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

                     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 September 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 November 12, 1999:

         Common Stock $.01 par value                       16,711,056
                  Class                                 Number of shares

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


Transitional Small Business Disclosure Format  (check one):   Yes  |_|  No  |X|


<PAGE>



                                COMPOSITECH LTD.


                                      Index

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

             Balance Sheets as of September 30, 1999 (unaudited) and December 31, 1998............................2

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

             Statements of Cash Flows (unaudited) for the nine-month periods
               ended September 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..................................................................9

Part II - Other Information
---------------------------

Item 2.  Changes in Securities...................................................................................13

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

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

<PAGE>



                                COMPOSITECH LTD.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         September 30      December 31
                                                                                             1999             1998
                                                                                          ------------    ------------
                                                                                          (unaudited)
<S>                                                                                       <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                               $     30,311    $    102,286
  Short-term investments
  Accounts receivable trade - net                                                              182,529          27,273
  Accounts receivable from joint venture                                                        53,510         103,696
  Inventories                                                                                  248,516         254,784
  Prepaid expenses and other                                                                   172,463         165,827
                                                                                          ------------    ------------
        Total current assets                                                                   687,329         653,866

Property and equipment at cost - net                                                         5,365,772       5,721,215
Investment in joint ventures - net of accumulated amortization
         of $35,250 (1999) and $21,750 (1998)                                                5,675,509       5,562,090
Advance payments on construction-in-progress                                                                    16,753
Deferred debt expense - net of accumulated amortization of $273,960 (1999)                     109,496         133,728
Other assets and other deferred charges, net of accumulated amortization
       of $376,154 (1999) and $19,256 (1998)                                                   396,507         151,110
                                                                                          ------------    ------------
Total assets                                                                              $ 12,234,613    $ 12,238,762
                                                                                          ============    ============

LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities:
  Accounts payable                                                                        $  1,561,248    $    637,861
  Deferred salaries                                                                            163,212         194,739
  Accrued interest - all (1998) to stockholders                                                 55,349           5,880
  Other accrued liabilities                                                                    555,148         413,982
  Deferred licensing income                                                                     64,800          64,248
  Loans and notes payable                                                                    2,387,167         438,917
  Notes payable to directors/stockholders                                                       75,000
                                                                                          ------------    ------------
        Total current liabilities                                                            4,861,924       1,755,627

Non-current liabilities:
  Notes payable to directors/stockholders                                                    1,507,500       1,595,000
  Deferred salaries - officers/directors                                                       895,635         814,481
  Accrued interest - directors/stockholders                                                    367,774         248,948
  Capital lease obligations                                                                                      9,235
  Deferred licensing income                                                                    597,583         713,001
  Advances received on sale of common stock                                                    500,000         500,000
                                                                                          ------------    ------------
        Total non-current liabilities                                                        3,868,492       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 - 442,662
   (1999) and 550,995 (1998)                                                                 1,327,986       1,652,985
  Common stock, par value $.01 per share; authorized shares - 50,000,000,
    issued and outstanding shares - 16,710,768 (1999) and 13,150,128 (1998)                    167,108         131,502
  Additional paid-in capital                                                                43,309,017      37,436,677
  Cumulative foreign currency translation adjustment                                          (324,078)       (552,039)
  Deficit                                                                                  (40,289,012)    (33,954,155)
                                                                                          ------------    ------------
                                                                                             4,191,021       4,714,970
  Less notes receivable received for issuance of common stock                                 (686,824)       (312,500)
                                                                                          ------------    ------------
    Total stockholders' equity                                                               3,504,197       4,402,470
                                                                                          ------------    ------------
Total liabilities and stockholders' equity                                                $ 12,234,613    $ 12,238,762
                                                                                          ============    ============
</TABLE>

See accompanying notes.


                                       2
<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                           Three Months Ended             Nine Months Ended
                                                                              September 30                   September 30
                                                                       ----------------------------    ----------------------------
                                                                           1999            1998            1999            1998
                                                                       ------------    ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>             <C>
Revenues:
  Sales                                                                $    291,692    $    136,830    $    507,657    $    298,983
  Licensing                                                                  14,105          16,280          42,556          47,856
                                                                       ------------    ------------    ------------    ------------
       Total revenues                                                       305,797         153,110         550,213         346,839

Costs and expenses:
  Manufacturing                                                           1,820,349       1,318,667       4,393,656       3,334,231
  Selling, general and administrative                                       409,328         310,323       1,197,831         933,337
  Research and development                                                   74,842          41,146         222,649         107,056
                                                                       ------------    ------------    ------------    ------------

      Total operating expenses                                            2,304,519       1,670,136       5,814,136       4,374,624
                                                                       ------------    ------------    ------------    ------------

(Loss) from operations                                                   (1,998,722)     (1,517,026)     (5,263,923)     (4,027,785)

Other income (expenses):
  Interest income                                                            13,207          16,972          33,786          47,932
  Interest expense, net of interest capitalized                             (95,730)         21,909        (213,250)       (125,251)
  Amortization of debt premium/discount and expenses                       (461,661)                       (698,963)       (497,603)
  Loss on disposal of property and equipment                                                                                 (8,360)
  Other income (expense)                                                     (5,587)         20,020         (91,465)         75,816
                                                                       ------------    ------------    ------------    ------------
                                                                           (549,771)         58,901        (969,892)       (507,466)
                                                                       ------------    ------------    ------------    ------------
(Loss) from operations before equity in operations of joint venture      (2,548,493)     (1,458,125)     (6,233,815)     (4,535,251)

Equity in operations of joint venture                                       (53,828)         23,687        (101,042)         74,934
                                                                       ------------    ------------    ------------    ------------
   Net (loss)                                                            (2,602,321)     (1,434,438)     (6,334,857)     (4,460,317)

Preferred stock dividends                                                                   102,212          15,692         367,330
                                                                       ------------    ------------    ------------    ------------
   (Loss) attributable to common stockholders                          ($ 2,602,321)   ($ 1,536,650)   ($ 6,350,549)   ($ 4,827,647)
                                                                       ============    ============    ============    ============

(Loss) per common share - basic and diluted                            ($      0.16)   ($      0.12)   ($      0.40)   ($      0.43)
                                                                       ============    ============    ============    ============

Shares used in computing (loss) per common share                         16,608,458      12,457,706      15,681,582      11,241,770
                                                                       ============    ============    ============    ============
</TABLE>

See accompanying notes.


                                       3
<PAGE>

                                COMPOSITECH LTD.
                            STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                         September 30
                                                                                  --------------------------
                                                                                     1999           1998
                                                                                  -----------    -----------
<S>                                                                               <C>            <C>
Cash Flows from Operating Activities
Net (loss)                                                                        ($6,334,857)   ($4,460,317)
Adjustments to reconcile net (loss) to net cash and
  cash equivalents used in operating activities:
    Depreciation and amortization, including capital leases                           856,630        524,900
    Loss on disposal of property and equipment                                                         8,360
    Amortization of debt premium/discount and expenses                                698,963        497,603
    Issuance of common stock as compensation to non-employee directors                 24,502
    Equity in net (income) loss of joint venture                                      101,042        (74,934)
    Changes in operating assets and liabilities:
       Accounts receivable trade - net                                               (155,256)        (7,507)
       Accounts receivable from joint venture                                          50,186        103,764
       Inventories                                                                      6,268         72,869
       Prepaid expenses and other                                                      (6,136)       (47,200)
       Other assets and other deferred charges                                         40,568         (8,362)
       Accounts payable                                                               923,387       (162,147)
       Deferred salaries                                                               49,627        229,464
       Accrued interest                                                               168,295         91,360
       Deferred licensing income                                                     (114,866)       813,581
       Other accrued liabilities                                                      248,314         22,183
                                                                                  -----------    -----------
          Net cash and cash equivalents (used) in operating activities             (3,443,333)    (2,396,383)

Cash Flows from Investing Activities
Purchase of property and equipment - net                                             (331,792)      (733,586)
Investment in joint ventures                                                                        (467,487)
Patent costs deferred                                                                 (18,866)        (7,929)
                                                                                  -----------    -----------
          Net cash and cash equivalents (used in) investing activities               (350,658)    (1,209,002)

Cash Flows from Financing Activities
Net proceeds from issuance of common stock                                          2,277,535        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                                           1,679,682
Advance received on sale of common stock                                                             500,000
Payment of capital lease obligations                                                  (23,983)       (32,289)
Payment of loans and notes payable                                                   (212,500)
                                                                                  -----------    -----------
        Net cash and cash equivalents provided by financing activities              3,722,016      3,354,831
                                                                                  -----------    -----------
        (Decrease) in cash and cash equivalents                                       (71,975)      (250,554)
        Cash and cash equivalents at beginning of period                              102,286        624,254
                                                                                  -----------    -----------
        Cash and cash equivalents at end of period                                $    30,311    $   373,700
                                                                                  ===========    ===========

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
                                                                                  ===========    ===========
  Issuance of common stock as compensation to non-employee directors              $    24,502
                                                                                  ===========

Cash paid for:
  Interest                                                                        $    60,742    $    92,390
                                                                                  ===========    ===========
</TABLE>


See accompanying notes.


                                       4
<PAGE>

                                COMPOSITECH LTD.


                          Notes to Financial Statements
                                   (Unaudited)

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

Note 2 - Common Stock Issuances and Stock Options

     During the nine months ended September 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  494,689  shares of common
stock at prices  ranging  from  $1.188 per share to $2.50 per share,  the market
value of the  common  stock  on the  date of the  grant,  including  options  to
purchase  151,000  shares of common stock which are  cancelable if certain goals
are not achieved.

     During the nine months  ended  September  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.


                                       5
<PAGE>


     During the nine months  ended  September  30, 1999,  108,333  shares of the
Series A convertible  preferred stock were converted at the existing  conversion
rate  into  54,166  shares  of  common   stock,   resulting  in  a  decrease  in
stockholders'  equity  relating  to  Series  A  convertible  preferred  stock of
$324,999,  an increase in stockholders'  equity relating to common stock of $542
and an increase in additional paid-in capital of $324,457.

     During the nine  months  ended  September  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 nine months ended September 30, 1999, the Company sold 1,644,088
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 private  placements,
realizing  approximately $2.3 million, net of expenses. In connection with these
private  placements,  the Company issued warrants to purchase  688,308 shares of
common  stock at prices  ranging  from  $1.125 to $2.25 per  share,  exercisable
principally two years after the purchase of the common stock.

     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.

     During  July 1999,  warrants to purchase  271,991  shares of the  Company's
common stock were exercised,  at prices ranging from $1.125 per share to $2.6125
per share, in exchange for notes receivable in the amount of $404,324,  maturing
on September 1, 2000,  resulting in an increase in stockholders' equity relating
to common  stock of $2,720 and an  increase  in  additional  paid-in  capital of
$401,604.

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 7.04%),  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.

     During 1999, the Company borrowed  $1,380,000 under a term note series (the
"Term  Notes")  as a bridge  to a future  financing.  The notes are due 180 days
after  issuance,  are  collateralized  by certain  production  equipment and are
payable at maturity in cash or common stock at the  Company's  option.  Warrants
issued in connection  with the financing  were priced at 110% of the closing bid
price of the  Company's  common  stock  on the  dates  of the  closings  and are
exercisable for five years.  The estimated fair market value of the warrants are
being  amortized over the term of the notes.  See Note 4 regarding  extension of
the due dates of the Term Notes.


                                       6
<PAGE>

     Details of the individual closings are as follows :

<TABLE>
<CAPTION>
                                                March 16,          April 21,        July 28,
                                                 1999                1999            1999
                                               --------------------------------------------------
<S>                                                    <C>               <C>                <C>
    Principal                                     $ 500,000         $ 430,000        $ 450,000
    Number of warrants                              125,000           107,500          112,500
    Exercise price of warrants                      $ 2.372           $ 2.647          $ 2.131
    Fair market value of warrants                  $ 73,267          $ 88,688         $ 62,635
</TABLE>

     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  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.

     In August 1999, the Company obtained  extensions on the due dates, to April
2,  2001,  on  $1,420,000  of  loans  and  notes  payable  to  stockholders  and
officers/directors,  $879,385 of deferred  salaries due to officers and $367,774
(as of September 30, 1999) in accrued interest due to officers, stockholders and
directors. In exchange for the extension of the due dates on the notes and loans
payable and the  accruable  interest as of December 31,  1999,  the Company will
issue  warrants to purchase  182,252 shares of common stock at an exercise price
per share of $1.272,  equaling the price of warrants issued in connection with a
recently  concluded  financing  transaction.  The warrants are exercisable until
August 2004.

     In August and  September  of 1999,  the Company sold a total of $343,000 of
short term bridge notes,  realizing $315,560,  net of commissions,  in a private
placement.  In connection with this transaction,  the Company issued warrants to
purchase  115,750  shares of its common stock at prices  ranging from $1.188 per
share to $1.563  per  share,  exercisable  for two  years  after the date of the
notes.

Note 4 - Subsequent Events

     In October 1999,  the Company sold a total of $300,000 of short term bridge
notes,  realizing  $276,000,  net of  commissions,  in a private  placement.  In
connection with this  transaction,  the Company issued or will issue warrants to
purchase  112,500  shares of its common  stock at exercise  prices  ranging from
$1.094 to $1.245  per  share,  exercisable  until two years from the date of the
notes.

     The Company has agreed with the holders of the Term Note series, originally
closed  in three  tranches  in March,  April and July of 1999 to extend  the due
dates of all the notes issued in that  transaction  to March 31,  2000,  and the
holders and the placement  agent have agreed not to exercise any warrants issued
in connection with this transaction until that date,  subject to the sale of the
Series C 8%  Convertible  Preferred  Stock,  par  value  $0.01,  the  "Series  C
Preferred Stock", in the aggregate amount of $2 million.  In connection with the
extension,  the Company will issue new term notes with terms  similar to the old
notes in an aggregate amount of approximately $2,065,000,  representing the face
amount  of the  original  term  notes,  plus  the  redemption  premium,  accrued
interest,  a 20% premium in lieu of repricing rights and related fees. The notes
will be payable at maturity in cash or common stock, at the Company's option. In
connection


                                       7
<PAGE>

with this  refinancing,  the Company will issue  warrants,  including  placement
agent  warrants,  to purchase  approximately  316,871  shares of common stock at
$1.20 per share,  representing 110% of the closing bid price of the stock on the
date of negotiation, exercisable until October 2004.

     On November 5, 1999,  the Company sold 54,000  shares of Series C Preferred
Stock for $540,000.  In connection with the closing, the Company issued and will
issue warrants,  including placement agent warrants,  to purchase 129,000 shares
of common stock at $1.272 per share,  representing 110% of the closing bid price
of the stock on the date of closing.  The Company  anticipates  the issuance and
sale of an  additional  146,000  shares of Series C  Preferred  Stock with gross
proceeds of $1,460,000.


                                       8
<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 nine months 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.  In 1999,  production ramp up has been affected due to difficulties in
hiring and training skilled  operators due to the labor shortage on Long Island.
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
or produced by those companies, respectively.

     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.

     In September  1999, the Company  announced that Tyco  International  Ltd.'s
Tyco-Santa Clara unit received  approval from  Underwriters  Laboratories to use
Compositech's  CL200+  laminates to  manufacture  printed  circuit  boards.  The
Company has been receiving  orders from  Tyco-Santa  Clara as well as other Tyco
units.

     Also in September  1999,  the Company  announced that  electrical  property
tests  performed  by an  independent  laboratory  to  determine  the  dielectric
constant and dissipation  factor of Compositech's  CL200+ laminates  resulted in
performance measurements  approximately equivalent to epoxy/PPO laminates.  This
type of laminates are used in the rapidly  growing  high-


                                       9
<PAGE>

performance  segment  of the  electronics  market  where a premium  is placed on
electrical performance.

Results of Operations

     Sales of  laminates  increased  to  $291,692  for the  three  months  ended
September  30, 1999 from $136,830 for the three months ended  September  30,1998
and to $507,657 for the nine months ended  September  30, 1999 from $298,983 for
the nine months ended  September  30, 1998.  Sales for the third quarter of 1999
included the initial shipments under the supply agreement with Teradyne.

     Research and development expenses increased to $74,842 for the three months
ended  September 30, 1999 from $41,146 for the three months ended  September 30,
1998 and to $222,649 for the nine months ended  September 30, 1999 from $107,056
for the nine months ended September 30, 1998, reflecting the company's increased
development efforts on improved manufacturing methods.

     Manufacturing  expenses  increased to $1,820,349 for the three months ended
September 30, 1999 from $1,318,667 for the three months ended September 30, 1998
and to $4,393,656 for the nine months ended  September 30, 1999 from  $3,334,231
for the nine months ended  September 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 recruiting and training of additional manufacturing personnel and related
expenses,  in anticipation of increased sales.  Depreciation expense, a non-cash
item,  increased to $686,689 for the nine months ended  September  30, 1999 from
$484,332 for the nine months ended  September  30, 1998,  reflecting  the higher
level of production equipment placed in service during the past year.

     Selling,  general and administrative expenses increased to $409,328 for the
three months ended  September  30, 1999 from $310,323 for the three months ended
September  30, 1998 and to  $1,197,831  for the nine months ended  September 30,
1999 from $933,337 for the nine months ended  September  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.  Professional fees, consulting costs and investor
relations  expense  increased by approximately  $239,000 due primarily to higher
legal expenses and higher financial  public relations costs,  which included the
amortization  of  approximately  $104,000 of the estimated  fair market value of
warrants given to a consulting  firm in exchange for public  relations  services
for the  calendar  year 1999.  Included  in the total for the 1999  periods is a
non-cash item of $24,500  representing the  compensation  costs for non-employee
directors,  which the Company will pay in shares of its common stock. During the
first nine  months of 1999,  approximately  $393,000  of  selling,  general  and
administrative   expenses  were  charged  to  the  Canadian  joint  venture,  in
accordance with the joint venture agreements,  compared with $297,000 of charges
in the nine months ended September 30, 1998.

     Interest expense,  net of interest  capitalized,  increased to $213,250 for
the nine months ended September 30, 1999 from $125,251 for the nine months ended
September  30,  1998.  The increase is related to the addition of the Term Notes
and the short  term  bridge  notes in 1999.  The 1998  period  also  included  a
reduction of $66,000,  due to the  capitalization of interest on construction in
progress;  the 1999 period  included only a $23,000  reduction,  reflecting  the

                                       10
<PAGE>

reduced level of construction in progress projects during 1999.  Amortization of
debt  premium/discount  and  expenses  was  $461,661  for the three months ended
September  30,  1999,  and  increased  to  $698,963  for the nine  months  ended
September 30, 1999 from  $497,603 for the nine months ended  September 30, 1998.
The expense for the nine months ended  September 30, 1999  includes  $551,192 of
amortization of debt premium,  expenses and warrants  granted in connection with
the Term Notes.  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 $91,465 for the nine months ended September 30,
1999 from ($75,816) for the nine months ended September 30, 1998. The nine-month
period ended  September  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.

     The equity in the operations of the Canadian  joint venture  decreased to a
loss of $53,828 for the three months ended  September 30, 1999, from a profit of
$23,687 for the three months ended  September 30, 1998 and to a loss of $101,042
for the nine months  ended  September  30, 1999 from a profit of $74,934 for the
nine months ended September 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
1999 periods reflect the higher level of pre-opening costs incurred by the joint
venture,  including  the  hiring of the  general  manager  and  chief  financial
officer.  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 $2,602,321 for
the three months ended September 30, 1999 compared with $1,434,438 for the three
months ended September 30, 1998 and a net loss of $6,334,857 for the nine months
ended  September  30, 1999 compared  with  $4,460,317  for the nine months ended
September  30, 1998.  The net loss included  non-cash  items of $841,068 for the
1999 three-month period,  $151,781 for the 1998 three-month  period,  $1,681,137
for the 1999 nine-month period and $955,929 for the 1998 nine-month  period. The
increased  loss was  attributable  primarily to the increases in  manufacturing,
process  development  and selling and  administrative  expenses,  as well as the
large increase in non-cash amortizations.

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 September 30, 1999, the Company had
approximately $30,000 of available cash resources.  In October 1999, the Company
sold an additional $300,000 of short term bridge notes. On November 5, 1999, the
Company sold  $540,000 of Series C Preferred  Stock and  anticipates  selling an
additional $1,460,000.  No assurances can be given that the additional financing
will be completed. However, the Company will require additional funding to cover
current operations and to fund additional production


                                       11
<PAGE>

equipment purchases, based on projected levels of production,  sales and capital
expenditure  requirements,  until  revenues from  operations  are sufficient for
these purposes.

     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.

Nine Months Ended  September 30, 1999 Compared with Nine Months Ended  September
30, 1998

     Net cash and cash  equivalents  used in operating  activities  increased to
$3,443,333 for the nine months ended  September 30, 1999 from $2,396,383 for the
nine months ended  September 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 nine months ended  September
30, 1998,  with  $813,581  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.

     Net cash and cash  equivalents  used in  investing  activity  decreased  to
$350,658 for the nine months ended September 30, 1999,  compared with $1,209,002
for the nine months ended September 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  increased to $3,722,016 for the nine
months ended  September  30,  1999,  from  $3,354,831  for the nine months ended
September 30, 1998. The primary sources of the funds, net of expenses,  provided
by financing  activities in the nine-month  period ended September 30, 1999 were
the private placements of the Company's common stock,  totaling $2,277,535,  the
sale of the Term Notes,  totaling  $1,150,621,  net of expenses  and the sale of
short-term bridge notes, totaling $315,560,  net of commissions.  The payment of
$212,500  of loans in 1999,  relate  primarily  to two  bridge  loans,  totaling
$200,000,  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 1998 period.


                                       12
<PAGE>

Part II - Other Information

Item 2.  Changes in Securities

     (c) Recent Sales of Unregistered Securities.

     During the month ended July 31, 1999,  the Company  sold 100,000  shares of
its common  stock and warrants to purchase  15,000  shares of common stock at an
exercise price of $2.25 per share,  exercisable  until July 31, 2001, to certain
accredited  investors  in a private  placement,  for an  aggregate  offering  of
$225,000.  In connection with the private  placement,  Trautman  Wasserman & Co.
Inc., the placement agent,  received cash commissions of $18,000 and warrants to
purchase  25,000 shares of common stock at an exercise price of $2.25 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 July 28,  1999,  in  connection  with the  closing of the third and
          final tranche of a term note series,  the Company  issued  warrants to
          purchase:

          (i)  90,000   shares  of  its  Common  Stock  for  $2.131  per  share,
               exercisable  until July 28, 2004 as  investor  warrants to SovCap
               Equity Partners,  Ltd.,  Correllus  International Ltd. and Bronia
               GmbH; and

          (ii) 22,500   shares  of  its  Common  Stock  for  $2.131  per  share,
               exercisable  until  July 28,  2004 as  compensation  warrants  to
               Sovereign Capital Advisors, LLC, the placement agent.

     b)   In August 1999,  in  connection  with the  extension of due dates,  to
          April 2, 2001, on $1,420,000 of loan and notes payable to stockholders
          and officers/directors and accruable interest as of December 31, 1999,
          the Company issued or will issue  warrants to purchase  182,252 shares
          of its common  stock,  exercisable  until  August  2004 at an exercise
          price of $1.272 per share.

     c)   In August and  September  of 1999,  in  connection  with the sale of a
          series of short term bridge  notes in a private  placement to a number
          of  accredited  investors,  the  Company  issued  warrants to purchase
          115,750  shares of its common  stock at exercise  prices  ranging from
          $1.188 per share to $1.563 per share, exercisable until two years from
          the date of the note.



                                       13
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

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

         3.5        Certificate of  Designation  for the  Company's  Series C 8%
                      Convertible Preferred Stock, filed on November 1, 1999.

         3.6        Certificate of Correction of Certificate of Designation  for
                      the Company's  Series C 8%  Convertible  Preferred  Stock,
                      filed on November 8, 1999.

         10.50      Form of  Promissory  Note  between  the  Company and certain
                      investors in connection with a private  placement of short
                      term bridge  notes  which had its most  recent  closing on
                      October 22, 1999.

         10.51      Convertible Preferred Stock Purchase Agreement,  dated as of
                      November  5, 1999  between  the Company and The Shaar Fund
                      Ltd.

         10.52      Registration  Rights Agreement dated as of November 5, 1999,
                      between the Company and The Shaar Fund Ltd.

         10.53      Common Stock Purchase Warrant dated November 5, 1999 between
                      the Company and The Shaar Fund Ltd.

         10.54      Letter  agreement,  dated  October 27, 1999  concerning  the
                      Bridge Note Purchase  Agreement  between  Compositech  and
                      SovCap Equity Partners, Ltd.

         10.55      Form of Investor Subscription  Agreement between Compositech
                      and  certain   investors  in  connection  with  a  private
                      placement  of  Compositech's  common  stock  which had its
                      final closing on July 27, 1999.

         10.56      Form of Common Stock  Purchase  Warrant issued in connection
                      with Compositech's private placement,  which had its final
                      closing on July 27, 1999.

         27         Financial Data Schedules  ( Edgar version only )



(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 September 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: November 15, 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)


                                       15