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 DECEMBER 31, 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 February 19, 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 DECEMBER 31, 1998
                                   FORM 10-QSB

                                      INDEX


                                                                            Page
                                                                            ----

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheet as of December 31, 1998
         (Unaudited) ........................................................ 1

         Consolidated Statements of Operations
         For the three and six and months ended December 31, 1998 and 1997 
        (Unaudited) ......................................................... 2

         Consolidated Statement of Changes
         in Shareholders' Equity for the  six months
         ended December 31, 1998 (Unaudited) ................................ 3

         Consolidated Statement of Cash Flows
         For the six months ended December 31, 1998
         (Unaudited) ........................................................ 4

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


Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations ................................. 7

Part II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds ......................... 14

Item 6.  Exhibits and Reports on Form 8-K .................................. 14

Signatures ................................................................. 16


                                       -i-

<PAGE>


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

<TABLE>
<CAPTION>
                                                                            December 31,
                                                                                1998
                                                                            ------------
<S>                                                                         <C>        
ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                               $ 2,709,028
    Short-term investments                                                      513,157
    Trade receivables                                                            25,334
    Inventory                                                                    20,090
    Due from Elecmatec                                                           76,796
    Other receivables and prepaid expenses                                       81,178
                                                                            -----------
       Total current assets                                                   3,425,583
                                                                            -----------
FIXED ASSETS
    Cost                                                                        376,274
    Less - accumulated depreciation                                             140,277
                                                                            -----------
       Total fixed assets                                                       235,997
                                                                            -----------
       Total assets                                                         $ 3,661,580
                                                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Sundry payables and accrued expenses                                    $   250,032
                                                                            -----------
       Total current liabilities                                                250,032

LONG TERM LIABILITIES
    Long term loan                                                              200,000
    Accrued severance pay                                                        96,278
                                                                            -----------
       Total long term liabilities                                              296,278
                                                                            -----------
       Total liabilities                                                        546,310
                                                                            -----------
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                                                7,517,333
    Accumulated deficit                                                      (4,422,884)
                                                                            -----------
       Total shareholders' equity                                             3,115,270
                                                                            -----------
       Total liabilities and shareholders' equity                           $ 3,661,580
                                                                            ===========
</TABLE>

     The accompanying  notes are an integral part of this  consolidated  balance
sheet.


                                      -1-
<PAGE>


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

<TABLE>
<CAPTION>
                                                  For the three months ended     For the six months ended
                                                          December 31,                 December 31,
                                                     1998           1997           1998           1997
                                                  -----------    -----------    -----------    -----------
                                                         (pro forma)                   (pro forma)
<S>                                               <C>            <C>            <C>            <C>        
REVENUES

    Sales                                         $     6,976    $        23    $     7,165    $     3,350
    Contract services                                   9,607         28,349         10,291         32,365
                                                  -----------    -----------    -----------    -----------
       Total revenues                                  16,583         28,372         17,456         35,715
                                                  -----------    -----------    -----------    -----------

COSTS AND EXPENSES

    Research and development costs                    165,965         62,492        310,490        123,641
    Cost of merchandise purchased                       6,975            972          7,143          3,585
    Cost of contract services performed
       by subcontractors                                9,188         20,027          9,868         26,056
    Marketing expenses                                 59,490         21,962        127,163         29,926
    General and administrative expenses               144,426         93,133        272,169        177,714
                                                  -----------    -----------    -----------    -----------
       Total costs and expenses                       386,044        198,586        726,833        360,922
                                                  -----------    -----------    -----------    -----------

       Loss before one-time charge                   (369,461)      (170,214)      (709,377)      (325,207)

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

       Operating Loss                                (369,461)      (170,214)    (4,481,431)      (325,207)

FINANCING INCOME NET                                   36,775          6,732         59,383          9,706

LOSS ON SALE OF FIXED ASSETS                             (836)            --           (836)            --
                                                  -----------    -----------    -----------    -----------

       Net loss                                   $  (333,522)   $  (163,482)   $(4,422,884)   $  (315,501)
                                                  ===========    ===========    ===========    ===========

Net loss per common share                         $     (0.16)   $     (0.16)   $     (2.12)   $     (0.30)
                                                  ===========    ===========    ===========    ===========
Weighted average number of common
    shares outstanding, basic and diluted           2,082,088      1,041,044      2,082,088      1,041,044
                                                  ===========    ===========    ===========    ===========
</TABLE>


     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
initial public offering,
net of offering costs of $1,328,721        1,041,044           10,411        4,646,871               --         4,657,282

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

Net Loss                                          --               --               --       (4,422,884)       (4,422,884)
                                         -----------      -----------      -----------      -----------       -----------

Balance as of December 31, 1998            2,082,088      $    20,821      $ 7,517,333      $(4,422,884)      $ 3,115,270
                                         ===========      ===========      ===========      ===========       ===========
</TABLE>

     The accompanying notes are an integral part of this consolidated  financial
statement.


                                      -3-
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                   For the six
                                                                                   months ended
                                                                                   December 31,
                                                                                       1998
                                                                                   ------------
<S>                                                                                <C>         
CASH FLOW FROM OPERATING ACTIVITIES
    Net loss                                                                       $(4,422,884)
    Adjustments to reconcile net loss to net cash used in operating activities       3,918,230
                                                                                   -----------
       Net cash used in operating activities                                          (504,654)
                                                                                   -----------

CASH FLOW FROM INVESTING ACTIVITIES
    Acquisition of subsidiary, net of cash acquired                                    (49,699)
    Investment in fixed assets                                                        (150,292)
    Short-term investments                                                            (513,157)
    Proceeds from sale of fixed assets                                                  12,680
                                                                                   -----------
       Net cash used in investing activities                                          (700,468)
                                                                                   -----------

CASH FLOW FROM FINANCING ACTIVITIES
    Share capital issuance                                                           4,657,282
    Short term borowings, net                                                         (743,132)
                                                                                   -----------
       Net cash provided by financing activities                                     3,914,150
                                                                                   -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                                2,709,028
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                        --
                                                                                   -----------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                     $ 2,709,028
                                                                                   ===========

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED
    IN OPERATING ACTIVITIES
    Items not involving cash flows:
       Depreciation                                                                $    15,817
       Severance pay                                                                    74,836
       Loss on sale of fixed assets                                                        836
       Acquired research and development in process                                  3,772,054
    Changes in operating assets and liabilities:
       Decrease  in receivable and prepaid expenses                                    529,888
       Increase in Inventory                                                           (20,090)
       Decrease in sundry payables and accrued expenses                               (455,111)
                                                                                   -----------
                                                                                   $ 3,918,230
                                                                                   ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES
       Fair value of acquired assets and research and development in process       $ 3,994,649
       Less - liabilities assumed                                                   (1,067,369)
       Less - shares issued as consideration for acquisition of subsidiary          (2,873,280)
                                                                                   -----------
       Cash paid                                                                        54,000
       Less cash acquired                                                               (4,301)
                                                                                   -----------
                                                                                        49,699
                                                                                   ===========
</TABLE>

     The accompanying notes are an integral part of this consolidated  financial
statement.


                                      -4-
<PAGE>


                     SCNV ACQUISITION CORP. AND SUBSIDIARIES

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

General

The financial  statements as of and for the three and six months ended  December
31, 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 periods 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 and six months ended December 31, 1997 pertain to the
pro forma results of operations of SCNV  Acquisition  Corp.  (the "Company") and
Solmecs  Corporation N.V.  ("Solmecs") and its wholly-owned  subsidiary  Solmecs
(Israel) Ltd. 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


                                      -5-
<PAGE>


$3,772,054  has been reflected as acquired  research and  development in process
and fully expensed at the date of the Acquisition.

Subsequent event

The Company has entered into a letter of intent with Elecmatec  Electro-Magnetic
Technologies Ltd.  ("Elecmatec")  and the current  stockholders of Elecmatec for
the purchase of 90.4% of the outstanding shares of Elecmatec. The purchase price
for the  acquisition  is the cash payment of $150,000 at closing  (subsequent to
December  31,  1998),  and an  additional  payment of $150,000 to be invested in
Elecmatec,  on a sliding scale basis, upon successful completion by Elecmatec of
certain  third party debt or equity  financing.  In  addition  SCNV will loan to
Elecmatec  up  to  $1,000,000  to  finance  Elecmatec's  activities  until  such
financing is raised.  In connection with this  transaction,  options to purchase
30,000 shares of Common Stock of SCNV will be issued. The exercise price of each
option  shall be the higher of (i) $1.00 and (ii) the per share  market price of
SCNV's shares of Common Stock on the date of grant.  As of December 31, 1998 the
Company advanced $76,796 to Elecmatec.

Elecmatec  is the owner of a patented  micro-gravity  casting  technology  which
enables  the  continuous   casting  of  metallic   composite   materials   under
gravity-free  conditions.  Elecmatec  intends to establish a production plant at
"Kiryat-Gat" a southern town of Israel to produce alloy and bi-metal  strips for
sale initially to engine bearing and other original  equipment  manufacturers in
the automotive industry.


                                      -6-
<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 further 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  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   and  product
development,  uncertainty  of market  acceptance of the Company's  technologies,
relationships  with and dependence on third-party  equipment  manufacturers  and
suppliers,  uncertainties  relating to government  and  regulatory  policies and
other political risks and other risks detailed in the Company's filings with the
Securities and Exchange Commission. 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  expects to manufacture and market certain  technologies  which have
been identified by Solmecs and shown to be commercially  viable.  The Company is
currently  concentrating  on the further  development and  commercialization  of
advanced  double-sided  photo-voltaic  cells and silicon  monocrystals,  both of
which are technologies


                                      -7-
<PAGE>


developed  by  Russian  scientists   associated  with  the  space  and  military
industries  of the former  Soviet  Union,  and  identified  by the  Company  for
commercial exploitation.  Pursuant to an arrangement with a Russian company, the
Company has begun to develop  double-sided  photo-voltaic  cells for  commercial
distribution.  Additionally,  the  Company  has  commenced  the  acquisition  of
materials  and  facilities  from  such  Russian  entities  for  the  purpose  of
developing its own manufacturing  capabilities for both photo-voltaic  cells and
silicon monocrystals.  Management anticipates establishing production facilities
in Israel for both of such technologies by late 1999.

In January  1999,  the Company  entered  into a letter of intent with  Elecmatec
Electro-Magnetic  Technologies,  Inc. ("Elecmatec") and its stockholders for the
acquisition of 90.4% of the outstanding capital stock of Elecmatec. Elecmatec is
the  owner of  patented  micro-gravity  casting  technology  which  enables  the
continuous  casting  of  metallic  composite   materials  under   "gravity-free"
conditions. Elecmatec intends to establish a manufacturing facility in Israel in
1999 to produce alloy and bi-metal  strips for sale  initially to engine bearing
and other original equipment manufacturers in the automotive industry.

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.  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 is continuing in its process of identifying proprietary technologies
with  potential for  commercial  viability.  The Company  intends to implement a
four-step   process  with  respect  to  the  development  of  such   proprietary
technologies  which it  identifies  for  exploitation.  Initially  the  Company,
through its scientific,  engineering and administrative personnel, will identify
and analyze a number of such proposed  advanced  technologies.  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


                                      -8-
<PAGE>


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 statements of operations and other financial and operating data
for the three and six month periods ended December 31, 1998 are derived from the
unaudited  financial  statements of the Company included  elsewhere herein.  The
unaudited pro forma consolidated  statements of operations for the three and six
month periods ended December 31, 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 payment to officers in connection with employment agreements in the amount of
$30,000 and  $60,000 for the three and six months  periods  ended  December  31,
1997, respectively.

Three Months Ended  December 31, 1998 Compared with Pro Forma Three Months Ended
December 31, 1997

Sales.  Sales  increased to $6,976 for the three months ended  December 31, 1998
from $23 for the three months ended December 31, 1997. The increase in sales was
primarily attributable to the increase in sales of photo-voltaic panels.

Contract  Services.  Contract services  decreased to $9,607 for the three months
ended  December 31, 1998 from  $28,349 for the three  months ended  December 31,
1997. The decrease is attributable to the reduction in contract services related
to the completion of the "Dead Sea" project.

Total  Revenues.  Total revenues  decreased by $11,789 or 42% to $16,583 for the
three  months ended  December 31, 1998  compared to $28,372 for the three months
ended  December  31,  1997.  The  decrease is  attributable  to the  decrease in
contract services.

Research and  Development  Costs.  Research and  development  costs increased by
$103,473 or 166% to $165,965  for the three  months  ended  December  31,  1998,
compared to $62,492 for the three months ended  December 31, 1997.  The increase
is primarily due to (i) the increase in salaries  resulting  from 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 increase of sales of  photo-voltaic
cells and panels, costs of merchandise purchased increased by $6,003 or 618%, to
$6,975 for the three  months ended  December  31, 1998,  from $972 for the three
months ended December 31, 1997.

Costs of  Contract  Services  Performed  by  Subcontractors.  Costs of  contract
services  performed by subcontractors  decreased by $10,839 or 54% to $9,188 for
the three months


                                      -9-
<PAGE>


ended  December  31,  1998,  as compared to $20,027 for the three  months  ended
December  31,  1997.  This  decrease is mainly due to the  reduction in services
related to the completion of the "Dead Sea" project.

Marketing  Expenses.  Marketing expenses increased by $37,528 or 171% to $59,490
for the three  months ended  December  31, 1998,  as compared to $21,962 for the
three months ended December 31, 1997. This increase is primarily attributable to
(i)  salaries  and  related  expenses  resulting  from the hiring of  additional
marketing  personnel  and (ii)  foreign  travel  related  to the  marketing  and
implementation of new technologies.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased by $51,293 or 55% to $144,426 for the three months ended  December 31,
1998, as compared to $93,133 for the three months ended December 31, 1997.  This
increase is primarily  attributable  to (i) the increase in rent fees associated
with the leasing of new facilities in Omer Industrial Park and (ii) salaries and
related expenses resulting from the hiring of additional personnel.

Operating Loss.  Operating loss increased to $369,461 for the three months ended
December 31, 1998,  from $170,214 for the three months ended  December 31, 1997.
This increase is primarily  attributable to an increase in expenses as set forth
above.

Financing Income,  Net.  Financing income was $36,775 for the three months ended
December  31,  1998,  as  compared to  financing  income of $6,732 for the three
months ended December 31, 1997. The increase is  attributable to interest earned
on deposits.

Net Loss. As a result of the  foregoing,  net loss increased to $333,522 for the
three  months ended  December 31, 1998 from  $163,482 for the three months ended
December 31, 1997.

Six Months  Ended  December  31, 1998  Compared  with Pro Forma Six Months Ended
December 31, 1997

Sales. Sales increased to $7,165 for the six months ended December 31, 1998 from
$3,350 for the six months ended  December  31,  1997.  The increase in sales was
primarily attributable to the increase in sales of photo-voltaic panels.

Contract  Services.  Contract  services  decreased to $10,291 for the six months
ended December 31, 1998 from $32,365 for the six months ended December 31, 1997.
The decrease is  attributable  to the decrease in contract  sales related to the
completion of the "Dead Sea" project.

Total  Revenues.  Total revenues  decreased by $18,259 or 51% to $17,456 for the
six months ended  December 31, 1998 compared to $35,715 for the six months ended
December 31,  1997.  The  decrease is  attributable  to the decrease in contract
services.

Research and  Development  Costs.  Research and  development  costs increased by
$186,849  or 151% to  $310,490  for the six  months  ended  December  31,  1998,
compared to $123,641 for the six months ended December 31, 1997. The increase is
primarily  due to (i)  the  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.


                                      -10-
<PAGE>


Costs of Merchandise  Purchased.  Due to the increase of sales of  photo-voltaic
cells and panels, costs of merchandise  purchased increased by $3,558 or 99%, to
$7,143 for the six months  ended  December  31,  1998,  from  $3,585 for the six
months ended December 31, 1997.

Costs of  Contract  Services  Performed  by  Subcontractors.  Costs of  contract
services  performed by subcontractors  decreased by $16,188 or 62% to $9,868 for
the six months  ended  December  31,  1998,  as  compared to $26,056 for the six
months ended December 31, 1997.  This decrease is mainly due to the reduction in
services related to the completion of the "Dead Sea" project.

Marketing Expenses.  Marketing expenses increased by $97,237 or 325% to $127,163
for the six months ended  December 31, 1998, as compared to $ 29,926 for the six
months ended December 31, 1997.  This increase is primarily  attributable to (i)
salaries and related expenses resulting from the hiring of additional  marketing
personnel and (ii) foreign travel related to the marketing and implementation of
new technologies.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased by $94,455 or 53% to $272,169  for the six months  ended  December 31,
1998, as compared to $ 177,714 for the six months ended December 31, 1997.  This
increase  is  primarily  attributable  to  (i)  salaries  and  related  expenses
resulting  from the  hiring of  additional  personnel,  (ii)  professional  fees
associated  with  services  rendered to the Company and  Solmecs,  and (iii) the
increase  in rent 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 in July 1998 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 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  $4,481,431  for the six  months  ended
December 31,  1998,  from  $325,207 for the six months ended  December 31, 1997.
This  increase  is also  attributable  to an  increase  in expenses as set forth
above.

Financing  Income,  Net.  Financing  income was $59,383 for the six months ended
December 31, 1998, as compared to financing  income of $9,706 for the six months
ended  December 31, 1997.  The increase is  attributable  to interest  earned on
deposits.

Net Loss. As a result of the foregoing, net loss increased to $4,422,884 for the
six months  ended  December  31,  1998 from  $315,501  for the six months  ended
December 31, 1997.


                                      -11-
<PAGE>


Liquidity and Capital Resources

The Company 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.  The  Company has  incurred
significant  losses  since  inception,  resulting in an  accumulated  deficit of
$4,422,884  at December 31, 1998.  The  Company's  cash  requirements  have been
exceeding its cash flow from operations and its continuing cash requirements are
expected to be significant due to, among other things, costs associated with the
development  of  manufacturing  facilities  for  advanced  technologies  such as
double-sided  photo-voltaic  cells  and  silicon  monocrystals,  as  well as the
research  and  development  of  additional  technologies  identified  or  to  be
identified by the Company.

At  December  31,  1998,  the  Company had  working  capital of  $3,175,551  and
shareholders' equity of $3,115,270.  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.

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.

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 until December 31, 1999. 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.  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


                                      -12-
<PAGE>


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.

Year 2000

In connection  with the  implementation  of its business  plan,  the Company has
evaluated and is in the process of updating its  Information  Technology  ("IT")
systems to ensure that it will have the capability to manage and manipulate data
in the year 2000 and beyond.  As the Company takes measures to be in compliance,
new programs are currently being tested. It is anticipated that the Company's IT
systems  will  be  substantially  compliant  by the end of the  Company's  first
quarter of fiscal 2000  (September  30, 1999).  Costs incurred by the Company to
date to implement  its plans have not been material and are not expected to have
a material effect on the Company's financial condition or results of operations.

As the Company  enters into  commercial  relationships  it  addresses  year 2000
compliance with key business partners and  sub-contractors  and anticipates that
such key business partners and sub-contractors who are not yet compliant will be
prior to year end.


                                      -13-
<PAGE>


                           PART II - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

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.  On 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 December 31,
1998 the Company has applied the balance of net  proceeds  from the  Offering as
follows: (i) approximately $130,000 to market research and marketing activities;
(ii)  approximately  $311,000 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;  (iv)  approximately  $98,000  for the  purchase  of
equipment and machinery,  and (v) approximately  $272,000 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

(b)  Reports on Form 8-K


                                      -14-
<PAGE>


     No  reports  on Form 8-K were  filed by the  Company  during  the six month
     period ended December 31, 1998.


                                      -15-
<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 19th day of February 1999.


                                          SCNV ACQUISITION CORP.
                                          (Registrant)

                  February 19, 1999       /s/     Herman Branover               
                                          --------------------------------------
                                          Professor Herman Branover
                                          President and Chief Executive Officer

                  February 19, 1999       /s/    Jacline Bavli                  
                                          --------------------------------------
                                          Jacline Bavli
                                          Chief Financial Officer


                                      -16-