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

                     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 March 31, 1999

                                       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.)

                  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 May 12, 1999:

            Common Stock $.01 par value                   15,648,694
            ---------------------------
                     Class                             Number of shares

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

<PAGE>

                                COMPOSITECH LTD.


                                      Index

Part I - Financial Information                                              Page
------------------------------                                              ----

Item 1.  Financial Statements

         Balance Sheets as of March 31, 1999 (unaudited) and
           December 31, 1998...................................................2

         Statements of Operations (unaudited) for the three months
           ended March 31, 1999 and 1998.......................................3

         Statements of Cash Flows (unaudited) for the three months
           ended March 31, 1999 and 1998.......................................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................................................11

Item 4.  Submission of Matters to a Vote of Security Holders..................12

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

Signature.....................................................................13

<PAGE>

                                COMPOSITECH LTD.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                         March 31      December 31
                                                                                                           1999            1998
                                                                                                       ------------    ------------
<S>                                                                                                     <C>             <C>
ASSETS                                                                                                  (unaudited)
Current assets:
  Cash and cash equivalents                                                                                $520,592        $102,286
  Accounts receivable trade - net                                                                            23,058          27,273
  Accounts receivable from joint venture                                                                     47,360         103,696
  Inventories                                                                                               247,630         254,784
  Prepaid expenses and other                                                                                252,299         165,827
                                                                                                       ------------    ------------
        Total current assets                                                                              1,090,939         653,866

Property and equipment at cost - net                                                                      5,572,717       5,721,215
Investment in joint ventures - net of accumulated amortization
         of $26,250 (1999) and $8,200 (1998)                                                              5,652,654       5,562,090
Advance payments on construction-in-progress                                                                 16,753          16,753
Deferred debt expense - net of accumulated amortization of $35,247 (1999)                                   149,711         133,728
Other assets and other deferred charges, net of accumulated amortization
       of $60,840 (1999) and $19,256 (1998)                                                                 356,511         151,110
                                                                                                       ------------    ------------
Total assets                                                                                            $12,839,285     $12,238,762
                                                                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                                         $515,969        $637,861
  Deferred salaries - $853,159 (1999) to  officers                                                        1,038,958         194,739
  Accrued interest - $293,563 (1999) and all (1998) to stockholders                                         295,341           5,880
  Other accrued liabilities                                                                                 420,158         413,982
  Deferred licensing income                                                                                  65,892          64,248
  Loans and notes payable                                                                                   956,417         438,917
  Notes payable to directors/stockholders                                                                 1,595,000
                                                                                                       ------------    ------------
        Total current liabilities                                                                         4,887,735       1,755,627

Non-current liabilities:
  Notes payable to directors/stockholders                                                                                 1,595,000
  Deferred salaries - officers                                                                                              814,481
  Accrued interest - directors/stockholders                                                                                 248,948
  Capital lease obligations                                                                                   1,387           9,235
  Deferred licensing income                                                                                 647,933         713,001
  Advances received on sale of common stock                                                                 500,000         500,000
                                                                                                       ------------    ------------
        Total non-current liabilities                                                                     1,149,320       3,880,665

7% Series B convertible preferred stock, par value $0.01 ; stated value $10,000 per share;
    authorized shares - 220, issued and outstanding shares - 25 (1999) and 220 (1998)                       250,000       2,200,000

Commitments

Stockholders'  equity :
  Undesignated preferred stock; authorized 3,999,780 shares, none issued and outstanding
  Series A convertible preferred stock, par value $3.00 per share; authorized shares - 714,161,
    issued and outstanding shares - 487,661 (1999) and 550,995 (1998)                                     1,462,983       1,652,985
  Common stock, par value $.01 per share; authorized shares - 50,000,000,
    issued and outstanding shares - 15,643,694 (1999) and 13,150,128 (1998)                                 156,437         131,502
  Additional paid-in capital                                                                             41,276,449      37,436,677
  Cumulative foreign currency translation adjustment                                                       (451,462)       (552,039)
  Deficit                                                                                               (35,592,177)    (33,954,155)
                                                                                                       ------------    ------------
                                                                                                          6,852,230       4,714,970
  Less notes receivable received for issuance of common stock                                              (300,000)       (312,500)
                                                                                                       ------------    ------------
    Total stockholders' equity                                                                            6,552,230       4,402,470
                                                                                                       ------------    ------------
Total liabilities and stockholders' equity                                                              $12,839,285     $12,238,762
                                                                                                       ============    ============
</TABLE>

See accompanying notes.



                                       2
<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31
                                                                          -------------------------------
                                                                              1999               1998
                                                                          ------------       ------------
<S>                                                                        <C>                <C>
Revenues:
  Sales                                                                    $    95,980        $    86,401
  Licensing                                                                     12,590             12,916
                                                                          ------------       ------------
       Total revenues                                                          108,570             99,317

Costs and expenses:
  Manufacturing                                                              1,202,842            960,562
  Selling, general and administrative                                          369,579            292,252
  Research and development                                                      67,386             40,613
                                                                          ------------       ------------

      Total operating expenses                                               1,639,807          1,293,427
                                                                          ------------       ------------

(Loss) from operations                                                      (1,531,237)        (1,194,110)

Other income (expenses):
  Interest income                                                               11,652             16,782
  Interest expense, net of interest capitalized                                (65,590)           (95,479)
  Amortization of debt discount and expenses                                   (42,834)          (308,132)
  Loss on disposal of property and equipment                                                       (8,274)
  Other income (expense)                                                        (4,500)            50,346
                                                                          ------------       ------------
                                                                              (101,272)          (344,757)

                                                                          ------------       ------------
 (Loss) from operations before equity in operations of joint venture        (1,632,509)        (1,538,867)

Equity in operations of joint venture                                           (5,513)            40,879
                                                                          ------------       ------------
   Net (loss)                                                               (1,638,022)        (1,497,988)

Preferred stock dividends                                                       11,851
                                                                          ------------       ------------
   (Loss) attributable to common stockholders                              ($1,649,873)       ($1,497,988)
                                                                          ============       ============

(Loss) per common share - basic and diluted                                     ($0.11)            ($0.16)
                                                                          ============       ============

Shares used in computing (loss) per common share                            14,627,528          9,176,650
                                                                          ============       ============
</TABLE>

See accompanying notes.


                                       3
<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                               March 31
                                                                                     -----------------------------
                                                                                         1999              1998
                                                                                     -----------       -----------
<S>                                                                                  <C>               <C>
Cash Flows from Operating Activities
Net (loss)                                                                           ($1,638,022)      ($1,497,988)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                              268,638           176,495
    Loss on disposal of property and equipment                                                               8,274
    Amortization of debt discount and expenses                                            48,604           308,132
    Equity in net income of joint venture                                                  5,513           (40,879)
    Changes in operating assets and liabilities:
       Accounts receivable trade - net                                                     4,215           (13,440)
       Accounts receivable from joint venture                                            (57,232)           82,259
       Inventories                                                                         7,154            24,001
       Prepaid expenses and other                                                         27,096           (83,739)
       Other assets and other deferred charges                                            16,500
       Accounts payable                                                                 (121,892)         (271,421)
       Deferred salaries                                                                  29,738           112,691
       Accrued interest                                                                   40,513            26,544
       Deferred licensing income                                                         (63,424)          917,084
       Other accrued liabilities                                                          83,701             2,175
                                                                                     -----------       -----------
          Net cash and cash equivalents (used) in operating activities                (1,348,898)         (249,812)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                                 (81,644)         (178,159)
Patent costs deferred                                                                    (10,113)
                                                                                     -----------       -----------
          Net cash and cash equivalents (used in) investing activities                   (91,757)         (178,159)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                             1,406,308           952,500
Net proceeds from loans and notes payable                                                460,501
Payment of capital lease obligations                                                      (7,848)          (10,954)
                                                                                     -----------       -----------
        Net cash and cash equivalents provided by financing activities                 1,858,961           941,546
                                                                                     -----------       -----------
        (Decrease) in cash and cash equivalents                                          418,306           513,575
        Cash and cash equivalents at beginning of period                                 102,286           624,254
                                                                                     -----------       -----------
        Cash and cash equivalents at end of period                                      $520,592        $1,137,829
                                                                                     ===========       ===========

Supplemental disclosures of cash flow information
 Noncash financing activities:
 Preferred Stock dividends  on 7% Series B convertible preferred stock                   $11,851
                                                                                     ===========
 Issuance of common stock as compensation for bridge financing                           $12,500
                                                                                     ===========

Cash paid for:
  Interest                                                                               $26,232           $68,934
                                                                                     ===========       ===========
</TABLE>

See accompanying notes.


                                       4
<PAGE>

                                COMPOSITECH LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                                 March 31, 1999

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,  1998 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 period ended March 31, 1999 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended December 31, 1999.

Reclassifications

     Certain  reclassifications  have been made to the financial  statements for
the three months ended March 31, 1998 to conform to presentations  for the three
months ended March 31, 1999.

Note 2 - Common Stock Issuances and Stock Options

     During January 1999,  pursuant to Compositech's  Amended and Restated Stock
Award Plan (the "Award Plan"),  the Company granted to a new employee options to
purchase 10,000 shares of common stock at $1.406 per share,  the market value on
the date of the grant.

     During  January 1999,  pursuant to the Award Plan, the Company issued stock
awards  of 17,395  shares of its  common  stock to its  non-employee  directors,
vesting on a quarterly  basis,  as payment of the annual  $10,000 per year,  per
director,  retainer  approved by the Board of Directors on January 22, 1999. The
number of shares was determined using a price of $2.875, the market price on the
date approved by the Board of Directors.

     During  March  1999,  pursuant to the Award  Plan,  the Company  granted to
selected  officers and  employees  options to purchase  97,189  shares of common
stock at $2.50  per  share,  the  market  price  on the  date of the  grant,  in
recognition of the continued deferral of certain deferred salaries.


                                       5
<PAGE>

     In the three  months ended March 31,  1999,  63,334  shares of the Series A
convertible  preferred stock were converted at the existing conversion rate into
31,667 shares of common stock,  resulting in a decrease in stockholders'  equity
relating to Series A  convertible  preferred  stock of $190,002,  an increase in
stockholders'  equity  relating  to  common  stock  of $317 and an  increase  in
additional paid-in capital of $189,685.

     During the three months ended March 31, 1999, the Company issued  1,387,331
shares of common  stock upon the  conversion  of 195 shares of the  Company's 7%
Series B convertible  preferred stock ($1,950,000 face amount),  resulting in an
increase in  stockholders'  equity  relating  to common  stock of $13,873 and an
increase in additional paid-in capital of $1,936,127. The shares issued included
an accrued 7% dividend, paid in shares of common stock.

     During the three months ended March 31,  1999,  the Company sold  1,074,568
shares of its common stock,  including 600,000 shares of its common stock issued
as a result of the exercise of a stock purchase option, in a private  placement,
realizing  approximately $1.4 million, net of expenses.  In connection with this
private  placement,  the Company issued  warrants to purchase  505,928 shares of
common stock at prices ranging from $1.125 to $2.125 per share.

Note 3 - Loan and Note Payable

     In January 1999, the Company borrowed an additional  $17,500,  bringing the
total amount  borrowed to $456,417,  under the credit  facility  through  Credit
Bancorp,  which is  collateralized  by  approximately  1.7 million shares of the
Company's  common stock loaned to the Company by two of the Company's  officers.
The loan is due on  December  29,  1999 and  bears  interest  at the rate of one
percent above the LIBOR rate (currently  6.25%),  payable  quarterly. 

     A default would occur if the Company fails to supplement  the collateral or
partially  repay the loan in the event the  collateral  falls in value by 25% or
more from the value as of the loan date.  The  Company  has agreed  with the two
officers to issue replacement  shares to them in the event of any liquidation of
the collateral by the lender and provide them with  registration  rights,  where
necessary.

     In March  1999,  the Company  closed on the first  tranche of $500,000 of a
$1.5 million term note series, due on September 12, 1999, payable at maturity in
cash  or  common  stock  at the  Company's  option,  collateralized  by  certain
equipment.  In connection  with this  closing,  the Company  issued  warrants to
purchase 125,000 shares of common stock at $2.372 per share, 110% of the closing
bid price of the stock on the date of the closing.  The warrants are exercisable
until March 16, 2004.  The fair market value of the warrants has been  estimated
at $73,267 which is being amortized over the term of the note.

Note 4 - Subsequent Events

     In April 1999,  the Company closed on the second tranche of $430,000 of the
$1.5 million term note series,  due on October 18, 1999,  payable at maturity in
cash  or  common  stock  at the  Company's  option,  collateralized  by  certain
equipment.  In connection  with this  closing,  the Company  issued  warrants to
purchase 107,500 shares of common stock at $2.647 per share, 110% of the closing
bid price of the stock on the date of the closing.  The warrants are exercisable
until April 21, 2004.  The fair market value of the warrants has been  estimated
at $88,688 which is being amortized over the term of the note.


                                       6
<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, 1998 and
the risk factors listed therein.

Overview

     The Company  manufactures  copper-clad  fiberglass  epoxy laminates used to
manufacture printed circuit boards required by the electronics industry.  During
1997 and 1998, the Company produced and sold its laminates in limited quantities
through a highly focused sales effort to gain production  experience and product
performance  data.  However,  this highly  focused sales effort left the Company
vulnerable to order volatility. Throughout 1997 and 1998, and continuing through
the first  quarter of 1999,  the Company  worked on adjusting  and enhancing its
production equipment and its manufacturing processes. Production ramp up issues,
coupled  with order  volatility,  led to a slower  than  expected  expansion  in
production capacity.  The Company continues to work on and is making progress on
solving issues with process enhancements and contamination which affect finished
goods' yields and production efficiencies.

Results of Operations

     Sales of  laminates  increased  to $95,980 for the three months ended March
31, 1999 from $86,401 for the three months  ended March  31,1998.  Sales for the
first quarter of 1999 were below the Company's  expectations  due primarily to a
delay in the completion of a long term supply agreement.

     Research and development expenses increased to $67,386 for the three months
ended March 31, 1999 from  $40,613 for the three  months  ended March 31,  1998,
reflecting   the   company's   increased   development   efforts  on   improving
manufacturing methods.

     Manufacturing  expenses  increased to $1,202,842 for the three month period
ended March 31, 1999 from  $960,562  for the three  months ended March 31, 1998,
reflecting  the  higher  levels  of  direct  expenditures   related  to  process
enhancements and improvements to process  reliability as well as the addition of
manufacturing  management  personnel  and related  expenses,  as compared to the
first quarter of the previous year.

     Selling,  general and administrative expenses increased to $369,579 for the
three months ended March 31, 1999 from $292,252 for the three months ended March
31, 1998.  Increases in payroll related costs in connection with the hiring of a
new chief executive  officer and technical  director were partially  offset by a
decrease  in  recruitment  costs which was related to the search for a new chief
executive  officer.  Other  increases  were  experienced  in  travel  and  sales
promotion costs, including the costs of an industry trade show in March of 1999.
Professional  fees and


                                       7
<PAGE>

investor relations expense increased by approximately  $52,000, due primarily to
higher  financial  public  relations  costs,  which included the amortization of
approximately  $31,000 of the estimated fair market value of warrants given to a
consulting firm in exchange for public relations  services for the calendar year
1999.  During the first  quarter  of 1998 and 1999,  approximately  $112,000  of
selling,  general and administrative expenses were charged to the Canadian joint
venture, in accordance with the joint venture agreements.

     Interest expense  decreased to $65,590 for the three months ended March 31,
1999 from $95,479 for the three  months  ended March 31,  1998.  The decrease is
related to the borrowing cost of the 5% convertible debentures, which were fully
converted  by April 1998,  which was not  present in the first  quarter of 1999.
Amortization  of debt  discount and expenses  decreased to $42,834 for the three
months  ended March 31, 1999 from  $308,132 for the three months ended March 31,
1998. The 1998 period  reflected the high  amortization of costs associated with
the 5% convertible debentures, including accelerated amortization of $263,257 as
a result of debenture conversions during the three months ended March 31, 1998.

     Other expense increased to $4,500 for the three months ended March 31, 1999
from  ($50,346) for the three months ended March 31, 1998.  The first quarter of
1998 included a property tax refund  applicable to prior fiscal  periods as well
as adjustments of prior period professional fee charges,  both of which were not
present in the 1999 period.

     The equity in the operations of the Canadian  joint venture  decreased to a
loss of $5,513,  for the three  months  ended March 31,  1999,  from a profit of
$40,879 for the three months ended March 31, 1998.  These amounts  represent the
Company's  50% share of the net profit or loss of the joint  venture.  The first
quarter 1998 profit  resulted from a cumulative  adjustment  of interest  income
recorded  by the  joint  venture  on its  short  term  investments  in excess of
administrative and marketing costs incurred.

     The foregoing  resulted in the Company  having a net loss of $1,638,022 for
the three months ended March 31, 1999  compared  with  $1,497,988  for the three
months ended March 31, 1998.  The increased loss was  attributable  primarily to
the lower than expected  sales  revenues and the increase in  manufacturing  and
process   development   expenses,   offset  partially  by  a  reduction  in  the
amortization of debt discount and expenses, a non-cash item.


                                       8
<PAGE>

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,  1998
financial  statements,  which  expresses  substantial  doubt about the Company's
ability  to  continue  as a  going  concern.  The  Company  expects  significant
operating  losses to continue  in 1999.  As of March 31,  1999,  the Company had
approximately  $521,000 of available cash resources.  In April 1999, the Company
closed on the second  tranche of $430,000 of the $1.5  million term note series,
due on October 18,  1999,  payable at  maturity  in cash or common  stock at the
Company's  option.  There is an  additional  amount  available  on the term note
series of $570,000.  However,  the Company will  require  additional  funding to
cover current operations and to fund additional  production equipment purchases,
which  will  require at least  $450,000  per month  based on  current  levels of
production and sales, until revenues from operations are sufficient.

     Current liabilities include approximately $853,000 in deferred salaries due
to officers,  accrued interest of approximately $293,000 due to stockholders and
notes  payable  of  $1,495,000  due  to  officers/directors,  all of  which  are
currently due on or after January 2, 2000 and whose due dates have  historically
been  extended  in the  event  the  Company  does 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 adequate  funds are not available to
satisfy either short-term or long-term capital requirements,  the Company may be
required to limit its operations  significantly.  No assurance can be given that
the  Company  will  successfully  complete  expansion  and  enhancement  of  its
production  equipment,  achieve  broad  commercial  acceptance of its product or
generate sufficient revenues to achieve profitable operations.  No assurance can
be  given  that  management  has  identified  and made  appropriate  assumptions
regarding all factors that may affect the Company's business in the future.


Three  Months  Ended March 31, 1999  Compared  with Three Months Ended March 31,
1998

     Net cash and cash  equivalents  used in operating  activities  increased to
$1,348,898 for the three months ended March 31, 1999 from $249,812 for the three
months ended March 31,  1998.  Licensing  fees  received in cash from the Taiwan
joint venture  totaling  $930,000,  net of expenses,  was the primary  source of
funds  provided by  operating  activities  for the three  months ended March 31,
1998, with $917,084 deferred to future periods for financial reporting purposes.
The increases in manufacturing and process development expenses, accounted for a
significant  portion of the  remainder of the increase in cash used in operating
activities.  Increases in deferred  salaries,  accrued interest and expenses for
this same period  were offset by a decrease in accounts  payable and an increase
in accounts receivable due from the Canadian joint venture.


                                       9
<PAGE>

     Net cash and cash  equivalents  used in  investing  activity  decreased  to
$91,757 for the three months ended March 31, 1999,  compared  with  $178,159 for
the three months ended March 31, 1998.  Increases in deferred  patent costs were
more than  offset  by a  decrease  in  capital  expenditures  for  property  and
equipment, which included advance payments on construction-in-progress.

     Cash flows from financing  activities increased to $1,858,961 for the three
months ended March 31, 1999,  from $941,546 for the three months ended March 31,
1998. The primary sources of the funds,  net of expenses,  provided by financing
activities  in the first  quarter  of 1999  were the  private  placement  of the
Company's common stock, totaling $1,406,308 and the closing of the first tranche
of the term notes series,  totaling $430,000. The sale of stock to the Taiwanese
joint  venture,  net of expenses,  accounted  for $952,500 of funds  provided by
financing  activities  in the first  quarter of 1998,  reduced by the payment of
capital lease obligations of $10,954.


                                       10
<PAGE>

Part II - Other Information

Item 2.  Changes in Securities

     (c)  Recent Sales of Unregistered Securities.

     During the three months ended March 31,  1999,  the Company sold  1,074,568
shares of its common  stock and  warrants to purchase  163,897  shares of common
stock at prices  ranging from $1.125 per share to $2.125 per share,  exercisable
until February 15, 2001, to certain accredited investors in a private placement,
for an aggregate offering of $1,535,934.

     In  connection  with the private  placement,  Trautman & Company,  Inc.,  a
placement agent,  received cash commissions of $106,875 and warrants to purchase
338,361 shares of common stock at exercise  prices ranging from $1.125 per share
to $2.125 per share,  exercisable until February 15, 2001, and Sovereign Capital
Advisors,  LLC, a placement  agent,  received  cash  commissions  of $14,000 and
warrants  to  purchase  1,843  shares of common  stock for  $2.035 per share and
warrants  to  purchase  1,827  shares of  common  stock for  $2.053  per  share,
exercisable until February 15, 2001.

     The sales of the  shares  of  common  stock  and  warrants  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 and Rule 506 promulgated thereunder.

     The following  warrants  were issued in reliance  upon the  exemption  from
registration  under the  Securities  Act  provided  in section  4(2)  thereof as
transactions not involving a public offering :

     (a)  On January 13, 1999, the Company issued  warrants to purchase  300,000
          shares of its common  stock for $1.25 per share,  the market price the
          date of the  issuance,  exercisable  until  January 13, 2004,  to Boca
          Investments, in exchange for financial public relations services to be
          rendered to the Company over a twelve-month  period commencing January
          13, 1999. In connection with this  transaction,  Trautman and Company,
          Inc.  received  warrants to purchase 100,000 shares,  as a commission,
          under the identical terms.

     (b)  On March 10,  1999,  the Company  issued  warrants to purchase  25,483
          shares of its  common  stock for $2.50 per  share,  exercisable  until
          March 10, 2004, to certain officers, directors and stockholders of the
          Company who are holders of notes payable, in exchange for an extension
          of the payment of the accrued interest, as of December 31, 1998, until
          January 2, 2000.

     (c)  On March 16,  1999,  in  connection  with the  closing of the  initial
          tranche  of a $1.5  million  term  note  series,  the  Company  issued
          warrants to purchase:

               (i)  100,000  shares of its  Common  Stock for  $2.372 per share,
                    exercisable  until March 16,  2004 as  investor  warrants to
                    SovCap Equity Partners, Ltd; and

               (ii) 25,000  shares of its  Common  Stock for  $2.372  per share,
                    exercisable until March 16, 2004 as compensation warrants to
                    Sovereign Capital Advisors, LLC, the placement agent.


                                       11
<PAGE>

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

     At  a  special  meeting  of  stockholders  held  on  March  26,  1999,  the
stockholders  approved  an  amendment  of the  Company's  Amended  and  Restated
Certificate  of  Incorporation,  increasing  the number of authorized  shares of
common  stock of the Company from  25,000,000,  $0.01 par value,  to  50,000,000
shares,  $0.01 par  value.  Holders  of record as of  February  12,  1999 of the
Company's common stock and Series A Convertible Preferred Stock were entitled to
notice of, and to vote at, the meeting.

     The results of the voting was as follows:

           For                                                   13,549,277
                                                                 ==========

           Against                                                  275,672
           Abstain                                                   31,500
           Non-votes                                              1,213,254
                                                                 ----------
                Total counted as Against                          1,520,426
                                                                 ==========


     Item 6. Exhibits and Reports on Form 8-K

(a)  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 March 31, 1999.


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<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: May 14, 1999                       /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)



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