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

                     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, 1997

                                       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, 1997:

 Common Stock $.01 par value                                   6,138,939
 ---------------------------                                   ---------
          Class                                             Number of shares

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<PAGE>

                                COMPOSITECH LTD.

                                      Index

<TABLE>
<CAPTION>
Part I - Financial Information                                                       Page
------------------------------                                                       ----
<S>      <C>                                                                           <C>
Item 1.  Financial Statements

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

         Statements of Operations (unaudited) for the three-month periods
           ended March 31, 1997 and 1996................................................3

         Statements of Cash Flows (unaudited) for the three-month periods
           ended March 31, 1997 and 1996................................................4

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

Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations........................................6

Part II - Other Information
---------------------------
Item 6.  Exhibits and Reports on Form 8-K...............................................9

Signature...............................................................................9
</TABLE>



<PAGE>

                                COMPOSITECH LTD.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                         March 31       December 31
                                                                                                           1997            1996
                                                                                                       ------------    ------------
ASSETS                                                                                                  (unaudited)
<S>                                                                                                    <C>             <C>         
Current assets:
  Cash and cash equivalents                                                                            $  1,287,866    $    673,084
  Short-term investments                                                                                               $  2,384,700
  Inventories                                                                                               261,392         217,974
  Accounts receivable trade - net                                                                            24,478          66,293
  Prepaid expenses and other                                                                                 69,348          66,880
                                                                                                       ------------    ------------
        Total current assets                                                                              1,643,084       3,408,931

Property and equipment at cost - net                                                                      4,627,711       3,866,140
Advance payments on construction-in-progress                                                                 27,200         114,712
Other assets and deferred charges                                                                            58,720          58,087
                                                                                                       ------------    ------------
Total assets                                                                                           $  6,356,715    $  7,447,870
                                                                                                       ============    ============

LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities:
  Accounts payable                                                                                     $    565,966    $    691,763
  Deferred salaries - $ 539,904 to officers/stockholders                                                    715,725         715,728
  Accrued interest - stockholders                                                                            99,332          61,816
  Other accrued liabilities                                                                                 232,188         227,889
  Current maturities of  long-term debt - stockholders                                                    1,595,000         100,000
                                                                                                       ------------    ------------
        Total current liabilities                                                                         3,208,211       1,797,196

Long-term debt - stockholders                                                                                             1,495,000

Capital lease obligations                                                                                    84,560          19,336
Other liabilities                                                                                            37,500          37,500
Commitments

Stockholders'  equity :
  Undesignated preferred stock; authorized 4,000,000 shares,
    none issued and outstanding
  Series A convertible preferred stock, par value $3.00 per share; authorized shares - 714,161,
    issued and outstanding shares - 644,161 (1997) and 684,161 (1996)                                     1,932,483       2,052,483
  Common stock, par value $.01 per share; authorized shares - 25,000,000,
    issued and outstanding shares - 6,138,939 (1997) and 6,118,939 (1996)                                    61,389          61,189
  Additional paid-in capital                                                                             22,678,733      22,558,933
  Deficit                                                                                               (21,646,161)    (20,573,767)
                                                                                                       ------------    ------------
    Total stockholders' equity                                                                            3,026,444       4,098,838
                                                                                                       ------------    ------------
Total liabilities and stockholders' equity                                                             $  6,356,715    $  7,447,870
                                                                                                       ============    ============
</TABLE>

See accompanying notes.

                                       2


<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                             March 31
                                                                                 --------------------------------
                                                                                    1997                 1996
                                                                                 -----------          -----------
<S>                                                                              <C>                  <C>        
Revenues:
  Sales                                                                          $   151,999          $    39,985
                                                                                 -----------          -----------
       Total revenues                                                                151,999               39,985
                                                                                 -----------          -----------

Costs and expenses:
  Manufacturing expenses                                                             765,723              682,158
  Selling, general and administrative                                                422,491              267,968
  Research and development                                                            23,008               24,625
                                                                                 -----------          -----------

      Total operating expenses                                                     1,211,222              974,751
                                                                                 -----------          -----------

(Loss) from operations                                                            (1,059,223)            (934,766)

Other income (expenses):
  Interest income                                                                     25,588                8,660
  Interest and amortization of debt expense
   (net of interest capitalized of $4,000 (1997) and $4,000 (1996))                  (40,977)            (217,694)
 Other                                                                                 2,218                7,117
                                                                                 -----------          -----------
                                                                                     (13,171)            (201,917)

( Loss ) before provision  for income taxes                                       (1,072,394)          (1,136,683)
Provision for income taxes
                                                                                 -----------          -----------
Net (loss)                                                                       ($1,072,394)         ($1,136,683)
                                                                                 ===========          ===========
Net (loss) per share                                                             ($     0.16)         ($     0.28)
                                                                                 ===========          ===========

Shares used in computing net (loss) per share                                      6,865,221            4,008,363
                                                                                 ===========          ===========

</TABLE>

See accompanying notes.

                                       3

<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                                           Three Months Ended
                                                                                                                March 31
                                                                                                     -------------------------------
                                                                                                         1997               1996
                                                                                                     -----------        ------------
<S>                                                                                                  <C>                <C>         
Cash Flows from Operating Activities
Net (loss)                                                                                           ($1,072,394)       ($1,136,683)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                                               62,565             63,921
    Write off and amortization of debt financing costs                                                                       75,974
    Changes in operating assets and liabilities:
       Inventories                                                                                       (49,418)           (16,698)
       Accounts receivable - trade                                                                        41,815             22,849
       Prepaid expenses and other                                                                         (2,468)            (2,404)
       Other assets                                                                                         (633)             2,087
       Accounts payable                                                                                 (125,800)           165,906
       Deferred salaries                                                                                                     36,997
       Accrued interest                                                                                   37,516            137,402
       Other accrued liabilities                                                                         (21,813)           (67,163)
                                                                                                     -----------        -----------
          Net cash and cash equivalents  used in operating activities                                 (1,130,630)          (717,812)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                                                (726,800)           (82,133)
Advance payments on construction-in-progress                                                              87,512
Short term investments - maturities                                                                    2,384,700
                                                                                                     -----------        -----------
          Net cash and cash equivalents (used in) provided by investing activities                     1,745,412            (82,133)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                                                                  408,152
Net proceeds from notes payable                                                                                             149,067
Payment received on notes receivable                                                                                        750,000
Payment of notes payable                                                                                                    (20,000)

                                                                                                                        -----------
        Net cash and cash equivalents provided by financing activities                                                    1,287,219
                                                                                                     -----------        -----------
        Increase in cash and cash equivalents                                                          2,261,289            487,274
        Cash and cash equivalents at beginning of period                                                 673,084            925,848
                                                                                                     -----------        -----------
        Cash and cash equivalents at end of period                                                   $ 1,287,866        $ 1,413,122
                                                                                                     ===========        ===========

Supplemental disclosures of cash flow information
Noncash financing activities:
  Capital lease obligations for property and equipment acquisitions                                  $    91,336
                                                                                                     ===========        ===========
Cash paid for:
  Interest                                                                                           $     4,201        $     4,318
                                                                                                     ===========        ===========
</TABLE>


See accompanying notes.

                                       4


<PAGE>

                                COMPOSITECH LTD.

                          Notes to Financial Statements
                                   (Unaudited)

                                 March 31, 1997


Note 1 - Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and  with  the  instructions  to  Form  10-QSB  and  Article  10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Annual Report on
Form  10-KSB for the year ended  December  31,  1996 of  Compositech  Ltd.  (the
"Company"). In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating results for the three-month period ended March 31, 1997 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended December 31, 1997.

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

     The Company requires  additional funding from financing or other sources to
cover  operating  expenses and planned  expenditures  for additional  production
equipment  until  sufficient  revenues  are  generated  to cover such  expenses.
Management is in the process of arranging  additional  financing  anticipated to
net $4.6 million for the  foregoing  purposes.  The foregoing  conditions  raise
substantial  doubt about the  Company's  ability to continue as a going  concern
should the financing not be obtained.  The accompanying  financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

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

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

                                       5

<PAGE>


Note 2 - Stock Options and Series A Convertible Preferred Stock Conversions

     On January 31,  1997,  the Company  granted to  selected  officers  and key
employees  options to purchase 78,500 shares of common stock at $5.75 per share,
the market  value at the date of grant.  The Company also granted to its outside
directors  options to purchase 45,000 shares of common stock at $5.75 per share,
the market value at the date of the grant,  subject to approval by  stockholders
of amendments to the Company's Amended and Restated Stock Award Plan.

     In March 1997,  40,000 shares of the Series A convertible  preferred  stock
were  converted at the  existing  conversion  rate into 20,000  shares of common
stock,  resulting  in a  decrease  in Series A  convertible  preferred  stock of
$120,000,  an  increase in common  stock of $200 and an  increase in  additional
paid-in capital of $119,800.


Note 3 - Net Loss Per Share

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


Item 2.

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

     This Quarterly  Report on Form 10-QSB contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934.  Actual results could differ materially
from those projected in the  forward-looking  statements as a result of a number
of important  factors.  For a discussion of important  factors that could affect
the  Company's  results,  please  refer  to  the  discussions  below  and in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996.

Overview

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

                                       6

<PAGE>

     During 1996 and  continuing  through the first quarter of 1997, the Company
has  been  producing  and  selling  its  laminates  in  limited  quantities  for
qualification  and use in production by its customers.  The quantities  produced
have been limited because of working  capital,  limited amounts of equipment and
production  constraints.  Through December 31, 1996, the Company had been in the
development  stage  because it had not generated  significant  revenues from its
planned principal  operations.  Revenues have been limited over the last several
months  because  production  yields  were  affected by  contamination  caused by
installing new equipment and training new personnel while continuing production,
and by defective  incoming  copper foil.  With the new  production  equipment in
place, the upgrading and training of manufacturing personnel,  with improvements
being  instituted in production and incoming copper  inspection and improvements
in quality being  instituted by copper foil vendors,  significant  revenues from
the sales of laminates are  anticipated to occur in 1997.  Thus, the Company has
concluded that it is no longer in the development stage.

Results of Operations

     Sales of  laminates  increased to $151,199 for the three months ended March
31, 1997 from $39,985 for the three  months  ended March 31, 1996.  The increase
resulted  from  additional  orders of laminates by customers  but was limited by
production constraints referred to above.

     Research  and  development  expenses  were  approximately  the same in each
period.

     Manufacturing  expenses  increased  to $765,723  for the three month period
ended March 31, 1997 from  $682,158  for the three  months ended March 31, 1996,
reflecting  the higher  levels of  production  during  1997 and the  addition of
manufacturing personnel to meet anticipated increases in production levels.

     Selling,  general and administrative expenses increased to $422,491 for the
three months ended March 31, 1997 from $267,968 for the three months ended March
31, 1996. Legal and other expenses related to being a public company in the 1997
quarter  increased  by  approximately  $38,000.  Patent  expenses  increased  by
approximately  $7,000 due  principally  to  increased  activity  in the  further
development of the Company's  international  patent estate. Other increases were
approximately $77,000 in personnel costs and $15,000 in insurance as the Company
increased administrative staffing and commercial activities.

     Interest  and  amortization  of debt  expense  decreased to $40,977 for the
three months ended March 31, 1997 from $217,694 for the three months ended March
31, 1996.  The decrease in 1997 was due to the  repayment of a large  portion of
the Company's debt with the proceeds of the Company's IPO in July 1996.

     The foregoing  resulted in the Company  having a net loss of $1,072,394 for
the three months ended March 31, 1997  compared  with  $1,136,683  for the three
months  ended  March 31,  1996.  Increases  in sales  revenue and  decreases  in
interest  expense were nearly  offset by increases  in  manufacturing,  selling,
general and administrative expenses.

Liquidity and Capital Resources

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

                                       7

<PAGE>

     At March 31, 1997, the Company had cash and cash equivalents of $1,287,866.
In addition, in order to provide funds for the purchase of additional production
equipment and additional  working capital,  the Company is negotiating a private
placement of convertible  debentures which would net approximately $4.6 million.
The Company plans to use a  substantial  portion of such funds for equipment and
the balance for working  capital and  operations  (which  require  approximately
$350,000  a  month  based  on  anticipated  production  rates).  As the  Company
increases  its  production   rates,  it  will  have  increased   operating  cash
requirements  through at least the third quarter of 1997,  before the effects of
expanded production capacity can be realized. Significant revenues from the sale
of laminates are  anticipated to commence in 1997.  Thus the Company  expects to
achieve a positive cash flow during 1997. Such expectation is based on important
assumptions  regarding a number of factors and future events,  some of which are
beyond the Company's  control  including  risks and  uncertainties  described in
reports  and other  documents  filed by the  Company  from time to time with the
Securities and Exchange  Commission.  There can be no assurance that  management
has identified and made appropriate  assumptions  regarding all factors that may
affect the Company's  business in the future.  Beyond 1997, the Company plans to
obtain additional  financing for further expansion from the exercise of warrants
issued as part of the IPO and other prior  financings  or  commercial  financing
sources.

     The  Company  has had  limited  revenues  from the sale of  laminates,  has
incurred significant losses and has had substantial negative cash flow since its
inception.  The Company expects  significant  operating losses and negative cash
flow to continue  through the first half of 1997.  The Company is expanding  its
production capacity and plans to realize significant revenues in 1997. There can
be no assurance  that the Company will  successfully  complete  expansion of its
production  equipment,  achieve  broad  commercial  acceptance of its product or
generate sufficient revenues to achieve profitable operations.

     On March 29, 1996,  the Company signed a Memorandum of  Understanding  with
three Quebec  institutional  investors,  providing for the initiation of certain
studies and  procedures  which may lead to an  investment in the Company for the
purpose  of  forming a joint  venture  for the  establishment  of a plant in the
greater  Montreal area to manufacture  Compositech's  laminates.  On February 6,
1997,  the parties  agreed in principle to an  investment  in the Company and to
form the joint  venture.  The project has  received  financing  commitments  and
agreements are in the drafting stage.

Three  Months  Ended March 31, 1997  Compared  with Three Months Ended March 31,
1996

     Net cash and cash  equivalents  used in operating  activities  increased to
$1,130,630 for the three months ended March 31, 1997 from $717,812 for the three
months ended March 31, 1996.  The principal  reason for the  difference  was the
reduction  in  accounts  payable  for the three  months  ended  March 31,  1997,
reflecting the payment for capital expenditures  invoiced in the previous fiscal
quarter, as compared to an increase in accounts payable during the first quarter
of  1996.  Net  cash  and  cash  equivalents   used  in  investing   activities,
representing  capital  expenditures  for  equipment  and  advance  payments  for
equipment  increased  to $639,288 for the three months ended March 31, 1997 from
$82,133 for the three months ended March 31, 1996.  The increase  resulted  from
design, engineering and construction of additional production modules as part of
the  expansion  program and the upgrading of existing  equipment.  Maturities of
short term U.S.  Government  securities  during the three months ended March 31,
1997 accounted for $2,384,700 of funds provided by investing activities.

                                       8

<PAGE>

     There were no cash  flows from  financing  activities  in the three  months
ended March 31, 1997, as compared to $1,287,219 for the three months ended March
31, 1996.  The  principal  financing  activities in the three months ended March
31,1996  period were the  receipt of net  proceeds  from the  issuance of common
stock in private  placements  of $408,152,  net proceeds  from notes  payable of
$149,067  and the  collection  of  $750,000  of  notes  receivable  received  in
connection with the 10% Secured Note financing in 1995.


Part II - Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits
                     None

(b)      Reports on Form 8-K

                  None

     All other items  required in Part II have been filed  previously or are not
applicable for the quarter ended March 31, 1997.


                                    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 15, 1997                    /s/ Samuel S. Gross
                                       --------------------------------------
                                       Executive Vice President and Treasurer
                                       (Principal Accounting Officer and officer
                                       duly authorized to sign this report on
                                       behalf of the registrant)



                                       9