UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10-QSB

--------------------------------------------------------------------------------

(Mark one)

  [X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
      of 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

  [_] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
      of 1934

         For the transition period from ______________ to _____________


--------------------------------------------------------------------------------

                        Commission File Number: 0-10999
                                                -------


                        COMPOSITE TECHNOLOGY CORPORATION
       (Exact name of small business issuer as specified in its charter)


               Nevada                                        59-2025386
      ------------------------                       ------------------------
      (State of incorporation)                       (IRS Employer ID Number)


                      2026 McGaw, Irvine, California 92614
         -------------------------------------------------------------
              (Address of principal executive offices) (Zip Code)

                                 (949) 428-8500
                                 --------------
                        (Registrant's telephone number)

 -------------------------------------------------------------------------------

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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 13, 2004: 109,008,734

                            -----------------------

Transitional Small Business Disclosure Format (check one): YES [_] NO [X]


                                     Page 1
<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION

                Form 10-QSB for the Quarter ended June 30, 2004

                               Table of Contents


                                                                           Page
                                                                           ----
PART I - FINANCIAL INFORMATION

  Item 1   Financial Statements                                              3

  Item 2   Management's Discussion and Analysis or Plan of Operation        18

  Item 3   Controls and Procedures                                          19

PART II - OTHER INFORMATION

  Item 1   Legal Proceedings                                                20

  Item 2   Changes in Securities                                            21

  Item 3   Defaults Upon Senior Securities                                  22

  Item 4   Submission of Matters to a Vote of Security Holders              22

  Item 5   Other Information                                                22

  Item 6   Exhibits and Reports on Form 8-K                                 22

SIGNATURES                                                                  22

                                        2
<PAGE>

ITEM 1

PART 1 - FINANCIAL STATEMENTS

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                          CONSOLIDATED BALANCE SHEETS
                                 June 30, 2004
                                  (UNAUDITED)


                                     ASSETS

                                                                 JUNE 30, 2004
                                                                 -------------
CURRENT ASSETS
     Cash and cash equivalents                                     $  489,088
     Prepaid expenses and other current assets                        494,713
                                                                   ----------

              Total current assets                                    983,801

PROPERTY AND EQUIPMENT, net                                         1,221,060
OTHER ASSETS                                                          274,784
                                                                   ----------

              TOTAL ASSETS                                         $2,479,645
                                                                   ==========


                                  -CONTINUED -

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements

                                        3
<PAGE>

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                    CONSOLIDATED BALANCE SHEETS - CONTINUED
                                 June 30, 2004
                                  (UNAUDITED)


                     LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                              June 30, 2004
                                                              -------------

CURRENT LIABILITIES
     Accounts payable - trade                                  $  1,198,413
     Accrued legal settlement                                        71,581
     Accrued payroll and related expenses                           142,013
     Accrued officer compensation                                   292,953
     Deferred revenue                                               564,750
     Deferred gain on sale of fixed assets                           55,765
     Capital lease obligations - current                            247,042
     Other current liabilities                                      204,668
     Note payable  - shareholder/director                            81,000
                                                               ------------
Total current liabilities                                         2,858,185

LONG TERM LIABILITIES
     Capital lease obligations - long term                          546,776
                                                               ------------
Total long term liabilities                                         546,776
                                                               ------------


TOTAL LIABILITIES                                                 3,404,961

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Common stock, $ 0.001 par value
       200,000,000 shares authorized
       104,311,234 shares issued and outstanding                    104,311
     Common stock committed                                          26,250
     Common stock subscription receivable                          (148,522)
     Deferred compensation - stock options                         (412,520)
     Additional paid-in capital                                  19,563,468
     Deficit accumulated during the development stage           (20,058,303)
                                                               ------------

         Total shareholders' deficit                               (925,316)
                                                               ------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                    $  2,479,645
                                                               ============

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                        4
<PAGE>

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             Nine and Three months
                          ended June 30, 2004 and 2003
      And for the period from March 28, 2001 (Inception) to June 30, 2004

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                  Period from
                                                                                                                 March 28,2001
                                                                                                                   (date of
                                   Three months           Three months         Nine months       Nine months       inception)
                                      ended                  Ended                ended             ended           through
                                  June 30, 2004         June 30, 2003        June 30, 2004      June 30, 2003    June 30, 2004
                               --------------------------------------------------------------------------------------------------
<S>                             <C>                   <C>                  <C>                  <C>                 <C>
REVENUES                       $                 --  $                --  $                --  $            --  $              --
                               --------------------  -------------------  -------------------  ---------------  -----------------

EXPENSES

Officer compensation                         86,923              102,099              272,258          132,099            837,158
General and administrative                1,116,493              190,245            2,670,772          356,390          4,455,122
Legal, professional
   and consulting                           321,179              344,297            2,005,104          770,522          6,542,947
Research and development                    305,760              191,626            1,511,570        1,209,945          4,573,859
Reorganization                                   --                   --                   --               --             30,000
Depreciation                                 29,931                  791               61,170            3,491             84,345
Compensation expense
   related to issuances
   of common stock at
   less than fair value                          --                   --                   --               --            603,500
Compensation expense
   related to fair
   value of stock options
   legal                                          -               64,125              128,250          205,100            563,900
Compensation expense
    related to fair
    value of warrants                     1,540,000                   --            1,540,000               --          1,540,000
Compensation expense
    related to fair
    value of options
    research and development                 40,325               40,881              120,975          264,018            687,854
                               --------------------  -------------------  -------------------  ---------------  -----------------

TOTAL OPERATING
    EXPENSES                              3,440,611              934,064            8,310,099        2,941,565        19,918,685
6,770,099
LOSS FROM OPERATIONS                     (3,440,611)            (934,064)          (8,310,099)      (2,941,565)       (19,918,685)
                               --------------------  -------------------  -------------------  ---------------  -----------------
</TABLE>

                                   -CONTINUED-

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                        5
<PAGE>





                COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   Nine and Three months ended June 30, 2004 and
           2003 And for the period from March 28, 2001 (Inception) to
                            June 30, 2004 (Continued)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                     Period from
                                                                                                                    March 28,2001
                                                                                                                       (date of
                                  Three months            Three months          Nine months        Nine months       inception)
                                      ended                  ended                 ended              ended            through
                                  June 30, 2004          June 30, 2003        June 30, 2004      June 30, 2003     June 30, 2004
                               ----------------------------------------------------------------------------------------------------
<S>                             <C>                   <C>                  <C>                  <C>                 <C>
LOSS FROM OPERATIONS                (3,440,611)              (934,064)          (8,310,099)         (2,941,565)       (19,918,685)
                                  ------------           ------------         ------------        ------------       ------------

OTHER (EXPENSE)/Income
    Interest                               147                  8,550                   --               5,300            (16,968)
    Gain on sale of assets               3,280                     --                3,280                  --              3,280
    Impairment adjustment
    on investments in
    other companies                         --                     --                   --                  --           (137,230)
    Litigation settlement                   --                (95,494)                  --             (95,494)
                                  ------------           ------------         ------------        ------------       ------------

  Total other expense                    3,427                (86,944)                3,280            (90,194)          (150,918)
                                  ------------           ------------         ------------        ------------       ------------

NET LOSS                            (3,437,184)            (1,021,008)          (8,306,819)         (3,031,759)       (20,069,603)
PREFERRED STOCK DIVIDENDS                   --                 (5,000)                  --              15,000                 --
                                  ------------           ------------         ------------        ------------       ------------

NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS                      $ (3,437,184)            (1,016,008)          (8,306,819)       $ (3,046,759)      $(20,069,603)
</TABLE>

                                   -CONTINUED-

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 Nine and Three months ended June 30, 2004 and
           2003 And for the period from March 28, 2001 (Inception) to
                           June 30, 2004 (Continued)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                       Period from
                                                                                                                       March 28,2001
                                                                                                                        (date of
                                   Three months           Three months           Nine months         Nine months        inception)
                                      ended                  ended                  ended               ended            through
                                  June 30, 2004           June 30, 2003         June 30, 2004       June 30, 2003    June 30, 2004
                               ----------------------------------------------------------------------------------------------------
<S>                             <C>                   <C>                  <C>                  <C>                 <C>
BASIC AND FULLY DILUTED
  LOSS PER SHARE                            (0.03)                (0.01)                (0.08)              (0.03)
  LOSS PER SHARE                            (0.03)                (0.01)                (0.08)              (0.03)
                                   --------------        --------------        --------------      --------------

TOTAL BASIC AND DILUTED
  LOSS PER SHARE
  AVAILABLE TO COMMON
  SHAREHOLDERS                              (0.03)                (0.01)                (0.08)              (0.03)
                                   ==============        ==============        ==============      ==============

WEIGHTED-AVERAGE COMMON
  SHARES OUTSTANDING                  102,948,012            89,748,749           101,499,604          82,472,143
                                   ==============        ==============        ==============      ==============
</TABLE>

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       7
<PAGE>




                COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    9 months ended June 30, 2004 and 2003
              And for the period from March 28, 2001 (inception) to
                                 June 30, 2004

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                  Period from
                                                                                                 March 28,2001
                                                                                                   (date of
                                                       Nine months           Nine months           inception)
                                                          ended                 ended               through
                                                      June 30, 2004          June 30, 2003       June 30, 2004
                                                      --------------        --------------       --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>                    <C>               <C>
    Net loss                                          $   (8,306,819)          (3,036,759)       $  (20,069,603)
    Adjustments to reconcile net loss to
      net cash used in operating activities:
      Depreciation                                            61,170                 3,491               84,345
      Accretion of deferred gain on sale of PP&E              (3,280)                   --               (3,280)
      Amortization of prepaid expenses
            originally paid with common stock                325,199              (830,159)             411,347
      Issuance of common stock for
           consulting, legal, and other expenses             744,044             2,715,882            6,410,521
      Issuance of common stock for
           compensation                                       64,005                    --              157,755
      Issuance of warrants for services
           rendered for research and development                  --                    --               61,250
      Issuance of warrants for legal settlement                   --                    --               11,750
      Issuance of common stock for law suit                       --                95,494                   --
      Compensation expense related to
           issuances of common stock at
           less than fair value                                   --                    --              603,500
      Compensation expense related to
          fair value of stock options and warrants         1,789,226               469,119            2,791,755
      Carrying value impairment adjustment
          on investments in other companies                       --                    --              137,230
    (Increase) decrease in -
      Prepaid expenses and other current assets             (476,492)              (77,000)            (320,107)
      Bank Overdraft                                              --                 5,179                   --

    Increase (decrease) in -
      Accounts payable - trade                               722,600              (485,452)           1,195,343
      Accrued legal settlement                              ( 74,019)                   --               71,581
      Accrued payroll and related expenses                    80,761                    --              142,013
      Accrued interest payable                                    --                (9,851)              13,101
      Accrued officer compensation                            37,334               (15,650)             263,025
      Deferred revenue                                       564,750                    --              564,750
      Accrued expenses - other                               204,668                (2,220)             204,668
                                                      --------------        --------------       --------------
Net cash provided (used) in operating activities      $   (4,266,853)       $   (1,167,926)      $   (7,269,056)
                                                      --------------        --------------       --------------
</TABLE>

                                  -CONTINUED-

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       8
<PAGE>

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended June 30, 2004 and 2003
      And for the period from March 28, 2001 (inception) to June 30, 2004
                                  (continued)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                   Period from
                                                                                                  March 28,2001
                                                                                                    (date of
                                                           Nine months         Nine months          inception)
                                                              ended               ended              through
                                                          June 30, 2004       June 30, 2003       June 30, 2004
                                                         --------------       --------------     --------------
<S>                                                        <C>                    <C>              <C>
Net cash provided (used) in operating activities           $(4,266,853)         (1,167,926)        $(7,269,056)
                                                           -----------         -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES
      Sale of property and equipment                           500,000                  --             500,000
      Cash advanced by (to) officers, net                           --                  --              29,928
      Investments in other companies                                --                  --             (40,000)
      Purchase of property and equipment                      (719,172)           (152,979)           (943,080)
                                                           -----------         -----------         -----------

Net cash provided by (used in) investing activities           (219,172)           (152,979)           (453,152)
                                                           -----------         -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES
      Common stock subscription receivable                     (98,522)                 --            (148,522)
      Proceeds from sale of committed stock                     13,750                  --             208,125
      Payment for costs associated with
        the sale of common stock                              (220,030)                 --            (237,030)
      Proceeds from notes payable -
          shareholder                                           81,000              30,000             334,000
      Payments on capital leases                                (6,212)                 --              (6,212)
      Proceeds from sale of preferred stock                         --                  --             132,000
      Proceeds from exercise of warrants                       695,911                  --             695,911
      Proceeds from sale of common stock                     3,378,718           1,277,072           7,233,024
                                                           -----------         -----------         -----------

Net cash provided (used)in financing activities              3,844,615           1,307,072           8,211,296
                                                           -----------         -----------         -----------

Net increase(decrease) in cash and cash equivalents        $  (641,410)        $  (13,833)         $   489,088
</TABLE>

                                   -CONTINUED-

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                        9
<PAGE>

               COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        (a development stage enterprise)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended June 30, 2004 and 2003
      And for the period from March 28, 2001 (inception) to June 30, 2004
                                  (continued)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                  Period from
                                                                                                 March 28,2001
                                                                                                   (date of
                                                            Nine months        Nine months         inception)
                                                              ended              ended              through
                                                          June 30, 2004       June 30, 2003      June 30, 2004
                                                          --------------      --------------     --------------
<S>                                                        <C>                 <C>                <C>
Net increase(decrease) in cash and cash equivalents        $  (641,410)        $   (13,833)       $   489,088

CASH AND CASH EQUIVALENTS, BEGINNING OF
      PERIOD                                                 1,130,498              13,956                 --
                                                           -----------         -----------        -----------

CASH AND CASH EQUIVALENTS, END OF
          PERIOD                                           $   489,088         $       123        $   489,088
                                                           ===========         ===========        ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION

      CONVERSION OF SHORT TERM WORKING
          CAPITAL LOANS TO COMMON STOCK                    $        --         $    30,000        $    30,000
                                                           ===========         ===========        ===========
      CAPITAL LEASES                                       $   800,000         $        --        $   800,000
                                                           ===========         ===========        ===========


</TABLE>

   The financial information presented herein has been prepared by management
           without audit by independent certified public accountants.
   The accompanying notes are an integral part of these financial statements.

                                       10
<PAGE>

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

      We are  an  Irvine,  CA  based  company  providing  innovative  technology
      solutions for electric power  transmission  systems using our  proprietary
      advanced  composite  technologies.  Our first  product is a family of high
      performance aluminum conductor composite core ("ACCC") cables for electric
      transmission and distribution lines.

      In December  2003,  the first  commercial  order was received for our ACCC
      cable for a new transmission  line in Kansas.  This order requires a small
      size ACCC  cable to  replace  a "Hawk"  size  designation,  which we began
      producing in the second  quarter of 2004.  We will  continue to design and
      produce other sizes of ACCC cable to fill customer  requirements.  We have
      received progress  payments of $564,750 against this order which has been
      recorded as deferred revenue in the accompanying balance sheet.

      In December 2003, the Company incorporated three inactive  subsidiaries as
      Nevada Corporations:  CTC Wind Systems Corporation  ("CTCWSC"),  CTC Cable
      Corporation ("CTCCC"),and CTC Towers & Poles Corporation ("CTCTPC").

NOTE 2 - GOING CONCERN

      The Company has  received a report from its  independent  auditors for the
      year ended  September  30,  2003 that  includes an  explanatory  paragraph
      describing the  uncertainty  as to the Company's  ability to continue as a
      going concern.  These consolidated  financial  statements  contemplate the
      ability to continue as such and do not include any adjustments  that might
      result from this uncertainty.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation

      The  accompanying  financial  statements  have been prepared in conformity
      with  accounting  principles  generally  accepted in the United  States of
      America for interim  financial  information  and with the  instructions to
      Form 10-QSB and Regulation  S-B.  Accordingly,  they do not include all of
      the information and footnotes required by accounting  principles generally
      accepted  in  the  United   States  of  America  for  complete   financial
      statements.   In  the  opinion  of  management,   all  normal,   recurring
      adjustments  considered  necessary  for  a  fair  presentation  have  been
      included.  The financial statements should be read in conjunction with the
      audited  financial  statements and notes thereto included in the Company's
      Annual Report on Form 10-KSB for the year ended  September  30, 2003.  The
      results of  operations  for the three and nine months ended June 30, 2004
      are not necessarily indicative of the results that may be expected for the
      year ended September 30, 2004.

      Development Stage Enterprise

      The Company is a  development  stage  company as defined in  Statement  of
      Financial  Accounting  Standards ("SFAS") No. 7, "Accounting and Reporting
      by Development Stage  Enterprises." The Company is devoting  substantially
      all of its present  efforts to establish a new  business,  and its planned
      principal operations have not yet commenced.  All losses accumulated since
      inception have been considered as part of the Company's  development stage
      activities.

                                       11
<PAGE>

      Stock-Based Compensation

      SFAS No. 123,  "Accounting for Stock Compensation," as amended by SFAS No.
      148,   "Accounting   for   Stock-Based   Compensation   -  Transition  and
      Disclosure,"   defines  a  fair  value  based  method  of  accounting  for
      stock-based  compensation.  However,  SFAS No.  123  allows  an  entity to
      continue to measure  compensation  cost related to stock and stock options
      issued to employees using the intrinsic method of accounting prescribed by
      Accounting  Principles Board ("APB") Opinion No.  25,"Accounting for Stock
      Issued to  Employees."  Entities  electing to remain  with the  accounting
      method of APB No. 25 must make pro forma  disclosures  of net  income  and
      earnings  per share as if the fair value method of  accounting  defined in
      SFAS No. 123 had been applied.  The Company has elected to account for its
      stock-based  compensation  to employees  using the intrinsic  value method
      under APB No. 25.

      The Company has adopted the  disclosure-only  provisions  of SFAS No. 123.
      Accordingly,   no  compensation  cost  other  than  that  required  to  be
      recognized  by APB No. 25, the  difference  between  the fair value of the
      Company's  common  stock at the grant date and the  exercise  price of the
      options has been recognized. Had compensation cost for the Company's Stock
      Plan been determined  based on the fair value at the grant date for awards
      consistent with the provisions of SFAS No. 123, the Company's net loss and
      loss per share for the three  months and nine  months  ended June 30, 2004
      and 2003  would have been  increased  to the pro forma  amounts  indicated
      below:
<TABLE>
<CAPTION>
                                                             Nine months         Nine months      Three months     Three months
                                                                ended               ended            ended            ended
                                                            June 30, 2004       June 30, 2003     June 30, 2004    June 30, 2003
                                                            -------------       -------------     --------------   -------------
<S>                                                         <C>                 <C>
         Net loss, as reported                              $  (8,306,819)      $  (3,046,759)    $  (3,437,184)   $ (1,016,008)
         Add stock based employee compensation
           expense included in net income, net of tax
         Deduct total stock based employee compensation                --                --
         Expense determined under fair value method
           for all awards, net of tax                            (323,957)            (65,833)    $    (161,978)   $    (32,917)
                                                            -------------       -------------     -------------    ------------
         Net loss, pro forma                                $  (8,630,773)      $  (3,102,592)    $  (3,599,162)   $ (1,048,925)
                                                            =============       =============     =============    ============

         Earnings per common share
           Basic, as reported                               $       (0.08)      $       (0.04)    $       (0.04)   $      (0.01)
           Basic, pro forma                                 $       (0.08)      $       (0.04)    $       (0.04)   $      (0.01)
           Diluted, as reported                             $       (0.08)      $       (0.04)    $       (0.04)   $      (0.01)
           Diluted, pro forma                               $       (0.08)      $       (0.04)    $       (0.04)   $      (0.01)
</TABLE>


      Principles of Consolidation

      The consolidated  financial statements include the accounts of CTC and its
      wholly owned  subsidiaries,(collectively,  the "Company"). All significant
      inter-company accounts and transactions are eliminated in consolidation.

      Research and Development Expenses

      Research and development expenses are charged to operations as incurred.

      Loss Per Share

      The Company  utilizes  SFAS No. 128,  "Earnings per Share." Basic loss per
      share is computed by dividing loss available to common shareholders by the
      weighted-average  number of common  shares  outstanding.  Diluted loss per
      share  is  computed  similar  to  basic  loss per  share  except  that the
      denominator is increased to include the number of additional common shares
      that would have been  outstanding if the potential  common shares had been
      issued  and  if  the  additional  common  shares  were  dilutive.   Common
      equivalent  shares are excluded  from the  computation  if their effect is
      anti-dilutive.

                                       12
<PAGE>

      The following common stock  equivalents were excluded from the calculation
      of  diluted   loss  per  share for the three months and nine months ended
      June 30, 2004 and 2003 since  their   effect   would  have  been
      anti-dilutive:

                                                              June 30,
                                                      ------------------------
                                                         2004          2003
                                                      ----------    ----------
          Series B convertible preferred stock                --        80,000
          Options for common stock                     6,765,398     5,057,740
          Warrants                                    11,779,569    15,266,789


NOTE 4 - PROPERTY AND EQUIPMENT

      Property and equipment at June 30, 2004 consisted of the following:

          Manufacturing equipment                            $  891,448
          Office furniture equipment                              8,168
             Leasehold improvements                             350,693
                                                             ----------
                                                              1,250,309

          Less accumulated depreciation                          29,249
                                                               --------

              TOTAL                                          $1,221,060
                                                             ==========

      Depreciation  expense  was  $29,931  and $791 and  $61,170  and $3,491 and
      $84,345 for the three  months and nine months ended June 30, 2004 and 2003
      and  the  period  from  March  28,  2001  (inception)  to June  30,  2004,
      respectively.


NOTE 5 - NOTE PAYABLE TO RELATED PARTY

      In June 2004 the  Company  received a short  term,  non  interest  bearing
      advance from one of its Directors for  operating  expenses.  This note has
      subsequently been repaid.


NOTE 6 - SHAREHOLDERS' EQUITY

      PREFERRED STOCK

      In January  2004,  the Company  converted the 1,000 shares of Series B 10%
      preferred stock of its subsidiary Transmission Technology Corporation into
      80,000 shares of unregistered,  restricted common stock. In addition,  the
      Company issued 27,631 shares of unregistered,  restricted  common stock in
      satisfaction of the unpaid preferred stock dividends and interest totaling
      $31,996.

      COMMON STOCK

      Services Rendered

      During the nine months ended June 30,  2004,  the Company  issued  700,000
      shares of common stock registered  pursuant to Form S-8 to two individuals
      for legal litigation services and Intellectual property services valued at
      $1.047  million  which  approximated  the closing  price of the  Company's
      common stock as quoted on the NASDAQ Electronic Bulletin Board on the date
      of issue.

      During the 3 month period ended June 30,  2004,  the Company  issued these
      two individuals the following common stock registered pursuant to Form S-8
      (i)  a  consultant   providing  legal  services,   intellectual   property
      registration and intellectual  property  protection  strategy services was
      issued  250,000  shares of common stock valued  $337,500 (ii) a consultant
      providing  legal  litigation  services was issued 250,000 shares of common
      stock valued at $337,500.

                                       13
<PAGE>

      During November 2003, the Company  committed to issue 20,000 shares of the
      Company's  restricted,  unregistered  common stock to one  individual  for
      consulting  services.  This  transaction  was  valued  at  $28,050,  which
      approximates  the "fair value" of the  Company's  stock on the date of the
      transaction  using the  discounted  closing price of the Company's  common
      stock as quoted on the NASDAQ Electronic  Bulletin Board. During the three
      months  ended  March 31,  2004 it was  determined  by the  Company and the
      consultant that the agreement was not in the best interest of either party
      and  therefore the contract was not  consummated  or fully  executed.  The
      20,000 shares committed for the consulting  services were reversed and the
      $28,050 was reclassified to accounts payable.

      Cash

      During  November  2003,  pursuant to a Private  Placement  Memoranda,  the
      Company sold an aggregate of 25,000 Units for gross  proceeds of $100,000.
      Each Unit consisted of 10 shares of restricted  unregistered  common stock
      and  two  Series  P  warrants  to  purchase  one  share  of  unregistered,
      restricted  common  stock.  Each Series P warrant  entitles  the holder to
      purchase  a share of common  stock at $0.80 per share and  expires  at the
      earlier of July 30, 2005 or three weeks following written  notification by
      the Company  that its common  stock closed at or above $1.20 per share for
      10  consecutive  trading days.  In addition,  the Series P warrants can be
      redeemed  by the  Company  for  $0.001  each if a  Registration  Statement
      covering the shares  underlying  the Series P warrants  has been  declared
      effective and the  Company's  common stock closes at or above $1.20 for 10
      consecutive days.

      During  November  2003,  pursuant to a Private  Placement  Memoranda,  the
      Company  sold an  aggregate of 89,360  shares of  restricted  unregistered
      common stock at $1.40 per share for gross proceeds of $125,104.

      In December 2003, the Company issued  2,400,000 Units for cash proceeds of
      $2,790,000 net of offering  costs of $210,000.  Each unit consisted of one
      share  of the  Company's  unregistered  restricted  common  stock  and 0.5
      warrant to purchase  one share of the  Company's  unregistered  restricted
      common stock at an exercise  price of $2.04 per share.  The warrants  vest
      immediately and expire in December 2008. The Company has the right to call
      the warrants if the closing price of the Company's common stock is greater
      than 200% of the exercise price of the warrants for 20 consecutive trading
      days. In June 2004, the Company offered the warrant holders, for a limited
      period of time,  the  opportunity  to exercise their warrants at a reduced
      strike  price  of  $0.50.  Pursuant  to this  offer,  the  Company  issued
      1,000,000 shares of the Company's  unregistered,  restricted  common stock
      against receipt of $500,000.

      During the nine months  ended June 30, 2004,  1,080,000  Series E Warrants
      were  exercised  for total cash  consideration  of $270,000,  at $0.25 per
      share.

      During the nine months ended June 30, 2004,  60,000 Series H Warrants were
      exercised for total cash consideration of $120,000, at $0.50 per share.

      Stock for Lease Agreement

      In December  2003, as part of entering into a lease  agreement for its new
      offices and warehouse,  the Company issued 140,160 shares of  unregistered
      restricted  common  stock  valued at $147,168 to the lessor as payment for
      the first two month's rent.

      Sale-Lease Back of Capital Assets

      On May 7, 2004 the  Company  entered  into a $500,000  sale  leaseback  of
      certain  of its  capital  assets.  Under  the  terms of the  Master  Lease
      Agreement the Company  received  $450,000  which was net of a 10% security
      deposit and is to make payments totaling $16,444 for 36 months. At the end
      of the lease  period,  the Company has the right to renew the lease for an
      additional  12 months,  terminate and return the equipment or purchase the
      equipment  at the greater of fair market  value or 10% of the  capitalized
      cost.  The Company  recognized  a gain in the amount of $ 59,045 from this
      transaction  and will defer the gain and  recognize  it as income over the
      period of the initial lease term.

                                       14
<PAGE>

      Exchange Offer

      In November 2003, the Company made an offer to the holders of the Series E
      and Series H warrants that if the holders  exercised their warrants before
      December 10,  2003,  the holder  would  receive one share of  unregistered
      common   stock  and  one  Series  R  warrant  to  purchase  0.2  share  of
      unregistered  restricted  common stock. Each Series R warrant entitled the
      holder to purchase  one share of common  stock at $2 per share and expires
      on December 30, 2005.  In addition,  the Series R warrants can be redeemed
      by the Company for $0.001 each if a  Registration  Statement  covering the
      shares  underlying  the Series R warrants has been declared  effective and
      the Company's  common stock closes at or above $3 for 10 consecutive  days
      and if the  shares  underlying  the  warrants  have  been  registered.  In
      December  2003,   the  Company  issued  592,500  shares  of   unregistered
      restricted  common  stock and 58,500  Series R warrants  in  exchange  for
      proceeds of $153,125.

                                       15
<PAGE>

      STOCK OPTIONS

      Stock Plan

      During the nine month  period  ending  June 30,  2004 the  Company did not
      issue any stock options to employees as deferred compensation.  During the
      previous  nine month  period from  October 1, 2002 to June 30,  2003,  the
      Company recorded deferred compensation of $378,303 related to the issue of
      750,000   options   granted  in  February  2003.   The  Company   recorded
      compensation  expenses of $1,047,000 and $1,459,652 during the nine months
      ended June 30,  2004 and 2003,  respectively,  for the value of the legal,
      consulting,  and research and development  services  rendered during those
      periods.

      In the first nine months of 2004 in connection with the departure of three
      Former employees a total of 179,614 shares were issued and 920,386 options
      cancelled.

      In March 2004 a total of 87,342 options  granted to former  consultants of
      the Company's predecessor were cancelled.

      In April 2004, a consultant  was issued  120,000 shares of common stock on
      the exercise of 120,000 stock options at an exercise price of 0.25 cents.

      In June 2004 an employee was issued  54,400  shares of common stock on the
      exercise of 75,000 stock options on a cashless basis.

      The following table  summarizes all Stock Plan activity  through March 31,
      2004.

<TABLE>
<CAPTION>
                                                                          Weighted-Average
                                                           Number             Exercise
                                                          of Shares            Price
                                                         -----------        -----------
<S>                                                       <C>             <C>
          Outstanding, March 18, 2001 (inception)                --         $       --
            Granted                                       1,357,740         $     0.35
                                                         ----------

          Outstanding, September 30, 2001                 1,357,740         $     0.35
            Granted                                       5,950,000         $     0.35
            Exercised                                    (2,000,000)        $     0.24
                                                         ----------

          Outstanding, September 30, 2002                 5,307,740         $     0.39
            Granted                                       3,950,000         $     0.46
            Exercised                                      (110,000)        $     0.25
            Canceled                                     (1,000,000)        $     0.69
                                                         ----------

          Outstanding, September 30, 2003                 8,147,740         $     0.39
            Exercised                                       (50,000)        $     0.25
            Cancelled                                      (200,000)        $     0.25
                                                         ----------

          Outstanding, December 31, 2003                  7,897,740         $     0.39
               Exercised                                   (249,614)        $     0.39
               Cancelled                                   (807,728)        $     0.25
                                                         ----------

          Outstanding, March 31, 2004                     6,840,398         $     0.38
               Exercised                                    (54,400)        $     0.32
               Cancelled                                    (20,600)        $     0.39
                                                         ----------

            OUTSTANDING, JUNE 30, 2004                    6,765,398         $     0.38
                                                         ==========

          EXERCISABLE, JUNE 30, 2004                      3,532,259         $     0.35
                                                         ==========
</TABLE>

                                       16
<PAGE>

      WARRANTS

      The following table summarizes all Warrant activity through June 30, 2004:

<TABLE>
<CAPTION>
                                                                           Weighted-Average
                                                            Number             Exercise
                                                           of Shares            Price
                                                         ------------        -----------
<S>                                                      <C>                 <C>
          Outstanding, March 18, 2001 (inception)                 --         $        --
            Granted                                        1,905,600         $      1.26
                                                         -----------

          Outstanding, September 30, 2001                  1,905,600         $      1.26
            Granted                                          848,630         $      0.50
            Exercised                                         (7,940)        $      1.26
                                                         -----------

          Outstanding, September 30, 2002                  2,746,290         $      1.03
            Granted                                       14,568,834         $      0.46
            Exercised                                       (267,500)        $      0.29

          Outstanding, September 30, 2003                 17,047,624         $      0.55
            Granted                                        1,378,500         $      1.93
            Exercised                                       (785,555)        $      0.32
            Cancelled                                     (4,451,000)        $      0.50

          Outstanding, December 31, 2003                  13,189,569         $      0.73
            Exercised                                       (400,000)        $      0.25


          OUTSTANDING, March 31, 2004                     12,179,569         $      0.74
               Exercised                                  (1,010,000)        $      2.02
                                                         ===========

          Outstanding, JUNE 30, 2004                      11,779,569         $      0.63
                                                         ===========
</TABLE>

NOTE 7 - SUBSEQUENT EVENTS

      A short  term  non  interest  bearing  loan  made by one of the  Company's
      Directors was repaid on August 9, 2004.

      In July 2004, the Company called all of its outstanding Series H warrants.
      As at August 12, 2004 the Company had received $1,571,250 from exercise of
      3,142,800 such warrants.

                                       17
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      RESULTS OF OPERATIONS

      In the Fiscal  Quarter  ended  December  31,  2003 the  Company  commenced
      providing services under a $2.675 million contract for design, production,
      and installation of a 21 mile long new ACCC  transmission  line in Kansas.
      Revenue from this contract will be recognized  upon  completion  and as of
      June 30,  2004,  the  Company  had  received  $564,750  under the  initial
      milestone  of the  contract  but has been  recorded as  deferred  revenue.
      During the nine months  ending  June 30,  2004 the  Company  began to hire
      additional personnel necessary to carry out the manufacturing required for
      the $2.675 million contract as well as to enable it to meet additional any
      production  requirement  when  the  Company  is  able  to  secure  further
      contracts.  The company is now established in its new improved  production
      facility  and HQ. The Company has  expended  funds on  additional  capital
      equipment  required  for  the  production  of  product  and  is  currently
      currently upgrading its information  technology systems for the financial,
      sales, marketing and administrative support.  Additional expenditures were
      made for intellectual  property  protection,  reorganization of accounting
      and legal services.

      PLAN OF OPERATION

      We completed a $3,000,000  financing in December of 2003. In July 2004, we
      called for  exercise all of the Series H warrants and if a good portion of
      the 3,655,500 H warrants  outstanding at June 30, 2004 is exercised,  this
      may yield  approximately $1.8 million.  Additional  warrants may be called
      since  the  underlying  shares  are  registered  and the  stock  price has
      exceeded a fixed  percentage of the exercise price of certain warrants for
      a  defined  period.  We may be able to  secure  direct  financing  through
      advance orders, deposits to secure strategic partnerships or joint venture
      relationships,  or direct  investment in our new  subsidiaries  to provide
      most financial  requirements for the new non-cable products.  We cannot be
      sure, however, that such we can secure such direct financing,  deposits or
      investments in our new subsidiaries.

      We believe that our current cash balance,  as supplemented by the proceeds
      from the conversion of warrants, progress payments that may be made on the
      $2.675  million  order  and  additional  sales  of cable  will  not  cover
      anticipated   operating   expenses  for  a  period  of  one  year  without
      supplementing  our  cash  reserves  with  additional  debt  and/or  equity
      financings.   Therefore,   the  Company  will  continue  discussions  with
      potential sources.

                                       18
<PAGE>

      ACQUISITION OF PLANT AND EQUIPMENT

      We do not own any real estate.  We have designed,  built and  successfully
      operated two  pultrusion  lines for ACCC cable and these lines now operate
      from the new leased  facility.  The materials  and machinery  necessary to
      begin  construction  of  additional  high speed  production  lines for the
      development of other products for the utility  industry has been prepared.
      Additional  fabrication  equipment  and  materials  will be  necessary  to
      complete these tasks.

      Sale-Lease Back of Capital Assets

      On May 7, 2004 the  Company  entered  into a $500,000  sale  leaseback  of
      certain of its capital assets,  including its pultrusion lines.  Under the
      terms of the Master Lease  Agreement the Company  received  $450,000 which
      was net of a 10% security deposit and is to make payments totaling $17,714
      for 36 months.  At the end of the lease period,  the Company has the right
      to renew the lease for an additional  12 months,  terminate and return the
      equipment or purchase the equipment at the greater of fair market value or
      10% of the capitalized  cost. The Company  recognized a gain in the amount
      of $ 59,045 from this transaction and will defer the gain and recognize it
      as income over the period of the initial lease term.


      PERSONNEL

      We currently have 29 full time employees.  We have 2 officers, 3 corporate
      managers, 6 corporate administrative and production facility assistants, 3
      production  managers  and 15  production  employees.  We also  utilize the
      services of seven consultants.  Numerous technical skills will be required
      to bring our  products to market.  Recruiting  efforts have begun and will
      continue in the near  future.  Independent  consultants,  accountants  and
      attorneys  have been  retained  in the past and will  continue  to be used
      extensively in the future.


      OFF BALANCE SHEET ARRANGEMENTS

      There are no off balance sheet arrangements.

ITEM 3 - CONTROLS AND PROCEDURES

      As required  by Rule 13a-15  under the  Exchange  Act,  within the 90 days
      prior to the  filing  date of this  report,  the  Company  carried  out an
      evaluation  of  the  effectiveness  of the  design  and  operation  of the
      Company's disclosure controls and procedures.  This evaluation was carried
      out under the  supervision  and with the  participation  of the  Company's
      management.  Based upon that evaluation, the Company's President and Chief
      Executive  Officer  concluded that the Company's  disclosure  controls and
      procedures are effective, however, since the departure of the former Chief
      Financial  Officer in June 2004,  the role of Chief  Financial  Officer is
      currently filled by the Chief Executive Officer.  The Company is currently
      seeking a suitable candidate for the role of Chief Financial  Officer.  In
      the event that a  suitable  candidate  cannot  immediately  be found,  the
      Company  anticipates  appointing an interim Chief Financial Officer before
      the end of September 2004.  There have been no significant  changes in the
      Company's internal controls or in other factors, which could significantly
      affect  internal  controls  subsequent to the date the Company carried out
      its evaluation.

      Disclosure  controls and procedures are controls and other procedures that
      are  designed  to ensure that  information  required  to be  disclosed  in
      Company  reports  filed or  submitted  under the Exchange Act is recorded,
      processed,  summarized and reported,  within the time periods specified in
      the  Securities  and  Exchange  Commission's  rules and forms.  Disclosure
      controls  and  procedures  include,   without  limitation,   controls  and
      procedures designed to ensure that information required to be disclosed in
      Company   reports  filed  under  the  Exchange  Act  are  accumulated  and
      communicated  to  management,  including  the  Company's  Chief  Executive
      Officer  and Chief  Financial  Officer  as  appropriate,  to allow  timely
      decisions regarding required disclosure.

                                       19
<PAGE>

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

      From time to time, the Company is involved in routine  litigation  matters
      that are incidental to its business.

      On December  24, 2002,  Robert  Nikoley and Gary Cope filed a case against
      the Company.  This case was settled in its  entirety on August 5th,  2004.
      All  claims  asserted  by both  plaintiffs  have  been  settled  in  their
      entirety.  Settlement  documents are being prepared and will be filed with
      the Court in coming  weeks.  Pursuant to the  settlement,  the Company has
      agreed to pay Cope  $10,000  and issue to him, in the  aggregate,  100,000
      shares  of  unregistered  common  stock of the  Company.  Pursuant  to the
      settlement,  the Company  has agreed to pay  Nikoley  $65,000 and issue to
      him, in the aggregate,  575,000 shares of unregistered common stock of the
      Company.

      J.P. Turner & Company,  L.L.C.  ("J.P.  Turner")  initiated an arbitration
      before the National  Association  of  Securities  Dealers in February 2004
      alleging  Composite  Technology  Corporation  ("CTC")  breached a finder's
      agreement by failing to pay certain fees to J.P. Turner. CTC disputes that
      any breach of the  agreement  took place and denies that J.P.  Turner made
      any  introductions  of investors to CTC which  directly lead to financing.
      CTC has filed a counterclaim  against J.P. Turner alleging claims of fraud
      against J.P. Turner arising out of misrepresentations  made by J.P. Turner
      concerning  an  investment  opportunity.  J.P.  Turner  seeks  $200,000 in
      monetary damages, a warrant to purchase 200,000 shares of CTC common stock
      at an  exercise  price equal to the  closing  bid on  December  17,  2003,
      pre-judgment  interest as of December 18, 2003, reasonable attorneys' fees
      and costs. CTC seeks compensatory damages in an amount according to proof,
      punitive damages, and reasonable  attorneys' fees and costs based upon its
      counterclaims.  CTC filed its Statement of Answer and Counterclaims on May
      17,  2004.  The matter is  presently  set for  hearing in  February  2005.
      Additionally,  CTC recently asked the panel of arbitrators assigned to the
      matter to change the location of the hearing from Georgia to California.

      On October 16, 2003, the Company filed suit against  Acquvest,  Inc., Paul
      Koch,  Victoria Koch,  Patricia Manolis,  and Michael Tarbox at the Orange
      County  Superior   Court.   The  Company  alleges  causes  of  action  for
      declaratory relief, breach of contract, fraudulent inducement,  rescission
      and  economic  duress  arising  out of certain  subscription  and  related
      agreements  among the Company and the defendants.  In connection with such
      agreements,  CTC issued to Acquvest,  Inc. and Patricia Manolis,  in April
      2003 and  September  2003, a total of 150,000  units for a total  purchase
      price of  $375,000.  Each unit  consists  of 10  shares  of  unregistered,
      restricted  common stock and 10 Series I warrants to purchase one share of
      unregistered,  restricted common stock. Each Series I warrant entitles the
      holder to purchase a share of common  stock at $0.50 per share and expires
      on March 30,  2005.  The  agreements  provide for the issuance of up to an
      additional  550,000 of such units for the same purchase price of $2.50 per
      unit, subject to certain  conditions,  and registration of share issuances
      under the  Securities  Act of 1933.  The  additional  units  have not been
      issued and the additional  purchase  consideration  has not been paid. The
      parties  disagree  as to their  respective  rights  and  obligations  with
      respect to the original issuances and such additional units.  10,000 units
      were  also  issued  to Paul  Koch for  services  in  connection  with such
      agreements,  and a dispute has arisen as to his  entitlement  to those and
      additional  units and  warrants in  connection  with the  agreements.  The
      defendants   deny  CTC's  material   allegations   and  intend  to  assert
      cross-claims against CTC. CTC is seeking actual damages, punitive damages,
      statutory  costs,  attorneys'  fees  and  injunctive  relief  against  the
      defendants.  CTC  believes  the  defendants  will seek the same relief and
      issuance of the additional  units against CTC and CTC's  officers.  On May
      13, 2004, the court sustained the defendants' demurrers as to CTC's causes
      of action for breach of contract, fraudulent inducement,  rescission (only
      as against  Patricia  Manolis)  and  economic  duress and the  defendants'
      motion  to  strike  CTC's  request  for  punitive  damages  based  on  the
      rescission  and economic  duress  causes of action,  with leave for CTC to
      amend its complaint.  CTC has filed an amended  complaint.  The defendants
      recently  changed  litigation  counsel,  which has resulted in an informal
      stay of the proceedings pending confirmation of the new counsel.

                                       20
<PAGE>

      On November 4, 2003,  Ascentient  Capital Group LLC, Mark Bergendahl,  and
      Bradley  Wilhite  ("Plaintiffs")  filed suit against the Company  alleging
      causes of action against the Company and its CEO personally (`defendants')
      for breach of contract, specific performance,  fraud and deceit, negligent
      misrepresentations, breach of covenant of good faith and fair dealing, and
      declaratory  relief  arising  out of a business  advisory  and  consulting
      agreement (the "Agreement") allegedly executed between CTC and Ascendiant.
      CTC denies the material allegations and, on November 10, 2003, CTC filed a
      case in Orange County Superior Court against Plaintiffs alleging causes of
      action for declaratory relief, breach of contract,  fraudulent inducement,
      and  economic  coercion  arising out of the  Agreement  as well as various
      unrelated  business  agreements  between  Plaintiffs and Wilcoxon.  CTC is
      seeking actual damages, punitive damages, statutory costs, attorneys' fees
      and  injunctive  relief  against  Plaintiffs.  The  principal  parties are
      Ascendiant,  Bergendahl,  Wilhite, CTC and Wilcoxon. On November 24, 2003,
      the court entered an order  consolidating  the cases. On January 15, 2004,
      the parties  agreed to submit all claims and  cross-claims  arising out of
      the Agreement to binding  arbitration  before the Honorable  Robert Thomas
      Ret.) at JAMS - Orange County.  The remaining  claims and cross-claims not
      arising out of the  Agreement  remain  pending  before  Judge  Thrasher of
      Orange  County  Superior  Court.  On May  28,  2004,  CTC's  demurrers  to
      Plaintiffs' causes of action in the arbitration for specific  performance,
      negligent  misrepresentation and breach of covenant of good faith and fair
      dealing were  sustained,  with leave to amend,  as well as CTC's motion to
      strike  plaintiff's  claims for punitive damages.  Plaintiff  subsequently
      filed  an  amended   complaint.   Judge  Thomas  has  reserved  ruling  on
      Plaintiffs'  demurrers and motion to strike in the arbitration pending the
      outcome of the ruling on Plaintiffs' demurrers and motions to strike filed
      with respect to CTC's  cross-claim  pending in the superior  court.  Judge
      Thrasher  recently issued an order exempting this case from post pre-trial
      deadlines  and noting  that he expects  that the case will not  proceed to
      trial within 24 months of the date of filing.

      On November 4, 2003, the Company filed suit against Michael  DeAngelo,  at
      the Orange County  Superior Court CTC alleged causes of action against the
      defendant,  Mr.  DeAngelo,  for  declaratory  relief,  economic duress and
      fraudulent  inducement  arising  out of a  consulting  services  agreement
      executed  by the  parties on which CTC  alleged  the  defendant  failed to
      perform. CTC is seeking actual damages, punitive damages, statutory costs,
      attorneys' fees and injunctive  relief against the defendant.  On February
      23, 2004, a default  judgment was entered against the defendant due to his
      failure to respond to CTC's complaint.


ITEM 2 - CHANGES IN SECURITIES

      In April 2004, a consultant  was issued  120,000 shares of common stock on
      in reliance upon the exemption from registration set forth in Section 4(2)
      of the Securities Act the exercise of 120,000 stock options at an exercise
      price of 0.25 cents.

      In June 2004,  an employee  was issued  54,400  shares of common  stock in
      reliance upon the exemption from registration set forth in Section 4(2) of
      the  Securities  Act on the exercise of 75,000 stock options on a cashless
      basis.

      In June  2004,  Investors  that  had  participated  in the  December  2003
      offering  when  the  Company  issued  2,400,000  shares  of the  Company's
      unregistered, restricted common stock and 1,200,000 warrants were offered,
      the  opportunity  to exercise  their warrants at a reduced strike price of
      $0.50.  When the offer closed,  four of such warrant holders had chosen to
      exercise  this option with the result  that the Company  issued  1,000,000
      shares of the  Company's  unregistered,  restricted  common stock  against
      receipt of $500,000 in reliance upon the exemption from  registration  set
      forth in Section 4(2) of the Securities Act

      During June 2004,  10,000 were issued in reliance upon the exemption  from
      registration  set forth in  Section  4(2) of the  Securities  Act Series E
      Warrants were exercised for total cash  consideration of $2,500,  at $0.25
      per share.

                                       21
<PAGE>

ITEM 3 - DEFAULTS ON 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

EXHIBITS

Number         Description
--------------------------------------------------------------------------------

3.1*           Articles of Incorporation of the Company

3.2*           By-Laws of the Company

31.1           Certification pursuant to Section 302 of Sarbanes-Oxley Act of
               2002 - Chief Executive Officer

32.1           Certifications pursuant to Section 906 of Sarbanes-Oxley Act of
               2002.

(*) Incorporated herein by reference to Form 8-K filed with the U. S. Securities
and Exchange Commission on November 20, 2001.

(**)  Incorporated  herein  by  reference  to  Form  8-K  filed  with  the U. S.
Securities and Exchange Commission on December 19, 2003.


Reports on Form 8-K
-------------------


No Current Reports on Form 8-K were filed during the quarterly period ended June
30, 2004.


--------------------------------------------------------------------------------


                                   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.

                                       COMPOSITE TECHNOLOGY CORPORATION

Date: August 16, 2004                  /s/ Benton H Wilcoxon
      ---------------                  --------------------------------
                                       Benton H Wilcoxon
                                       Chief Executive Officer and Acting
                                       Chief Financial Officer


                                       22