================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-QSB

(X)  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF  THE  SECURITIES
     EXCHANGE ACT OF 1934

                 For the quarterly period ended June 30, 2000 OR

( )  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 0-20701

                                COMPOSITECH LTD.
             (Exact Name of Registrant as specified in its charter)

        Delaware                                             11-2710467
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                 710 Koehler Avenue, Ronkonkoma, New York 11779
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (631) 585-7710

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirement for the past 90 days. Yes _X_   No ___

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of August 12, 2000:

         Common Stock $.01 par value                          20,034,205
         ---------------------------                          ----------
                    Class                                  Number of shares


================================================================================



<PAGE>


                                COMPOSITECH LTD.

                                      Index
<TABLE>
<CAPTION>
Part I - Financial Information                                                               Page
------------------------------                                                               ----

Item 1.  Financial Statements

<S>                                                                                            <C>
             Balance Sheets as of June 30, 2000 (unaudited) and December 31, 1999...............2

             Statements of Operations (unaudited) for the three-month and six-month
               periods ended June 30, 2000 and 1999.............................................3

             Statements of Cash Flows (unaudited) for the six months
               ended June 30, 2000 and 1999.....................................................4

             Notes to Financial Statements (unaudited)..........................................5

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

Part II - Other Information

Item 1.  Legal Proceedings.....................................................................11

Item 2.  Changes in Securities.................................................................11

Item 6.  Exhibits and Reports on Form 8-K......................................................12

Signature......................................................................................12
</TABLE>



<PAGE>

                                COMPOSITECH LTD.
                                 BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                                                         June 30        December 31
                                                                                                           2000             1999
                                                                                                       ------------    -------------
ASSETS                                                                                                  (unaudited)
Current assets:
<S>                                                                                                    <C>             <C>
  Cash and cash equivalents                                                                            $      7,036    $     73,197
  Accounts receivable trade - net                                                                                            82,783
  Inventories                                                                                                                15,000
  Prepaid expenses and other                                                                                 77,750          48,412
                                                                                                       ------------    ------------
        Total current assets                                                                                 84,786         219,392

Property and equipment held for sale                                                                      2,000,000       2,000,000
Investment in joint venture                                                                                                 466,000
Deferred debt expense - net of accumulated amortization of $461,078                                                          49,163
Other assets and other deferred charges, net of accumulated amortization
       of $931,055 (2000) and $658,375 (1999)                                                               519,274         401,894
                                                                                                       ------------    ------------
Total assets                                                                                           $  2,604,060    $  3,136,449
                                                                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
Current liabilities:
  Accounts payable                                                                                     $  2,013,658    $  1,814,421
  Deferred salaries                                                                                         149,181         152,362
  Accrued interest - $20,802 (2000) and $44,276 (1999) to stockholders                                      148,572         104,423
  Other accrued liabilities                                                                                 592,313         642,762
  Loans and notes payable                                                                                 2,034,772       2,976,935
  Notes payable to directors/stockholders                                                                   158,333         158,333
                                                                                                       ------------    ------------
        Total current liabilities                                                                         5,096,829       5,849,236

Non-current liabilities:
  Notes payable to directors/stockholders                                                                 1,420,000       1,420,000
  Deferred salaries - officers / directors                                                                  977,827         913,135
  Accrued interest - directors/stockholders                                                                 471,315         366,476
  Deferred licensing income                                                                                                 643,840
  Advances received                                                                                                         500,000
                                                                                                       ------------    ------------
        Total non-current liabilities                                                                     2,869,142       3,843,451


Commitments

Stockholders' (deficiency) :
  Undesignated  preferred stock;  authorized  3,799,780 shares,  none issued and
  outstanding
  Series A convertible  preferred stock, par value $3.00 per share;
    authorized shares - 714,161, issued and outstanding shares - 326,665 (2000) and 393,997 (1999)          979,995       1,181,991
  Series C 8% convertible preferred stock, par value $0.01 per share; authorized shares - 200,000
    issued and outstanding shares - 54,000                                                                  540,000         540,000
  Common stock, par value $.01 per share; authorized shares - 50,000,000,
    issued and outstanding shares - 20,983,790 (2000) and 18,023,613 (1999)                                 209,838         180,236
  Additional paid-in capital                                                                             47,252,126      44,449,398
  Deficit                                                                                               (51,787,658)    (50,349,052)
                                                                                                       ------------    ------------
                                                                                                         (2,805,699)     (3,997,427)

  Less treasury shares to be received - 949,585 (2000) and 951,000 (1999)                                (1,744,388)     (1,746,987)
  Less notes receivable received for issuance of common stock                                              (811,824)       (811,824)
                                                                                                       ------------    ------------
    Total stockholders' (deficiency)                                                                     (5,361,911)     (6,556,238)

                                                                                                       ------------    ------------
Total liabilities and stockholders' (deficiency)                                                       $  2,604,060    $  3,136,449
                                                                                                       ============    ============
</TABLE>


See accompanying notes.


                                       2
<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                           Three Months Ended               Six Months Ended
                                                                                 June 30                         June 30
                                                                      ------------------------------   -----------------------------
                                                                          2000             1999           2000             1999
                                                                      -------------   --------------  -------------   --------------
<S>                                                                    <C>             <C>             <C>             <C>
Revenues:
  Sales                                                                $       --      $    119,985    $       --      $    215,965
  Licensing                                                                                  15,861            --            28,451
                                                                       ------------    ------------    ------------    ------------
       Total revenues                                                                       135,846            --           244,416

Costs and expenses:
  Manufacturing                                                                --         1,370,465            --         2,573,307
  Selling, general and administrative                                       454,205         418,924       1,010,524         788,503
  Research and development                                                     --            80,421            --           147,807
                                                                       ------------    ------------    ------------    ------------
      Total operating expenses                                              454,205       1,869,810       1,010,524       3,509,617

(Loss) from operations                                                     (454,205)     (1,733,964)     (1,010,524)     (3,265,201)

Other income (expenses):
  Interest income                                                            16,394           8,927          32,901          20,579
  Interest expense, net of interest capitalized                             (98,186)        (51,930)       (197,464)       (117,520)
  Amortization of debt discount and expenses                                               (194,468)       (259,869)       (237,302)
  Other income (expense)                                                     (1,679)        (81,378)         (3,650)        (85,878)
                                                                       ------------    ------------    ------------    ------------
                                                                            (83,471)       (318,849)       (428,082)       (420,121)
                                                                       ------------    ------------    ------------    ------------
 (Loss) from operations before equity in operations of joint venture       (537,676)     (2,052,813)     (1,438,606)     (3,685,322)

Equity in operations of joint venture                                                       (41,701)           --           (47,214)
                                                                       ------------    ------------    ------------    ------------
   Net (loss)                                                              (537,676)     (2,094,514)     (1,438,606)     (3,732,536)

Preferred stock dividends                                                                     3,841            --            15,692
                                                                       ------------    ------------    ------------    ------------
   (Loss) attributable to common stockholders                          ($   537,676)   ($ 2,098,355)   ($ 1,438,606)   ($ 3,748,228)
                                                                       ============    ============    ============    ============

(Loss) per common share - basic and diluted                            ($      0.03)   ($      0.13)   ($      0.08)   ($      0.25)
                                                                       ============    ============    ============    ============

Shares used in computing (loss) per common share                         19,815,059      15,786,991      19,000,246      15,210,462
                                                                       ============    ============    ============    ============
</TABLE>


See accompanying notes.


                                       3

<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                                                             Six Months Ended
                                                                                                                 June 30
                                                                                                     ------------------------------
                                                                                                        2000               1999
                                                                                                     -----------        -----------
<S>                                                                                                  <C>                <C>
Cash Flows from Operating Activities
Net (loss)                                                                                           ($1,438,606)       ($3,732,536)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                                                8,818            555,553
    Amortization of debt discount and expenses                                                           259,869            237,302
    Amortization of deferred charges                                                                     214,034
    Issuance of common stock as compensation to directors                                                 43,000
    Issuance of common stock in exchange for consulting services                                          18,000
    Equity in net loss of joint venture                                                                                      47,214
    Changes in operating assets and liabilities:
       Accounts receivable trade - net                                                                    82,783            (52,585)
       Accounts receivable from joint venture                                                                               (38,342)
       Inventories                                                                                        15,000             29,625
       Prepaid expenses and other                                                                        (29,338)           (54,613)
       Other assets and other deferred charges                                                            14,010             29,156
       Accounts payable                                                                                  199,237            181,895
       Deferred salaries                                                                                  61,511             43,452
       Accrued interest                                                                                  185,509            100,114
       Deferred licensing income                                                                                            (84,419)
       Other accrued liabilities                                                                         (47,850)           209,956
                                                                                                     -----------        -----------
          Net cash and cash equivalents (used) in operating activities                                  (414,023)        (2,528,228)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                                                                   (234,559)
Patent costs deferred                                                                                     (4,070)            (6,947)
                                                                                                     -----------        -----------
          Net cash and cash equivalents (used in) investing activities                                    (4,070)          (241,506)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                                               159,382          2,070,535
Net proceeds from exercise of warrants                                                                   157,864              1,282
Net proceeds from loans and notes payable                                                                 45,686            992,250
Payment of capital lease obligations                                                                                        (15,632)
Payment of loans and notes payable                                                                       (11,000)          (204,167)

                                                                                                     -----------        -----------
        Net cash and cash equivalents provided by financing activities                                   351,932          2,844,268
                                                                                                     -----------        -----------
        Increase (decrease) in cash and cash equivalents                                                 (66,161)            74,534
        Cash and cash equivalents at beginning of period                                                  73,197            102,286
                                                                                                     -----------        -----------
        Cash and cash equivalents at end of period                                                   $     7,036        $   176,820
                                                                                                     ===========        ===========

Supplemental disclosures of cash flow information
Noncash financing activities:
  Dividends on 7% Series B convertible preferred stock                                                                  $    15,692
  Issuance of common stock in repayment of promissory notes
      including accrued interest                                                                     $ 1,174,248
  Issuance of common stock as compensation for bridge financing                                                         $    30,000
  Issuance of common stock as compensation to directors                                              $    43,000

Cash paid for:
  Interest                                                                                           $    11,879        $    36,498

</TABLE>


See accompanying notes.


                                       4

<PAGE>


                                COMPOSITECH LTD.


                          Notes to Financial Statements

                                   (Unaudited)

                                 March 31, 2000

Note 1 - Basis of Presentation and Significant Accounting Policies

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to  Form  10-QSB  and  Article  10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Annual Report on
Form  10-KSB for the year ended  December  31,  1999 of  Compositech  Ltd.  (the
"Company"). In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included. Operating results for the three-month and six-month periods ended June
30, 2000 are not necessarily  indicative of the results that may be expected for
the year ended December 31, 2000.

Note 2 - Common Stock Issuances and Stock Options

     During January 2000,  pursuant to the Company's  Amended and Restated Stock
Award Plan (the "Award Plan"), the Company issued to its non-employee  directors
stock awards of 36,365 shares of its common stock,  vesting on a quarterly basis
over a one-year period, as payment of the annual $10,000 per year, per director,
retainer  for  the  year  2000  and  13,094  shares  of  its  common  stock,  as
compensation  for the 1999  meeting  attendance  of the Board of  Directors  and
related subcommittees.

     During  February  2000,  pursuant  to the Award Plan,  the Company  granted
incentive options to its employees to purchase 600,000 shares of common stock at
$0.01 per share. These options are exercisable only in the event of a successful
transfer of the Company's  technology or financing to restart production,  while
still employed by the Company.

     During February 2000, the Compensation  Committee approved the repricing of
stock  options held by current  employees,  to an exercise  price of $1.4375 per
share,  the market price on the date  approved by the  Committee,  for all stock
options with exercise prices in excess of $1.4375 per share.  The  authorization
covered  options to purchase  584,544  shares of common stock,  of which 575,271
shares are  exercisable  as of the current  date.  At June 30, 2000,  the market
price of the Company's  common stock was lower than the repriced  exercise price
and, therefore, there was no charge to earnings.

     In the six  months  ended  June 30,  2000,  67,332  shares of the  Series A
convertible  preferred stock were converted at the existing conversion rate into
33,665 shares of common

                                       5

<PAGE>


stock,  resulting  in a decrease in  stockholders'  equity  relating to Series A
convertible  preferred stock of $201,996,  an increase in  stockholders'  equity
relating to common stock of $337 and an increase in additional  paid-in  capital
of $201,322, net of expenses of $337.

     During January 2000, in connection  with an agreement to provide  financial
public  relations and investor  relations  services,  the Company issued 500,000
shares of its common stock to a consultant.  The Company has estimated the value
of the stock at $323,500, which is being amortized over the twelve-month life of
the agreement.  This issuance  resulted in an increase in  stockholders'  equity
relating to common stock of $5,000 and an increase in additional paid-in capital
of $313,500, net of expenses of $5,000.

     During  February 2000, in connection  with the settlement  agreement  which
terminated the Taiwan joint venture agreement, the Company issued 587,372 shares
of its  common  stock to its  former  joint  venture  partner,  resulting  in an
increase  in  stockholders'  equity  relating  to common  stock of $5,874 and an
increase in additional  paid-in  capital of $666,092,  net of expenses of $5,874
(see Note 3).

     On March 31, 2000, the Company issued 789,563 shares of its common stock in
connection  with the conversion of the first tranche of a term note series which
totaled  $898,128,  including  accrued  interest,  resulting  in an  increase in
stockholders'  equity  relating  to common  stock of $7,896 and an  increase  in
additional paid-in capital of $882,336, net of expenses of $7,896.

     During May 2000, in connection  with the first three months of an agreement
to provide  consulting  services  in  connection  with the  Company's  licensing
efforts,  the Company  issued  25,398  shares of common  stock,  resulting in an
increase  in  stockholders'  equity  relating  to  common  stock  of $254 and an
increase in additional paid-in capital of $17,492, net of expenses of $254.

     During the six months ended June 30, 2000,  the Company sold 395,319 shares
of  its  common  stock,  in a  private  placement,  realizing  $174,119,  net of
expenses,  resulting in an increase in  stockholders'  equity relating to common
stock of $3,953 and an increase in additional paid-in capital of $170,166.

     During the six months ended June 30, 2000,  the Company sold 141,583 shares
of its common  stock in  connection  with the  exercise of  warrants,  realizing
$159,280,  resulting in an increase in  stockholders'  equity relating to common
stock of $1,415 and an increase in additional  paid-in capital of $156,449,  net
of expenses of $1,416.

     During the six months  ended June 30,  2000,  the  Company  issued  456,000
shares  of its  common  stock  in  connection  with  the  repayment  of  certain
promissory  notes payable  totaling  $276,120,  including  accrued  interest and
$20,000  which was borrowed  during  January  2000,  resulting in an increase in
stockholders'  equity  relating  to common  stock of $4,560 and an  increase  in
additional paid-in capital of $267,001, net of expenses of $4,559.


                                       6
<PAGE>


Note 3 - Joint Venture

     As of February 17, 2000,  the Company  reached a settlement  agreement with
its joint venture partner/licensee in Taiwan, which terminated the joint venture
agreement  and the license for use of the  Company's  proprietary  technology in
Taiwan.  Under the terms of the  settlement,  in  exchange  for the  issuance of
587,372 shares of its common stock to the licensee,  the Company retained the $1
million license down payment it received in 1998. Additionally,  in exchange for
returning the equity held by the Company in the  Taiwanese  joint  venture,  the
Company  retained the $500,000  advance it received to make the investment.  The
Company has  recorded  the value of the shares  issued in  connection  with this
settlement  at  $677,840,  representing  the net balance of the  accounts on its
balance sheet as of the agreement date,  relating to the investment in the joint
venture,  the deferred licensing income and the advances received on the sale of
common stock.

     On April 25, 2000, the Board of Directors for the Company's  Canadian joint
venture  approved the  dissolution  and  liquidation  of the joint  venture.  In
accordance with that action, the Company will receive back 949,585 shares of its
common stock,  which is adjusted from the 951,000  shares which were recorded as
treasury  shares to be  received in the  Company's  financial  statements  as of
December 31, 1999.

Note 4 - Subsequent Events

     As of June 2, 2000,  the  Company  signed a letter of intent  with the Aeon
Group,  Inc.,  regarding a potential merger of the two companies.  On August 14,
2000, the parties terminated their merger discussions.

     On July 12, 2000,  the Company  sold 500 shares of Series D 8%  Convertible
Preferred  Stock (the "Series D stock") in a private  placement to an accredited
investor, for a total of $500,000, which after expenses netted $420,000, as part
of a bridge  financing.  The  purchase  agreement  requires  the Company to lend
$100,000  of the net  proceeds to the Aeon  Group,  Inc..  The Series D stock is
intended to be a bridge  financing to be redeemed  from future  financings to be
received in connection with a merger of the Company. In connection with the sale
of the Series D stock,  the Company issued  warrants to the investor to purchase
709,849 shares of its common stock,  exercisable at $0.7326 per share,  of which
number,  one-half is exercisable  immediately,  three-quarters is exercisable if
the Series D stock is not redeemed within 120 days of the closing for the Series
D stock and the  balance is  exercisable  if the Series D stock is not  redeemed
within 180 days of that closing,.

     On July 14,  2000,  the  holders of certain  term notes  payable,  totaling
approximately  $1,651,000 including accrued interest as of June 30, 2000, agreed
to an  extension  of the due  date on such  notes to July 21,  2000,  which  was
subsequently extended to September 25, 2000.


                                       7
<PAGE>


Item 2.

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

     This Quarterly  Report on Form 10-QSB contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934.  Actual results could differ materially
from those projected in the  forward-looking  statements as a result of a number
of important  factors.  For a discussion of important  factors that could affect
the Company's results, in addition to the discussions below, please refer to the
Company's  Annual Report on Form 10-KSB for the year ended December 31, 1999 and
the risk factors listed therein.

Overview

     Compositech Ltd. (the "Company"),  a Delaware corporation,  has developed a
proprietary   technology   for  the   manufacture  of  innovative  and  superior
copper-clad fiberglass epoxy laminates used to make printed circuit boards.

     In the last half of 1999,  we  experienced  a demand for  product  that was
greater than our production  capability.  In addition,  we were unable to obtain
adequate  financing  to maintain or expand our  manufacturing  capabilities.  On
December 3, 1999, we suspended our  manufacturing  operations  and refocused our
resources on locating suitable  licensees,  joint venture partners or purchasers
for our technology. As a result, we reduced our staff from 124 employees to six.
We are also exploring  potential  mergers and  acquisitions  or other  strategic
transactions.

     In March  2000,  we  formally  launched  our  licensing  program by sending
proposals  to  a  limited   number  of  select   candidates   supported  by  our
recommendation letters from several original equipment  manufacturers  ("OEM's")
and  printed  circuit  board  customers.  At the  current  date,  we are  having
licensing discussions with five potential licensees.  These include two laminate
manufacturers and two suppliers to the industry.

     The  accompanying  financial  statements  have been  prepared  assuming the
Company will continue as a going concern.  In addition to the matters  discussed
above,  the Company has incurred  recurring  operating  losses and has a working
capital  deficiency.  The Company requires,  and is negotiating for,  additional
funding from financing or other sources to satisfy its existing  liabilities and
cover future operating expenses until sufficient  revenues are generated.  Since
December 31, 1999, the Company has received private  placement  funding from the
sales of its  common  stock and  Series D 8%  Convertible  Preferred  Stock.  In
addition,  the Company has  initiated  discussions  with  certain  creditors  to
provide accommodations with regard to outstanding liabilities.  These conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The financial statements do not include any adjustments to reflect the
possible future effects on the  recoverability  and  classification of assets or
the amounts and  classification  of liabilities that may result from the outcome
of this uncertainty.


                                       8
<PAGE>


Results of Operations

     In light of the Company's decision to suspend its manufacturing  operations
on December 3, 1999 and refocus its  resources on locating  suitable  licensees,
joint venture  partners or purchasers for its patented  technology and equipment
design,  management's  comparative  analysis is limited to those areas for which
data is available  for both  periods.  During the first six months of 2000,  the
Company  did not record any sales,  manufacturing  or research  and  development
expenses.  Lease  related  obligations  of  the  idled  manufacturing  facility,
totaling  approximately  $100,000  were charged to the  restructuring  provision
recorded as of December 31, 1999.

     Selling,  general and administrative expenses increased to $454,205 for the
three months  ended June 30, 2000 from  $418,924 for the three months ended June
30, 1999 and to $1,010,524  for the six months ended June 30, 2000 from $788,503
for the six months ended June 30, 1999. Decreases in payroll related, travel and
promotion  expenses were more than offset by an increase in non-cash  charges of
approximately  $186,000 due to  amortization of the value of warrants and common
stock issued in exchange for  professional  services and $43,000 for  directors'
compensation,  paid in common  stock.  For the six months  ended June 30,  2000,
there was an increase of approximately  $142,000 in legal and professional  fees
related to creditor  activities and the pursuit of licensing and financings.  In
addition,  expenses for the 1999 period  reflected a reduction of  approximately
$243,000 of expenses that were charged to the Company's  Canadian joint venture,
in accordance with the joint venture agreements.

     Interest  expense  increased to $98,186 for the three months ended June 30,
2000 from  $51,930 for the three  months ended June 30, 1999 and to $197,464 for
the six months  ended June 30, 2000 from  $117,520 for the six months ended June
30, 1999. The increase is related to the borrowing cost of the term note series,
as well as the increases in the prime  lending rate,  which affects the interest
expense of some of the stockholder loans and notes payable.

     The foregoing resulted in the Company having a net loss of $537,676 for the
three months ended June 30, 2000 compared with  $2,094,514  for the three months
ended June 30, 1999 and a net loss of  $1,438,606  for the six months ended June
30, 2000 compared with  $3,732,536  for the six months ended June 30, 1999.  The
decreased  loss  was  attributable  to the  lower  operating  costs,  due to the
redirection  of  the  Company's   operations  from  manufacturing  to  licensing
activities,  offset  partially  by an increase in the  amortization  of the fair
market value of common stock and warrants and other non-cash items.

Liquidity and Capital Resources

     The Company has incurred  significant  losses and has substantial  negative
cash flow since its inception.  The Company's independent auditors have included
an  explanatory  paragraph  in their  report  covering  the  December  31,  1999
financial  statements,  which  expresses  substantial  doubt about the Company's
ability to continue as a going concern.  The Company expects operating losses to
continue in 2000. As of June 30, 2000, the Company had  approximately  $7,000 of
available  cash  resources.  On July 12,  2000,  the Company  sold 500 shares of
Series D 8%  Convertible  Preferred  Stock  (the  "Series D stock") in a private
placement  to an  accredited  investor,  for an total of  $500,000,  which after
expenses netted $420,000, as part of a bridge financing.  The purchase agreement
requires  the Company to lend  $100,000  of the net  proceeds to the Aeon Group,
Inc.. The Series D stock is intended to be a bridge financing to be redeemed


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<PAGE>


from  future  financings  to be  received  in  connection  with a merger  of the
Company.  However,  the Company will require additional funding to cover current
operations,  which require approximately $75,000 a month based on current levels
of operations, until revenues from licensing, joint ventures or technology sales
are sufficient.

     Current  liabilities include  approximately  $1,558,000 of convertible term
notes, which the Company anticipates will be converted into shares of its common
stock.  Non-current  liabilities  include  approximately  $978,000  in  deferred
salaries  due to officers,  accrued  interest of  approximately  $471,000 due to
stockholders  and notes payable of $1,420,000 due to  officers/directors,  whose
due dates have  historically  been extended because the Company did not have the
available cash resources to repay on the scheduled due dates.

     The Company is negotiating for additional funding.  Such additional funding
may be raised  through  sources  including  license fees,  sales of equipment in
connection  with licensing  operations,  joint  ventures or other  collaborative
relationships,  as well as equity or debt  financing.  No assurance can be given
that funding will be sufficient  and  available or, if it is available,  that it
will be available on acceptable  terms. If additional funds are not available to
satisfy our past due accounts  payable and our  short-term or long-term  capital
requirements, we may not be able to continue as a going concern.

Six Months Ended June 30, 2000 Compared with Six Months Ended June 30, 1999

     Net cash and cash  equivalents  used in operating  activities  decreased to
$414,023  for the six months  ended June 30,  2000 from  $2,528,228  for the six
months ended June 30, 1999.  The  decreased  level of  activities  and continued
deferral of salaries, accrued interest and other accrued liabilities contributed
to the lower use of cash during the first half of 2000.

     Net cash and cash  equivalents  used in  investing  activity  decreased  to
$4,070 for the six months ended June 30, 2000,  from $241,506 for the six months
ended June 30, 1999.  During the first half of 2000,  there were no expenditures
for property and equipment,  which totaled  $234,559 during the six months ended
June 30, 1999.

     Cash flows from  financing  activities  decreased  to $351,932  for the six
months ended June 30, 2000,  from  $2,844,268  for the six months ended June 30,
1999. The primary sources of the funds,  net of expenses,  provided by financing
activities in the first half of 2000 were the private placement of the Company's
common stock and the sale of the Company's  common stock through the exercise of
warrants.  The  primary  sources  of the funds,  net of  expenses,  provided  by
financing activities in the first half of 1999 were the private placement of the
Company's  common stock,  totaling  $2,070,535  and the closing of the first and
second tranches of the term notes series,  totaling approximately  $779,000, net
of expenses.


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<PAGE>


Part II - Other Information

Item 1. Legal Proceedings

     The Company is a party to the following legal proceedings :

1.   On April 3, 2000,  the Company  entered into a stipulation  agreement  with
     Reckson Operating  Partnership,  L.P.  ("Reckson") as a result of a summary
     proceeding  that was  instituted on March 14, 2000 in the District Court of
     the  County  of  Suffok,  NY by  Reckson  with  regard  to  non-payment  of
     approximately  $72,000  of rent and real  estate  taxes.  The  Company  and
     Reckson have agreed to a payment  schedule and to terminate  the  Company's
     lease as of June 30,  2000.  The Company made the final  payment  under the
     stipulation agreement on July 5, 2000.

2.   On March 28,  2000,  the  Company  filed a verified  answer in regard to an
     action  commenced on January 11, 2000 in the Supreme  Court of State of New
     York by Yates Foil USA, Inc., which seeks damages of approximately $140,000
     for goods  sold and  delivered.  The  amount of the claim is accrued on the
     books of the Company as at December 31, 1999.

3.   The  Company  is also a party to  several  legal  proceedings  relating  to
     creditors which are not material.

Item 2. Changes in Securities

     (c) Recent Sales of Unregistered Securities.

     During the three  months  ended June 30,  2000,  the Company  sold  236,572
shares  of its  common  stock  to  certain  accredited  investors  in a  private
placement,  for an aggregate offering of $94,200. In connection with the private
placement,  Trautman  Wasserman & Company,  Inc., the placement agent,  received
cash commissions of $7,536.

     The sales of the shares of common stock in the private  placement were made
in reliance upon the exemption  from  registration  under the  Securities Act of
1933,  as amended  (the  "Securities  Act"),  provided  by  Section  4(2) of the
Securities Act.


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<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

Exhibit Number               Description

3.7*      Certificate of Designation  for the Company's  Series D 8% Convertible
          Preferred Stock, filed on July 10, 2000. (Incorporated by reference to
          Exhibit 3.7 previously filed with Compositech's registration statement
          on Form S-3 filed on July 21, 2000)

10.74*    Letter  Agreement,   dated  June  2,  2000,  between  Compositech  and
          Sovereign Capital  Advisors,  LLC, to extend the due date on a certain
          Secured Convertible Bridge Financing Note.  (Incorporated by reference
          to Exhibit  10.32  previously  filed with  Compositech's  registration
          statement on Form S-3 filed on July 21, 2000)

10.75*    Letter Agreement,  dated June 26, 2000 between  Compositech and SovCap
          Equity Partners,  Ltd.,  Sovereign Capital Advisors LLC, Arab Commerce
          Bank, Ltd.,  Correllus  International Ltd. and Bronia GmbH,  extending
          the  term  of the  Repricing  Warrants  from  90  days  to  180  days.
          (Incorporated  by reference  to Exhibit  10.33  previously  filed with
          Compositech's  registration  statement  on Form S-3  filed on July 21,
          2000)

10.76*    Letter Agreement between Compositech and SovCap Equity Partners, Ltd.,
          Sovereign  Capital Advisors LLC, Arab Commerce Bank,  Ltd.,  Correllus
          International  Ltd. and Bronia GmbH dated July 14, 2000, to extend the
          due  dates  on  certain  Bridge  Financing  Notes.   (Incorporated  by
          reference  to  Exhibit  10.34  previously  filed  with   Compositech's
          registration statement on Form S-3 filed on July 21, 2000)

10.77*    Letter Agreement,  dated July 7, 2000, between  Compositech and SovCap
          Equity Partners, Ltd., as Representative for the Purchasers amending a
          certain  Bridge Note  Purchase  and  Security  Agreement as to certain
          collateral.  (Incorporated  by reference to Exhibit  10.35  previously
          filed with Compositech's  registration  statement on Form S-3 filed on
          July 21, 2000)

10.78*    Convertible Preferred Stock and Warrants Purchase Agreement dated July
          7,  2000  between   Compositech   and  The  Gross   Foundation,   Inc.
          (Incorporated  by reference  to Exhibit  10.36  previously  filed with
          Compositech's  registration  statement  on Form S-3  filed on July 21,
          2000)

10.79*    Registration  Rights  Agreement  dated  as of  July 7,  2000,  between
          Compositech and The Gross Foundation,  Inc. (Incorporated by reference
          to Exhibit  10.37  previously  filed with  Compositech's  registration
          statement on Form S-3 filed on July 21, 2000)

10.80*    Common Stock Purchase Warrant dated July 12, 2000 between  Compositech
          and The Gross Foundation,  Inc.  (Incorporated by reference to Exhibit
          10.38 previously filed with  Compositech's  registration  statement on
          Form S-3 filed on July 21, 2000)

10.81*    Letter Agreement,  dated July 19, 2000, between Compositech and SovCap
          Equity Partners,  Ltd., as Representative for the Purchasers  amending
          certain Registration Rights Agreements.  (Incorporated by reference to
          Exhibit  10.39  previously  filed  with   Compositech's   registration
          statement on Form S-3 filed on July 21, 2000)


                                       12
<PAGE>


10.82     Letter  Agreement,  dated  July  21,  2000,  between  Compositech  and
          Sovereign Capital  Advisors,  LLC, to extend the due date on a certain
          Secured Convertible Bridge Financing Note.

10.83     Letter Agreement between Compositech and SovCap Equity Partners, Ltd.,
          Sovereign  Capital Advisors LLC, Arab Commerce Bank,  Ltd.,  Correllus
          International  Ltd. and Bronia GmbH dated July 21, 2000, to extend the
          due dates on certain Bridge Financing Notes.

27        Financial Data Schedules ( Edgar version only )

*    Previously filed

(b)  Reports on Form 8-K

          NONE

     All other items  required in Part II have been filed  previously or are not
applicable for the quarter ended June 30, 2000.


                                    Signature

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

                                   COMPOSITECH LTD.



Dated: August 14, 2000             /s/ Samuel S. Gross
                                   ---------------------------------------------

                                   Executive Vice President and Treasurer
                                   (Principal Accounting Officer officer
                                   duly authorized to sign this report on behalf
                                   of the registrant)


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