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

                     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, 1997

                                       OR

(X)  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.)

                  120 Ricefield Lane, Hauppauge, New York 11788
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (516) 436-5200

     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 14, 1997:

         Common Stock $.01 par value                             6,153,939
         ---------------------------                             ---------
                  Class                                      Number of shares
================================================================================


<PAGE>

                                COMPOSITECH LTD.

                                      Index

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

<S>                                                                                       <C>
Item 1.  Financial Statements

         Balance Sheets as of  June 30, 1997 (unaudited) and December 31, 1996 ........    2

         Statements of Operations (unaudited) for the three-month and six-month periods
            ended June 30, 1997 and 1996 ..............................................    3

         Statements of Cash Flows (unaudited) for the six-month periods
            ended June 30, 1997 and 1996 ..............................................    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 2.  Changes in Securities ........................................................   10

Item 4.  Submission of Matters to a Vote of Security Holders ..........................   11

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

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


<PAGE>


                                COMPOSITECH LTD.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    June 30            December 31
                                                                                                      1997                 1996
                                                                                                   ------------        ------------
ASSETS                                                                                              (unaudited)
<S>                                                                                                <C>                 <C>         
Current assets:
  Cash and cash equivalents                                                                        $  1,410,741        $    673,084
  Short-term investments                                                                                                  2,384,700
  Inventories                                                                                           353,900             217,974
  Accounts receivable trade - net                                                                        23,925              66,293
  Prepaid expenses and other                                                                             82,083              66,880
                                                                                                   ------------        ------------
        Total current assets                                                                          1,870,649           3,408,931

Property and equipment at cost - net                                                                  5,073,348           3,866,140
Advance payments on construction-in-progress                                                             25,500             114,712
Other assets and deferred charges                                                                       468,379              58,087
                                                                                                   ------------        ------------
Total assets                                                                                       $  7,437,876        $  7,447,870
                                                                                                   ============        ============

LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities:
  Accounts payable                                                                                 $    880,117        $    691,763
  Deferred salaries - $ 539,904  to  officers/stockholders                                              715,728             715,728
  Accrued interest - $ 59,414  (1997) and all (1996 ) to stockholders                                    68,482              61,816
  Other accrued liabilities                                                                             382,983             227,889
  Current maturities of  long-term debt - officers / stockholders                                     1,595,000             100,000
                                                                                                   ------------        ------------
        Total current liabilities                                                                     3,642,310           1,797,196

Long-term debt  to stockholders                                                                                           1,495,000
5% Convertible debentures  (net of amortized discount of $114,875)                                    1,995,875

Capital lease obligations                                                                                85,287              19,336
Other liabilities                                                                                        37,500              37,500
Commitments

Stockholders'  equity :
  Undesignated preferred stock; authorized 4,000,000 shares,
    none issued and outstanding
  Series A convertible  preferred stock,  par value $3.00 per share;  authorized
    shares - 714,161, issued and outstanding shares - 614,161 (1997) and 684,161 (1996)               1,842,483           2,052,483
  Common stock, par value $.01 per share; authorized shares - 25,000,000,
    issued and outstanding shares - 6,153,939 (1997) and 6,118,939 (1996)                                61,539              61,189
  Additional paid-in capital                                                                         23,137,583          22,558,933
  Deficit                                                                                           (23,364,701)        (20,573,767)
                                                                                                   ------------        ------------
    Total stockholders' equity                                                                        1,676,904           4,098,838
                                                                                                   ------------        ------------
Total liabilities and stockholders' equity                                                         $  7,437,876        $  7,447,870
                                                                                                   ============        ============
</TABLE>

See accompanying notes.


                                       2


<PAGE>


                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                               Three Months Ended            Six Months Ended      
                                                                                   June 30                        June 30          
                                                                           --------------------------    --------------------------
                                                                                1997           1996           1997           1996 
                                                                           -----------    -----------    -----------    -----------
<S>                                                                        <C>            <C>            <C>            <C>        
Revenues:
  Sales                                                                    $   143,469    $    55,067    $   295,468    $    95,052
                                                                           -----------    -----------    -----------    -----------
       Total revenues                                                          143,469         55,067        295,468         95,052
                                                                           -----------    -----------    -----------    -----------

Costs and expenses:
  Manufacturing expenses                                                     1,389,893        657,204      2,155,616      1,339,362
  Selling, general and administrative                                          369,498        239,891        791,989        507,859
  Research and development                                                      23,197         30,857         46,205         55,482
                                                                           -----------    -----------    -----------    -----------

      Total operating expenses                                               1,782,588        927,952      2,993,810      1,902,703
                                                                           -----------    -----------    -----------    -----------

(Loss) from operations                                                      (1,639,119)      (872,885)    (2,698,342)    (1,807,651)

Other income (expenses):
  Interest income                                                               13,245         15,431         38,833         24,091
  Interest and amortization of debt discount and expense
  (net of interest capitalized of $ 82,000 (1997) and $ 5,000 (1996))          (98,908)      (213,262)      (139,885)      (430,956)
 Other                                                                           6,242            501          8,460          7,618
                                                                           -----------    -----------    -----------    -----------

                                                                               (79,421)      (197,330)       (92,592)      (399,247)

Net (loss)                                                                 ($1,718,540)   ($1,070,215)   ($2,790,934)   ($2,206,898)
                                                                           ===========    ===========    ===========    ===========
Net (loss) per share                                                       ($     0.25)   ($     0.24)   ($     0.41)   ($     0.52)
                                                                           ===========    ===========    ===========    ===========

Shares used in computing net (loss) per share                                6,865,221      4,404,326      6,865,221      4,226,146
                                                                           ===========    ===========    ===========    ===========
</TABLE>

See accompanying notes.

                                       3

<PAGE>


                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                            Six Months Ended
                                                                                                                 June 30
                                                                                                     ------------------------------
                                                                                                         1997               1996
                                                                                                     -----------        -----------
<S>                                                                                                  <C>                <C>         
Cash Flows from Operating Activities
Net (loss)                                                                                           ($2,790,934)       ($2,206,898)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                                              195,224            127,842
    Amortization of debt discount and expenses                                                           121,202            153,077
    Changes in operating assets and liabilities:
       Inventories                                                                                      (141,926)           (84,173)
       Accounts receivable - trade                                                                        42,368            (19,035)
       Prepaid expenses and other                                                                        (15,203)           (60,519)
       Other assets and deferred charges                                                                 (94,314)             2,748
       Accounts payable                                                                                  188,354            260,400
       Deferred salaries                                                                                                     73,995
       Accrued interest                                                                                    6,666            142,618
       Other accrued liabilities                                                                         133,850            185,155
                                                                                                     -----------        -----------
          Net cash and cash equivalents  used in operating activities                                 (2,354,713)        (1,424,790)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                                              (1,305,096)          (314,188)
Advance payments on construction-in-progress                                                              89,212
Patent costs deferred                                                                                    (94,536)
Short term investments - maturities                                                                    2,384,700
                                                                                                     -----------        -----------
          Net cash and cash equivalents (used in) provided by investing activities                     1,074,280           (314,188)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                                                                  932,342
Net proceeds from notes payable                                                                                             145,687
Net proceeds received from convertible debentures                                                      2,022,231
Payment received on notes receivable                                                                                        750,000
Payment of capital lease obligations                                                                      (4,141)
Payment of notes payable                                                                                                    (82,500)
                                                                                                                   
                                                                                                     -----------        -----------
        Net cash and cash equivalents provided by financing activities                                 2,018,090          1,745,529
                                                                                                     -----------        -----------
        Increase in cash and cash equivalents                                                            737,657              6,551
        Cash and cash equivalents at beginning of period                                                 673,084            925,848
                                                                                                     -----------        -----------
        Cash and cash equivalents at end of period                                                   $ 1,410,741        $   932,399
                                                                                                     ===========        ===========

Supplemental disclosures of cash flow information 
Noncash financing activities:
  Capital lease obligations for property and equipment acquisitions                                  $    91,336
                                                                                                     ===========
Cash paid for:
  Interest                                                                                           $    94,018        $   165,753
                                                                                                     ===========        ===========
</TABLE>


See accompanying notes.

                                       4

<PAGE>


                                COMPOSITECH LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                                  June 30, 1997


Note 1 - Basis of Presentation

     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,  1996 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 six-month period ended June 30, 1997 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 1997.

     Through December 31, 1996, the Company's  activities had been accounted for
as those of a "Development Stage  Enterprise".  Based on the level of production
and sales  anticipated  for 1997, the Company has concluded that it is no longer
in the development stage as of January 1, 1997.

     The Company has obtained  patents in the United States and  internationally
and has filed additional patent applications.  As of January 1, 1997, coincident
with no longer being in the development  stage, the costs incurred in connection
with patents have been  deferred  and are being  amortized  over the life of the
patents beginning upon issue. Costs related to unsuccessful  patent applications
will be expensed.

     In February 1997, the Financial Accounting Standards Board issued Statement
128,  Earnings per Share,  which is required to be adopted on December 31, 1997.
At that time,  the Company will be required to change the method  currently used
to compute  earnings per share and to restate all prior  periods.  Under the new
requirements for calculating  primary earnings per share, the dilutive effect of
stock options will be excluded.  The impact of Statement 128 on the  calculation
of primary and fully diluted earnings per share as of June 30, 1997 and June 30,
1996 is not material.

     Current maturities of long-term debt-stockholders include $1,495,000 due to
officers or directors maturing March 31, 1998, as amended.




                                       5
<PAGE>

Note 2 - 5% Convertible Debentures / Subsequent Events

     From May 28 through  June 10, 1997,  the Company  issued  $2,250,000  of 5%
convertible  debentures (the  "Debentures") in a private placement for which the
Company received net proceeds of  approximately  $2,022,000 after the payment of
commissions  and expenses.  Subsequent to June 30, 1997 through  August 5, 1997,
the Company issued additional  Debentures  aggregating  $4,255,000 for which the
Company received net proceeds of approximately  $3,924,000.  The Debentures were
issued  to  provide  funds to obtain  additional  production  equipment  and for
working capital.  Interest is payable quarterly.  The Debentures are due May 31,
2000 and are  partially  collateralized  either by the  equipment to be obtained
with the proceeds or certain existing production  equipment.  The Debentures are
convertible into shares of Common Stock commencing August 26, 1997 at the lesser
of (i) $6.00 per share or (ii) (a) from August 26, 1997 to  November  24,  1997,
85% and (b) from November 25, 1997 to maturity,  80% of the closing bid price of
the Common  Stock as reported  on The Nasdaq  SmallCap  Market(SM)  for the five
trading days prior to the date of conversion.  The Company may repurchase any of
the  individual  Debentures  at a 25%  premium if the  closing  bid price of the
Common  Stock is less  than  $4.00  for any two  days out of a five day  trading
period.

     Trautman Kramer & Company Inc., the placement agent,  received  warrants to
buy 182,140  shares of the Company's  Common Stock at $6.00 per share as partial
compensation  in  connection  with  the  sale of  Debentures.  The  value of the
warrants have been estimated at approximately $91,000.  Accordingly,  additional
paid in capital was credited with $31,500 in the second quarter of 1997 and will
be  credited  with  $59,500  in the third  quarter  of 1997.  The debt  discount
resulting  therefrom as well as from expenses paid in cash is being amortized to
expense over the life of the Debentures.

     Based on a recent SEC pronouncement, due to the difference between the fair
market value of the Common Stock on the dates the  Debentures  were sold and the
earliest  discounted   conversion  price,  the  Company  recognized  a  deferred
financing  cost of  $114,000  in the  second  quarter  of 1997  and  expects  to
recognize  $862,000  of such costs in the third  quarter of 1997.  The  deferred
financing  cost is being  amortized over the periods from issuance to August 26,
1997, the date on which the Debentures become  convertible.  Management believes
that the proceeds  received  from the  Debentures  and the  discount  offered on
conversion of the debt is a fair  representation of the net proceeds the Company
would  otherwise  expect to receive from an equity  offering of a like number of
shares after consideration of all associated commissions, costs and expenses.

Note 3 - Stock Options and Series A Convertible Preferred Stock Conversions

     During the first quarter of 1997, the Company granted to selected officers,
directors and key employees  options to purchase  123,500 shares of common stock
at $5.75 per  share,  the market  value at the date of grant.  During the second
quarter of 1997,  the  Company  granted to  selected  key  employees  options to
purchase  18,000 shares of common stock at prices  ranging from $4.375 to $4.75,
the market values at the date of the grant.


                                       6
<PAGE>


     In the six  months  ended  June 30,  1997,  70,000  shares of the  Series A
convertible  preferred stock were converted at the existing conversion rate into
35,000 shares of common  stock,  resulting in a decrease in Series A convertible
preferred stock of $210,000, an increase in common stock of $350 and an increase
in additional paid-in capital of $209,650.

Note 4 - Net Loss Per Share

     Net loss per  share is based on the  weighted  average  number of shares of
common stock  outstanding  assuming the  conversion  of the Series A convertible
preferred stock into common stock.  However, in accordance with Staff Accounting
Bulletin Number 83 ("SAB No. 83") of the Securities and Exchange Commission, the
common stock equivalents of 404,205 shares that were issued during the 12 months
preceding the Company's initial public offering ("IPO"), which closed on July 9,
1996, at prices below the IPO price have been included in the Company's loss per
share computation using the treasury stock method and the IPO price, and treated
as if they had been  issued at the  Company's  inception  even  though they were
antidilutive in the period with losses.

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,  please  refer  to  the  discussions  below  and in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996.

Overview

     The  Company was founded in 1984 to develop  copper-clad  fiberglass  epoxy
laminates used to manufacture printed circuit boards required by the electronics
industry.  As part of its development  program,  the Company developed processes
and  machinery to  manufacture  its unique  laminates,  designed  and  assembled
prototype  equipment to produce 24" x 24"  laminates,  designed and assembled an
initial  production module to produce 36" x 48" laminates,  designed,  assembled
and is completing the start up of additional  production  modules  obtained with
part of the  proceeds  of its IPO in  order  to  achieve  commercial  levels  of
production.

     During 1996 and continuing  through the second quarter of 1997, the Company
has  been  producing  and  selling  its  laminates  in  limited  quantities  for
qualification  and use in production by its customers.  The quantities  produced
have been limited  because of working  capital and  production  constraints  and
limited amounts of equipment. Through December 31, 1996, the Company had been in
the development stage because it had not generated significant revenues from its
planned  principal  operations.  Revenues have been limited  during 1997 because
production  yields  were  affected by  contamination  caused by  installing  new
equipment  and  training  new  personnel  while  continuing  production,  and by
defective incoming copper foil. With the new production  equipment in place, the
upgrading  and training of  manufacturing  personnel,  with  improvements  being
instituted in production  and incoming  copper  inspection and  improvements  in


                                       7
<PAGE>


quality being instituted by copper foil vendors,  significant  revenues from the
sales of  laminates  are  anticipated  to occur in 1997.  Thus,  the Company has
concluded that it is no longer in the development stage.

Results of Operations

     Sales of  laminates  increased  to $143,469 for the three months ended June
30, 1997 from  $55,067 for the three  months ended June 30, 1996 and to $295,468
for the six months  ended June 30, 1997 from  $95,052  for the six months  ended
June 30, 1996.  The increase  resulted  from  additional  orders of laminates by
customers but was limited by the production constraints referred to above and by
delays in customers' programs for which Compositech's laminates were qualified.

     Research and development expenses decreased slightly during the periods, to
$23,197 for the three  month  period  ended June 30,  1997 from  $30,857 for the
three month  period  ended June 30, 1996 and to $46,205 for the six month period
ended June 30, 1997 from $55,482 for the six month period ended June 30, 1997.

     Manufacturing  expenses  increased to $1,389,893 for the three month period
ended June 30, 1997 from  $657,204  for the three months ended June 30, 1996 and
to $2,155,616  for the six month period ended June 30, 1997 from  $1,339,362 for
the six month  period  ended June 30,  1996,  reflecting  the  higher  levels of
production  during 1997 affected by the production  yields referred to above and
the  addition  of  manufacturing  personnel  to meet  anticipated  increases  in
production levels.

     Selling,  general and administrative expenses increased to $369,498 for the
three months  ended June 30, 1997 from  $239,891 for the three months ended June
30, 1996 and to $791,989  for the six months  ended June 30, 1997 from  $507,859
for the six  months  ended June 30,  1996.  Increased  legal and other  expenses
related to being a public  company  totaled  $105,000 in the first six months of
1997. Other increases were approximately $156,000 in personnel costs and $30,000
in insurance as the Company increased administrative staffing to handle expected
increases in commercial activities.

     Interest  and  amortization  of debt  discount and expense (net of interest
capitalized)  decreased to $98,908 for the three months ended June 30, 1997 from
$213,362  for the three  months  ended June 30, 1996 and to $139,885 for the six
months ended June 30 from  $430,956 for the six months ended June 30, 1996.  The
decreases in 1997 were due to the  repayment of a large portion of the Company's
debt with the proceeds of the Company's IPO in July 1996.  Included in the total
for the three  months  ended and six months  ended June 30, 1997 was $121,202 of
amortization of discount and expenses  relative to the Debentures (see Note 2 to
the financial statements).

     The foregoing  resulted in the Company  having a net loss of $1,718,540 for
the three  months ended June 30, 1997  compared  with  $1,070,215  for the three
months ended June 30, 1996 and $2,790,934 for the six months ended June 30, 1997
compared with  $2,206,898  for the six months ended June 30, 1996.  Increases in
sales  revenue  and  decreases  in  interest  expense  were more than  offset by
increases in manufacturing, selling, general and administrative expenses.


                                       8
<PAGE>



Liquidity and Capital Resources

     Prior to its IPO, the Company had financed its operations  through  private
placements of debt and equity  securities and from income from a patent immunity
agreement.  Some of this  financing  had come from officers and directors of the
Company.

     At June 30, 1997, the Company had cash and cash  equivalents of $1,410,741.
Subsequent  to June 30, 1997,  the Company  concluded  its private  placement of
convertible  debentures which netted additional  proceeds of approximately  $3.9
million.  The  Company  plans to use a  substantial  portion  of such  funds for
equipment  and the balance for working  capital and  operations.  As the Company
increases  its  production   rates,  it  will  have  increased   operating  cash
requirements  through at least the third quarter of 1997,  before the effects of
expanded production capacity can be realized. Significant revenues from the sale
of laminates are anticipated to commence in the second half of 1997. The Company
expects  based on  currently  proposed  plans and  assumptions  relating  to its
operations that the proceeds of the Debentures together with projected cash flow
from  operations  and  available  cash  resources,  supplemented  by  commercial
financing,  will be sufficient to satisfy its anticipated cash  requirements for
the  balance  of  1997.  Such  expectation  is based  on  important  assumptions
regarding  a number of factors and future  events,  some of which are beyond the
Company's  control  including risks and  uncertainties  described in reports and
other  documents  filed by the Company from time to time with the Securities and
Exchange  Commission.  There can be no assurance that  management has identified
and made  appropriate  assumptions  regarding  all  factors  that may affect the
Company's  business in the future.  There can be no  assurance  that the Company
will successfully complete expansion of its production equipment,  achieve broad
commercial  acceptance of its product or generate sufficient revenues to achieve
profitable  operations,  and not require additional financing.  Beyond 1997, the
Company  plans to obtain  additional  financing  for  further  expansion  or for
working capital from operations, the exercise of warrants,  financing sources or
equity offerings.

     On February 6, 1997, following an earlier Memorandum of Understanding,  the
Company   agreed  in  principle   with  four  Quebec   institutional   investors
(collectively,  the "Quebec  Investors")  to form a 50/50 joint  venture for the
establishment   of  a  plant  in  the  greater   Montreal  area  to  manufacture
Compositech's laminates. The project cost is estimated to be approximately $24.5
million  with an initial  capitalization  by the  parties of  approximately  $11
million with the balance to be in debt financing for which firm commitments have
been obtained from the National Bank of Canada and  governmental  agencies.  The
Company's $5.5 million  capital  investment in the joint venture is to be funded
by the Quebec Investors purchasing shares of the Company's Common Stock. In July
1997,  the parties  agreed that the  purchase  price of the shares  would be the
weighted  average  closing  price for the 60 day trading  period ending with the
closing of the  agreements  expected to be in early August.  Based on the latest
market values,  there would be an estimated  987,000  shares issued.  The Quebec
Investors will have an option to sell their 50% interest in the joint venture to
the Company for a like number of shares and,  under certain  circumstances,  the
Company  would have an option to purchase  the  interest  for the same number of
shares.  The  establishment  of the  project  is subject  to the  completion  of
definitive  agreements  and certain other  conditions.  The Company is unable to
predict when, if ever, such conditions will be satisfied.



                                       9
<PAGE>


Six Months Ended June 30, 1997 Compared with Six Months Ended June 30, 1996

     Net cash and cash  equivalents  used in operating  activities  increased to
$2,354,713  for the six months ended June 30, 1997 from  $1,424,790  for the six
months ended June 30, 1996. The increased net loss, increase of deferred charges
related to the proposed joint venture in Canada,  and a reduction in the rate of
increase  of accrued  liabilities  represent  the  principal  components  of the
increase in funds used.

     Net cash and cash equivalents  provided by investing activities amounted to
$1,074,280  for the six months ended June 30, 1997,  compared  with net cash and
cash  equivalents  used of  $314,188  for the six months  ended  June 30,  1996.
Capital  expenditures for equipment and advance payments for equipment increased
to  $1,215,884  for the six months ended June 30, 1997 from $314,188 for the six
months ended June 30, 1996. The increase  resulted from design,  engineering and
construction of additional  production  modules as part of the expansion program
and the upgrading of existing  equipment.  Patent costs deferred totaled $94,536
for the six months ended June 30, 1997. Maturities of short term U.S. Government
securities during the six months ended June 30, 1997 accounted for $2,384,700 of
funds provided by investing activities.

     Cash flows from  financing  activities  increased to $2,018,090 for the six
months  ended June 30, 1997 from  $1,745,529  for the six months  ended June 30,
1996. The principal financing activity in the six months ended June 30, 1997 was
the issuance of the Debentures,  resulting in net proceeds of $2,022,231,  while
the six month  period  ended June 30, 1996  included the receipt of net proceeds
from the  issuance  of common  stock in  private  placements  of  $932,342,  net
proceeds from notes payable of $145,687 and the  collection of $750,000 of notes
receivable received in connection with the 10% Secured Note financing in 1995.


Part II - Other Information

Item 2.  Changes in Securities

     On May 28,  1997 and June 10,  1997 the  Company  had  initial  closings on
$2,250,000 of 5% Convertible  Debentures (the "Debentures") (net proceeds to the
Company  of  approximately  $2,022,000)  in a private  placement  to  accredited
investors.  The sales of the Debentures was exempt from  registration  under the
Securities  Act of 1933,  as amended,  pursuant to Section  4(2)  thereof,  as a
transaction not involving a public offering. The Debentures are convertible into
shares of the Company's  common stock pursuant to the terms  described in Note 2
in the  Financial  Statements.  Trautman  Kramer & Company,  Inc.  served as the
Company's  placement  agent for the  private  placement.  Following  the  period
covered by this report,  the Company had additional  closings on an aggregate of
$4,255,000  in  Debentures  (net  proceeds  to  the  Company  of   approximately
$3,924,000)  with  substantially   similar  terms  as  the  initial  investments
described above.




                                       10
<PAGE>


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

     The  Company's  1997 Annual  Meeting of  Stockholders  was held on June 24,
1997. The following actions were taken:

1. Eight  directors  were elected to serve for one-year  terms on the  Company's
Board of Directors, by the following votes:

                                                For              Withheld
                                             ----------          ---------
        Jonas Medney                          6,444,295           16,725
        Fred E. Klimpl                        6,432,862           28,158
        Samuel S. Gross                       6,444,295           16,725
        John F. Gahran                        6,435,462           25,558
        Willard T. Jackson                    6,441,695           19,325
        Robert W. Middleton                   6,435,462           25,558
        Heinz-Gerd Reinkemeyer                6,433,862           27,158
        James W. Taylor                       6,432,862           28,158

2. The  selection  of Ernst & Young LLP as auditors for the Company for the year
1997 was  ratified  by a vote of  6,426,637  shares in favor and  20,433  shares
opposed. A total of 13,950 shares abstained from voting.

3. The amendment of  Compositech's  Amended and Restated Stock Award Plan to (i)
increase by 600,000  shares the number of shares of Common Stock  authorized for
issuance  thereunder and (ii) permit  Compensation  Committee members to receive
awards  thereunder,  was  approved  by a vote of  6,282,405  shares in favor and
147,482 shares opposed. A total of 31,133 shares abstained from voting.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

        Exhibit Number                        Description
        --------------                        -----------
            10.10                      Compositech Ltd. Amended and
                                       Restated Stock Award Plan

(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, 1997.


                                       11
<PAGE>


                                    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, 1997             /s/ Samuel S. Gross
                                   --------------------------------------------
                                   Executive Vice President and Treasurer
                                   (Principal Accounting Officer and  officer
                                   duly authorized to sign this report on behalf
                                   of the registrant)

                                       12