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

                     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, 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 August 13, 1999:

Common Stock $.01 par value                                       16,686,563
---------------------------                                    ----------------
          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, 1999 (unaudited) and December 31, 1998..........2

         Statements of Operations (unaudited) for the three-month and six-month
              periods ended June 30, 1999 and 1998.....................................3

         Statements of Cash Flows (unaudited) for the six-month periods
              ended June 30, 1999 and 1998.............................................4

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

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations...........................................8

Part II - Other Information

Item 2.  Changes in Securities........................................................12

Item 4.  Submission of Matters to a Vote of Security Holders..........................13

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

Signature.............................................................................15
</TABLE>


<PAGE>

                                COMPOSITECH LTD.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                     June 30       December 31
                                                                                                      1999            1998
                                                                                                  ------------    ------------
ASSETS                                                                                            (unaudited)
Current assets:
<S>                                                                                               <C>             <C>
  Cash and cash equivalents                                                                       $    176,820    $    102,286
  Accounts receivable trade - net                                                                       79,858          27,273
  Accounts receivable from joint venture                                                               142,038         103,696
  Inventories                                                                                          225,159         254,784
  Prepaid expenses and other                                                                           220,940         165,827
                                                                                                  ------------    ------------
        Total current assets                                                                           844,815         653,866

Property and equipment at cost - net                                                                 5,505,950       5,721,215
Investment in joint ventures - net of accumulated amortization
         of $30,750 (1999) and $21,750 (1998)                                                        5,721,818       5,562,090
Advance payments on construction-in-progress                                                                            16,753
Deferred debt expense - net of accumulated amortization of $132,298 (1999)                             157,001         133,728
Other assets and other deferred charges, net of accumulated amortization
       of $204,738 (1999) and $19,256 (1998)                                                           493,324         151,110
                                                                                                  ------------    ------------
Total assets                                                                                      $ 12,722,908    $ 12,238,762
                                                                                                  ============    ============

LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities:
  Accounts payable                                                                                $    819,756    $    637,861
  Deferred salaries                                                                                    173,287         194,739
  Accrued interest - all (1998) to stockholders                                                         13,440           5,880
  Other accrued liabilities                                                                            525,141         413,982
  Deferred licensing income                                                                             65,460          64,248
  Loans and notes payable                                                                            1,386,417         438,917
  Notes payable to directors/stockholders                                                               50,000
                                                                                                  ------------    ------------
        Total current liabilities                                                                    3,033,501       1,755,627

Non-current liabilities:
  Notes payable to directors/stockholders                                                            1,540,833       1,595,000
  Deferred salaries - officers/directors                                                               879,385         814,481
  Accrued interest - directors/stockholders                                                            341,502         248,948
  Capital lease obligations                                                                                              9,235
  Deferred licensing income                                                                            627,370         713,001
  Advances received on sale of common stock                                                            500,000         500,000
                                                                                                  ------------    ------------
        Total non-current liabilities                                                                3,889,090       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 - none (1999) and 220 (1998)                              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 - 477,661 (1999) and 550,995 (1998)                                1,432,983       1,652,985
  Common stock, par value $.01 per share; authorized shares - 50,000,000,
    issued and outstanding shares - 16,307,072 (1999) and 13,150,128 (1998)                            163,071         131,502
  Additional paid-in capital                                                                        42,509,551      37,436,677
  Cumulative foreign currency translation adjustment                                                  (336,097)       (552,039)
  Deficit                                                                                          (37,686,691)    (33,954,155)
                                                                                                  ------------    ------------
                                                                                                     6,082,817       4,714,970
  Less notes receivable received for issuance of common stock                                         (282,500)       (312,500)
                                                                                                  ------------    ------------
    Total stockholders' equity                                                                       5,800,317       4,402,470
                                                                                                  ------------    ------------
Total liabilities and stockholders' equity                                                        $ 12,722,908    $ 12,238,762
                                                                                                  ============    ============
</TABLE>

See accompanying notes.

                                       2

<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                            Three Months Ended            Six Months Ended
                                                                                 June 30                        June 30
                                                                       ----------------------------    ----------------------------
                                                                           1999            1998            1999            1998
                                                                       ------------    ------------    ------------    ------------
<S>                                                                        <C>              <C>            <C>             <C>
Revenues:
  Sales                                                                    $119,985         $75,752        $215,965        $162,153
  Licensing                                                                  15,861          18,660          28,451          31,576
                                                                       ------------    ------------    ------------    ------------
       Total revenues                                                       135,846          94,412         244,416         193,729

Costs and expenses:
  Manufacturing                                                           1,370,465       1,055,002       2,573,307       2,015,564
  Selling, general and administrative                                       418,924         330,762         788,503         623,014
  Research and development                                                   80,421          25,297         147,807          65,910
                                                                       ------------    ------------    ------------    ------------
      Total operating expenses                                            1,869,810       1,411,061       3,509,617       2,704,488
                                                                       ------------    ------------    ------------    ------------
(Loss) from operations                                                   (1,733,964)     (1,316,649)     (3,265,201)     (2,510,759)

Other income (expenses):
  Interest income                                                             8,927          14,178          20,579          30,960
  Interest expense, net of interest capitalized                             (51,930)        (51,681)       (117,520)       (147,160)
  Amortization of debt discount and expenses                               (194,468)       (189,471)       (237,302)       (497,603)
  Loss on disposal of property and equipment                                                    (86)                         (8,360)
  Other income (expense)                                                    (81,378)          5,450         (85,878)         55,796
                                                                       ------------    ------------    ------------    ------------
                                                                           (318,849)       (221,610)       (420,121)       (566,367)
                                                                       ------------    ------------    ------------    ------------
(Loss) from operations before equity in operations of joint venture      (2,052,813)     (1,538,259)     (3,685,322)     (3,077,126)

Equity in operations of joint venture                                       (41,701)         10,368         (47,214)         51,247
                                                                       ------------    ------------    ------------    ------------
   Net (loss)                                                            (2,094,514)     (1,527,891)     (3,732,536)     (3,025,879)

Preferred stock dividends                                                     3,841         265,118          15,692         265,118
                                                                       ------------    ------------    ------------    ------------
   (Loss) attributable to common stockholders                           ($2,098,355)    ($1,793,009)    ($3,748,228)    ($3,290,997)
                                                                       ============    ============    ============    ============

(Loss) per common share - basic and diluted                                  ($0.13)         ($0.15)         ($0.25)         ($0.31)
                                                                       ============    ============    ============    ============

Shares used in computing (loss) per common share                         15,786,991      12,054,898      15,210,462      10,623,725
                                                                       ============    ============    ============    ============
</TABLE>

See accompanying notes.

                                       3

<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                              Six Months Ended
                                                                                   June 30
                                                                         --------------------------
                                                                             1999           1998
                                                                         -----------    -----------
<S>                                                                      <C>            <C>
Cash Flows from Operating Activities
Net (loss)                                                               ($3,732,536)   ($3,025,879)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                  555,553        349,432
    Loss on disposal of property and equipment                                                8,360
    Amortization of debt discount and expenses                               237,302        497,603
    Equity in net (income) loss of joint venture                              47,214        (51,247)
    Changes in operating assets and liabilities:
       Accounts receivable trade - net                                       (52,585)        13,696
       Accounts receivable from joint venture                                (38,342)        71,658
       Inventories                                                            29,625         31,425
       Prepaid expenses and other                                            (54,613)        (4,724)
       Other assets and other deferred charges                                29,156
       Accounts payable                                                      181,895       (299,269)
       Deferred salaries                                                      43,452        171,462
       Accrued interest                                                      100,114         55,508
       Deferred licensing income                                             (84,419)       877,808
       Other accrued liabilities                                             209,956         63,498
                                                                         -----------    -----------
          Net cash and cash equivalents (used) in operating activities    (2,528,228)    (1,240,669)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                    (234,559)      (487,689)
Investment in joint ventures                                                                 (1,487)
Patent costs deferred                                                         (6,947)        (7,929)
                                                                         -----------    -----------
          Net cash and cash equivalents (used in) investing activities      (241,506)      (497,105)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                 2,070,535        987,120
Net proceeds from exercise of warrants                                         1,282
Net proceeds from issuance of 7% Series B convertible preferred stock                     1,900,000
Net proceeds from loans and notes payable                                    992,250
Payment of capital lease obligations                                         (15,632)       (21,415)
Payment of loans and notes payable                                          (204,167)
                                                                         -----------    -----------
        Net cash and cash equivalents provided by financing activities     2,844,268      2,865,705
                                                                         -----------    -----------
        Increase in cash and cash equivalents                                 74,534      1,127,931
        Cash and cash equivalents at beginning of period                     102,286        624,254
                                                                         -----------    -----------
        Cash and cash equivalents at end of period                       $   176,820    $ 1,752,185
                                                                         ===========    ===========

Supplemental disclosures of cash flow information
Noncash financing activities:
  Preferred Stock dividends on 7% Series B convertible preferred stock   $    15,692
                                                                         ===========
  Issuance of common stock as compensation for bridge financing          $    30,000    $   265,118
                                                                         ===========    ===========

Cash paid for:
  Interest                                                               $    36,498    $    92,390
                                                                         ===========    ===========
</TABLE>


See accompanying notes.

                                       4

<PAGE>

                                COMPOSITECH LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                                  June 30, 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 and six-month period ended June
30, 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 and six months ended June 30, 1998 to conform to  presentations
for the three months and six months ended June 30, 1999.

Note 2 - Common Stock Issuances and Stock Options

     During  the six months  ended  June 30,  1999,  pursuant  to  Compositech's
Amended and Restated Stock Award Plan (the "Award Plan"), the Company granted to
selected  officers and employees  options to purchase  137,189  shares of common
stock at prices  ranging  from  $1.406 per share to $2.50 per share,  the market
value of the common stock on the date of the grant.

     During the six months ended June 30, 1999,  pursuant to the Award Plan, the
Company  issued  stock  awards  of  19,424  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  value of the  common  stock on the date  approved  by the  Board of
Directors.

     During the six months  ended June 30, 1999,  73,334  shares of the Series A
convertible  preferred stock were converted at the existing conversion rate into
36,667 shares of common stock,  resulting in a decrease in stockholders'  equity
relating to Series A  convertible  preferred  stock of $220,002,  an increase in
stockholders'  equity  relating  to  common  stock  of $367 and an  increase  in
additional paid-in capital of $219,635.

                                       5

<PAGE>

     During the six months ended June 30,  1999,  the Company  issued  1,500,142
shares of common stock upon the conversion of all 220 shares of the Company's 7%
Series B convertible  preferred stock ($2,200,000 face amount),  resulting in an
increase in  stockholders'  equity  relating  to common  stock of $15,001 and an
increase in additional paid-in capital of $2,184,999. The shares issued included
an accrued 7% dividend, paid in shares of common stock.

     During the six months  ended June 30,  1999,  the  Company  sold  1,544,088
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 $2.1 million, net of expenses.  In connection with this
private  placement,  the Company issued  warrants to purchase  648,308 shares of
common stock at prices ranging from $1.125 to $2.125 per share.

     During June 1999, warrants to purchase 2,250 shares of the Company's common
stock were exercised at $1.125 per share, resulting in proceeds of $2,531.

Note 3 - Loans and Notes 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  directors.
The loan is due on  December  29,  1999 and  bears  interest  at the rate of one
percent above the one year LIBOR rate (currently 6.84%),  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
directors 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
$1.4  million  term note series,  which  tranche is 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. In April 1999, the Company closed on the second tranche of $430,000 of
the $1.4  million term note  series,  which  tranche is 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.

     As part of a Retirement  and Consulting  Agreement  entered into on May 28,
1999,   between  the  Company  and  Fred  E.  Klimpl,   the   Company's   former
Vice-Chairman,  the Company  has agreed to make  payments at the rate of $50,000
per annum to Mr. Klimpl which will initially

                                       6

<PAGE>

repay the  $150,000 in loans due to Mr.  Klimpl,  followed in order by an agreed
upon severance payment and deferred compensation owed to Mr. Klimpl.

Note 4 - Subsequent Events

     During July 1999,  the Company sold 100,000 shares of its common stock in a
private  placement,  realizing  approximately  $200,000,  net  of  expenses.  In
connection with this private placement,  the Company issued warrants to purchase
40,000 shares of common stock at an exercise price of $2.25 per share.

     In July 1999, the Company closed on the third and final tranche of $450,000
of the $1.4 million term note series,  which tranche is due on January 24, 2000,
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 112,500 shares of common stock at $2.131 per
share,  110% of the closing  bid price of the stock on the date of the  closing.
The warrants are  exercisable  until July 28, 2004. The fair market value of the
warrants has been  estimated at $62,635 which will be amortized over the term of
the note.

     In August 1999, the Company obtained  extensions on the due dates, to April
2,  2001,  on  $1,445,000  of  loans  and  notes  payable  to  stockholders  and
officers/directors,  $879,385 of deferred  salaries due to officers and $341,502
in accrued interest due to officers, stockholders and directors. In exchange for
the  extension of due dates on the notes and loans  payable,  and the  accruable
interest as of  December  31,  1999,  the  Company  issued  warrants to purchase
185,137  shares  of common  stock at an  exercise  price  per share  still to be
determined.   The  foregoing  amounts  have  been  reclassified  as  non-current
liabilities, as of June 30, 1999, in the accompanying balance sheet.





                                       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, 1998 and
Amendment No. 2 to its Registration  Statement on Form S-3 declared effective by
the  Securities  and Exchange  Commission  on June 15, 1999 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 half of 1999,  the  Company  worked on  adjusting  and  enhancing  its
production equipment and its manufacturing processes. Production ramp up issues,
defective  incoming raw materials,  necessitating  a change in vendors,  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 incoming raw materials, process enhancements and contamination which
affect manufacturing yields and production efficiencies.

     In April 1999,  the  Company  announced  that Sun  Microsystems,  Inc.  and
Praegitzer  Industries  Inc.  have  approved  the  use of  Compositech's  CL200+
filament wound  laminates in the  manufacture of printed circuit boards utilized
by those companies.

     In June  1999,  the  Company  announced  the  signing of a supply and joint
product development agreement with Teradyne, Inc.'s Connection Systems Division.
The electronic  materials supply agreement,  which is renewable,  provides for a
minimum  annual  purchase  commitment  for the first year,  a joint  development
program for high performance  laminates and documentation of CL200+  performance
in a high volume backplane manufacturing environment.

Results of Operations

     Sales of  laminates  increased  to $119,985 for the three months ended June
30, 1999 from  $75,752 for the three  months  ended June 30,1998 and to $215,965
for the six months  ended June 30, 1999 from  $162,153  for the six months ended
June 30, 1998.  Sales for the second  quarter of 1999 included a small amount of
the initial order under the supply agreement with Teradyne.  Sales for July 1999
were  approximately  $76,000  and the  order  backlog  in  mid-August  1999  was
approximately $150,000.

                                       8

<PAGE>

     Research and development expenses increased to $80,421 for the three months
ended June 30, 1999 from $25,297 for the three months ended June 30, 1998 and to
$147,807  for the six months ended June 30, 1999 from $65,910 for the six months
ended June 30, 1998,  reflecting the company's increased  development efforts on
improved manufacturing methods.

     Manufacturing  expenses  increased to $1,370,465 for the three months ended
June 30, 1999 from  $1,055,002  for the three  months ended June 30, 1998 and to
$2,573,307  for the six months ended June 30, 1999 from  $2,015,564  for the six
months ended June 30, 1998,  reflecting the higher levels of direct expenditures
related to the  increased  level of sales and  manufacturing  activity,  process
enhancements and improvements to process  reliability as well as the addition of
manufacturing  personnel  and related  expenses,  in  anticipation  of increased
sales.

     Selling,  general and administrative expenses increased to $418,924 for the
three months  ended June 30, 1999 from  $330,762 for the three months ended June
30, 1998 and to $788,503  for the six months  ended June 30, 1999 from  $623,014
for the six months ended June 30, 1998.  Increases in payroll  related  costs in
connection with the new chief  executive  officer,  technical  director and West
Coast sales manager were partially  offset by a decrease in  recruitment  costs.
Other increases were experienced in travel and sales promotion costs,  including
the  costs of an  industry  trade  show in March  of  1999.  Professional  fees,
consulting  costs and investor  relations  expense  increased  by  approximately
$118,000  due  primarily  to higher  financial  public  relations  costs,  which
included the amortization of approximately  $67,000 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  half  of  1999,
approximately  $243,000 of selling,  general and  administrative  expenses  were
charged to the Canadian  joint  venture,  in  accordance  with the joint venture
agreements,  compared  with $214,000 of charges in the six months ended June 30,
1998.

     Interest  expense  decreased  to $117,520 for the six months ended June 30,
1999 from  $147,160  for the six months  ended June 30,  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  half of 1999.
Amortization  of debt discount and expenses  increased to $194,468 for the three
months  ended June 30, 1999 from  $189,471  for the three  months ended June 30,
1998,  but  decreased  to $237,302  for the six months  ended June 30, 1999 from
$497,603 for the six months ended June 30, 1998.  The expense for the six months
ended June 30, 1999 includes  $209,503 of  amortization of expenses and warrants
granted in  connection  with the $1.4 million term note series.  The 1998 period
reflected  the   amortization  of  costs  associated  with  the  5%  convertible
debentures,  including  accelerated  amortization  of  $473,325  as a result  of
debenture conversions during the four months ended April 30, 1998.

     Other expense increased to $81,378 for the three months ended June 30, 1999
from  ($5,450)  for the three  months ended June 30, 1998 and to $85,878 for the
six months ended June 30, 1999 from  ($55,796) for the six months ended June 30,
1998. The three and six-month periods ended June 30, 1999 include a provision of
approximately  $74,000  related to severance  pay due to a former  officer.  The
first half 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.

                                       9

<PAGE>

     The equity in the operations of the Canadian  joint venture  decreased to a
loss of  $41,701  for the three  months  ended June 30,  1999,  from a profit of
$10,368  for the three  months  ended June 30, 1998 and to a loss of $47,214 for
the six months  ended June 30,  1999 from a profit of $51,247 for the six months
ended June 30, 1998. These amounts  represent the Company's 50% share of the net
profit or loss of the joint  venture.  The loss  recognized in the first half of
1999  reflects  the higher  level of  pre-opening  costs  incurred  by the joint
venture.  The first half 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 $2,094,514 for
the three  months ended June 30, 1999  compared  with  $1,527,891  for the three
months ended June 30, 1998 and a net loss of $3,732,536 for the six months ended
June 30, 1999 compared with  $3,025,879  for the six months ended June 30, 1998.
The net loss  included  non-cash  items  of  $523,084  for the 1999  three-month
period,  $352,126  for the  1998  three-month  period,  $840,069  for  the  1999
six-month period and $804,148 for the 1998 six-month period.  The increased loss
was  attributable   primarily  to  the  increases  in   manufacturing,   process
development and selling and administrative expenses.

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 June 30,  1999,  the Company had
approximately  $177,000 of available cash  resources.  In July 1999, the Company
closed on the third and final  tranche of $450,000 of the $1.4 million term note
series, which tranche is due on January 24, 2000, payable at maturity in cash or
common  stock  at the  Company's  option.  However,  the  Company  will  require
additional funding to cover current operations and to fund additional production
equipment  purchases,  which will require an average of $500,000 per month based
on projected levels of production,  sales and capital expenditure  requirements,
until revenues from operations are sufficient.

     The Company is negotiating  currently for additional funding from financial
sources and strategic  partners.  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.

                                       10

<PAGE>

Six Months Ended June 30, 1999 Compared with Six Months Ended June 30, 1998

     Net cash and cash  equivalents  used in operating  activities  increased to
$2,528,228  for the six months ended June 30, 1999 from  $1,240,669  for the six
months  ended June 30,  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 six months ended June 30, 1998,
with $877,808 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 accounts payable, deferred salaries,  accrued interest
and  expenses  for this same  period  were  partially  offset by a  increase  in
accounts receivable and accounts receivable due from the Canadian joint venture.

     Net cash and cash  equivalents  used in  investing  activity  decreased  to
$241,506 for the six months ended June 30, 1999,  compared with $497,105 for the
six months  ended June 30,  1998,  reflecting a decrease in the level of capital
expenditures  for property and  equipment,  which included  advance  payments on
construction-in-progress.

     Cash flows from financing  activities  decreased slightly to $2,844,268 for
the six months ended June 30,  1999,  from  $2,865,705  for the six months ended
June 30, 1998. 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  $779,000,  net of expenses.
The payment of $200,000 of loans in 1999, relate to two bridge loans made to the
Company,  which were repaid  following the receipt of the funds from the private
placement.  The sale of the 7% Series B convertible  preferred stock,  realizing
$1,900,000, net of expenses and the sale of stock to the Taiwanese joint venture
for  $952,500,  net of expenses,  comprised  the  majority of funds  provided by
financing activities in the first half of 1998.

                                       11

<PAGE>

Part II - Other Information

Item 2.  Changes in Securities

     (c) Recent Sales of Unregistered Securities.

     During the month ended June 30, 1999,  the Company  sold 469,520  shares of
its common  stock and  warrants to  purchase  43,750  shares of common  stock at
prices ranging from $1.375 per share to $2.125 per share, exercisable until July
31,  2001,  to  certain  accredited  investors  in a private  placement,  for an
aggregate offering of $750,962.

     In connection with the private  placement,  Trautman  Wasserman & Co. Inc.,
the  placement  agent,  received  cash  commissions  of $60,077 and  warrants to
purchase  98,630 shares of common stock at exercise  prices  ranging from $1.375
per share to $2.125 per share, exercisable until July 31, 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 as  transactions  not involving a public offering and
Rule 506 promulgated thereunder.

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

     a)   On April 21,  1999,  in  connection  with the  closing  of the  second
          tranche  of a $1.4  million  term  note  series,  the  Company  issued
          warrants to purchase:

               (i)  86,000  shares of its  Common  Stock for  $2.647  per share,
                    exercisable  until April 21,  2004 as  investor  warrants to
                    SovCap Equity Partners,  Ltd., Correllus  International Ltd.
                    and Arab Commerce Bank; and

               (ii) 21,500  shares of its  Common  Stock for  $2.647  per share,
                    exercisable until April 21, 2004 as compensation warrants to
                    Sovereign Capital Advisors, LLC, the placement agent.

     b)   On June 11,  1999,  the Company  issued  warrants to purchase  114,103
          shares of its common  stock for  $1.134 per share,  110% of the market
          price  the date of the loan from  Credit  Bancorp,  exercisable  until
          December 29, 2003,  to certain  directors of the Company,  in exchange
          for the pledging of their  shares of the  Company,  in order to secure
          the loan obtained from Credit Bancorp.

     c)   On June 11,  1999,  the Company  issued  warrants to purchase  400,000
          shares of its common stock for $2.20 per share,  representing  110% of
          the market price on the date of the agreement,  exercisable until June
          3, 2002,  to The J.B.  Sutton  Group LLC, in exchange  for  investment
          banking services for a two year period.

                                       12

<PAGE>

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

     The  Company's  1999 Annual  Meeting of  Stockholders  was held on June 22,
1999. The following actions were taken:

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

                                                    For             Withheld
                                                 ----------         --------
          Jonas Medney                           14,067,151          161,566
          Samuel S. Gross                        14,064,262          164,455
          Robert W. Middleton                    14,068,262          160,455
          Fred E. Klimpl                         14,049,762          178,955
          Willard T. Jackson                     14,071,262          157,455
          Heinz-Gerd Reinkemeyer                 14,070,141          158,566
          Christopher F. Johnson                 14,071,262          157,455
          Pierre Laflamme                        14,070,151          158,566
          James W. Taylor                        14,071,262          157,455

2. The selection of Ernst & Young LLP as auditors for the Company for the year
1999 was ratified by a vote of 14,025,837 shares in favor and 63,855 shares
opposed. A total of 139,025 shares abstained from voting.

3. The amendment of Compositech's Amended and Restated Stock Award Plan to
increase by 1,000,000 shares the number of shares of Common Stock authorized for
issuance thereunder, was approved by a vote of 5,487,313 shares in favor and
699,413 shares opposed. A total of 81,024 shares abstained from voting. The
broker non-votes totaled 7,960,967.

                                       13

<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit Number                                 Description
     --------------                                 -----------

     10.14.2   Compositech Ltd. Amended and Restated Stock Award Plan

     10.45     First Amendment to Bridge Note  Purchase  Agreement,  dated April
                  21,  1999,  between the Company and  Purchasers  of the Second
                  Closing  Bridge  Notes

     10.46     Second  Amendment to Bridge Note Purchase  Agreement,  dated July
                  28, 1999, between  the  Company  and  Purchasers of  the Third
                  Closing Bridge Notes

     10.47     Second Amendment to the Registration Rights Agreement, dated July
                  28, 1999, between the Company and the Purchasers of the First,
                  Second and Third Closing Bridge Notes

     10.48     Retirement and Consulting Agreement,  dated May 28, 1999, between
                  the Company and Fred E. Klimpl

     10.49     Supply and Joint  Product  Development  Agreement,  dated June 1,
                  1999, between the Company and Teradyne, Inc. *

     27        Financial Data Schedules ( Edgar version only )


     * Portions  of this  Exhibit  have been  omitted  pursuant to a request for
     confidential  treatment which has been filed separately with the Securities
     and Exchange Commission.

(b)  Reports on Form 8-K

                                                                    Financial
   Date of Report                   Item Reported               Statements Filed
   --------------                   -------------               ----------------
   June 22, 1999            Item 5 - Other Events                      No
                         (Announcing supply and joint development
                             agreement with Teradyne, Inc.'s
                             Connection System Division )

All other  items  required  in Part II have  been  filed  previously  or are not
applicable for the quarter ended June 30, 1999.

                                       14

<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 16, 1999                 /s/ Samuel S. Gross
                                       --------------------------
                                       Executive Vice President, Secretary and
                                       Treasurer
                                       (Principal Accounting Officer and officer
                                       duly authorized to sign this report on
                                       behalf of the registrant)