel
for  marketing  positions,  (iii)  professional  fees  associated  with services
rendered to the Company and Solmecs,  and (iv) fees  associated with the leasing
of new facilities in Omer Industrial Park.

One-Time Charge of Acquired Research and Development In-Process. The acquisition
of Solmecs by the Company has been  accounted  for as a purchase  and the excess
purchase  price  over  fair  value of assets  acquired  of  $3,772,054  has been
reflected in the  Company's  statement of  operations  as acquired  research and
development  in  process.  The Company  has  recorded a one-time  charge for the
write-off in full of such research and  development in process as of the date of
the Acquisition.

Operating Loss After One-Time  Charge.  Primarily due to the one-time  charge of
$3,772,054  reflecting  the write-off of acquired  research and  development  in
process,  operating  Loss  increased  to  $4,111,970  for the three months ended
September 30, 1998, from $154,993 for the three months ended September 30, 1997.
The increase is also  attributable to an increase in expenses as set forth above
as well as a decrease in sales of photovoltaic cells and panels.

Financing Income,  Net.  Financing income was $22,608 for the three months ended
September  30,  1998,  as compared to  financing  income of $2,974 for the three
months ended September 30, 1997. The increase is attributable to interest earned
on deposits.

Net Loss. As a result of the foregoing, net loss increased to $4,089,362 for the
three months ended  September  30, 1998 from $152,019 for the three months ended
September 30, 1997.


                                        8

<PAGE>

Liquidity and Capital Resources

As of  September  30, 1998,  the Company had working  capital of  $3,644,444,  a
shareholders' equity of $3,490,122 and an accumulated deficit of $4,089,362. The
improvement  in  shareholders'  equity and  working  capital was due to proceeds
received by the Company upon the  consummation of the Public Offering on July 8,
1998.

During the period from inception through June 30, 1998, Batei Sefer Limlacha,  a
principal stockholder of the Company, loaned to the Company $110,108 for working
capital  purposes.  During the period from September 1997 through June 30, 1998,
Batei Sefer Limlacha loaned to Solmecs  $375,000 for working  capital  purposes.
The loans from Batei Sefer  Limlacha  were repaid in full by the Company on July
8, 1998.

In April  1998,  Solmecs  (Israel)  Ltd.  obtained a line of credit  facility of
approximately  $270,000  from an Israeli bank allowing for overdraft for working
capital  purposes.  The line of credit facility was secured by a fixed charge on
Solmecs  (Israel)  Ltd.'s  uncalled  share  capital and  goodwill and a floating
charge on all of its  present  and future  acquired  property  and  rights.  The
Company repaid the line of credit  facility in full on July 9, 1998 resulting in
the cancellation of the fixed and floating charges securing such obligation.

In April 1998, Solmecs obtained a loan of $60,000 from an unrelated third party.
The loan did not bear interest and was repaid on the  consummation of the Public
Offering.

On July 8, 1998 the Company  consummated  the Public Offering of 1,041,044 Units
consisting  of Common  Stock and  Warrants  for net  proceeds  to the Company of
approximately $4,700,000 after expenses of the offering.

The Company's capital requirements will be significant. The Company is dependent
upon the  proceeds  of the Public  Offering  to finance  the  operations  of the
Company,  including  the  costs of market  research  and  marketing  activities,
continued   research  and  development   efforts,   establishing   manufacturing
capabilities and the acquisition of intellectual  property  rights.  The Company
anticipates,  based on management's  internal forecasts and assumptions relating
to its operations  (including  assumptions  regarding the timing and progress of
the Company's  technologies),  that the net proceeds of the Public Offering will
be sufficient to satisfy the Company's  contemplated  cash  requirements  for at
least 12 months following the consummation of the Public Offering.  In the event
that the Company's plans change, its assumptions change or prove inaccurate,  or
if the  proceeds  of the  Public  Offering  prove  to be  insufficient  to  fund
operations, the Company could be required to seek additional financing. Based on
the  results of  preliminary  assessment  activity  to be  performed  on several
potential  projects  identified or to be identified by the Company,  the Company
intends to engage in research and  development of two such projects in the first
year and four projects in the second year (which may include an additional years
work on all or both of the  projects  from the first year) and  believes  that a
number of such  projects  will enter the  commercialization  stage  during  such
two-year period.  Completion of the research,  development and commercialization
of the Company's technologies or any potential


                                        9

<PAGE>

application of such technologies  will require  significant  additional  effort,
resources and time including funding  substantially greater than the proceeds of
the Public Offering and otherwise currently available to the Company.  Moreover,
the proceeds  received in the Public Offering may be insufficient to satisfy the
scheduled  projects,  requiring the Company to seek  additional  financing.  The
Company has no current  arrangements  with respect to, or sources of, additional
financing, and it is not anticipated that existing shareholders will provide any
portion  of  the  Company's  future  financing  requirements.  There  can  be no
assurance  that  additional  financing  will be  available  to the Company  when
needed, on commercially reasonable terms, or at all.

Inflation

In the 1990's the economy of Israel experienced  significant  expansion.  During
calendar  years 1992 through  1997,  Israel's  gross  domestic  product  ("GDP")
increased by 6.2%, 6.7%, 3.4%,  6.5%, 6.8% and 2.1%  (estimated),  respectively.
The Israeli  Government's  monetary  policy  contributed  to relative  price and
exchange rate stability during most of these years despite  fluctuating rates of
economic  growth and a high rate of  unemployment.  The inflation rate for 1994,
1995,  1996 and 1997 was 14.5%,  8.1%,  10.6% and 7.0%,  respectively.  Although
during 1997 the rate of devaluation  of the NIS against the dollar  exceeded the
rate of inflation in Israel,  for the several years  preceding  1997 the rate of
inflation  in Israel  exceeded  the rate of  devaluation  of the NIS against the
dollar.

Israel's economy has been subject to numerous destabilizing factors, including a
period of rampant  inflation in the early to  mid-1980's,  low foreign  exchange
reserves,  fluctuations in world commodity prices,  military conflicts and civil
unrest. In response to these problems,  the Israeli Government has intervened in
various  sectors  of the  economy,  employing,  among  other  means,  fiscal and
monetary policies,  import duties, foreign currency restrictions and controls of
wages,  prices and foreign  currency  exchange  rates.  The  Israeli  Government
frequently has changed its policies in all these areas.


                                       10

<PAGE>

                           PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

(d)      On July 8, 1998 the Company  consummated  its initial  public  offering
         (the "Public Offering")  contemplated by its Registration  Statement on
         Form SB-2 (file no. 333- 43955)  which was  declared  effective  by the
         Securities  and  Exchange  Commission  on June  29,  1998.  A total  of
         1,197,200  Units were  registered for sale by the Company to the public
         and  1,041,444  Units  were sold to the public  for gross  proceeds  of
         $5,986,003.  Each Unit consisted of one share of common stock, $.01 par
         value per share,  of the Company (the  "Common  Stock") and one Class A
         redeemable Common Stock purchase warrant (the  "Warrants").  The Common
         Stock and Warrants  included in the Units were registered in the Public
         Offering and became  detachable and separately  transferrable  from the
         Units on September  29, 1998. In addition,  1,041,044  shares of Common
         Stock  issuable  upon  exercise of the Warrants  were  registered.  The
         Warrants are  exercisable  between June 29, 1999 and June 28, 2003.  In
         addition,  104,104 Units were registered  pursuant to an option granted
         to the Underwriter of the Public Offering.

         Net proceeds from the Offering were approximately  $4,700,000.  July 8,
         1998  (the  closing  date  of  the   Offering)   the  Company   applied
         approximately   $391,000  of  net  proceeds  toward  the  repayment  of
         indebtedness  of Solmecs to a stockholder  of the Company.  The Company
         also repaid approximately  $110,000 owed to such stockholder for monies
         advanced  for  pre-offering  expenses.  As of  September  30,  1998 the
         Company has applied the balance of net  proceeds  from the  Offering as
         follows:  (i)  approximately  $70,000 to market  research and marketing
         activities;  (ii)  approximately  $150,000 to research and development;
         (iii)  approximately  $182,000 to repayment of an existing  credit line
         facility,  approximately  $90,000 of which was incurred after March 31,
         1998,  and which allows for future  borrowing  by the Company;  and (v)
         approximately   $130,000  to  working  capital  and  general  corporate
         purposes.

         On July 8, 1998,  contemporaneous  with the  consummation of the Public
         Offering,   the  Company  acquired,   in  a  tax  free  stock-for-stock
         transaction, all of the issued and outstanding capital stock of Solmecs
         Corporation  N.V., a Netherlands  Antilles company and its wholly-owned
         subsidiary   Solmecs  (Israel)  Ltd.  from  Bayou   International  Ltd.
         ("Bayou") and issued to Bayou  499,701  shares of  unregistered  Common
         Stock of the Company.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  Exhibit 27 - Financial Data Schedule


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<PAGE>

         (b)      Reports on Form 8-K

                  No reports on Form 8-K were  filed by the  Company  during the
                  three month period ended September 30, 1998.


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<PAGE>

                     SCNV ACQUISITION CORP. AND SUBSIDIARIES

                                   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 on the 17th day of November 1998.



                                SCNV ACQUISITION CORP.
                                (Registrant)


                                /s/  Herman Branover
                                -------------------------------------
                                Professor Herman Branover
                                President and Chief Executive Officer


                                /s/  Jacline Bavli
                                -------------------------------------
                                Jacline Bavli
                                Chief Financial Officer



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