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Conmat Technologies Inc – ‘PRER14A’ on 8/12/02

On: Monday, 8/12/02, at 12:29pm ET · Accession #: 950116-2-1778 · File #: 0-30166

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/12/02  Conmat Technologies Inc           PRER14A                1:275K                                   St Ives Financial/FA

Revised Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     Revised Preliminary Proxy Solicitation Material      106    428K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information Assumed Liabilities Dissenters Rights Ecesis Forward Looking Statements Incorporation of Certain Documents by Reference License and Asset Purchase Agreement Note Note 14 - Incentive Based Compensation Note 4 - Management's Plan Other Matters Other Shareholder Matters Proposal I Approval of License and Asset Purchase Agreement Proposal Ii Plan of Liquidation and Distribution for Polychem Proxy Statement Purchase Price Revenue Recognition Security Ownership of Management and Principal Shareholders Settlement Agreement Solicitation of Proxies Summary Term Sheet Supply Agreement Unaudited Pro Forma Condensed Consolidated Financial Statements Voting at the Special Meeting; Revocation of Proxies
1	1st Page - Filing Submission
6	Proxy Statement
"	Summary Term Sheet
"	Purchase Price
7	Ecesis
"	Settlement Agreement
8	Voting at the Special Meeting; Revocation of Proxies
9	Additional Information
"	Solicitation of Proxies
"	Forward Looking Statements
10	Proposal I Approval of License and Asset Purchase Agreement
11	Supply Agreement
13	Assumed Liabilities
18	Proposal Ii Plan of Liquidation and Distribution for Polychem
19	Dissenters Rights
20	Unaudited Pro Forma Condensed Consolidated Financial Statements
26	Security Ownership of Management and Principal Shareholders
27	Other Shareholder Matters
28	Other Matters
29	Incorporation of Certain Documents by Reference
38	Revenue Recognition
40	Note 4 - Management's Plan
47	Note 14 - Incentive Based Compensation
57	License and Asset Purchase Agreement
106	Note

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SCHEDULE 14A
(Rule 14a-101)

SCHEDULE 14A INFORMATION

 Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

                                                        [Enlarge/Download Table]

                                                                                                     
Filed by the Registrant |_|                                                                          
Filed by a Party other than the Registrant |_|                                                       
Check the appropriate box:                                                                           
|X| Preliminary Proxy Statement                          |_|  Confidential, For Use of the Commission
                                                              Only (as permitted by Rule 14a-6(e)(2))
|_|  Definitive Proxy Statement                                                                      
|_|  Definitive Additional Materials                                                                 
|_|  Soliciting Material Pursuant to Exchange Act Rule 240.14a-11 or 14a-12                          

 ConMat Technologies, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):                              

|_|  No Fee Required                                                            

|_|  Fee computed on table below per Exchange Act Rules 14(a)-6(i)(1) and 0-11. 
(1) Title of each class of securities to which investment applies:    
N/A                                         
      --------------------------------------------------------------------------

(2) Aggregate number of securities to which investment applies:       

     ---------------------------------------------------------------------------

(3) Per unit price or other underlying value of investment computed   
        pursuant to Exchange Act Rule 0-11: (set forth the amount on which the
filing fee is calculated and state how it was determined.)    

     ---------------------------------------------------------------------------

(4) Proposed maximum aggregate value of investment:                   

     ---------------------------------------------------------------------------

(5) Total Fee paid                                                    

     ---------------------------------------------------------------------------

|X| Fee paid previously with preliminary materials.                             

|_| Check box if any part of the fee is offset as provided by Exchange Act Rule 
0-11(a)(2) and identify the filing for which the offsetting fee was paid        
previously. Identify the previous filing by registration statement number, or   
the Form or Schedule and the date of its filing.                                

(1) Amount Previously Paid:                                           

(2) Form, Schedule or Registration Statement No.:                     

(3) Filing Party:                                                     

(4) Date Filed:                                                       

PRER14A 2nd Page of 106 TOC 1st Previous Next ↓Bottom Just 2nd
 ConMat Technologies, Inc.
Franklin Avenue and Grant Street
Phoenixville, PA 19460

________, 2002

DEAR FELLOW SHAREHOLDER:                                                        

       You are cordially invited to attend a special meeting of shareholders
(the "Special Meeting") of ConMat Technologies, Inc. ("ConMat") to be held on   
_________, 2002 at 10:00 a.m., local time at the offices of Klehr, Harrison,    
Harvey, Branzburg & Ellers LLP, 260 South Broad Street, Philadelphia,           
Pennsylvania.                                                                   

    Details of the business to be conducted at the Special Meeting are
given in the attached Notice of Special Meeting and Proxy Statement.            

       We look forward to seeing you at the Special Meeting and we urge your
favorable vote on the proposals in this Proxy Statement.                        

      Whether or not you are planning to attend, we urge you to return the
enclosed proxy at your earliest convenience.                                    

          Sincerely,

                        /s/ Edward F. Sager, Jr.

                            Edward F. Sager, Jr.
                 President

PRER14A 3rd Page of 106 TOC 1st Previous Next ↓Bottom Just 3rd
 ConMat Technologies, Inc.
Franklin Avenue and Grant Street
Phoenixville, PA 19460

 -------------------------

 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 To Be Held On _________, 2002

To the Shareholders of ConMat Technologies, Inc. ("ConMat"):                    

A special meeting of shareholders (the "Special Meeting") of ConMat will be held
on _________, 2002, at 10:00 a.m., local time at the offices of Klehr, Harrison,
Harvey, Branzburg & Ellers LLP, 260 South Broad Street, Philadelphia,           
Pennsylvania, for the following purposes:                                       

       o  To consider and vote upon a proposal to approve the sale of all of
    Polychem's product lines of custom engineered plastic molded
        products and certain related assets (the "Sale") pursuant to the
       License and Asset Purchase Agreement, dated March 20, 2002 (the
     "License and Asset Purchase Agreement"), by and among ConMat,
           Polychem Corporation, a Pennsylvania corporation and a wholly owned
            subsidiary of ConMat ("Polychem") and Ecesis LLC, a Delaware limited
liability company ("Ecesis");                           

       o  To consider and vote upon a plan of liquidation and dissolution of
         Polychem (the "Liquidation") that will authorize: (i) the sale of
         Polychem's remaining assets after the closing of the Sale on such
         terms and conditions as the Board of Directors deems appropriate,
            (ii) the distribution of any proceeds to ConMat after payment of the
           Company's creditors, and (iii) the dissolution of Polychem pursuant
to the Pennsylvania Business Corporation Law; and       

    o  To transact such other business as may properly come before the
    Special Meeting and any or all adjournments or postponements
thereof.                                                

The Sale and the Liquidation will result in the sale of substantially all of the
operating assets of Polychem, ConMat's sole subsidiary. The License and Asset   
Purchase Agreement provides that the closing of the Sale requires the approval  
of the shareholders of ConMat. The approval of the Sale will require the        
affirmative vote of a majority of the outstanding shares of ConMat common stock 
who are entitled to vote at the Special Meeting.                                

Ecesis is a Delaware limited liability company that was formed to purchase      
Polychem's product lines. Two of ConMat's former directors and officers, Paul A.
DeJuliis and Richard R. Schutte, are members of Ecesis. Odyssey Capital Group,  
L.P., a former shareholder of ConMat, is also a member of Ecesis.               

Director Edward F. Sager, Jr. (the "Disinterested Director"), was authorized by 
the Board of Directors to negotiate the License and Asset Purchase Agreement on 
behalf of ConMat and to consider the fairness of the proposed agreement to the  
shareholders of ConMat. The Disinterested Director is not a member of Ecesis and
was not an employee of ConMat prior to March 13, 2002.                          

Ogorek & Company has issued a fairness opinion to the effect that the Sale is   
fair to ConMat's shareholders. A copy of the fairness opinion is included as    
Annex B to the accompanying Proxy Statement.                                    

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Based upon the recommendation of the Disinterested Director and the fairness    
opinion, the Board of Directors recommends that the shareholders of ConMat vote 
"FOR" the approval and adoption of the Sale.                                    

In addition, the Board of Directors recommends that the shareholders of ConMat  
vote "FOR" the Liquidation.                                                     

Under Florida law, the holders of ConMat common stock have a right to dissent   
from approving the Sale and the Liquidation and receive the "fair value" of     
their shares upon compliance with the requirements of the Florida Business      
Corporation Act. This right is explained more fully under "Dissenters Rights" in
the accompanying Proxy Statement. The dissenters' rights provisions of Florida  
law are included as Annex E to the accompanying Proxy Statement.                

Please refer to the accompanying Proxy Statement for a more complete description
of the matters to be considered at the Special Meeting. The Board of Directors  
of ConMat has fixed the close of business on May 1, 2002 as the record date for 
determining the shareholders entitled to receive notice of and to vote at the   
Special Meeting and at any and all adjournments or postponements thereof.       

Management welcomes your attendance at the Special Meeting. Whether or not you  
expect to attend the Special Meeting in person, you are requested to complete,  
sign, date and promptly return the enclosed proxy in the accompanying           
postage-paid envelope. The prompt return of your proxy will save expenses       
involved in further communication. Your proxy will not affect your right to vote
in person if you attend the Special Meeting.                                    

                                        By Order of the Board of Directors

                              /s/ Edward F. Sager, Jr.

                      Edward F. Sager,
               President

 Your vote is important.
To vote your shares, please sign, date and complete the enclosed proxy
and mail it promptly in the enclosed, postage paid return envelope. 

2 

PRER14A 5th Page of 106 TOC 1st Previous Next ↓Bottom Just 5th
 TABLE OF CONTENTS

SUMMARY TERM SHEET.............................................................1

VOTING AT THE SPECIAL MEETING; REVOCATION OF PROXIES...........................3

ADDITIONAL INFORMATION.........................................................4

SOLICITATION OF PROXIES........................................................4

FORWARD LOOKING STATEMENTS.....................................................4

PROPOSAL I APPROVAL OF LICENSE AND ASSET PURCHASE AGREEMENT....................5

PROPOSAL II PLAN OF LIQUIDATION AND DISTRIBUTION FOR POLYCHEM.................13

DISSENTERS RIGHTS.............................................................14

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...............15

SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS...................21

OTHER SHAREHOLDER MATTERS.....................................................22

OTHER MATTERS.................................................................23

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................24

Annex A - License and Asset Purchase Agreement, Dated as of March 20, 2002      
    By and Among ConMat Technologies, Inc., Polychem Corporation and
Ecesis LLC                                                  

Annex B - Fairness Opinion of Ogorek & Company                                  

Annex C - Settlement Agreement dated as of October 25, 2001 and modified        
December 5, 2001 among ConMat Technologies, Inc., Polychem  
      Corporation, Paul A. DeJuliis, Esq., as the Chapter 11 Trustee for
The Eastwind Group, Inc.                                    

Annex D - Plan of Liquidation and Distribution for Polychem Corporation         

Annex E - Florida Law related to Dissenter's Rights                             

PRER14A 6th Page of 106 TOC 1st Previous Next ↓Bottom Just 6th
 ConMat Technologies, Inc.
Franklin Avenue and Grant Street
Phoenixville, PA 19460

------------------------------

 PROXY STATEMENT

------------------------------

     The enclosed proxy is solicited by the Board of Directors of ConMat
Technologies, Inc., a Florida corporation ("ConMat"), for use at a special      
meeting of shareholders (the "Special Meeting") of ConMat to be held on         
_________, 2002, at 10:00 a.m., local time, at the offices of Klehr, Harrison,  
Harvey, Branzburg & Ellers LLP, 260 South Broad Street, Philadelphia,           
Pennsylvania, or any adjournments or postponements thereof. This Proxy Statement
and accompanying proxy are first being mailed to ConMat's shareholders on or    
about _________, 2002.                                                          

SUMMARY TERM SHEET

      This section summarizes selected information about the proposed sale
(the "Sale") of the product lines of Polychem Corporation, a wholly owned       
subsidiary of ConMat ("Polychem"), to Ecesis LLC ("Ecesis") and the subsequent  
liquidation and distribution of the remaining assets of Polychem (the           
"Liquidation"), each of which are more fully set forth in this Proxy Statement. 
This section may not contain all of the information that is important to you. To
more fully understand the Sale and the Liquidation, we strongly encourage you to
read carefully this entire Proxy Statement. A copy of the License and Asset     
Purchase Agreement is included as Annex A to this Proxy Statement. A copy of the
Plan of Liquidation adopted by the Board of Directors of Polychem is included as
Annex D to this Proxy Statement.                                                

The Sale:                 ConMat's wholly owned subsidiary Polychem has agreed  
(See page 7)              to sell its molded plastics product lines to Ecesis   
                  pursuant to the terms of the License and Asset
                       Purchase Agreement. Ecesis will also assume certain
                   liabilities of Polychem. Prior to obtaining the
                         approval of ConMat's shareholders to the Sale and the
                 satisfaction of the other closing conditions,
                Polychem has licensed to Ecesis the right to
                        manufacture and market the product lines pursuant to
               the terms of the License and Asset Purchase
                         Agreement. In the event that ConMat's shareholders do
                        not approve the Sale, the license will terminate and
                        Polychem will resume direct marketing of the product
lines.                      

Purchase Price:           Polychem will receive approximately $1,650,000 from   
(See page 8)              Ecesis for the product lines, consisting of $500,000  
                         in cash paid at closing of the Sale, and a $1,150,000
                    secured promissory note delivered to Polychem at
                         closing. In addition, Ecesis will deliver to Polychem
                       399,826 shares of ConMat's Series C Preferred Stock
                     and warrants to purchase 382,500 shares of ConMat
                     common stock owned by Ecesis. Polychem intends to
                       distribute to ConMat the net proceeds from the Sale
                   after satisfaction of its remaining liabilities
        pursuant to the Plan of Liquidation.

PRER14A 7th Page of 106 TOC 1st Previous Next ↓Bottom Just 7th
Polychem:                 Polychem is a Pennsylvania corporation and wholly     
(See page 7)              owned subsidiary of ConMat. Polychem's primary        
                    business is the manufacturing and marketing of a
                variety of molded plastic products for water
                      treatment plants and other specialty applications.

Ecesis:                   Ecesis is a Delaware limited liability company. Two   
(See page 7)              of ConMat's and Polychem's former directors and       
                      officers, Paul A. DeJuliis and Richard R. Schutte,
                       are members of Ecesis. Messrs. DeJuliis and Schutte
                    resigned as directors and officers of ConMat and
                     Polychem on March 13, 2002 in connection with the
               execution of the License and Asset Purchase
Agreement.                  

Settlement Agreement:     ConMat, Polychem and Paul A. DeJuliis are parties to  
(See page 10)             a Settlement Agreement, dated October 25, 2001 and    
                   modified December 5, 2001, with John W. Morris,
                       Esquire, Chapter 11 Trustee for The Eastwind Group,
                      Inc. (the "Settlement Agreement"), relating to the
                  settlement of certain claims currently pending
                        against ConMat, Polychem and Paul A. DeJuliis. Under
                     the terms of the Settlement Agreement, ConMat has
                     agreed to pay $1,500,000 to settle various claims
                       asserted against ConMat, Polychem and Mr. DeJuliis.
                   ConMat intends to use proceeds from the Sale to
                satisfy its obligations under the Settlement
                    Agreement. A copy of the Settlement Agreement is
                included in this Proxy Statement as Annex C.

Future Operations:        Following the Sale and Liquidation, ConMat shall      
(See page 6)              continue as a public company and the Board of         
                        Directors shall actively seek to acquire an interest
                        in one or more operating businesses that it believes
                will be profitable to ConMat's shareholders.

Fairness Opinion:         Ogorek & Company has issued a fairness opinion to the 
(See page 6)              effect that the Sale is fair to the shareholders of   
                         ConMat. A copy of the fairness opinion is included in
    this Proxy Statement as Annex B.

Required Vote:            Holders of a majority of the shares of common stock   
(See page 13)             entitled to vote at the Special Meeting must vote to  
                     approve the Sale and Liquidation in order for the
proposals to be approved.   

Recommendation of Board   The Board of Directors authorized director Edward F.  
of Directors to Sale:     Sager, Jr. (the "Disinterested Director"), to act on  
(See page 12)             behalf of ConMat with respect to entering into the    
                    License and Asset Purchase Agreement because the
                        other two directors had a conflict of interest since
                       they were also members of Ecesis. The Disinterested
                     Director is not a member of Ecesis and was not an
                   employee of ConMat prior to March 13, 2002. The
                      Disinterested Director recommended to the Board of
                    Directors that it should approve the License and
                      Asset Purchase Agreement because it is fair to the
                  shareholders of ConMat. The Board of Directors
                         recommends that the shareholders of ConMat vote "FOR"
                  the approval of the License and Asset Purchase
Agreement.                  

2 

PRER14A 8th Page of 106 TOC 1st Previous Next ↓Bottom Just 8th
Plan of Liquidation and     Provided the shareholders of ConMat approve the     
Distribution of Polychem:   Sale, following the Sale, Polychem will liquidate   
(See page 13)               its assets and dissolve pursuant to the Plan of     
Liquidation.            

Recommendation of           The Board of Directors recommend that you vote      
Board of Directors:         "FOR" the approval of the Liquidation of Polychem.  
(See page 14)                                                                   

VOTING AT THE SPECIAL MEETING; REVOCATION OF PROXIES

       The Board of Directors has fixed the close of business on [________],
2002 as the record date (the "Record Date") for determining the shareholders    
entitled to notice of and to vote at the Special Meeting. As of the Record Date 
there were [________] shares of common stock issued and outstanding, each of    
which is entitled to one vote as to all matters to be acted upon at the Special 
Meeting. The presence, in person or by properly executed proxy, of the holders  
of a majority of the common stock entitled to vote at the Special Meeting is    
necessary to constitute a quorum at the Special Meeting. Only shareholders of   
record at the close of business on the Record Date will be entitled to vote at  
the Special Meeting or any adjournments or postponements thereof.               

        Shares of common stock represented at the Special Meeting in person or
by proxy will be counted for the purpose of determining whether a quorum is     
present at the Special Meeting. Shares which abstain from voting as to a        
particular matter will be treated as shares that are present and entitled to    
vote at the Special Meeting for purposes of determining whether a quorum exists,
but will not be counted as votes cast on such matter. Abstentions, therefore,   
will have the same effect as votes against approval of the proposals set forth  
in this Proxy Statement. If a broker or nominee holding stock in "street name"  
indicates on a proxy that it does not have discretionary authority to vote as to
a particular matter ("broker non-votes"), those shares will be treated as       
present and entitled to vote at the Special Meeting for purposes of determining 
whether a quorum exists, but will not be counted as votes cast on such matter.  

All shares of common stock which are entitled to vote and are 
represented at the Special Meeting by properly executed proxies received prior  
to or at the Special Meeting, and not revoked, will be voted at the Special     
Meeting in accordance with the instructions indicated on such proxies. If no    
instructions are indicated (other than in the case of broker non-votes), such   
proxies will be voted for approval and adoption of the proposals set forth in   
this Proxy Statement.                                                           

       The Board of Directors does not intend to bring any matter before the
Special Meeting other than the matters specifically referred to in the notice of
the Special Meeting, nor does the Board of Directors know of any other matter   
which anyone else proposes to present for action at the Special Meeting.        
However, if any other matter is properly brought before the Special Meeting, the
persons named in the accompanying proxy or their duly constituted substitutes   
acting at the Special Meeting will be deemed authorized to vote or otherwise act
thereon in accordance with their judgment on such matter. Proxies indicating a  
vote against the proposals contained herein may not be voted by the persons     
marked in the accompanying proxy or their duly constituted substitutes for      
adjournment of the Special Meeting for the purpose of giving management         
additional time to solicit votes to approve such proposals.                     

     Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)  
filing with the Secretary of ConMat, at or before the taking of a vote at the   
Special Meeting, a written notice of revocation bearing a later date than the   
proxy, (ii) duly executing a later dated proxy relating to the same shares and  
delivering it to the Secretary of ConMat before the taking of a vote at the     
Special Meeting or (iii) attending the Special Meeting and voting in person     

3 

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(although attendance at the Special Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation or subsequent proxy  
should be sent to ConMat Technologies, Inc., Franklin Avenue and Grant Street,  
Phoenixville, PA 19460, Attention: Corporate Secretary, or hand delivered to the
Secretary of ConMat at or before the taking of the vote at the Special Meeting. 

         Enclosed herewith is a proxy card for use by holders of ConMat's common
stock. Properly executed proxies will be voted in accordance with the           
instructions therein. In the absence of instruction, the shares of common stock 
represented at the Special Meeting by the enclosed proxy will be voted FOR each 
of the proposals set forth herein.                                              

ADDITIONAL INFORMATION

        ConMat will furnish without charge to any shareholder, upon written or
oral request, any documents filed by ConMat pursuant to the Securities Exchange 
Act. Requests for such documents should be addressed to Edward F. Sager, Jr.,   
President, ConMat Technologies, Inc., Franklin Avenue and Grant Street,         
Phoenixville, PA 19460, telephone number (610) 935-0225. Documents filed by     
ConMat pursuant to the Securities Exchange Act may be reviewed and/or obtained  
through the Securities and Exchange Commission's Electronic Data Gathering      
Analysis and Retrieval System, which is publicly available through the          
Securities and Exchange Commission's web site (http://www.sec.gov).             

 SOLICITATION OF PROXIES

  All expenses of ConMat's solicitation of proxies for the Special
Meeting will be borne by ConMat. In addition to solicitation by use of the      
mails, proxies may be solicited from ConMat shareholders by directors, officers 
and employees of ConMat in person or by telephone, telegram or other means of   
communication. Such directors, officers and employees will not be additionally  
compensated, but may be reimbursed for reasonable out-of-pocket expenses in     
connection with such solicitation. ConMat reserves the right to retain a proxy  
solicitation firm for assistance in connection with the solicitation of proxies 
for the Special Meeting should the Board of Directors deem such action prudent. 
Arrangements will also be made with brokerage houses, custodians, nominees and  
fiduciaries for forwarding of proxy solicitation materials to beneficial owners 
of shares held of record by such brokerage houses, custodians, nominees and     
fiduciaries, and ConMat will reimburse such brokerage houses, custodians,       
nominees and fiduciaries for their reasonable expenses incurred in connection   
therewith.                                                                      

FORWARD LOOKING STATEMENTS

         Some of the statements contained in this Proxy Statement discuss future
expectations, contain projections of results of operations or financial         
condition or state other "forward-looking" information. Those statements are    
subject to known and unknown risks, uncertainties and other factors that could  
cause the actual results to differ materially from those contemplated by the    
statements. The forward-looking information is based on various factors and was 
derived using numerous assumptions.                                             

Important factors that may cause actual results to differ from
projections include, for example,                                               

   o  general economic conditions, including their impact on capital
expenditures;                                           
  o  business conditions in the material technology and wastewater
treatment industries;                                   
o  the regulatory environment;                                
 o  rapidly changing technology and evolving industry standards;
o  new products and services offered by competitors; and      
o  price pressures.                                           

4 

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   In addition, in this Proxy Statement, the words "believe", "may",
"will", "estimate", "continue", "anticipate", "intend", "expect", "plan", and   
similar expressions, as they relate to the business or management of ConMat or  
Polychem, are intended to identify forward-looking statements.                  

  ConMat undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future      
events or otherwise after the date of this Proxy Statement. In light of these   
risks and uncertainties, the forward-looking events and circumstances discussed 
in this report may not occur and actual results could differ materially from    
those anticipated or implied in the forward-looking statements.                 

PROPOSAL I
APPROVAL OF LICENSE AND ASSET PURCHASE AGREEMENT

          The first Proposal presented to the ConMat shareholders at the Special
Meeting is to consider and approve the License and Asset Purchase Agreement that
provides for the sale of the product lines of ConMat's wholly owned subsidiary, 
Polychem, to Ecesis. Ecesis will also assume certain obligations of Polychem in 
connection with the sale.                                                       

       Two of ConMat's and Polychem's former directors and officers, Paul A.
DeJuliis and Richard R. Schutte, and a former shareholder of ConMat, Odyssey    
Capital Group, L.P., are members of Ecesis. Messrs. DeJuliis and Schutte        
collectively own 65% of Ecesis.                                                 

 ConMat and Polychem plan to use a portion of the purchase price
received from the Sale to satisfy their obligations under the Settlement        
Agreement relating to the settlement of certain claims against ConMat, Polychem 
and Mr. DeJuliis. A copy of the License and Asset Purchase Agreement is included
in this Proxy Statement as Annex A and a copy of the Settlement Agreement is    
included as Annex C.                                                            

Background to the Proposal

  Reason for the Sale. In September, 2001 Polychem was informed by
General Electric Capital Corporation ("GECC") that GECC was unwilling to        
continue to provide working capital financing to Polychem to support its        
operations. Polychem has not been able, and the Board of Directors of ConMat    
does not anticipate that Polychem will be able to, obtain sufficient capital    
financing on reasonable terms from another lender to replace the GECC financing.
Without such financing, Polychem will be unable to continue operations.         
Accordingly, the Board of Directors of ConMat has deemed it in the best interest
of ConMat and its shareholders to liquidate all of the assets of Polychem and   
satisfy all of its liabilities.                                                 

  Ecesis Offer. In July 2001, Paul DeJuliis and Richard R. Schutte
advised the Board of Directors that they were interested in purchasing          
Polychem's product lines. At that time, Mr. DeJuliis was the Chairman of the    
Board of Directors and the Chief Executive Officer of ConMat and Polychem, and  
Mr. Schutte was a director and the President and Chief Operating Officer of     
ConMat and Polychem.                                                            

     On account of the conflict between Messrs. DeJuliis and Schutte and
ConMat and Polychem, on July 17, 2001, the Board of Directors authorized the    
Disinterested Director to act on behalf of ConMat and Polychem with respect to  
the negotiation of the License and Asset Purchase Agreement. The Disinterested  
Director is not a member of Ecesis and prior to March 13, 2002, was not an      
officer or an employee of ConMat or Polychem.                                   

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       On February 19, 2002, ConMat retained Ogorek & Company to opine as to
the fairness of the proposed Sale with respect to ConMat's shareholders.        
Pursuant to its letter dated [_____________], 2002, Ogorek & Company opines that
the Sale is fair with respect to ConMat's shareholders. A copy of Ogorek &      
Company 's opinion is included as Annex B to this Proxy Statement.              

         Ecesis was formed on November 8, 2001. Messrs. DeJuliis and Schutte are
members of Ecesis, together with Odyssey Capital, L.P., a former shareholder of 
ConMat ("Odyssey"), and certain other parties. Odyssey delivered 399,826 shares 
of ConMat's Series C Preferred Stock and warrants to purchase 382,500 shares of 
ConMat common stock (collectively, the "ConMat Securities") to Ecesis in        
exchange for its membership interest in Ecesis. Ecesis shall deliver the ConMat 
Securities to Polychem as a portion of the purchase price for the Sale under the
License and Asset Purchase Agreement.                                           

       Messrs. DeJuliis and Schutte resigned from their respective positions
with ConMat and Polychem on March 13, 2002. Kenneth W. Evans, Jr. and John R.   
Toedtman were appointed by the Board of Directors of ConMat to fill the         
vacancies resulting from such resignations on March 13, 2002. As a result of Mr.
DeJuliis' resignation, the 166,667 shares of ConMat's Series B Preferred Stock  
held by Mentor Special Situation Fund, L.P. ("Mentor") are subject to redemption
at Mentor's election at a redemption price of $3.00 per share plus accrued      
dividends ($90,000 as of March 31, 2002). Mentor has not exercised its          
redemption right. Edward F. Sager, Jr., is a general partner of Mentor.         

         On March 20, 2002, the Board of Directors approved the Sale pursuant to
the License and Asset Purchase Agreement on behalf of ConMat and Polychem,      
subject to the approval of ConMat's shareholders.                               

 Supply Agreement. Polychem and Ecesis entered into a Supply and
Equipment Purchase Agreement on March 20, 2002 with Ensinger Vekton, Inc.       
("Ensinger") and Putnam Precision Molding, Inc. (collectively with Ensinger,    
"Supplier"), pursuant to which Polychem has outsourced the manufacturing of     
certain of its product lines to Supplier. Under the terms of the agreement,     
Polychem and Ecesis agreed to purchase a minimum of $2,500,000 of products from 
Supplier during each year of the agreement. The term of the agreement is five   
years and will renew automatically thereafter for successive one year terms     
unless terminated by either of the parties. In addition, the agreement also     
provides that Polychem will sell to Supplier certain of its manufacturing assets
for a purchase price of $287,000, which amount shall be paid monthly by Supplier
to GECC, as Polychem's senior secured lender, on Polychem's behalf, at the rate 
of 15% of the invoice amount of purchased products. Under the terms of the      
License and Asset Purchase Agreement, Ecesis has agreed to assume all of        
Polychem's rights (other than the right to receive the purchase price of        
equipment) and obligations under this agreement.                                

        Future Operations. Provided ConMat's shareholders approve the Sale and
the Liquidation, ConMat will oversee the winding up and dissolution of Polychem.
During and after such period, the Board of Directors of ConMat will seek to     
acquire an interest in one or more suitable operating businesses, which may     
include assets or shares of another entity to be acquired by ConMat directly or 
through a subsidiary, that the Board of Directors believes will be profitable to
ConMat and its shareholders.                                                    

 Parties to the Sale

 ConMat Technologies, Inc.
Franklin Avenue and Grant Street
Phoenixville, PA 19460
(610) 935-0225

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       ConMat Technologies, Inc. was incorporated in Florida in 1986. ConMat
is not an operating company and does not have significant assets or conduct     
significant business except through its wholly owned subsidiary, Polychem. In   
December 1998, ConMat acquired Polychem from The Eastwind Group, Inc.           

Polychem Corporation
Franklin Avenue and Grant Street
Phoenixville, PA 19460
(610) 935-0225

       Polychem, a Pennsylvania corporation, is a wholly owned subsidiary of
ConMat. Polychem develops custom engineered plastic molded products which are   
marketed to wastewater treatment plants and other industrial end users.         

Ecesis LLC
Franklin Avenue and Grant Street
Phoenixville, PA 19460
(610) 935-0225

     Ecesis LLC, a Delaware limited liability company, had no operations
prior to March 20, 2002 and was formed to purchase the product lines of Polychem
covered by the License and Asset Purchase Agreement. Two of ConMat's and        
Polychem's former directors and officers, Paul A. DeJuliis and Richard R.       
Schutte, are members of Ecesis.                                                 

 Terms of the License and Asset Purchase Agreement

      The following is a summary of the material provisions of the License
and Asset Purchase Agreement among ConMat, Polychem and Ecesis. We encourage you
to read all of the information in this Proxy Statement and the complete License 
and Asset Purchase Agreement set forth as Annex A. ConMat shareholders will not 
receive any distributions as a result of approving the Sale. ConMat intends to  
apply a majority of the cash proceeds received from the Sale to pay its         
obligations under the Settlement Agreement.                                     

       Sale of Product Lines and Related Assets. Pursuant to the License and
Asset Purchase Agreement, Polychem will sell to Ecesis Polychem's product lines 
and various related assets (the "Product Lines"). The Product Lines include all 
of Polychem's intellectual property, such as all of Polychem's patents and      
copyrights, all of Polychem's customer orders and contracts, good will, going   
concern value and other tangible and intangible assets. Ecesis will not,        
however, purchase any of Polychem's accounts receivable (approximately          
$2,206,000 at March 31, 2002), inventory (approximately $486,000 at March 31,   
2002), equipment, ancillary product lines or real estate.                       

Since the sale of the Product Lines represents the sale of a  
substantial portion of the assets of ConMat, the Sale is conditioned upon ConMat
obtaining the consent of its shareholders to the transaction.                   

   License of Product Lines. Pending the satisfaction of the closing
conditions contained in the License and Asset Purchase Agreement, including     
obtaining the approval of ConMat's shareholders, Polychem has licensed to Ecesis
the right to manufacture and distribute the Product Lines and use all of        
Polychem's assets used in connection with its business (the "License"). In      
consideration of the License, Ecesis will pay Polychem a royalty equal to its   
net operating profits from the sale of products. The License will terminate on  
the earlier of the date that the Sale occurs or the date that the License and   
Asset Purchase Agreement is terminated.                                         

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         Purchase Price. Ecesis will pay a total purchase price of $1,650,000 to
Polychem for the Product Lines consisting of (i) $500,000 cash; (ii) $1,150,000 
by the delivery of a promissory note to Polychem by Ecesis (the "Promissory     
Note"); and (iii) 399,826 shares of ConMat Series C Preferred Stock and warrants
to purchase 382,500 shares of ConMat common stock. As of March 31, 2002, the    
Series C Preferred Stock had an aggregate liquidation preference (including     
unpaid dividends) of $118,303, which is payable prior to any dividends or       
distributions to holders of ConMat common stock.                                

         Upon execution of the License and Asset Purchase Agreement, Ecesis paid
$150,000 of the purchase price as a deposit. In the event the Sale does not     
occur due to a material breach of the License and Asset Purchase Agreement by   
Ecesis, the deposit will be retained by Polychem as its exclusive remedy against
Ecesis for such breach. If the closing of the Sale does not occur for any other 
reason, the deposit will be repaid to Ecesis.                                   

    Under the terms of the Promissory Note, Ecesis will make a balloon
payment of principal and interest to Polychem on November 27, 2002. Interest    
will accrue on the principal balance of the Promissory Note at the rate of 4%   
per annum. Ecesis may prepay the Promissory Note in full at any time without    
penalty. The balance due under the Promissory Note is secured by the assets that
Ecesis is purchasing from Polychem pursuant to the terms of a Security Agreement
delivered by Ecesis to Polychem.                                                

     Assumed Liabilities. Ecesis will assume the liabilities of Polychem
under purchase orders and other contracts assigned to Ecesis in connection with 
the purchase of the Product Lines.                                              

     Ecesis may agree to assume additional liabilities or obligations of
Polychem at any time before or after the closing of the Sale. In such event,    
Ecesis will be credited with a partial payment of the purchase price equal to   
the amount of such additional assumed liability or obligation.                  

Representations and Warranties. The License and Asset Purchase
Agreement contains various customary representations and warranties of ConMat,  
Polychem and Ecesis. ConMat's representations and warranties include those as to
its organization and power, corporate authority, absence of conflicts, ownership
of 100% of the outstanding capital stock of Polychem and absence of brokers.    

   Polychem's representations and warranties include those as to its
organization and power, corporate authority, absence of conflict, absence of    
subsidiaries, financial statements, absence of undisclosed or contingent        
liabilities, absence of consents, good title to assets and absence of brokers.  

Ecesis' representations and warranties include those as to its
organization and power, authorization, absence of conflict, absence of consents 
and absence of brokers.                                                         

Any material breach by ConMat or Polychem of their respective 
representations and warranties will cause the breaching party to be in violation
of the terms of the License and Asset Purchase Agreement and may subject it to  
liability for damages. Any material breach by Ecesis of its representations and 
warranties will cause it to be in violation of the terms of the License and     
Asset Purchase Agreement and may result in the loss of its $150,000 deposit.    

 Conditions to Closing. The License and Asset Purchase Agreement
provides that, prior to the completion of the Sale, Polychem and ConMat will    
conduct their business in the ordinary course of business and consistent with   
prior practice other than as modified by the License. The License and Asset     
Purchase Agreement also provides that certain conditions must be satisfied or   
waived prior to the Sale, including with respect to ConMat and Polychem:        

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 o  ConMat and Polychem shall have performed and complied in all
         material respects with all covenants, agreements, obligations and
        conditions required by them under the License and Asset Purchase
Agreement;                                              

     o  No action or suit shall have been instituted or threatened which
presents a substantial risk to the transaction;         

       o  ConMat and Polychem shall have obtained all necessary consents and
approvals to the transaction; and                       

        o  ConMat shall have obtained the consent of the holders of a majority
         of the outstanding shares of its common stock to the transaction.

      In addition, Polychem shall change its name prior to the closing and
shall take all action necessary for Ecesis to use the name "Polychem" in its    
business after the closing.                                                     

         Termination. The License and Asset Purchase Agreement may be terminated
prior to the closing of the Sale under the following circumstances: (a) by      
either party upon the material breach of the other party, (b) by either party if
ConMat's Board of Directors determine in good faith that its fiduciary duties   
prohibit it from seeking shareholder approval of the transaction, (c) by either 
party if a condition to such party's obligation to effect the transaction set   
forth in the License and Asset Purchase Agreement is not satisfied or waived as 
of the closing date, (d) by the mutual consent of the parties or (e) by either  
party if the closing has not occurred on or before 90 days from the date of the 
License and Asset Purchase Agreement or such later date agreed to by the        
parties. The parties have agreed to extend the termination date of the License  
and Asset Purchase Agreement to December 31, 2002.                              

        If the License and Asset Purchase Agreement is terminated because of a
material breach by Ecesis, ConMat and Polychem may recover for damages from     
Ecesis only up to the $150,000 deposit.                                         

         Indemnification and Contribution. All representations and warranties by
the parties contained in the License and Asset Purchase Agreement shall survive 
for a period of two years after the closing of the Sale. If a party was         
fraudulent in any such representation or warranty, however, the other party may 
sue for damages or seek other remedies after such two-year period.              

    The License and Asset Purchase Agreement provides that, subject to
certain minimum limits on liability, ConMat and Polychem will indemnify, defend 
and hold harmless Ecesis from and against all demands, claims, causes of action 
and costs and expenses resulting from (i) any liability or obligation relating  
to Polychem's business existing on the closing date that is not assumed by      
Ecesis, (ii) any breach of a representation, warranty, covenant or agreement    
contained in the License and Asset Purchase Agreement by Polychem and (iii) any 
claim for taxes relating to Polychem's business incurred prior to the closing   
date.                                                                           

     Ecesis has agreed to indemnify, defend and hold harmless ConMat and
Polychem from and against all damages, claims, causes of action and costs and   
expenses resulting from (i) any of the liabilities of Polychem assumed by Ecesis
and (ii) any breach of a representation, warranty, covenant or agreement        
contained in the License and Asset Purchase Agreement by Ecesis.                

     In the event such indemnification provisions are not available to a
party with respect to a particular claim, such party shall have a right of      
contribution against the other party with respect to such claim. A right of     
contribution requires a party to pay its proportionate share of any claim based 
upon such party's relative fault.                                               

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 Estimated Closing

    If ConMat's shareholders approve the Sale, ConMat expects that the
closing of the Sale will take place as promptly as practical following such     
approval.                                                                       

Accounting Treatment

    The Sale will be treated as a sale for accounting purposes. A book
profit or loss (net of tax) will be recognized to the extent that the proceeds  
from the transaction are more or less than the sum of the book value of the net 
assets sold and transaction expenses. ConMat anticipates that the Sale will     
result in a book profit of approximately $1.4 million.                          

Federal Tax Consequences

        In general, Polychem will recognize gains or losses on the sale of the
Product Lines equal to the difference, if any, between the amount realized by   
Polychem from the sale of each asset less Polychem's adjusted tax basis in each 
such asset. The amount realized by Polychem will be equal to the sum of the     
amount of consideration received by Polychem plus the amount of any liabilities 
of Polychem that are assumed by Ecesis in connection with each such asset.      
Consummation of the transaction will not be a taxable event for United States   
federal income tax purposes for the shareholders of ConMat. ConMat anticipates  
that it will have sufficient tax losses so that no incremental tax liability    
will result.                                                                    

 Government and Regulatory Approvals

      ConMat is aware of no government or regulatory approval required for
the consummation of the Sale other than the filing of this proxy statement with 
the Securities and Exchange Commission.                                         

Settlement Agreement

         Polychem will advance a portion of the proceeds from the Sale to ConMat
for use to satisfy its obligations under the Settlement Agreement. The          
Settlement Agreement, dated October 25, 2001 and modified December 5, 2001, is  
among John W. Morris as the Chapter 11 Trustee for The Eastwind Group, Inc. (the
"Trustee"), Paul A. DeJuliis, ConMat and Polychem. The agreement relates to the 
settlement of certain claims brought by the Trustee against ConMat, Polychem and
Mr. DeJuliis. The agreement also provides for the settlement of certain claims  
brought by John R. Thach, ProFutures Special Equities Fund, L.P. and John Park  
against ConMat, Polychem, Mr. DeJuliis and The Eastwind Group, Inc. (the "Third 
Party Actions").                                                                

  Under the terms of the Settlement Agreement, ConMat will pay the
Trustee $1,500,000 on behalf of ConMat, Polychem and Mr. DeJuliis in            
consideration of the settlement of the claims asserted by the Trustee and the   
Third Party Actions.                                                            

       The Settlement Agreement was approved by the United States Bankruptcy
Court for the Eastern District of Pennsylvania (the "Bankruptcy Court") on      
February 27, 2002. The Settlement Agreement became effective upon such approval.

    ConMat has paid the Trustee $500,000 of the settlement amount. The
balance of the settlement amount of $1,000,000 is evidenced by a promissory note
delivered by ConMat and Polychem to the Trustee (the "Note"). The Note is       
secured by (i) the capital stock of ConMat held in trust for the shareholders of
The Eastwind Group, Inc., (ii) all of ConMat's assets, (iii) all assets and     
capital stock of Polychem and (iv) a mortgage on Polychem's real estate. The    
terms of the Note provide that ConMat was obligated to repay the balance due    

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under the Note to the Trustee no later than July 15, 2002. ConMat is currently  
discussing with the Trustee an agreement to forebear from exercising its rights 
under the Note. Negotiation of forbearance under the Note is a condition to     
closing of the Sale.                                                            

   Upon satisfaction of the obligations under the Note by ConMat and
Polychem, the Trustee will deliver to ConMat certificates representing all      
shares of preferred and common stock of ConMat formerly held by The Eastwind    
Group, Inc. and its affiliates, other than any shares acquired or transferred to
the Trustee from or after September 1, 2001 by entities that are not parties to 
the Settlement Agreement.                                                       

       In consideration of the settlement amount and agreement to settle the
Third Party Actions, the Settlement Agreement provides that each party will not 
sue the other party on such claims in the future.                               

     In connection with the settlement, Paul A. DeJuliis has agreed with
ConMat that, upon satisfaction of the obligations under the Note, he will       
surrender to ConMat for cancellation 298,333 shares of ConMat common stock,     
which are all shares owned by him.                                              

         In connection with the settlement, ConMat and Polychem have agreed with
John R. Thach to pay or otherwise resolve approximately $90,000 in outstanding  
federal tax claims related to former Eastwind subsidiaries for which Mr. Thach  
has personal liability.                                                         

Fairness Opinion

     The Board of Directors of ConMat has retained Ogorek & Company (the
"Reviewer") to render an opinion as to the fairness to the shareholders of      
ConMat, from a financial point of view, of the consideration to be received     
pursuant to the License and Asset Purchase Agreement.                           

        In connection with its opinion, Reviewer reviewed, among other things:

o  the terms and conditions of the License and Asset Purchase 
Agreement;                                              

   o  publicly available information concerning ConMat that Reviewer
        deemed to be relevant, including ConMat's annual reports on Form
10-KSB;                                                 

      o  certain of ConMat's interim reports to shareholders and quarterly
reports on Form 10-QSB; and                             

o  certain other information concerning ConMat and Polychem.  

      Reviewer held discussions with members of ConMat's senior management
regarding ConMat's and Polychem's historical and current business, operations,  
financial condition and future prospects, including discussions regarding       
liquidity and capital resources then available to ConMat. Reviewer reviewed the 
reported price and trading activity of the shares of ConMat's common stock,     
compared certain financial and stock market information concerning ConMat with  
similar information for other companies that Reviewer deemed reasonably         
comparable and the securities of which are publicly traded. In addition,        
Reviewer reviewed the financial industry for companies and transactions which   
they deemed comparable and performed such other studies and analyses that       
Reviewer considered appropriate.                                                

     In rendering its opinion, Reviewer relied upon and assumed, without
independent verification, the accuracy, completeness and fairness of all        
financial and other information that was available to it from public sources and
that was provided to it by ConMat or its representatives or that was otherwise  
reviewed by it. With respect to the financial and other information relating to 
prospects of ConMat and Polychem, Reviewer assumed that such information        
reflected the best currently available estimates and judgments of the management

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of ConMat as to the likely future financial performance of ConMat and Polychem. 
Reviewer did not make any independent valuation or appraisal of assets of ConMat
and Polychem, nor was it furnished with any evaluation or appraisal. Reviewer's 
opinion was based solely upon the information available to it and provided by   
ConMat, and upon the prevailing economic, financial market and other conditions 
as they existed as of the date its opinion was rendered. ConMat did not place   
any limitations on the nature or scope of Reviewer's investigation for purposes 
of rendering this opinion.                                                      

       For services rendered by Reviewer in connection with the Sale, ConMat
has agreed to pay Reviewer a customary fee of up to $35,000 and reimburse       
Reviewer for reasonable out-of-pocket expenses. The Disinterested Director      
selected Reviewer based on its experience and expertise. Reviewer is an         
investment banking firm specializing in corporate finance, mergers and          
acquisitions and advisory services. Reviewer's principal officers have combined 
over 20 years of mergers, acquisitions and valuation experience. There are no   
relationships between Reviewer or any of its officers and ConMat, Polychem or   
Ecesis.                                                                         

 The Reviewer's opinion, prepared for the Board of Directors, is
directed only to the fairness to ConMat's shareholders, as of the date of the   
opinion letter, from a financial point of view, of the consideration to be      
received pursuant to the License and Asset Purchase Agreement and does not      
constitute a recommendation to any shareholder as to how to vote at the Special 
Meeting.                                                                        

         A copy of the Reviewer's opinion is included in this Proxy Statement as
Annex B. You are urged to read this opinion in its entirety for assumptions     
made, procedures followed, other matters considered and limits of the review by 
Reviewer.                                                                       

 Recommendation of the Board of Directors for the Sale

        Because two of the members of Ecesis were members of ConMat's Board of
Directors, the Board of Directors appointed director Edward F. Sager, Jr., (the 
"Disinterested Director") to negotiate the License and Asset Purchase Agreement 
on behalf of ConMat and the Board of Directors and to consider the fairness of  
the proposed sale of assets to Ecesis. The Disinterested Director is not a      
member of Ecesis and was not an officer or employee of ConMat prior to March 13,
2002.                                                                           

       Based upon the fairness opinion of Reviewer and the recommendation of
the Disinterested Director, the Board of Directors has approved the License and 
Asset Purchase Agreement and has determined that the sale of the Product Lines  
contemplated by the License and Asset Purchase Agreement is fair to and in the  
best interests of, ConMat and its shareholders. Accordingly, the Board of       
Directors recommends that the shareholders of ConMat vote "FOR" the approval of 
the Sale at the Special Meeting.                                                

Dissenter Rights

       The shareholders of ConMat have a right to dissent from approving the
Sale and receive the "fair value" of their shares upon compliance with the      
requirements of the Florida Business Corporation Act. These rights are explained
in detail in the section entitled "Dissenters Rights" which beings on page 14 of
this Proxy Statement. The dissenters' rights provisions of the Florida Law are  
included as Annex E to the Proxy Statement. We urge you to read the "Dissenters 
Rights" section of this Proxy Statement and annex provisions of the Florida Law 
if you wish to exercise your dissenter's rights with respect to this Proposal I.

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Vote Required for Approval

      The affirmative vote of the holders of a majority of the outstanding
shares of common stock entitled to vote on this proposal is required to ratify  
and approve the License and Asset Purchase Agreement. Abstentions may be        
specified on the proposal and will be considered present at the Special Meeting,
but will not be counted as affirmative votes. Abstentions, therefore, will have 
the practical effect of voting against the proposal because the affirmative vote
of a majority of shares of common stock is required to approve the proposal.    
Broker non-votes will not be voted or have any effect on Proposal I.            

        The Board of Directors unanimously recommends a vote "FOR" Proposal I.

 PROPOSAL II
PLAN OF LIQUIDATION AND DISTRIBUTION
FOR POLYCHEM

   Provided that the Sale described in Proposal I is approved by the
ConMat shareholders, Polychem will have no operational assets after the sale of 
the Product Lines. After the Sale, Polychem's assets shall consist of the       
purchase price from the License and Asset Purchase Agreement, accounts          
receivable (approximately $2,206,000 at March 31, 2002), inventory              
(approximately $486,000 at March 31, 2002), equipment, ancillary product lines  
and the real property where its offices and manufacturing facility is located at
the corner of Franklin Avenue and Grant Street in Phoenixville, Pennsylvania    
(the "Phoenixville Property"). Polychem will generate no income after the Sale  
other than from collection of accounts receivable, sales of its remaining       
inventory and either sale of the Phoenixville Property or income from the rental
of the Phoenixville Property to Ecesis and/or other tenants.                    

      Accordingly, the Board of Directors of Polychem and ConMat adopted a
plan of liquidation and dissolution of Polychem (the "Plan of Liquidation") on  
March 13, 2002, subject to the approval of ConMat's shareholders at the Special 
Meeting. A copy of the Plan of Liquidation is set forth as Annex D to this Proxy
Statement. We encourage you to read the Plan of Liquidation in its entirety.    

Terms of Plan of Liquidation

  The Plan of Liquidation provides for the orderly liquidation and
winding up of Polychem through (i) the sale of its remaining assets, (ii)       
payment of its creditors, (iii) distribution of any remaining assets or proceeds
to its sole shareholder, ConMat, and (iv) its dissolution.                      

        Polychem intends to distribute a portion of the proceeds from the Sale
to ConMat for use to satisfy its obligations under the Settlement Agreement.    
Next, Polychem will use any remaining proceeds from the Sale to satisfy all     
payments to its creditors.                                                      

        Pursuant to the Plan of Liquidation, Polychem will actively pursue the
collection of its outstanding accounts receivable. Polychem will also be        
actively selling the remainder of its inventory and any of its other assets not 
otherwise disposed pursuant to the Supply Agreement or the License and Asset    
Purchase Agreement.                                                             

     Polychem will maintain the Phoenixville Property and shall actively
seek to obtain additional tenants. Once the Board of Directors believes that    
market conditions are favorable, Polychem shall seek to obtain a buyer for the  
Phoenixville Property.                                                          

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       After the sale of the Phoenixville Property and payment of all of its
creditors, Polychem will seek to dissolve.                                      

 Dissenters Rights

        The shareholders of ConMat have a right to dissent from approving Plan
of Liquidation and receive the "fair value" of their shares upon compliance with
the requirements of the Florida Business Corporation Act. These rights are      
explained in detail in the section entitled "Dissenters Rights" which beings on 
page 14 of this Proxy Statement. The dissenters' rights provisions of the       
Florida Law are included as Annex E to the Proxy Statement. We urge you to read 
the "Dissenters Rights" section of this Proxy Statement and annexed provisions  
of the Florida Law if you wish to exercise your dissenter's rights with respect 
to this Proposal II.                                                            

Vote Required for Approval

      The affirmative vote of the holders of a majority of the outstanding
shares of common stock entitled to vote on this proposal is required to ratify  
and approve the Plan of Liquidation. Abstentions may be specified on the        
proposal and will be considered present at the Special Meeting, but will not be 
counted as affirmative votes. Abstentions, therefore, will have the practical   
effect of voting against the proposal because the affirmative vote of a majority
of shares of common stock is required to approve the proposal.                  

         The Board of Directors unanimously recommends a vote "FOR" Proposal II.

 DISSENTERS RIGHTS

       With respect to the approval of the Sale pursuant to Proposal I and
the Plan of Liquidation pursuant to Proposal II, non-voting shareholders of     
ConMat are entitled to assert their dissenters' rights and obtain payment in    
cash for their shares under Sections 607.1302 and 607.1320 of the Florida       
Business Corporation Act ("FBCA"). If you wish to dissent from the Sale and the 
Liquidation and you properly perfect your dissenters' rights, you will be       
entitled to payment of the fair value of your shares of common stock or         
preferred stock in accordance with Sections 607.1320(5)-(10) of the FBCA. In    
order to perfect your dissenters' rights, you must fully comply with the        
statutory procedures of Sections 607.1301, 607.1302 and 607.1320 of the FBCA    
summarized below, the full text of which is set forth as Annex E. ConMat urges  
you to read those sections in their entirety and to consult with your legal     
advisor. To exercise your dissenters' rights, you must file with ConMat at its  
headquarters a written notice of your election to dissent within 20 days from   
the date of this Proxy Statement. You will forfeit your dissenters' rights if   
you do not file your election to dissent within the 20-day period. Once a notice
of election to dissent is filed with ConMat, you will be entitled to payment of 
the fair value of the shares, in accordance with the discussion below, and you  
will not be entitled to vote or exercise any other rights of a shareholder.     

         Your election to dissent must state: (a) your name and address; (b) the
number of shares as to which you dissent; and (c) demand for payment of the fair
value of your shares.                                                           

If you file an election to dissent: (a) you must deposit the  
certificate(s) representing your shares with ConMat when you file your election;
(b) you will be entitled only to payment pursuant to the procedure set forth in 
the FBCA; and (c) you will not be entitled to vote or exercise any other rights 
of a shareholder of ConMat.                                                     

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    You may withdraw your notice of election at any time before ConMat
makes an offer to purchase your shares, as described below, and only with       
ConMat's consent if you elect to withdraw after ConMat makes the offer. If you  
withdraw your notice of election, you will lose your right to pursue dissenters'
rights, and you will again have the rights you had prior to the filing of your  
notice of election. Further, in the event ConMat for any reason does not proceed
with the Sale, your right to receive fair value for your shares ceases and your 
status as a shareholder of ConMat will be restored.                             

   If you elect to exercise the dissenters' rights described in this
section: (a) within ten days after the period in which you may file your notice 
of election to dissent expires, ConMat will make a written offer to you to pay  
for your shares at a specified price that it deems to be the fair value of those
shares; and (b) ConMat will deliver to you with its offer (i) a balance sheet as
of the latest available date, and (ii) a profit and loss statement for the      
12-month period ended on the date of the balance sheet that ConMat provides you.

         After ConMat makes an offer to you, you will have 30 days to accept it.
If you accept it within that 30-day period, ConMat will pay you for your shares 
within 90 days of the later to occur (i) date of its offer and (ii) the date of 
the Sale. When we pay you the agreed value, you will cease to have any further  
interest in your shares. If we do not purchase your shares or you do not accept 
our offer within 30 days from the day ConMat makes it, then you will have 60    
days from the date of the Sale to demand that the Company file an action in any 
court of competent jurisdiction to determine the fair value of your shares.     
ConMat will have 30 days from the day it receives your demand to initiate the   
action. ConMat also may commence the action on its own initiative at any time   
within the 60-day period described above. If ConMat does not initiate the action
within the above-described period, you may do so in its name.                   

 UNAUDITED PRO FORMA CONDENSED
 CONSOLIDATED FINANCIAL STATEMENTS

    The following unaudited pro forma condensed consolidated financial
statements are based on ConMat's consolidated financial statements. The         
unaudited pro forma condensed consolidated statements give effect to the        
transactions as if they had been consummated as of January 1, 2001 (in the case 
of the operating statement data) or as of March 31, 2002 (in the case of the    
balance sheet data). The pro forma condensed consolidated financial statements  
are based on the assumptions set forth in the accompanying notes and should be  
read in conjunction with ConMat's consolidated financial statements (including  
the notes thereto) in the December 31, 2001 From 10-KSB and the March 31, 2002  
Form 10-QSB, which are incorporated herein by reference. The pro forma condensed
consolidated financial statements are not necessarily indicative of ConMat's    
future consolidated financial position or results of operations or of what      
ConMat's consolidated financial position would have been had the transactions   
been consummated as of March 31, 2002 or what the results of operations for the 
three months ended March 31, 2002 and year ended December 31, 2001 would have   
been had the transactions been consummated as of January 1, 2001.               

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ConMat Technologies, Inc. and Subsidiary                                        
Unaudited Pro Forma Condensed Consolidated Balance Sheet                        
March 31, 2002                                                                  

                                                        [Enlarge/Download Table]

                                                                                  Pro Forma                       
                                ASSETS                              Historical    Adjustments          Pro Forma  
                                                                   ------------  -------------         -----------
                                                                                                                  
Current Assets:                                                                                                   
   Cash and cash equivalents                                          $ 28,075   $    (28,075)  (f)    $        - 
   Accounts receivable - net                                         2,205,871     (2,205,871)  (d)             0 
   Inventories                                                         486,486       (486,486)  (e)             0 
   Prepaid expenses                                                    164,543       (164,543)  (f)             0 
                                                                   ------------  -------------         -----------
                                   Total Current Assets              2,884,975     (2,884,975)                  0 
Property, Plant & Equipment - held for sale                            988,423       (988,423)  (b/c)           0 
Deferred Income Taxes                                                1,125,493     (1,125,493)                  0 
Other Assets                                                           212,690       (212,690)  (a/f)           0 
                                                                   ------------  -------------         -----------
                                   Total Assets                    $ 5,211,581   $ (5,211,581)         $        - 
                                                                   ============  =============         ===========
                 LIABILITIES AND STOCKHOLDERS' EQUITY                                                             
Current Liabilities:                                                                                              
   Line of credit                                                  $ 1,029,791   $ (1,029,791)         $        - 
   Current portion of long-term debt                                   997,439       (997,439)                  0 
   Current portion of capital lease obligations                         22,946        (22,946)                  0 
   Accounts payable                                                  3,404,402     (1,438,925)          1,965,477 
   Legal settlement payable                                          1,435,000     (1,435,000)                  0 
   Accrued expenses                                                    659,700       (150,000)            509,700 
                                                                   ------------  -------------         -----------
                                   Total Current Liabilities         7,549,278     (5,074,101)          2,475,177 

Long-Term Debt                                                       1,788,807     (1,788,807)                  0 
Obligations Under Capital Leases                                         9,972         (9,972)                  0 
Other Liabilities                                                      479,095       (479,095)                  0 
                                                                   ------------  -------------         -----------
                                   Total Liabilities                 9,827,152     (7,351,975)          2,475,177 
Stockholders' Equity (Deficiency):                                                                                
   Series A preferred stock - $.001 par value, 1,500,000                                                          
      shares authorized, 713,250 shares issued and outstanding             713                                713 
   Series B Preferred Stock - $.001 par value, 166,667                                                            
      shares authorized, issued and outstanding                        500,000                            500,000 
   Series C preferred stock - $.001 par value, 446,150                                                            
      shares authorized, 382,500 issued and outstanding                    383           (383)                  0 
   Common stock - $.001 par value, 40,000,000 shares                                                              
      authorized, 2,988,083 shares issued, 2,607,758 outstanding         2,988                              2,988 
   Additional paid-in capital                                         (649,838)       (50,000)           (699,838)
   Accumulated deficit                                              (4,253,677)     2,140,777          (2,112,900)
   Cost of common shares in treasury, 380,325  shares                 (166,140)                          (166,140)
   Less: Receivables for shares sold                                   (50,000)        50,000                   0 
                                                                   ------------  -------------         -----------
                                   Total Stockholders' Deficiency   (4,615,571)     2,140,394          (2,475,177)
                                                                   ------------  -------------         -----------
              Total Liabilities and Stockholders' Deficiency       $ 5,211,581   $ (5,211,581)         $        - 
                                                                   ============  =============         ===========


See notes to unaudited pro forma consolidated condensed financial statements    

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ConMat Technologies, Inc. and Subsidiary                                        
Unaudited Pro Forma Condensed Consolidated Statement of Operations              
Three Months Ended March 31, 2002                                               

                                                        [Enlarge/Download Table]


                                                                         Pro Forma                 
                                                         Historical    Adjustments      Pro Forma  
                                                       --------------  -------------  -------------

                                                                                                   
Net Sales to Customers                                  $  1,492,115   $ (1,492,115)    $        - 
Cost of Goods Sold                                         1,531,113     (1,531,113)             0 
                                                       --------------  -------------  -------------
                            Gross (Loss) Profit              (38,998)        38,998              0 

Selling, General and Administrative Expenses               1,031,227     (1,031,227)             0 
Corporate Expenses                                           205,022       (190,022)        15,000 
                                                       --------------  -------------  -------------
                        Operating (Loss) Income           (1,275,247)     1,260,247        (15,000)

Other Income (Expense):                                                                            
   Interest expense                                         (128,762)       128,762              0 
   Legal settlement expense                                  (85,000)             0        (85,000)
   Rental income                                              74,802        (74,802)             0 
                                                       --------------  -------------  -------------
               (Loss) Income Before Tax Expense           (1,414,207)     1,314,207       (100,000)

Income Tax Expense                                                                               0 
                                                       --------------  -------------  -------------
                              Net (Loss) Income           (1,414,207)     1,314,207       (100,000)

Dividends on preferred shares                                (33,877)       (33,877)       (33,877)
                                                       --------------  -------------  -----------  
     Net (loss) available to common shareholders        $ (1,448,084)  $  1,280,330     $ (133,877)
                                                       ==============  =============  =============

Net (loss)  per Common Share:                                                                      
      Basic                                             $      (0.56)  $       0.49     $    (0.05)
                                                       ==============  =============  =============

      Diluted                                           $      (0.56)  $       0.49     $    (0.05)
                                                       ==============  =============  =============

Weighted average number of common shares outstanding:                                              

      Basic                                                2,607,758      2,607,758      2,607,758 
                                                       ==============  =============  =============

      Diluted                                              2,607,758      2,607,758      2,607,758 
                                                       ==============  =============  =============

See notes to unaudited pro forma consolidated condensed financial statements    

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ConMat Technologies, Inc. and Subsidiary                                        
Unaudited Pro Forma Condensed Consolidated Statement of Operations              
Year Ended December 31, 2001                                                    

                                                        [Enlarge/Download Table]


                                                                         Pro Forma                   
                                                        Historical      Adjustments       Pro Forma  
                                                       --------------  --------------  --------------
                                                                                                     
Net Sales to Customers                                  $ 12,289,424   $ (12,289,424)   $          - 
Cost of Goods Sold                                        10,022,205     (10,022,205)              0 
                                                       --------------  --------------  --------------
                                       Gross Profit        2,267,219      (2,267,219)              0 

Selling, General and Administrative Expenses               3,172,381      (3,172,381)              0 
Corporate Expenses                                         1,051,042        (991,042)         60,000 
                                                       --------------  --------------  --------------
                            Operating (Loss) Income       (1,956,204)      1,896,204         (60,000)

Other Income (Expense):                                                                              
   Interest expense                                         (495,106)        495,106               0 
   Legal settlement                                       (1,500,000)                     (1,500,000)
   Rental income                                             282,748        (282,748)              0 
                                                       --------------  --------------  --------------
                   (Loss) Income Before Tax Expense       (3,668,562)      2,108,562      (1,560,000)

Income Tax (Benefit) Expense                              (1,155,000)      1,155,000               0 
                                                       --------------  --------------  --------------
                                  Net (Loss) Income       (2,513,562)        953,562      (1,560,000)

Dividends on preferred shares                               (135,508)       (135,508)       (135,508)
                                                       --------------  --------------  --------------
        Net (loss) available to common shareholders     $ (2,649,070)  $     818,054    $ (1,695,508)
                                                       ==============  ==============  ==============

Net (loss)  per Common Share:                                                                        
      Basic                                             $      (1.01)  $        0.31    $      (0.65)
                                                       ==============  ==============  ==============

      Diluted                                           $      (1.01)  $        0.31    $      (0.65)
                                                       ==============  ==============  ==============

Weighted average number of common shares outstanding:                                                

      Basic                                                2,613,286       2,613,286       2,613,286 
                                                       ==============  ==============  ==============

      Diluted                                              2,613,286       2,613,286       2,613,286 
                                                       ==============  ==============  ==============

See notes to unaudited pro forma consolidated condensed financial statements    

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ConMat Technologies, Inc. and Subsidiary                                        
Summary of Footnotes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
March 31, 2002                                                                  

                                                        [Enlarge/Download Table]


                                              Cash            Assets        Liabilities        Equity   
                                          --------------  --------------  --------------  --------------

                                                                                                        
Historical Balances as of March 31, 2002   $     28,075     $ 5,183,506     $ 9,827,152     $(4,615,571)

Cash                                            (28,075)                        (28,075)                

Footnote A                                    1,650,000        (212,690)                      1,437,310 
                                             (1,650,000)                     (1,650,000)                

Footnote B                                      230,000         287,000                         217,000 
                                                               (300,000)                                
                                               (230,000)       (287,000)       (517,000)                

Footnote C                                    2,300,000        (688,423)                      1,611,577 
                                             (2,300,000)                     (2,300,000)                

Footnote D                                    2,205,871      (2,205,871)                                
                                             (2,205,871)                     (2,205,871)                

Footnote E                                      486,486        (486,486)                                
                                               (486,486)                       (486,486)                

Footnote F                                      164,543        (164,543)                                
                                               (164,543)                       (164,543)                

Deferred Taxes                                               (1,125,493)                     (1,125,493)

                                          --------------  --------------  --------------  --------------
Pro Forma Balances as of March 31, 2002    $          -     $         -     $ 2,475,177     $(2,475,177)
                                          ==============  ==============  ==============  ==============

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ConMat Technologies, Inc.                                                       
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements        

a)       The company has executed an agreement to sell the water treatment and  
   extrusion product lines of its Polychem Corporation subsidiary to
         Ecesis LLC - Polychem Division ("Ecesis"). Ecesis is a management owned
company employing the former management and staff of Polychem 
     Corporation. The sale of these intangible assets will provide $1.65
  million in cash and for the return of 382,500 shares of Series C
 preferred stock. The sale will result in a pre-tax book gain of
      approximately $1.4 million. All cash proceeds will be distributed to
      creditors in accordance with lien security priorities outstanding at
the time of collection.                                       

b)       The company had arranged to outsource production of all its product    
       lines. As a result the company is negotiating agreements for the sale
    of its production equipment and molds of certain specialty product
 lines. At present the company has agreed to sell certain of its
       equipment for a note of $287,000 payable based on future volumes. The
       company expects the note to be paid in full within 6 months. The note
     has been assigned to secured lenders who will receive all proceeds.
         Additionally the company expects to realize approximately $230,000 from
    the sale of certain product molds and the auction of its remaining
    equipment. All proceeds are encumbered by secured lienholders. The
         basis of the equipment is approximately $300,000 resulting in a pre-tax
book gain of $217,000.                                        

c)       The company is negotiating the sale of its manufacturing facility. At  
         present the company expects to realize $2.3 million, net of transaction
    expense. The sale will result in a book gain of approximately $1.6
       million. The property is encumbered by a mortgage with an outstanding
        balance of $1.9 million with accrued interest. Remaining proceeds will
be distributed to additional secured parties.                 

d)       Accounts receivable, net of reserves, of $2,205,871 will be            
  systematically collected and distributed in accordance with lien
security priorities at the time of collection.                

e)       Gross inventory along with any other materials purchased by Polychem   
      will be sold to Ecesis separately from the asset purchase agreement.
       All sales will be at cost. Proceeds will be distributed in accordance
      with lien security priorities outstanding at the time of collection.

f)       Other assets primarily prepaid insurances and taxes and federal and    
        state tax refunds will be collected and distributed in accordance with
     lien security priorities outstanding at the time of collection. The
     company expects these liquidations to yield approximately $165,000.

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SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS

      The following table sets forth information concerning the beneficial
ownership of ConMat's common stock as of ___________, 2002, by each director and
ConMat's Chief Executive Officer, all directors and the Chief Executive Officer 
as a group, and each person known to ConMat to beneficially own 5% or more of   
its outstanding common stock.                                                   

                                                        [Enlarge/Download Table]

------------------------------------------------- ---------------------------- --------------------------------

              Name and Address of                    Amount and Nature of               Percentage of          
                Beneficial Owner                   Beneficial Ownership (1)           Common Stock (1)         
                ----------------                   ------------------------           ----------------         
------------------------------------------------- ---------------------------- --------------------------------

                                                                                                               
Kenneth W. Evans, Jr.                                         90,000                          3.01%            
Franklin Avenue & Grant Street                                                                                 
Phoenixville, PA 19460                                                                                         
------------------------------------------------- ---------------------------- --------------------------------

Edward F. Sager, Jr.                                         397,492  (2)                    12.48%            
Franklin Avenue & Grant Street                                                                                 
Phoenixville, PA 19460                                                                                         
------------------------------------------------- ---------------------------- --------------------------------

John R. Toedtman                                              90,000                          3.01%            
Franklin Avenue & Grant Street                                                                                 
Phoenixville, PA 19460                                                                                         
------------------------------------------------- ---------------------------- --------------------------------

Directors and Chief Executive Officer                        577,492  (2)                    18.13%            
(3 persons)                                                                                                    
------------------------------------------------- ---------------------------- --------------------------------

The Eastwind Group, Inc.                                     638,350  (3)                    19.74%            
1525 Locust Street                                                                                             
17th Floor                                                                                                     
Philadelphia, PA  19102                                                                                        
------------------------------------------------- ---------------------------- --------------------------------

Ecesis, LLC                                                                                                    
Franklin Avenue & Grant Street                               382,500  (4)                    11.35%            
Phoenixville, PA  19460                                                                                        
------------------------------------------------- ---------------------------- --------------------------------

The Eastwind Group, Inc.                                     925,000                         31.29%            
     Shareholder Trust                                                                                         
c/o Paul A. DeJuliis                                                                                           
Franklin Avenue & Grant Street                                                                                 
Phoenixville, PA  19460                                                                                        
------------------------------------------------- ---------------------------- --------------------------------

Mentor Special Situation Fund, L.P. (7)                      166,667  (5)                     5.28%            
P.O. Box 560                                                                                                   
Yardley, PA  19067                                                                                             
------------------------------------------------- ---------------------------- --------------------------------

The DAR Group, Inc.                                          240,000                          8.03%            
30 Broad Street, 43rd Floor                                                                                    
New York, NY                                                                                                   
------------------------------------------------- ---------------------------- --------------------------------

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                                                        [Enlarge/Download Table]

------------------------------------------------- ---------------------------- --------------------------------

              Name and Address of                    Amount and Nature of               Percentage of          
                Beneficial Owner                   Beneficial Ownership (1)           Common Stock (1)         
                ----------------                   ------------------------           ----------------         
------------------------------------------------- ---------------------------- --------------------------------

                                                                                                               
------------------------------------------------- ---------------------------- --------------------------------
Paul A. DeJuliis                                            348,333   (6)                      11.47%          
1110 David Davis Lane                                                                                          
West Chester, PA  19382                                                                                        
------------------------------------------------- ---------------------------- --------------------------------

* Less than 1%                                                                  

(1)      Based upon 2,988,083 shares of common stock issued and outstanding as  
         of April 30, 2001, calculated in accordance with Rule 13d-3 promulgated
        under the Exchange Act. It also includes shares owned by (i) a spouse,
     minor children or by relatives sharing the same home, (ii) entities
        owned or controlled by the named person and (iii) other persons if the
         named person has the right to acquire such shares within 60 days by the
     exercise of any right or option. Unless otherwise noted, shares are
owned of record and beneficially by the named person.         
(2)      Includes 22,500 shares issuable upon the exercise of warrants held by  
       Mr. Sager, 166,667 shares issuable upon the exercise of warrants held
         by Mentor Special Situation Fund, L.P., of which Mr. Sager is a general
     partner, and 7,500 shares of common stock issuable upon exercise of
warrants held by George Stasen, a partner of Mr. Sager.       
(3)      Consists of shares issuable upon conversion of Series A Convertible    
Preferred Stock.                                              
(4)      Consists of shares of common stock issuable upon exercise of warrants. 
(5)      Edward F. Sager, Jr., a director of ConMat, is a general partner of    
Mentor Special Situation Fund, L.P.                           
(6)      Includes 50,000 Shares issuable upon the exercise of options.          

 OTHER SHAREHOLDER MATTERS

Shareholder Proposals and Nominations of Directors for ConMat's Shareholders
 Next Annual Meeting of Shareholders

        Any shareholder who intends to present a proposal for consideration at
ConMat's next annual meeting of shareholders intended to occur on or about      
August 27, 2002 must, submit his or her proposal to ConMat on or before June 14,
2002 in order to have ConMat consider the inclusion of such proposal in ConMat's
Proxy Statement and form of proxy relating to such annual meeting. Reference is 
made to Rule 14a-8 under the Securities Exchange Act for information concerning 
the content and form of such proposal and the manner in which such proposal must
be made.                                                                        

     Nominations for election to the Board of Directors at ConMat's next
annual meeting may be made only in writing by a shareholder entitled to vote at 
such annual meeting and must be addressed to the Corporate Secretary, ConMat    
Technologies, Inc., Franklin Avenue and Grant Street, Phoenixville, PA 19460 who
will forward such information to the Board of Directors. Nominations must be    
received by the Secretary on or before June 15, 2003, and must be accompanied by
the written consent of the nominee. Nominations should also be accompanied by a 
description of the nominee's business or professional background and otherwise  
contain the information required by Schedule 14A of the Securities Exchange Act.

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 OTHER MATTERS

 Revocability of Proxies

       Any Proxy solicited hereby by the person giving it at any time before
it has been exercised at the Special Meeting may be revoked by giving notice of 
revocation to the Secretary of ConMat in writing, submitting a later-dated Proxy
or by voting the shares in person at the Special Meeting. Holders whose shares  
are in street name should consult with their brokers concerning procedures for  
revocation. Subject to such revocation, all shares represented by a properly    
executed Proxy will be voted as directed by the holder on the Proxy card. If no 
choice is specified, proxies will be voted FOR each of Proposals I and II.      

Solicitation Costs

        ConMat will pay the cost of preparing and mailing this Proxy statement
and other costs of the Proxy solicitation. Certain of ConMat's officers and     
employees may solicit the submission of proxies authorizing the voting of shares
in accordance with the Board of Directors' recommendations, but no additional   
reimbursement will be paid by ConMat or ConMat for the solicitation of those    
proxies. Such solicitation may by made by personal interview, telephone, and    
telegram. Arrangements have also been made with brokerage firms and others for  
the forwarding of Proxy solicitation materials to the beneficial owners of      
Common Stock, and ConMat will reimburse them for reasonable out-of-pocket       
expenses incurred in connection therewith.                                      

 Experts

         The consolidated financial statements of ConMat as of December 31, 2001
and 2000 and for each of the two years in the period ended December 31, 2001    
included in this document have been so included in reliance on the reports of   
Cogen Sklar LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.                                             

      Representatives of Cogen Sklar LLP are not expected to be present at
the special meeting.                                                            

Other Business

      The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the      
Special Meeting. If other matters are presented, it is the intention of the     
persons named as proxies in the accompanying Proxy Card to vote in their        
discretion all shares represented by validly executed proxies.                  

 Where You Can Find More Information

      ConMat files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission ("SEC"). You  
may read and copy any reports, statements or other information that ConMat files
with the SEC at the SEC's public reference rooms at the following locations:    

Public Reference Room               Chicago Regional Office                     
450 Fifth Street, N.W.              Citicorp Center                             
Room 1024                           500 West Madison Street, Suite 1400         
Washington, DC 20549                Chicago, IL 60661-2511                      

23

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      Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public from 
commercial document retrieval services and at the Internet world wide web site  
maintained by the SEC at "http://www.sec.gov."                                  

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

   The following documents filed by ConMat with the Securities and
Exchange Commission pursuant to the Securities Exchange Act are hereby          
incorporated by reference in this proxy statement/prospectus:                   

      o  Annual Report on Form 10-K for the fiscal year ended December 31,
2001 (File No. 000-30166); and                          

       o  Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
(File No. 000-30166).                                   

         Each document filed by ConMat pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this proxy statement and    
prior to the date of the special meeting shall be deemed to be incorporated by  
reference in this proxy statement and to be a part of this proxy statement from 
the date of filing of such document. Any statement contained in this proxy      
statement or in a document incorporated or deemed to be incorporated by         
reference in this proxy statement shall be deemed to be modified or superseded  
for purposes of the Registration Statement and this proxy statement to the      
extent that a statement contained in this proxy statement or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
proxy statement modifies or supersedes such statement. Any such statement so    
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this proxy statement.                                   

          This proxy statement incorporates documents by reference which are not
included in or delivered with this document. Copies of the incorporated         
documents (other than exhibits to such documents, unless such exhibits are      
specifically incorporated by reference therein) will be furnished upon written  
or oral request without charge to each person to whom this proxy                
statement/prospectus is delivered. Requests should be made by _______ 2002 and  
should be directed to ConMat Technologies, Inc. Franklin Avenue and Grant       
Street, Phoenixville, PA 19460, or you may telephone (610) 935-0225.            

                                          By Order of the Board of Directors

                                /s/ Edward F. Sager, Jr.

                            Edward F. Sager, Jr.
                 President

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INDEX TO FINANCIAL STATEMENTS                                                   

                                                        [Enlarge/Download Table]


                                                                                                    Page
                                                                                                    ----
                                                                                                        
Audited Annual Financial Information                                                                    
         Report of Independent Auditors..............................................................F-1
         Consolidated Balance Sheet as of December                                                      
             31, 2001 and 2000.......................................................................F-2
         Consolidated Statement of Operations for the                                                   
             Years ended December 31, 2001 and 2000..................................................F-3
         Consolidated Statement of Changes in Stockholders Equity                                       
             for the Years ended December 31, 2001 and 2000..........................................F-4
         Consolidated Statement of Cash Flows for the Years                                             
             ended December 31, 2001 and 2000........................................................F-6
         Notes to Consolidated Financial Statements..................................................F-7

Unaudited Interim Financial Information                                                                 
         Consolidated Balance Sheet as of March 31, 2002............................................F-21
         Consolidated Statement of Operations for the                                                   
             Three Months ended March 31, 2002 and March 31, 2000...................................F-22
         Consolidated Statement of Cash Flows for the                                                   
             Three Months ended March 31, 2002 and March 31, 2000...................................F-23
         Notes to Consolidated Financial Statements.................................................F-24


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Audited Annual Financial Information                                            
------------------------------------                                            

Report of Independent Certified Public Accountants

Board of Directors                                                              
ConMat Technologies, Inc.                                                       

We have audited the accompanying consolidated balance sheets of ConMat          
Technologies, Inc. and Subsidiary as of December 31, 2001 and 2000 and the      
related consolidated statements of operations, stockholders' equity (deficit)   
and cash flows for the years then ended. The consolidated financial statements  
are the responsibility of the Company's management. Our responsibility is to    
express an opinion on the consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the      
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,    
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of ConMat 
Technologies, Inc. and Subsidiary as of December 31, 2001 and 2000 and the      
results of their operations and cash flows for the years then ended, in         
conformity with accounting principles generally accepted in the United States.  

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 4 to the         
financial statements, the Company was informed by its primary lender that it was
no longer willing to provide working capital financing to support the Company's 
operations. This coupled with the Company's significant operating losses raise  
substantial doubt about its ability to continue as a going concern. The         
financial statements do not include any adjustments that might result from the  
outcome of this uncertainty.                                                    

                                                   COGEN SKLAR LLP

Bala Cynwyd, Pennsylvania                                                       
May 10, 2002                                                                    

 F-1

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Balance Sheets                                                     

                                                        [Enlarge/Download Table]

                                                                        December 31    December 31
                               ASSETS                                      2001           2000    
                                                                       ------------   ------------
                                                                                                  
Current Assets:                                                                                   
   Cash and cash equivalents                                            $    84,315   $   153,038 
   Accounts receivable - net                                              4,512,093     4,744,077 
   Inventories                                                            1,048,607     1,478,185 
   Prepaid expenses                                                         142,415       269,178 
                                                                        -----------   ----------- 
                                                 Total Current Assets     5,787,430     6,644,478 
Property, Plant & Equipment - net                                                 -     1,227,409 
Property, Plant & Equipment - held for sale                               1,046,978             - 
Deferred Income Taxes                                                     1,125,493        78,493 
Other Assets                                                                216,285       270,858 
                                                                        -----------   ----------- 
                                                         Total Assets   $ 8,176,186   $ 8,221,238 
                                                                        ===========   =========== 

                LIABILITIES AND STOCKHOLDERS' EQUITY                                              
Current Liabilities:                                                                              
   Line of credit                                                       $ 2,818,893   $ 2,469,031 
   Current portion of long-term debt                                      1,020,846       789,338 
   Current portion of capital lease obligations                              28,229        64,743 
   Accounts payable                                                       3,227,633     2,711,097 
   Legal settlement payable                                               1,500,000             - 
   Accrued expenses                                                         492,490       551,219 
                                                                        -----------   ----------- 
                                            Total Current Liabilities     9,088,091     6,585,428 

Long-Term Debt                                                            1,796,106     2,149,064 
Obligations Under Capital Leases                                             14,259        33,818 
Other Liabilities                                                           479,095       168,969 
                                                                        -----------   ----------- 
                                                    Total Liabilities    11,377,551     8,937,279 

Stockholders' Equity (Deficiency):                                                                
   Series A preferred stock - $.001 par value, 1,500,000                                          
      shares authorized, 713,250 shares issued and outstanding                  713           713 
   Series B Preferred Stock - $.001 par value, 166,667                                            
      shares authorized, issued and outstanding                             500,000       500,000 
   Series C preferred stock - $.001 par value, 446,150                                            
      shares authorized,  382,500 issued and outstanding                        383           383 
   Common stock - $.001 par value, 40,000,000 shares                                              
      authorized, 2,988,083 and 2,963,083 shares issued,                                          
      2,607,758 and 2,742,258 outstanding                                     2,988         2,963 
   Additional paid-in capital                                              (649,838)      195,687 
   Accumulated deficit                                                   (2,839,471)     (300,949)
   Cost of common shares in treasury - 380,325 and 220,825 shares          (166,140)      (96,838)
   Less: Receivables for shares sold                                        (50,000)     (900,000)
              Receivable relating to Eastwind claim                               -      (118,000)
                                                                        -----------   ----------- 
                                       Total Stockholders' Deficiency    (3,201,365)     (716,041)
                                                                        -----------   ----------- 
                       Total Liabilities and Stockholders' Deficiency   $ 8,176,186   $ 8,221,238 
                                                                        ===========   =========== 

The accompanying notes are an integral part of these consolidated financial     
statements                                                                      

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Statements of Operations                                           

                                                        [Enlarge/Download Table]


                                                                             Year Ended December 31      
                                                                               2001             2000     
                                                                          -------------     ------------ 
                                                                                                         
Net Sales to Customers                                                    $ 12,289,424      $ 13,695,058 
Cost of Goods Sold                                                          10,022,205        10,493,578 
                                                                          ------------      ------------ 
                                                            Gross Profit     2,267,219         3,201,480 

Selling, General and Administrative Expenses                                 3,172,381         2,380,637 
Corporate Expenses                                                           1,051,042           510,059 
                                                                          ------------      ------------ 
                                                 Operating (Loss) Income    (1,956,204)          310,784 

Other Income (Expense):                                                                                  
   Interest expense                                                           (495,106)         (526,462)
   Legal settlement                                                         (1,500,000)                - 
   Rental income                                                               282,748           247,096 
                                                                          ------------      ------------ 
                              (Loss) Income Before Tax (Benefit) Expense    (3,668,562)           31,418 

Income Tax (Benefit) Expense                                                (1,155,000)           27,200 
                                                                          ------------      ------------ 
                                                       Net (Loss) Income    (2,513,562)            4,218 

Dividends on preferred shares                                                                            
                                                                              (135,508)          (87,754)
                                                                          ------------      ------------ 
                             Net (loss) available to common shareholders  $ (2,649,070)     $    (83,536)
                                                                          ============      ============ 

Net loss per Common Share:                                                                               
      Basic                                                               $      (1.01)     $      (0.04)
                                                                          ============      ============ 
      Diluted                                                             $      (1.01)     $      (0.04)
                                                                          ============      ============ 

Weighted average number of common shares outstanding:                                                    

      Basic                                                                  2,613,286         2,365,371 
                                                                          ============      ============ 
      Diluted                                                                2,613,286         2,365,371 
                                                                          ============      ============ 

The accompanying notes are an integral part of these consolidated financial     
statements                                                                      

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Statements of Changes in Stockholders' Equity (Deficiency)         
Years Ended December 31, 2001 and 2000                                          

                                                        [Enlarge/Download Table]


                                        Common stock            Series A preferred stock   Series B preferred stock  
                                  --------------------------  ---------------------------  --------------------------
                                    Shares        Amount        Shares         Amount        Shares        Amount    
                                  ------------  ------------  ------------  -------------  ------------  ------------
                                                                                                                     
Balance, December 31, 1999          2,250,000       $ 2,250     1,073,333        $ 1,073       166,667      $500,000 
Conversion of common shares                                                                                          
   and series A preferred shares                                                                                     
   for series C preferred shares      (75,000)          (75)     (285,000)          (285)                            
Conversion of series A preferred                                                                                     
   shares into common shares          313,000           313                                                          
Conversion of series A preferred                                                                                     
   shares into common shares           75,083            75      (75,083)            (75)                            
Issuance of common shares                                                                                            
   in exchange for note               400,000           400                                                          
                                  ------------  ------------  ------------  -------------  ------------  ------------
Balance, December 31, 2000          2,963,083         2,963      713,250             713       166,667       500,000 
Issuance of common shares              25,000            25                                                          
                                  ------------  ------------  ------------  -------------  ------------  ------------
Balance, December 31, 2001          2,988,083       $ 2,988       713,250         $  713       166,667      $500,000 
                                  ============  ============  ============  =============  ============  ============

                                                        [Enlarge/Download Table]

                                                                    Cost of common       
                                   Series C preferred stock       shares in treasury     
                                  --------------------------  ---------------------------
                                    Shares        Amount        Shares         Amount    
                                  ------------  ------------  ------------  -------------
                                                                                         
Balance, December 31, 1999                  -        $    -             -   $          - 

Conversion of common shares                                                              
   and series A preferred shares                                                         
   for series C preferred shares      382,500           383                              
Purchase of treasury shares                                       220,825        (96,838)
                                  ------------  ------------  ------------  -------------
Balance, December 31, 2000            382,500           383       220,825        (96,838)
Purchase of treasury shares                                       159,500        (69,302)
                                  ------------  ------------  ------------  -------------
Balance, December 31, 2001            382,500        $  383       380,325    $  (166,140)
                                  ============  ============  ============  =============

The accompanying notes are an integral part of these consolidated financial     
statements                                                                      

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                                                        [Enlarge/Download Table]

ConMat Technologies, Inc. and Subsidiary                                                                         
Consolidated Statements of Changes in Stockholders' Equity (Deficiency) - Continued                              
Years Ended December 31, 2001 and 2000                                                                           

                                                                         Notes       Receivable       Total      
                                         Additional     Accumulated    receivable    relating to   stockholders' 
                                          paid-in        earnings      for shares     Eastwind        equity     
                                        capital, net     (deficit)        sold          claim      (deficiency)  
                                        ------------   ------------   -----------    -----------   ------------- 
                                                                                                                 
Balance, December 31, 1999              $   (666,986)  $   (305,167)  $   (50,000)   $         -   $    (518,830)
Conversion of common shares                                                                                      
   and series A preferred shares                                                                                 
   for series C preferred shares                 (23)                                                            
Conversion of series A preferred                                                                                 
   shares into common shares                    (313)                                                            
Sale of common stock                         297,500                     (250,000)                        47,500 
Purchase of treasury shares                                                                              (96,838)
Expenses associated with                                                                                         
   equity transactions                       (34,091)                                                    (34,091)
Issuance of common shares                                                                                        
   in exchange for note                      599,600                     (600,000)                               
Eastwind claim receivable                                                               (118,000)       (118,000)
Net income                                                    4,218                                        4,218 
                                        ------------   ------------   -----------    -----------   ------------- 
Balance, December 31, 2000                   195,687       (300,949)     (900,000)      (118,000)       (716,041)

Issuance of common shares                      9,475                                                       9,500 
Net loss                                                 (2,513,562)                                  (2,513,562)
Expenses associated with                                                                                         
   equity transactions                        (5,000)                                                     (5,000)
Payment of series C preferred                                                                                    
   dividends                                                (24,960)                                     (24,960)
Write-off of note receivable for shares                                                                          
   sold                                     (850,000)                     850,000                                
Reversal of Eastwind claim receivable                                                    118,000         118,000 
Purchase of treasury shares                                                                              (69,302)
                                        ------------   ------------   -----------    -----------   ------------- 
Balance, December 31, 2001              $   (649,838)  $ (2,839,471)  $   (50,000)   $         -   $  (3,201,365)
                                        ============   ============   ===========    ===========   ============= 

The accompanying notes are an integral part of these consolidated financial     
statements                                                                      

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Statements of Cash Flows                                           

                                                        [Enlarge/Download Table]

                                                                  Year Ended December 31   
                                                                -------------------------- 
                                                                    2001            2000   
                                                                -----------      --------- 
                                                                                           
Cash Flows from Operating Activities:                                                      
   Net (loss) income                                            $(2,513,562)     $   4,218 
   Adjustments to reconcile to net cash provided by (used in)                              
     operating activities:                                                                 
         Depreciation and amortization                              269,983        263,116 
         Provision for bad debt expense                             335,839              - 
         Legal settlement expense                                 1,500,000              - 
         Receivable relating to Eastwind claim                      118,000       (118,000)
         Provision for pension expense                              302,860              - 
         Income tax benefit                                      (1,155,000)             - 
   Changes in assets and liabilities:                                                      
      (Increase) decrease in assets                                                        
         Accounts receivable                                       (103,855)      (174,651)
         Inventories                                                429,578       (203,138)
         Prepaid expenses                                           133,888       (210,837)
         Other assets                                               (27,315)       (59,013)
      Increase (decrease) in liabilities                                                   
         Accounts payable                                           516,535        988,734 
         Accrued expenses                                            66,537         95,506 
                                                                -----------      --------- 
           Net Cash (Used In) Provided By Operating Activities     (126,512)       585,935 

Cash Flows from Investing Activities:                                                      
   Purchase of property and equipment                                (5,289)      (403,397)
   Patent costs                                                           -        (43,821)
                                                                -----------      --------- 
                         Net Cash Used In Investing Activities       (5,289)      (447,218)

Cash Flows from Financing Activities:                                                      
   Net borrowings under lines of credit                             349,862        341,403 
   Repayments of term notes                                        (121,450)      (282,011)
   Repayments of capital lease obligations                          (56,073)       (83,526)
   Purchases of treasury stock                                      (69,302)       (96,838)
   Proceeds from sale of common stock                                     -         47,500 
   Offering costs associated with equity transactions                     -        (34,091)
   Payments of Series B preferred dividends                         (10,000)             - 
   Payments of Series C preferred dividends                         (24,959)             - 
   Proceeds from capital lease obligations                                          20,292 
   Recapitalization costs                                            (5,000)               
                                                                -----------      --------- 
           Net Cash Provided By (Used In) Financing Activities       63,078        (87,271)

            Net (Decrease) Increase in Cash & Cash Equivalents      (68,723)        51,446 

Cash and Cash Equivalents at Beginning of Period                    153,038        101,592 
                                                                -----------      --------- 
Cash and Cash Equivalents at End of Period                      $    84,315      $ 153,038 
                                                                ===========      ========= 

Supplemental Cash Flow Information:                                                        
   Cash paid for interest                                       $   495,106      $ 520,862 
                                                                ===========      ========= 
   Cash paid for taxes                                          $         -      $  40,000 
                                                                ===========      ========= 

The accompanying notes are an integral part of these
 consolidated financial statements

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

NOTE 1 - NATURE OF BUSINESS                                                     

ConMat Technologies, Inc. (ConMat or the Company), organized under the laws of  
the State of Florida, is engaged in the development and manufacture of          
proprietary custom engineered plastics and composite products for industrial end
users with a special emphasis on the wastewater treatment marketplace. ConMat   
conducts its operations through its wholly owned subsidiary, the Polychem       
Corporation (Polychem), located in Phoenixville, Pennsylvania. Polychem         
manufactures and sells clarifier components for wastewater treatment            
applications and other plastic-molded products, including buckets, sprockets and
bearings. Subsequent to December 31, 2001, Polychem entered into an agreement to
outsource all of its manufacturing operations. The wastewater treatment market  
is global in nature, and Polychem presently sells products internationally in   
Western Europe, the Middle East, Asia and South America, as well as in the      
United States.                                                                  

NOTE 2 - BASIS OF PRESENTATION                                                  

The consolidated financial statements include the accounts of ConMat and its    
wholly owned subsidiary, Polychem. Certain reclassifications to prior year      
amounts, none of which effect the net income, have been made to conform to the  
current year presentation.                                                      

On December 8, 1998, ConMat, a non-operating public company with 1,000,000      
common shares outstanding and immaterial net assets, acquired 100% of the       
outstanding common stock of Polychem from The Eastwind Group, Inc. (Eastwind)   
(the Acquisition). The Acquisition resulted in the owners and management of     
Polychem having effective operating control of the combined entity.             

Under generally accepted accounting principles, the Acquisition is considered to
be a capital transaction in substance, rather than a business combination. That 
is, the Acquisition is equivalent to the issuance of stock by Polychem for the  
net monetary assets of ConMat, accompanied by a recapitalization, and is        
accounted for as a change in capital structure. Accordingly, the accounting for 
the Acquisition is identical to that resulting from a reverse acquisition,      
except that no goodwill is recorded. Under reverse takeover accounting, the post
reverse-acquisition comparative historical financial statements of the "legal   
acquirer" (ConMat), are those of the "legal acquiree" (Polychem) (i.e. the      
accounting acquirer).                                                           

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Use of Estimates                                                                

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent 
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results    
could differ from those estimates.                                              

Comprehensive Income                                                            

The company adopted Statement of Financial Accounting Standard (SFAS No. 130,   
"Reporting Comprehensive Income") beginning January 4, 1998. Comprehensive      
income is a more inclusive financial reporting methodology that includes        
disclosure of certain financial information that historically has not been      
recognized in the calculation of net income (loss). Since the company had no    
items of other comprehensive income (loss), no separate statement of            
comprehensive income (loss) has been presented.                                 

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

Cash and Cash Equivalents                                                       

The Company's cash management system provides for the short-term investment of  
cash and the transfer or deposit of sufficient funds to cover checks as they are
submitted for payment. The Company considers all highly liquid debt instruments 
purchased with an original maturity of three months or less to be cash          
equivalents.                                                                    

Concentration of Credit Risk Involving Cash                                     

At December 31, 2001, the Company has no deposits with major financial          
institutions that exceed Federal Depository Insurance limits.                   

Inventories                                                                     

Inventories consist of raw materials, work-in-process, and finished goods.      
Work-in-process and finished goods include raw materials, direct labor, and a   
portion of manufacturing overhead. The Company's inventory is stated at the     
lower of cost or market, with cost determined by the first-in, first-out (FIFO) 
method.                                                                         

Revenue Recognition                                                             

The Company recognizes operating revenue when title and risk of loss pass to    
customers in accordance with Staff Accounting Bulletin No. 101, "Revenue        
Recognition," issued by the Securities and Exchange Commission.                 

Property, Plant and Equipment                                                   

Property, plant and equipment are stated at cost less accumulated depreciation. 
Depreciation is recorded using the straight-line and accelerated depreciation   
methods over the estimated useful lives of the assets. Leasehold improvements   
are amortized over the term of the lease or estimated useful life, whichever is 
shorter. Property, Plant & Equipment has been classified as "held for sale" as  
of December 31, 2001. See Note 4 and Note 7 for further discussion.             

Research and Development Costs                                                  

The Company expenses research and development costs as incurred. Research and   
development costs were approximately $226,000 for the year ended December 31,   
2001 and $225,000 for the year ended December 31, 2000.                         

Income Taxes                                                                    

The Company accounts for its income taxes under the liability method specified  
by Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for   
Income Taxes. Deferred tax assets and liabilities are determined based on the   
difference between the financial statement and tax bases of assets and          
liabilities as measured by the enacted tax rates which will be in effect when   
these differences reverse. Deferred tax expense is the result of changes in     
deferred tax assets and liabilities.                                            

Shipping Costs                                                                  

In September 2000, the Emerging Issues Task Force reached a consensus on Issue  
00-10, "Accounting for Shipping and Handling Fees and Costs" (Issue 00-10).     
Issue 00-10 requires that all amounts billed to customers related to shipping   
and handling should be classified as revenues. In addition, Issue 00-10         
specifies that the classification of shipping and handling cost is an accounting
policy decision that should be disclosed pursuant to APB #22, "Disclosure of    
Accounting Policies". The Company's product costs includes amounts for shipping 
and handling, therefore, it charges its customers shipping and handling fees at 
the time the products are shipped or when services are performed. The cost of   
shipping products to the customer is recognized at the time the products are    
shipped to the customer and is included in Cost of Goods Sold.                  

 F-8

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

Recent Accounting Pronouncements                                                

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,  
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("Statement    
144"), effective in fiscal years beginning after December 15, 2001, with early  
adoption permitted, and in general are to be applied prospectively. Statement   
144 establishes a single accounting model for the impairment or disposal of     
long-lived assets, including discontinued operations. Statement 144 superseded  
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for  
Long-Lived Assets to Be Disposed Of," and APB Opinion No. 30, "Reporting the    
Results of Operations - Reporting the Effects of Disposal of a Segment of a     
Business, and Extraordinary, Unusual and Infrequently Occurring Events and      
Transactions." The Company expects that the provisions of Statement 144 will not
have a material impact on its results of operations and financial position upon 
adoption.                                                                       

The following recently issued accounting pronouncements are currently not       
applicable to the Company.                                                      

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,     
"Business Combinations" ("Statement 141"), effective for all business           
combinations initiated after June 30, 2001. Statement 141 requires all business 
combinations to be accounted for under the purchase method. Statement 141       
supersedes APB Opinion No. 16, "Business Combinations," and Statement No. 38,   
"Accounting for Preacquisition Contingencies of Purchased Enterprises."         

In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,     
"Goodwill and Other Intangible Assets" ("Statement 142"), effective October 1,  
2001. Statement 142 addresses the financial accounting and reporting for        
acquired goodwill and other intangible assets. Under the new rules, the Company 
is no longer required to amortize goodwill and other intangible assets with     
indefinite lives, but will be subject to periodic testing for impairment.       
Statement 142 supersedes APB No. 17, "Intangible Assets."                       

In August 2001, the Financial Accounting Standards Board issued SFAS No. 143,   
"Accounting for Obligations Associated With the Retirement of Long-Lived Assets"
("Statement 143"), effective in fiscal years beginning after June 15, 2002, with
early adoption permitted. Statement 143 establishes accounting standards for the
recognition and measurement of an asset retirement obligation and its associated
asset retirement cost. It also provides accounting guidance for legal           
obligations associated with the retirement of tangible long-lived assets.       

Earnings (Loss) Per Share                                                       

The Company reports earnings per share in accordance with the provisions of SFAS
No. 128, Earnings Per Share. SFAS No. 128 requires presentation of basic and    
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share. Basic earnings per share excludes    
dilution and is computed by dividing income available to common stockholders by 
the weighted average common shares outstanding during the period. Diluted       
earnings per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.                                                              

The following are the basic and diluted earnings per share (EPS) computations   
for the periods presented:                                                      

F-9 

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

                                                        [Enlarge/Download Table]


                                                                        Year Ended December 31         
                                                             ------------------------------------------
                                                                   2001                     2000       
                                                             -----------------        -----------------
                                                                                                       
Earnings per Share - Basic:                                                                            
   Net income                                                    $(2,513,562)              $     4,218 
   Dividends on preferred shares                                    (135,508)                  (87,754)
                                                             -----------------        -----------------
   Net (loss) income available to common shareholders            $(2,649,070)              $   (83,536)
                                                             =================        =================

   Weighted average shares outstanding                              2,613,286                2,365,371 
                                                             =================        =================

                            Basic (Loss) Earnings Per Share      $      (1.01)             $     (0.04)
                                                             =================        =================

Earnings per Share - Diluted:                                                                          
   Net (loss) income available to common shareholders            $ (2,649,070)             $   (83,536)
   Dividends on preferred shares                                                                       
                                                                            -                        - 
   Income on common shares after                                                                       
                                                             -----------------        -----------------
      assumed conversions                                        $ (2,649,070)             $   (83,536)
                                                             =================        =================

   Weighted average shares outstanding                              2,613,286                2,365,371 
   Dilutive effect of preferred stock                                                                  
                                                                            -                        - 
   Dilutive effect of stock options and warrants                                                       
                                                                            -                        - 
                                                             -----------------        -----------------
      Diluted average shares outstanding                            2,613,286                2,365,371 
                                                             =================        =================

                          Diluted (Loss) Earnings Per Share      $      (1.01)             $     (0.04)
                                                             =================        =================


Series A preferred stock, convertible into 798,875 shares of common stock was   
outstanding during the fiscal years ended December 31, 2001 and 2000. Common    
stock warrants associated with the Series B and Series C preferred stock        
providing for the purchase of 579,167 and 196,667 common shares were outstanding
at December 31, 2001 and 2000, respectively. The exercise price of the warrants 
is $3.00 per warrant. The Company had stock options for the purchase of 375,000 
common shares outstanding at December 31, 2001 and 2000. The Series A preferred 
stock, preferred stock warrants and the stock options were excluded from the    
computation of diluted earnings per share for the year ended December 31, 2001  
and 2000, since these securities were antidilutive as a result of the Company's 
loss available to common shareholders.                                          

NOTE 4 - MANAGEMENT'S PLAN                                                      

As shown in the accompanying financial statements, the Company incurred a net   
loss of ($2,514,000) during the year ended December 31, 2001, and as of that    
date, the Company's current liabilities exceeded its current assets by          
$3,301,000 and its total liabilities exceeded its total assets by $3,201,000.   
Those factors, as well as the inability of the Company to either restructure or 
replace its financing (as discussed in Note 9), create an uncertainty about the 
Company's ability to continue as a going concern. Management of the Company has 
developed a plan that includes outsourcing the manufacturing of its product     
lines to a supplier as well as plans to reduce its liabilities through the sale 
of all of Polychem's assets. The ability of the Company to continue as a going  
concern is dependent on acceptance of the plan by the Company's stockholders.   
The financial statements do not include any adjustments that might be necessary 
if the Company is unable to continue as a going concern.                        

Polychem has agreed to outsource the manufacturing of its product lines to      
Ensinger Vekton, Inc. and Putnam Precision Molding, Inc. (collectively,         
"Supplier"), pursuant to a Supply and Equipment Purchase Agreement, dated March 
20, 2002. Under the terms of the agreement, Polychem has agreed to purchase a   
minimum of $2.5 million of products from Supplier each year and to sell to      
Supplier the equipment Polychem formerly used to manufacture its products.      

F-10

PRER14A 41st Page of 106 TOC 1st Previous Next ↓Bottom Just 41st
ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

On March 20, 2002, ConMat entered into a License and Asset Purchase Agreement   
(the "License and Asset Purchase Agreement") with Polychem and Ecesis LLC       
("Ecesis") which provides for the sale of Polychem's specialty and water        
treatment product lines to Ecesis (the "Sale"). The Sale is subject to the      
approval of ConMat's shareholders. The contemplated purchase price will be      
$1,600,000, which has been supported by an appraisal of the business by an      
independent third party.                                                        

ConMat anticipates holding a special meeting of its shareholders in the near    
future at which its shareholders will vote whether to approval the Sale and a   
Plan of Liquidation for the remaining assets of Polychem (the "Liquidation").   
ConMat believes that its shareholders will approve the Sale and the Liquidation.
Ecesis is a Delaware limited liability company which was formed to purchase     
Polychem's specialty and water treatment lines. Two of ConMat's and Polychem's  
former directors and officers, Paul A. DeJuliis and Richard R. Schutte, are     
members of Ecesis. Messrs. DeJuliis and Schutte resigned as directors and       
officers of ConMat and Polychem on March 13, 2002.                              

Pending the approval of the Sale by ConMat's shareholders, pursuant to the      
License and Asset Purchase Agreement, Polychem has licensed its specialty and   
water treatment product lines to Ecesis in exchange for royalties based on      
sales. In the event that the Sale is not approved by ConMat's shareholders, the 
license will terminate and Polychem will resume developing and marketing its    
product lines.                                                                  

If ConMat's shareholders approve the Sale and Liquidation, ConMat will have no  
assets (other than cash, if any, remaining after satisfaction of its and        
Polychem's liabilities). In such event, the Board of Directors of ConMat will   
seek to acquire an interest in one or more suitable operating businesses, which 
may include assets or shares of another entity to be acquired by ConMat directly
or through a subsidiary, that the Board of Directors believes will be profitable
to ConMat and its shareholders. In the event the Sale and Liquidation is not    
approved by ConMat's shareholders, the license to Ecesis shall terminate and    
ConMat shall resume operation of Polychem.                                      

NOTE 5 - ACCOUNTS RECEIVABLE                                                    

                                                                [Download Table]


                                          Year Ended December 31           
                                 ------------------------------------------
                                       2001                     2000       
                                 -----------------        -----------------

                                                                           
Accounts receivable                   $ 3,947,058              $ 4,239,826 
Retainage receivables                     960,874                  564,251 
Allowance for doubtful accounts          (395,839)                 (60,000)
                                 -----------------        -----------------
                                      $ 4,512,093              $ 4,744,077 
                                 =================        =================


The Company sells clarifier components to general contractors for use in        
building and maintaining wastewater treatment facilities operated by government 
municipalities. Sales of these components under contracts generally require     
retainage provisions, which become due upon completion of the entire contract.  

NOTE 6 - INVENTORIES                                                            

                                                                [Download Table]


                          Year Ended December 31           
                 ------------------------------------------
                       2001                     2000       
                 -----------------        -----------------

                                                           
Raw Materials         $   329,103              $   581,554 
Work-in-process           427,940                  630,314 
Finished goods            291,564                  266,317 
                 -----------------        -----------------
                      $ 1,048,607              $ 1,478,185 
                 =================        =================


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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT                                          

                                                        [Enlarge/Download Table]


                                                                 Year Ended December 31           
                                       Estimated        ------------------------------------------
                                     Useful Lives             2001                     2000       
                                  --------------------  -----------------        -----------------

                                                                                                  
Land                                                         $    56,000              $    56,000 
Buildings and equipment              10 - 15 years             1,058,325                  968,826 
Machinery and equipment               3 - 7 years              1,091,397                  938,283 
Construction in progress                                         109,592                  346,917 
                                                        -----------------        -----------------
                                                        -----------------        -----------------
                                                               2,315,314                2,310,026 
   Less accumulated depreciation                              (1,268,336)              (1,082,617)
                                                        -----------------        -----------------
                                                        -----------------        -----------------
                                                             $ 1,046,978              $ 1,227,409 
                                                        =================        =================

Pursuant to the discussion in "Note 4 - Management's Plan" for the Polychem     
operations, the Property, Plant & Equipment amounts as of December 31, 2001 have
been identified as "Held for Sale". Management estimates that the fair value    
less costs to sell will be in excess of the carrying value of the assets.       

Depreciation expense was $185,720 and $166,444 for the fiscal years ended       
December 31, 2001 and 2000, respectively.                                       

Machinery and equipment as of December 31, 2001 and 2000, includes $529,380 and 
$514,569, respectively, of equipment under capital leases, with accumulated     
depreciation of $427,547 and $344,976, respectively.                            

NOTE 8 - OTHER ASSETS                                                           

                                                                [Download Table]

                                  Year Ended December 31           
                         ------------------------------------------
                               2001                     2000       
                         -----------------        -----------------

                                                                   
Deferred financing, net         $  71,131                $ 145,794 
Patents, net                      145,154                  125,064 
                         -----------------        -----------------
                                $ 216,285                $ 270,858 
                         =================        =================

NOTE 9 - LINE OF CREDIT AND LONG-TERM DEBT                                      

On September 30, 1998, Polychem entered into a three year loan and security     
agreement (the Agreement) with a commercial lender which provided to Polychem a 
revolving credit line up to $3,500,000 based upon eligible accounts receivable  
and inventory, as defined. On August 25, 1999, the revolving credit line was    
increased to $5,000,000. The revolving credit line bears interest at the index  
rate, based on the rate for 30-day dealer paper, plus 8.75% (10.77% at December 
31, 2001). The Agreement also provided for a term loan for $1,500,000, secured  
by equipment, with interest at the index rate plus 10.5% (12.52% at December 31,
2001). As of December 31, 2001 the outstanding balance on the revolving line of 
credit was $2,818,893. The Agreement expired on September 30, 2001 as a result  
of the unwillingness by GE Capital Corporation, the lender, to provide continued
working capital financing to Polychem to support its operations. Management does
not anticipate that Polychem will be able to obtain sufficient capital financing
on reasonable terms from another lender to replace the GE Capital financing. The
Company has been granted an interim extension of the previous credit facility by
the lender, through May 31, 2002. The extension has imposed some additional     
financial restrictions and limitations on the Company generally in the form of  
additional reserves against maximum borrowing amount.                           

On August 25, 1999, Polychem received proceeds of $1,880,000 pursuant to a      
10-year mortgage loan containing a 25 year amortization schedule and a balloon  
payment due September 1, 2009, secured by Polychem's land and                   

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

building in Phoenixville, Pennsylvania. The mortgage loan bears interest at 8.5%
for the first five years and is adjusted to 3.5% above the 5-year U.S. Treasury 
Note Yield Rate at the end of the first five years. Polychem used $813,000 of   
the mortgage proceeds to reduce the term loan and $996,000 to reduce the        
revolving credit line.                                                          

Subsequent to December 31, 2001, Polychem was in default of the provisions of   
the term note payable to the Budd Company. An agreement between the two parties 
provides for various payments of principal and interest to be made during the   
period of January 1, 2002 through December 31, 2002.                            

At December 31, 2001, there was approximately $54,000 available for advances    
under the revolving line of credit.                                             

                                                        [Enlarge/Download Table]


                                                                          Year Ended December 31          
                                                                 -----------------------------------------
                                                                      2001                     2000       
                                                                 ----------------         ----------------
                                                                                                          
Polychem term note payable to the Budd Company, interest                                                  
at 8%, principle payable in various installments during                                                   
Calendar year 2002.                                                  $   813,148              $   813,148 

Polychem note payable, interest at index rate plus 10.5% at                                               
December 31, 2001 (12.52%) plus 6.5% at December 31,                                                      
2000 (13.15%) in monthly installments of $8,000 plus interest,                                            
with remaining balance to be paid during calendar year 2002.             180,000                  276,000 

Polychem 10-year mortgage note payable, interest at 8.5% for                                              
the first five years, thereafter, 3.5% above the 5-year                                                   
Treasury Note yield at August 25, 2004, monthly payments based                                            
upon a 25-year amortization schedule with a balloon Payment due                                           
September, 2009 of outstanding principal and Interest                  1,823,804                1,849,254 
                                                                 ----------------         ----------------
                                                                       2,816,952                2,938,402 
Less current portion                                                 (1,020,846)                 (789,338)
                                                                 ----------------         ----------------
                                                                     $ 1,796,106              $ 2,149,064 
                                                                 ================         ================

Maturities on these obligations at December 31, 2001 are as follows:            

                          2002                           $ 1,020,846
                          2003                                30,147
                          2004                                32,811
                          2005                                35,712
                          2006                                38,868
                          Thereafter                       1,658,568
                                                      ----------------
                                                         $ 2,816,952
                                                      ================

The carrying amounts of the Company's long-term debt approximate their fair     
value as of December 31, 2001 and 2000. The fair value of the Company's         
long-term debt is estimated using discounted cash flow analyses based on the    
Company's incremental borrowing rate for similar types of borrowing             
arrangements.                                                                   

Interest expense of $481,767 and $502,045 related to the line of credit and     
long-term debt was charged to operations for the years ended December 31, 2001  
and 2000, respectively.                                                         

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

NOTE 10 - CAPITALIZED LEASE OBLIGATIONS                                         

The Company leases certain equipment under capital leases. The weighted average 
interest rate related to these capital leases was 10% in both fiscal 2001 and   
2000. Interest expense of $5,614 and $13,836 on the capitalized lease           
obligations was charged to operations for the years ended December 31, 2001 and 
2000, respectively. Future minimum lease payments as of December 31, 2001, are  
as follows:                                                                     

                      2002                         $  30,840
                      2003                            14,636
2004            
                      2005                                 -
                      2006                                 -
                      Thereafter                           -
                                                    ----------
Total minimum lease payments                            
                                                      45,476
   Less amounts representing interest                  (2,988)
                                                    ----------
                                                      42,488
   Less current portion                               (28,229)
                                                    ----------
                                                   $  14,259
                                                    ==========

NOTE 11 - EMPLOYEE BENEFIT PLANS                                                

Defined Contribution Plans                                                      

Management and nonunion employees of Polychem participate in a qualified 401(k) 
savings plan. Participants can contribute a portion of their pretax             
compensation, and Polychem matches 50% of the first 4% of compensation          
contributed by the employee. Contributions to the plan for the years ended      
December 31, 2001 and 2000, were $34,276 and $37,889, respectively. Participants
vest in Polychem's contributions pro rata over two to five years. At the        
direction of the Board of Directors, Polychem may elect to contribute a maximum 
of 9% of each employee's compensation, in addition to the regular match, if     
sufficient profits are generated. There were no discretionary contributions made
in fiscal years 2001 or 2000.                                                   

Defined Benefit Pension Plan                                                    

Polychem maintains a non-contributory defined benefit pension plan for hourly   
union employees. The pension benefits are based on years of service and the     
benefit rate in effect at the date of retirement.                               

The plan status was as follows:                               

                                                        [Enlarge/Download Table]


                                                                  Year Ended December 31     
                                                             --------------------------------
                                                                2001                2000     
                                                             ------------        ------------
                                                                                             
Change in benefit obligation:                                                                
   Benefit obligation at beginning of year                   $ 2,210,961         $ 2,413,507 
   Service cost                                                   32,104              30,559 
   Interest cost                                                 154,004             158,541 
   Actual gain                                                   (49,495)           (191,293)
   Benefits paid                                                (199,521)           (200,353)
                                                             ------------        ------------
                          Benefit obligation at end of year    2,148,053           2,210,961 


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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

                                                        [Enlarge/Download Table]


                                                                                       
Change in plan assets:                                                                 
   Fair value of plan assets at beginning of year              2,019,244     2,317,283 
   Actual return on plan assets                                 (135,765)      (97,685)
   Employer contribution                                               0             0 
   Benefits paid                                                (199,521)     (200,353)
                                                             ------------  ------------
                   Fair value of plan assets at end of year    1,683,958     2,019,245 

   Funded status                                                (464,095)     (191,716)
   Unrecognized net actuarial gain                               114,484      (143,792)
   Unrecognized prior service cost                               132,033       148,127 
   Miniumum liability adjustment                                (246,517)       (4,335)
                                                             ------------  ------------
                             Prepaid (accrued) benefit cost  $  (464,095)  $  (191,716)
                                                             ============  ============

Weighted average assumptions as of end of year:                                        
   Discount rate                                                    7.50%         7.50%
   Expected return on plan assets                                   9.00%         9.00%

Components of net periodic benefit (cost) income:                                      
   Service cost                                              $   (32,104)  $   (30,559)
   Interest cost                                                (154,004)     (158,541)
   Actual return on plan assets                                 (135,765)      (97,685)
   Amortization of prior service cost                            (16,094)      (16,094)
   Recognized net gain (loss)                                    307,770       315,945 
                                                             ------------  ------------
                         Net periodic benefit (cost) income  $  (30,197)   $    13,066 
                                                             ============  ============


Postretirement Life Insurance Benefits                                          

Polychem provides postretirement life insurance benefits to all union employees.
The life insurance plan provides coverage ranging from $3,000 to $6,000 for     
qualifying retired employees. A discount rate of 7% was used in determining the 
present value of the obligations as of December 31, 2001 and 2000. The unfunded 
accumulated postretirement benefit obligation as of December 31, 2001 and 2000, 
was $15,000. The net periodic postretirement benefit cost for the years ended   
December 31, 2001 and 2000, was not material.                                   

NOTE 12 - INCOME TAXES                                                          

Under SFAS No. 109, Accounting for Income Taxes, deferred tax assets and        
liabilities are recognized for the future tax consequences attributable to      
differences between the financial statement carrying amounts of existing assets 
and liabilities and their respective tax bases. Deferred tax assets and         
liabilities are measured using enacted tax rates.                               

The components of income tax expense are as follows:                            

                            Year Ended December 31
                        ------------------------------
                        2001              2000
                        -----------        -----------
Current                                                                         
Federal                           $ (108,000)         $  20,000           
State                                      0              4,000           
                        -----------        -----------

                         (108,000)            24,000

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

Deferred                                                                        
Federal                     (827,000)              3,200                  
State                       (220,000)                  -                  
        -------------         ----------
        (1,047,000)              3,200
        -------------         ----------
       $(1,155,000)          $  27,200
        =============         ==========

The reconciliation of the statutory federal rate to the Company's effective     
income tax rate is as follows:                                                  

                                                        [Enlarge/Download Table]


                                                                 Year Ended December 31          
                                                        -----------------------------------------
                                                             2001                     2000       
                                                        ----------------         ----------------

                                                                                                 
Statutory tax provision                                      (1,247,311)                  10,682 
State income tax provision, net of federal tax benefit         (220,000)                   2,640 
Increase (decrease) in valuation allowance                      306,974                    7,468 
Nondeductable expense                                             5,337                    8,500 
Other                                                                 -                   (2,090)
                                                        ----------------         ----------------
                                                           $ (1,155,000)               $  27,200 
                                                        ================         ================

The tax effect of temporary differences that give rise to deferred income taxes 
is as follows:                                                                  

                                                        [Enlarge/Download Table]


                                                       Year Ended December 31          
                                              -----------------------------------------
                                                   2001                     2000       
                                              ----------------         ----------------
                                                                                       
Deferred tax assets                                                                    
   Accounts receivable                            $   161,452                $  20,400 
   Inventory                                           83,550                   43,627 
   Property, plant and equipment                       58,438                   37,438 
   Employee benefit plans                             184,923                   57,722 
   Legal settlement                                   630,000                        - 
   Net operating loss carryforwards                   406,000                        0 
   Valuation allowance on deferred tax asset         (398,870)                 (80,694)
                                              ----------------         ----------------
                                                  $ 1,125,493                $  78,493 
                                              ================         ================

A valuation allowance has been recorded to reduce the net deferred tax asset to 
an amount that management believes is realizable in future tax years from income
from operations. The Company will have a net operating loss of approximately    
$1,000,000 which will expire in 2021.                                           

NOTE 13 - COMMITMENTS AND CONTINGENCIES                                         

Operating Leases                                                                

The Company leases certain facilities and equipment under noncancellable        
operating leases that expire through May 2009. Rent expense of $21,980 and      
$30,007 has been charged to operations for the years ended December 31, 2001 and
2000, respectively. Minimum future rental payments under leases as of December  
31, 2001, are as follows:                                                       

2002                       $  34,749        
2003                          27,828        
2004                          12,789        
2005                          12,789        
2006                          12,789        
                    ----------
                   $ 100,944
                    ==========

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

Litigation                                                                      

ConMat is currently a defendant in an action originally filed on January 28,    
1999, in Pennsylvania state court captioned John R. Thach v. The Eastwind Group,
et al. On October 27, 2000, co-defendant, The Eastwind Group, Inc., filed a     
voluntary petition for relief under Chapter 11 of Title 11 of the Bankruptcy    
Code (U.S.B.C., E.D. Pa. Bankruptcy No. 00-33372 SR). The plaintiff removed the 
state court action to the United States Bankruptcy Court for the Eastern        
District of Pennsylvania on November 29, 2000 (U.S.B.C., E.D. Pa. Adversary No. 
00-906). Plaintiff maintains that Eastwind, his former employer, breached the   
terms of his severance agreement and that the sale of Polychem Corporation to   
ConMat was part of a conspiracy to avoid payments to him and has violated       
Pennsylvania's Uniform Fraudulent Transfer Act. The plaintiff seeks damages of  
at least $350,000 and punitive damages of at least $500,000. In addition, the   
plaintiff seeks to have the December 8, 1998 acquisition of Polychem declared   
null and void. Initially, the plaintiff sought a temporary restraining order and
preliminary injunction seeking to set aside the sale of Polychem to ConMat. By  
Order dated February 19, 1999, the State Court denied plaintiff's request for   
injunctive relief.                                                              

On January 22, 2001 the Bankruptcy Court appointed a Chapter 11 trustee to      
oversee and administer The Eastwind Group, Inc. bankruptcy. On May 24, 2001, the
bankruptcy trustee filed a substituted Complaint against ConMat. In his         
complaint, the bankruptcy trustee asserted claims against ConMat, including     
those originally raised in the John Thach complaint that the December 8, 1998   
acquisition of Polychem was a fraudulent transaction.                           

ConMat is currently a defendant in a federal district court action filed on     
April 11, 2000, in the United States District Court for the Eastern District of 
Pennsylvania captioned ProFutures Special Equities Fund, L.P. v. The Eastwind   
Group, et al. (U.S.D.C., E.D. Pa. Civil Action No. 00-CV-1888). ProFutures      
maintains that Eastwind and others violated federal and state securities laws   
and committed common law fraud in connection with the June 1998 purchase by     
ProFutures of $750,000 in Series C Convertible Preferred Stock of Eastwind.     
ProFutures seeks damages in the amount of $750,000 and seeks to have the        
acquisition of Polychem by ConMat declared null and void. ConMat, Paul A.       
DeJuliis and two other former officers of Eastwind filed a Motion to Dismiss the
Complaint on May 25, 2000 and ProFutures responded. Before the court issued a   
ruling on that motion, co-defendant Eastwind filed for bankruptcy and the case  
was stayed.                                                                     

To resolve the claims asserted by the bankruptcy trustee, John Thach and        
ProFutures, management of ConMat negotiated the terms of a settlement agreement 
with the bankruptcy trustee, which was filed with the bankruptcy court on       
October 25, 2001. Thereafter, on December 13 and 17, 2001, the bankruptcy court 
held a two-day hearing on the approval of the settlement agreement. On February 
27, 2002, the bankruptcy court approved the settlement agreement. The settlement
agreement requires the payment by ConMat of $1,500,000 to the bankruptcy        
trustee, including $500,000 in cash and a promissory note in the amount of      
$1,000,000. ConMat is funding its obligations under the settlement agreement in 
part by selling assets and effecting a management led buyout of Polychem's      
specialty and water treatment product lines.                                    

Subject to payment by ConMat of $1,500,000 to the bankruptcy trustee pursuant to
the settlement agreement and payment by Polychem of an IRS claim, John Thach's  
claims will be released against, among others, ConMat. In addition, the         
bankruptcy trustee has agreed to allocate and set aside a portion of the        
settlement proceeds, not to exceed $200,000, to fund the indemnification        
obligations from ConMat's share of liability, if any, in the ProFutures' action.
The $1,500,000 settlement payment has been accrued and reflected in the         
Company's results of operations for the year ended December 31, 2001. ConMat's  
wholly owned subsidiary, Polychem Corporation, is also a defendant in the       
actions brought by the bankruptcy trustee and Thach and is also a party to the  
various settlement agreements referenced above.                                 

In addition to the litigation arising out of the Eastwind bankruptcy and the    
claims asserted by Thach, Polychem is a defendant in an action filed by The Budd
Company in the Court of Common Pleas of Chester County. The Budd Company        
confessed judgment against Polychem under a note given by Polychem to The Budd  
Company. At present, The Budd Company has taken no steps to execute on its      
judgment and has accepted periodic payments from Polychem. As of December 31,   
2001, the balance due to The Budd Company was approximately $813,000.           

From time to time, ConMat and its subsidiary are parties to routine litigation, 
which arises in the normal course of business. In the opinion of management, the
resolution of these lawsuits would not have a material adverse effect on the    
Company's consolidated financial position or consolidated results of operations.

NOTE 14 - INCENTIVE BASED COMPENSATION                                          

In conjunction with the Acquisition, ConMat entered into an Employment Agreement
with ConMat's Chief Executive Officer and Chairman of the Board of Directors.   
Under the agreement, he will be paid an annual base salary ranging from $170,000
to $250,000, depending on ConMat's annual net income. As additional incentive   
compensation, upon executing the Employment Agreement, he received (i) 250,000  

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

shares of common stock for an aggregate purchase price of $50,000, paid by      
delivery of a two-year promissory note at 5% interest; and (ii) 250,000 options 
to purchase shares of common stock at an exercise price of $3.00 per share (the 
Stock Option Award). 50,000 of the options were exercisable as of November 30,  
1999. Another 100,000 options vest when ConMat realizes $750,000 in pre-tax     
income during a fiscal year. The remaining 100,000 options are exercisable after
when ConMat realizes $1,000,000 in pre-tax income during a fiscal year. All of  
the options expire ten years from the grant date and are immediately exercisable
upon a merger, sale of assets, or other transaction resulting in a change of    
control in which the holders of shares of common stock receive not less than    
$5.00 per share. During fiscal 1999 ConMat granted 175,000 employee stock       
options at a price of $3.00 per share, with 87,500 options vesting if ConMat    
realizes $750,000 in pre-tax income during a fiscal year. The balance of 87,500 
options vest if ConMat realizes $1,000,000 in pre-tax income during a fiscal    
year. During fiscal 2000, 75,000 of these options were forfeited. Also during   
fiscal 2000 another 25,000 options at a price of $0.875, were granted with      
similar vesting options as described above. No employee stock options were      
exercised during fiscal 2001 or 2000. There were no stock options granted during
2001.                                                                           

All stock option awards are accounted for under Accounting Principles Board     
(APB) Opinion No. 25 and related interpretations. Had compensation cost for the 
options been determined based on the fair value of the options on the grant date
consistent with the method of SFAS No. 123, Accounting for Stock Based          
Compensation, the Company's net loss per share for the fiscal year ended        
December 31, 2001 and 2000, would not be materially different from the amounts  
reported.                                                                       

NOTE 15 - INDUSTRY SEGMENT AND FOREIGN SALES INFORMATION                        

Management has determined that it operates in one industry segment (see note 1).

For the year ended December 31, 2001, Polychem's sales to foreign customers were
$5,295,258 or 43.1% of consolidated net sales, and consist principally of sales 
to customers in Asia (27%) and Europe (10%). Receivables from foreign customers 
were $2,034,000 as of December 31, 2001. For the year ended December 31, 2000,  
Polychem's sales to foreign customers were $5,224,523 or 38% of consolidated net
sales, and consist principally of sales to customers in Asia (23%) and Europe   
(10%). Receivables from foreign customers were $2,230,608 as of December 31,    
2000.                                                                           

NOTE 16 - MAJOR CUSTOMER                                                        

The Company sells a substantial portion of its products to one customer. During 
fiscal 2001 and 2000, net revenue from that one customer aggregated             
approximately $2,437,000 and $1,566,000, respectively. At December 31, 2001 and 
2000 amounts due from that customer included in trade accounts receivable were  
approximately $1,384,000 and $443,000, respectively.                            

NOTE 17 - EQUITY                                                                

Description of Preferred Stock                                                  

The Company is authorized to issue 10,000,000 shares of preferred stock. Of this
amount, 1,500,000 shares have been designated for Series A convertible preferred
stock, 166,667 shares have been designated for Series B preferred stock and     
446,150 shares have been designated for Series C preferred stock.               

Series A Preferred - Shares of the Series A convertible preferred stock rank    
prior to the common stock and pari passu with the Series B preferred stock and  
Series C preferred stock. The creation of any class or series of capital stock  
ranking senior or pari passu with the Series A convertible preferred stock or   
the Series C preferred stock requires the consent of a majority of the holders  
of Series A convertible preferred stock. The holders of the shares of the Series
A convertible preferred stock are entitled to receive non-cumulative, cash      
dividends at a rate of 2% per year, which dividends are payable in equal,       
quarterly installments, as and if declared by the Board of Directors out of     
funds legally available for the payment of dividends. The Company may, at its   

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ConMat Technologies, Inc. and Subsidiary Notes
to Consolidated Financial Statements
For the fiscal years ended December 31, 2001 and 2000 

sole discretion, pay any or all dividends in common stock rather than in cash.  
Shares of Series A convertible preferred stock are convertible at the option of 
the holder. The conversion price is equal to the greater of $3.00 or 80% of the 
closing bid price of the common stock on the conversion date, subject to        
adjustments due to stock splits, stock dividends, mergers, consolidations and   
other events. The Company has the right, by written notice to each of the       
holders of the Series A convertible preferred stock into shares of common stock 
at any time on or after the first day on which the closing bid price has been   
equal to or in excess of the conversion price for 45 consecutive calendar days. 
The holders of the Series A convertible preferred stock have no voting rights,  
except as otherwise required by the Florida Business Corporation Act.           

Series B Preferred - Shares of the Series B preferred stock rank prior to the   
common stock and pari passu with the Series A convertible preferred stock and   
Series C preferred stock. The creation of any class or series of capital stock  
ranking senior or pari passu with the Series B preferred stock or the Series C  
preferred stock requires the consent of a majority of the holders of Series B   
preferred stock. The holders of the shares of the Series B preferred stock are  
entitled to receive cash dividends at a rate of 8% per year, which dividends are
payable in equal, quarterly installments, as and if declared by the Board of    
Directors out of funds legally available for the payment of dividends. Such     
dividends will begin to accrue on the outstanding shares of the Series B        
preferred stock from the date of issuance and will accrue from day to day,      
whether or not earned or declared, until paid and shall be cumulative. The      
Company may redeem the Series B preferred stock any time for a redemption price 
of $3.00 per share, plus all accrued but unpaid dividends. The holders of the   
Series B preferred stock have the right to elect one member of ConMat's Board of
Directors. Except as otherwise required by the Florida Business Corporation Act,
the holders of the Series B preferred stock have no other voting rights. As of  
December 31, 2001 and 2000, there were $80,000 and $40,000, respectively of     
dividends in arrears on the Series B preferred stock. The Series B preferred    
stock has been reclassified as a part of the equity section of the Company's    
balance sheet to reflect the elimination of certain shareholder redemption      
provisions. These provisions were revised and eliminated in November 1999 in the
filing of revised Articles of Incorporation for ConMat.                         

Series C Preferred - Shares of the Series C preferred stock rank prior to the   
common stock and pari passu with the Series A convertible preferred stock and   
Series B preferred stock. The creation of any class or series of capital stock  
ranking senior or pari passu with the Series C preferred stock or the Series B  
preferred stock requires the consent of a majority of the holders of Series C   
preferred stock. The holders of the shares of the Series C preferred stock are  
entitled to receive cash dividends at a rate of 8% per year for three years and 
increasing 2% per year up to a maximum of 16%, which dividends are payable in   
equal, quarterly installments, as and if declared by the Board of Directors out 
of funds legally available for the payment of dividends. Such dividends will    
begin to accrue on the outstanding shares of the Series C preferred stock from  
the date of issuance and will accrue from day to day, whether or not earned or  
declared, until paid and shall be cumulative. Through June 30, 2000, dividends  
on the Series C preferred stock may be paid in additional shares of Series C    
preferred stock. The Company may redeem the Series C preferred stock any time   
for a redemption price of $3.00 per share, plus all accrued but unpaid          
dividends. Except as otherwise required by the Florida Business Corporation Act,
the holders of the Series C preferred stock have no other voting rights. For the
period January 1, 2000 through June 30, 2000 the shareholders of Series C       
preferred stock were entitled to 15,453 additional shares of Series C preferred 
stock as a stock dividend.                                                      

As of December 31, 2001 and December 31, 2000 there were $118,304 and $47,754,  
respectively of dividends in arrears on the Series C preferred stock.           

Warrants - As of December 31, 2001, there were outstanding warrants to purchase 
579,167 shares of ConMat common stock at an exercise price of $3.00 per share,  
subject to adjustment in the case of stock splits, stock dividends, below market
issuances or a merger or consolidation. The warrants are exercisable until      
December 31, 2005. The warrants are associated with the Series B and Series C   
preferred stock (196,667 and 382,500 warrants respectively).                    

Receivables from Sales of Stock                                                 

In addition the to $50,000 note receivable discussed in "Note 14 - Incentive    
Based Compensation", the Company has two other receivables relating to the sale 
of Company stock. During the fourth quarter of fiscal 2000 the Company entered  
into an agreement to have its wholly-owned subsidiary, Polychem, sell 250,000   

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ConMat Technologies, Inc. and Subsidiary
Notes to Consolidated Financial Statements
 For the fiscal years ended December 31, 2001 and 2000

shares of ConMat Technologies stock for proceeds totaling $250,000. Polychem    
held these shares as a result of Eastwind's default on a note payable to        
Polychem. The note payable from Eastwind had been collaterized by shares of     
ConMat Technologies, Inc.                                                       

Additionally, on September 28, 2000, the Company entered into an option         
agreement for the issuance of up to 400,000 shares of common stock in exchange  
for a purchase price of approximately $600,000. The option was exercised on     
November 6, 2000 and in exchange the Company accepted a note receivable for     
$600,000 to be satisfied on or before May 31, 2001. The note is collateralized  
by the Company's shares and should the note not be satisfied, the shares would  
be returned to the Company.                                                     

As of December 31, 2001 the receivables relating to the 250,000 shares and the  
400,000 shares remained outstanding. Management has determined that the         
likelihood of collecting on these receivables is remote. Therefore, the         
receivables have been written off and charged to additional paid-in capital. The
Company is attempting to have these shares returned and cancelled. If the shares
are not returned, the Company will pursue legal action since the notes were     
collateralized by the shares in question. Also, since the notes receivable were 
reflected as a contra-equity account, there is no dollar effect to the equity   
position of the Company. However, the loss per share for the year ended December
31, 2001 reflects the shares as outstanding. If the 650,000 shares were         
excluded, the basic and diluted loss per share would be $1.35.                  

Receivable Relating to Eastwind Bankruptcy Claim                                

In conjunction with bankruptcy proceedings initiated by Eastwind, the Company   
has made various claims for financial reimbursement of certain expenses incurred
by the Company that are directly related to Eastwind's activities. One of the   
primary assets held by Eastwind are preferred and common shares of ConMat       
Technologies, Inc. The Company believes that it will receive cash reimbursement 
for these claims. If however, cash is not made available through final          
settlement, the Company anticipates that it will in return receive back all or a
portion of the ConMat shares held by Eastwind. During the year ended December   
31, 2000, a $118,000 receivable relating to the Company's claims was classified 
as a reduction of stockholders' equity. As a result of the final settlement     
reached in the Eastwind Bankruptcy, this receivable was written off during the  
year ended December 31, 2001.                                                   

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Unaudited Interim Financial Information                                         
---------------------------------------                                         

ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Condensed Balance Sheets                                           

                                                        [Enlarge/Download Table]

                                                                           March 31          December 31    
                               ASSETS                                        2002                2001       
                                                                       ------------------  -----------------
Current Assets:                                                           (Unaudited)         (Audited)     
                                                                                                            
   Cash and cash equivalents                                                  $   28,075         $   84,315 
   Accounts receivable - net                                                   2,205,871          4,512,093 
   Inventories                                                                   486,486          1,048,607 
   Prepaid expenses                                                              164,543            142,415 
                                                                       ------------------  -----------------
                                                 Total Current Assets          2,884,975          5,787,430 
Property, Plant & Equipment - held for sale                                      988,423          1,046,978 
Deferred Income Taxes                                                          1,125,493          1,125,493 
Other Assets                                                                     212,690            216,285 
                                                                       ------------------  -----------------
                                                         Total Assets        $ 5,211,581        $ 8,176,186 
                                                                       ==================  =================
                LIABILITIES AND STOCKHOLDERS' EQUITY                                                        
Current Liabilities:                                                                                        
   Line of credit                                                            $ 1,029,791        $ 2,818,893 
   Current portion of long-term debt                                             997,439          1,020,846 
   Current portion of capital lease obligations                                   22,946             28,229 
   Accounts payable                                                            3,404,402          3,227,633 
   Legal settlement payable                                                    1,435,000          1,500,000 
   Accrued expenses                                                              659,700            492,490 
                                                                       ------------------  -----------------
                                            Total Current Liabilities          7,549,278          9,088,091 

Long-Term Debt                                                                 1,788,807          1,796,106 
Obligations Under Capital Leases                                                   9,972             14,259 
Other Liabilities                                                                479,095            479,095 
                                                                       ------------------  -----------------
                                                    Total Liabilities          9,827,152         11,377,551 
Stockholders' Equity (Deficiency):                                                                          
   Series A preferred stock - $.001 par value, 1,500,000                                                    
      shares authorized, 713,250 shares issued and outstanding                       713                713 
   Series B Preferred Stock - $.001 par value, 166,667                                                      
      shares authorized, issued and outstanding                                  500,000            500,000 
   Series C preferred stock - $.001 par value, 446,150                                                      
      shares authorized, 382,500 issued and outstanding                              383                383 
   Common stock - $.001 par value, 40,000,000 shares                                                        
      authorized, 2,988,083 shares issued, 2,607,758 outstanding                   2,988              2,988 
   Additional paid-in capital                                                  (649,838)          (649,838) 
   Accumulated deficit                                                       (4,253,677)        (2,839,471) 
   Cost of common shares in treasury, 380,325  shares                          (166,140)          (166,140) 
   Less: Receivables for shares sold                                            (50,000)           (50,000) 
                                                                       ------------------  -----------------
                                       Total Stockholders' Deficiency        (4,615,571)        (3,201,365) 
                                                                       ------------------  -----------------
                       Total Liabilities and Stockholders' Deficiency        $ 5,211,581        $ 8,176,186 
                                                                       ==================  =================

See notes to consolidated condensed financial statements                        

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Condensed Statements of Operations                                 
(Unaudited)                                                                     

                                                        [Enlarge/Download Table]

                                                         Three Months Ended March 31  
                                                            2002              2001    
                                                       --------------    -------------
                                                                                      
Net Sales to Customers                                  $   1,492,115      $ 3,589,407
Cost of Goods Sold                                          1,531,113        2,689,192
                                                       --------------    -------------
                                  Gross (Loss) Profit        (38,998)          900,215

Selling, General and Administrative Expenses                1,031,227          718,871
Corporate Expenses                                            205,022           97,752
                                                       --------------    -------------
                              Operating (Loss) Income     (1,275,247)           83,592

Other Income (Expense):                                                               
   Interest expense                                         (128,762)        (119,356)
   Legal settlement expense                                  (85,000)                -
   Rental income                                               74,802           66,411
                                                       --------------    -------------
                     (Loss) Income Before Tax Expense     (1,414,207)           30,647

Income Tax Expense                                                               9,200
                                                       --------------    -------------
                                    Net (Loss) Income   $ (1,414,207)      $    21,447
                                                       ==============    =============

Net (loss) earnings per Common Share:                                                 
      Basic                                             $      (0.56)      $         -
                                                       ==============    =============

      Diluted                                           $      (0.56)      $         -
                                                       ==============    =============

Weighted average number of common shares outstanding:                                 

      Basic                                                 2,607,758        2,630,174
                                                       ==============    =============

      Diluted                                               2,607,758        2,630,174
                                                       ==============    =============

See notes to consolidated condensed financial statements                        

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ConMat Technologies, Inc. and Subsidiary                                        
Consolidated Condensed Statements of Cash Flows                                 
(Unaudited)                                                                     

                                                        [Enlarge/Download Table]

                                                                    Three Months Ended March 31  
                                                                 --------------------------------
                                                                     2002                2001    
                                                                 -------------      -------------
                                                                                                 
Cash Flows from Operating Activities:                                                            
   Net (loss) earnings                                            $(1,414,207)         $   21,447

   Adjustments to reconcile to net cash provided by (used in)                                    
      operating activities:                                                                      
         Depreciation and amortization                                  54,285             68,218
         Legal settlement expenses                                    (65,000)                  -
   Changes in assets and liabilities:                                                            
      (Increase) decrease in assets                                                              
         Accounts receivable                                         2,306,222            151,228
         Receivable relating to Eastwind claim                               -           (75,000)
         Inventories                                                   562,121            271,872
         Prepaid expenses                                             (22,129)           (96,797)
         Other assets                                                    7,867            (8,198)
      Increase (decrease) in liabilities                                                         
         Accounts payable                                              176,769          (303,895)
         Accrued expenses                                              167,210          (135,099)
                                                                 -------------      -------------
           Net Cash Provided By (Used In) Operating Activities       1,773,138          (106,224)

Cash Flows from Investing Activities:                                                            
   Purchase of property and equipment                                                   (101,086)
                                                                 -------------      -------------
                         Net Cash Used In Investing Activities               0          (101,086)

Cash Flows from Financing Activities:                                                            
   Net borrowings (repayments) under lines of credit               (1,789,102)            274,833
   Repayments of term notes                                           (30,706)           (30,163)
   Repayments of capital lease obligations                             (9,570)           (27,374)
   Purchases of treasury stock                                               -           (69,302)
   Payments of Series B preferred dividends                                  -           (10,000)
   Payments of Series C preferred dividends                                  -           (24,959)
   Recapitalization costs                                                    -            (5,000)
                                                                 -------------      -------------
            Net Cash (Used In) Provided By Financing Activities    (1,829,378)            108,035

                       Net Decrease in Cash & Cash Equivalents        (56,240)           (99,275)

Cash and Cash Equivalents at Beginning of Period                        84,315            153,038
                                                                 -------------      -------------
Cash and Cash Equivalents at End of Period                        $     28,075         $   53,763
                                                                 =============      =============

Supplemental Cash Flow Information:                                                              
   Cash paid for interest                                         $    110,758         $  119,356
                                                                 =============      =============
   Cash paid for income taxes                                     $          -         $   58,670
                                                                 =============      =============

See notes to consolidated condensed financial statements                        

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ConMat Technologies, Inc and Subsidiary                                         

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                            

NOTE A - INTERIM FINANCIAL INFORMATION                                          

       The financial statements of ConMat Technologies, Inc. as of March 31,
2002 and 2001, and for the three months then ended and related footnote         
information are unaudited. All adjustments (consisting only of normal recurring 
adjustments) have been made which, in the opinion of management, are necessary  
for a fair presentation. Results of operations for the three months ended March 
31, 2002 are not necessarily indicative of the results that may be expected for 
any future period. The balance sheet at December 31, 2001 was derived from      
audited financial statements.                                                   

   Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting  
principles have been condensed or omitted. It is suggested that these           
consolidated financial statements be read in conjunction with the consolidated  
financial statements and notes included in the Company's Annual Report on Form  
10-KSB for the year ended December 31, 2001. The results of operations for the  
three months ended March 31, 2002 are not necessarily indicative of the         
operating results, which may be achieved for the full year.                     

NOTE B - EARNINGS (LOSS) PER SHARE                                              

        ConMat reports earnings per share in accordance with the provisions of
SFAS NO. 128, Earnings Per Share. SFAS No. 128 requires presentation of basic   
and diluted earnings per share in conjunction with the disclosure of the        
methodology used in computing such earnings per share. Basic earnings per share 
exclude dilution and is computed by dividing income available to common         
shareholders by the weighted average common shares outstanding during the       
period. Diluted earnings per share takes into account the potential dilution    
that could occur if securities or other contracts to issue common stock were    
exercised and converted into common stock. However, no potential common shares  
are included in the computation of diluted per share amounts when there is a    
loss from continuing operations.                                                

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The following are basic and diluted (loss) earnings per share calculations for  
the periods presented.                                                          

                                                        [Enlarge/Download Table]

                                                         Three Months Ended March 31  
                                                       -------------------------------
                                                            2002              2001    
                                                       --------------   --------------
                                                                                      
Earnings per Share - Basic:                                                           
   Net income                                            $(1,414,207)        $  21,447
   Dividends on preferred shares                             (33,877)         (33,877)
                                                       --------------   --------------
   Net (loss) income available to common shareholders    $(1,448,084)         (12,430)
                                                       ==============   ==============

   Weighted average shares outstanding                      2,607,758        2,630,174
                                                       ==============   ==============

                      Basic Earnings Per Share           $     (0.56)        $       -
                                                       ==============   ==============


  F-25

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                                                        [Enlarge/Download Table]


                                                                                       
Earnings per Share - Diluted:                                                          
   Net (loss) income available to common shareholders    $(1,448,084)       $ (12,430) 
   Dividends on preferred shares                                                       

   Net (loss) income available to common shareholders                                  
      after assumed conversions                        --------------   -------------- 
                                                          $(1,448,084)       $ (12,430)
                                                       ==============   ============== 

   Weighted average shares outstanding                      2,607,758        2,630,174 
   Dilutive effect of preferred stock                               0                0 
   Dilutive effect of stock options and warrants                    0                0 
                                                       --------------   -------------- 
      Diluted average shares outstanding                    2,607,758        2,630,174 
                                                       ==============   ============== 

                    Diluted Earnings Per Share           $     (0.56)       $        - 
                                                       ==============   ============== 

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                                                                         Annex A
                                                                         -------

LICENSE AND ASSET PURCHASE AGREEMENT

    LICENSE AND ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of March
20, 2002, by and between Ecesis LLC, a Delaware limited liability company       
("Ecesis"), Polychem Corporation, a Pennsylvania corporation ("Polychem") and   
ConMat Technologies, Inc., a Florida corporation (the "Shareholder").           

Recitals

   Polychem is engaged in the business of manufacturing a variety of plastic
products for water treatment plants and other specialty applications (as more   
fully defined herein, the "Products"). Such business as conducted by Polychem on
the date hereof is referred to in this Agreement as the "Business." Shareholder 
owns 100% of the outstanding capital stock of Polychem. Polychem and Shareholder
desire to license Ecesis to manufacture and sell the Products, and sell certain 
assets and liabilities of Polychem to Ecesis, all upon the terms set forth      
herein.                                                                         

  Accordingly, in consideration of the mutual agreements contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:  

ARTICLE I. LICENSE

1.1 License.                                                          

          (a) Effective immediately upon execution of this Agreement and payment
by Ecesis of the Deposit (defined in Section 2.3), Polychem hereby grants to    
Ecesis an exclusive, worldwide license and right to manufacture, market,        
distribute and sell the Products, and in connection therewith grants to Ecesis a
license to use all of Polychem's tangible and intangible assets related to the  
Business, including, without limitation, all Intellectual Property (as defined  
in Article XII herein) (the "License"), and assigns to Ecesis all current       
customer orders and contracts as set forth on Schedule 1.1(a) hereto. The       
License shall be for a term ending on the Closing Date or termination of this   
Agreement without Closing having occurred.                                      

          (b) In the event that the License is terminated other than on the sale
of the Assets pursuant to this Agreement, Ecesis shall immediately return to    
Polychem all tangible Assets and shall cease the use of any intangible Assets.  

1.2 Royalty; Rent.                                                    

         (a) In consideration of the grant of the License, Ecesis shall pay to
Polychem royalties equal to Ecesis' net operating profits from the sale of      
Products. "Net operating profits" shall mean the gross revenues actually        
received by Ecesis from the sale of the Products less the costs of the Products 
sold and a reasonable allocation of Ecesis' overhead. Ecesis shall pay Polychem 
by the tenth (10th) day of each month the royalties that accrued during the     
previous month computed on the basis of payments received during such month. At 
the time of such payment, Ecesis shall provide to Polychem a report of all sales
of Products completed during such month, the amount of payments received for    
Products during such month, the cost of the Products sold in which payment was  
received by Ecesis during such month, Ecesis allocation of its overhead with    
respect to such Products and royalties paid to Polychem with respect thereto.   

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          (b) Ecesis shall permit Polychem, or representatives of Polychem which
are reasonably acceptable to Ecesis, at Polychem's expense, to periodically     
examine Ecesis's books, ledgers, and records during regular business hours for  
the sole purpose of, and only to the extent necessary, to verify reports        
furnished to Polychem pursuant to Subsection (a) above; provided that Polychem  
delivers to Ecesis a written notice of Polychem's intention to conduct an       
inspection not less than five (5) business days before the intended date of such
inspection. In the event that amounts due Polychem are determined to have been  
underpaid by an amount greater than five percent (5%) of the amount actually    
due, Ecesis shall pay the cost of such examination plus a penalty equal to      
twenty-five percent (25%) of the underpayment. Any payment not made on or before
the due date shall accrue interest at a rate equal to one percent (1%) per      
calendar month or, if less, the maximum rate permitted under applicable law.    

 (c) Ecesis shall not have to pay Polychem rent for the use of
Polychem's real property located at Franklin Avenue and Grant Street,           
Phoenixville, PA 19460 during the term of the License. On the Closing Date, the 
parties shall enter into a short-term lease agreement for a portion of such real
property on commercially reasonable terms and market rental rates.              

   1.3 Ownership. Subject to the License, Polychem shall continue to own all
right, title, and interest in and to all Intellectual Property, and no such     
rights are granted to Ecesis under this Agreement, except as expressly provided 
in this Agreement. Except to further the purposes contemplated under or to      
exercise the rights expressly provided in this Agreement, the Intellectual      
Property may not be sold, sublicensed, lent, leased, rented, assigned,          
transferred, disassembled, reverse engineered or modified nor may any derivative
work be made of the Intellectual Property without the prior written agreement of
Polychem.                                                                       

   1.4 Supply Agreement. During the term of the License, Polychem assigns to
Ecesis all of its rights under the Supply Agreement, dated March 20, 2002, among
Polychem, Ecesis, Ensinger Vekton, Inc. and Putnum Precision Molding, Inc. (the 
"Supply Agreement") and Ecesis hereby assumes all of Polychem's duties and      
obligations under the Supply Agreement.                                         

1.5 Confidentiality.                                                  

       (a) Polychem and Ecesis each agree that all information received by
one party from the other party (collectively, "Confidential Information"), shall
be received in strict confidence, used only for the express purposes set forth  
in this Agreement, and not disclosed by the recipient party (except as required 
by law or court order), its agents, or employees without the prior written      
consent of the other party, unless such Confidential Information: (i) was in the
public domain at the time of disclosure; (ii) later became part of the public   
domain through no act or omission of the recipient party, its employees, agents,
or permitted successors or assigns; (iii) was lawfully disclosed to the         
recipient party by a third party having no obligation to the disclosing party;  
(iv) was already known by the recipient party at the time of disclosure; (v) was
independently developed by the recipient without use of or access to such       
Confidential Information; or (vi) is required to be disclosed to a government   
agency or by law.                                                               

2 

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 (b) Each party's obligations of confidentiality, non-use, and
nondisclosure shall be fulfilled by using at least the same degree of care with 
the other party's Confidential Information as it uses to protect its own        
confidential information. This obligation shall continue in full force and      
effect during the term of this Agreement and thereafter for a period of three   
(3) years.                                                                      

ARTICLE II. PURCHASE AND SALE OF ASSETS AND LIABILITIES 

2.1 Sale of Assets.                                                   

         (a) Sale of Assets. At the Closing (as defined below), Polychem shall
transfer and sell to Ecesis all of Polychem's right, title and interest in and  
to Polychem's Intellectual Property, customer orders and contracts, good will,  
the name "Polychem" and all derivations thereof and other tangible and          
intangible assets other than the assets set forth on Schedule 2.1 (the "Excluded
Assets") as of the Closing Date (the "Assets"), free of all liabilities,        
obligations, claims, liens and encumbrances, whether absolute, accrued,         
contingent or otherwise, except those expressly assumed by Ecesis as provided in
Section 2.4.                                                                    

         (b) The aggregate consideration for the Assets (the "Purchase Price")
shall be (i) $500,000 in immediately available funds, (ii) $1,150,000 by        
delivery of a Promissory Note in the form attached hereto as Exhibit "A" (the   
"Promissory Note") (which Promissory Note shall be secured by a security        
interest in the Assets of Ecesis pursuant to a Security Agreement in the form   
attached hereto as Exhibit "B" (the "Security Agreement"), and (iii) by delivery
to Seller of 399,826 shares of Series C Preferred Stock of the Shareholder (the 
"Series C Preferred") and warrants to purchase 382,500 shares of Common Stock of
the Shareholder (the "Warrant") held by Ecesis. As of December 31, 2001, the    
Series C Preferred has a liquidation preference of $1,199,478 and accrued and   
unpaid dividends of $118,303.                                                   

         (c) The transfer and sale of the Assets shall be effected by delivery
at the Closing of the following:                                                

            (i) by Polychem to Ecesis, a bill of sale substantially in the
form attached hereto as Exhibit "C" (the "Bill of Sale");                       

         (ii) by Polychem to Ecesis, assignments with respect to all
customer orders and contracts (including without limitation the Supply          
Agreement) and all Patents, Copyrights, Trade Secrets, Marks and Websites and   
all applications therefor in which Polychem has any interest, all in recordable 
form (each, an "Assignment," and collectively, the "Assignments");              

               (iii) by Polychem and Shareholder, such other good and sufficient
instruments of conveyance and transfer as shall be necessary or appropriate in  
Ecesis' sole discretion to vest in Ecesis good and valid title to the Assets    
(collectively, the "Other Instruments"), as contemplated by this Agreement;     

(iv) by Ecesis to Polychem, the Purchase Price.   

3 

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   2.2 Credits. In the event that Ecesis assumes any liability or obligation
of Polychem other than the Initial Assumed Liabilities and obtains a release of 
Polychem's obligations with respect thereto, or otherwise discharges such       
liability or obligations, the amount paid by Ecesis to discharge such liability 
or obligation shall be credited against Ecesis' obligations under Section       
2.1(b)(i) if occurring prior to the Closing Date and under the Promissory Note  
as if Ecesis had made a prepayment thereunder in such amount if occurring       
thereafter.                                                                     

2.3 Deposit. Contemporaneously with the execution and delivery of this
Agreement, Ecesis shall deposit with Polychem the sum of $150,000 (the          
"Deposit"). At the Closing, the Deposit shall be released and credited toward   
the Purchase Price as immediately available funds. If the Closing does not occur
as a result of a material breach of this Agreement by Ecesis, which such        
material breach remains uncured for a period of 30 days following written notice
to Ecesis of such material breach, the Deposit shall be retained by Polychem as 
liquidated damages for the failure of Ecesis to consummate the transactions     
contemplated by this Agreement. If the Closing does not occur for any other     
reason, the Deposit shall be promptly remitted to Ecesis. If the Closing does   
not occur, the retention of the Deposit by Polychem shall be the sole and       
exclusive remedy of Polychem and/or Shareholder for the failure of Ecesis to    
consummate the transactions contemplated by this Agreement.                     

    2.4 Assumption of Liabilities. Subject to the terms and conditions of this
Agreement, at the Closing, Ecesis shall assume and agree to perform, pay or     
discharge the liabilities and obligations of Polychem set forth in Schedule 2.4 
(the "Initial Assumed Liabilities") and such other liabilities (the "Additional 
Assumed Liabilities" and, together with the Initial Assumed Liabilities, the    
"Assumed Liabilities") as Ecesis may voluntarily assume pursuant to Section 2.2 
hereof pursuant to an assumption agreement, substantially in the form of Exhibit
"D" hereto (the "Assumption Agreement"). After the Closing, Ecesis may assume   
further Additional Liabilities as provided in Section 2.2 pursuant to an        
assumption agreement satisfactory to Ecesis and Polychem. Except as set forth in
this Section 2.4, the Assumption Agreement and any written agreements executed  
by Ecesis and Polychem after the Closing, Ecesis shall not assume or be         
responsible for any liabilities or obligations of Polychem. Following the       
Closing, Polychem shall perform, pay or discharge when due all liabilities and  
obligations relating to the Business, other than the Assumed Liabilities.       

 2.5 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets as set forth on Schedule 2.5 which shall be prepared as of     
Closing. Such Schedule shall be consistent with Section 1060 of the Code and the
applicable regulations related thereto. Such allocation shall be conclusive and 
binding on Ecesis, Polychem and Shareholder for purposes of their respective    
federal, state, local and foreign tax returns. Ecesis, Polychem and Shareholder 
shall file all tax returns, including the forms required by Section 1060 of the 
Internal Revenue Code of 1986, as amended consistent with such allocation.      

ARTICLE III. CLOSING

3.1 Closing. The closing of the transactions contemplated by this     
Agreement, other than the license which shall take effect immediately in        
accordance with Section 1.1, (the "Closing") shall take place at the offices of 
Klehr, Harrison, Harvey, Branzburg & Ellers LLP, 260 South Broad Street,        
Philadelphia, Pennsylvania, on the third (3rd) business day following approval  
of such transactions by Shareholder's stockholders or such other date and place 
as Ecesis and Polychem may agree. The date on which the Closing actually occurs 
is referred to herein as the "Closing Date".                                    

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  3.2 Deliveries by Polychem and Shareholder. At the Closing, Polychem and
Shareholder shall deliver to Ecesis the following:                              

(i) the Bill of Sale;                                       

(ii) the Assignments and Other Instruments;                 

(iii) the officers' certificate referred to in Section 7.5; 

 (iv) the secretary's certificates referred to in Section 7.6;

          (v) executed counterparts of any consents and approvals referred to in
Sections 4.6;                                                                   

(vi) all tangible Assets;                                   

       (vii) all documents containing or relating to intellectual property
and other intangible Assets to be transferred and sold to Ecesis pursuant to    
this Agreement;                                                                 

        (viii) all books and records (including all computerized records and
other computerized storage media and the software used in connection therewith) 
of the Business relating to the Assets (collectively, "Books and Records"),     
including all Books and Records relating to the purchase of materials, supplies 
and services for Polychem, dealings with customers and distributors of Polychem,
and employees of Polychem that Ecesis determines in its sole discretion to hire,
and duplicate copies of records relating to Polychem's bank accounts, but not   
including any books and records that are or related to Excluded Assets;         

    (ix) all other previously undelivered documents, instruments and
writings required to be delivered by Polychem or Shareholder to Ecesis at or    
prior to the Closing pursuant to this Agreement or otherwise required in        
connection herewith; and                                                        

          (x) evidence satisfactory to Ecesis that all liens and encumbrances on
the Assets have been removed.                                                   

    3.3 Deliveries by Ecesis. At the Closing, Ecesis shall deliver to Polychem
and Shareholder:                                                                

       (i) $500,000 (including full credit for the Deposit and any credits
under Section 2.4) by wire transfer of immediately available funds to an account
or accounts designated by Polychem;                                             

   (ii) the fully executed Promissory Note and Security Agreement;

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          (iii) certificates evidencing the Series C Preferred properly endorsed
for transfer and the original Warrant together with an executed assignment      
thereof;                                                                        

(iv) an executed counterpart of the Assumption Agreement;   

          (v) executed counterparts of any consents and approvals referred to in
Section 5.4; and                                                                

    (vi) all other previously undelivered documents, instruments and
writings required to be delivered by Ecesis to Polychem or Shareholder at or    
prior to the Closing pursuant to this Agreement or otherwise required in        
connection herewith.                                                            

ARTICLE IV. REPRESENTATIONS AND 
WARRANTIES OF SELLER AND SHAREHOLDER

 Polychem and Shareholder jointly and severally represent and warrant to
Ecesis as follows:                                                              

  4.1 Organization, Etc. Polychem is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of             
Pennsylvania. The Shareholder is a corporation duly organized, validly existing 
and in good standing under the laws of the State of Florida. Polychem has the   
power and authority to conduct its business as it is currently being conducted  
and to own and lease the property and assets that it now owns and leases.       
Polychem is qualified to do business in each jurisdiction in which the          
properties owned or leased by it or the nature of its business makes            
qualification or licensing as a foreign corporation necessary. The copies of the
certificate of incorporation and bylaws of Polychem, as previously delivered by 
Polychem to Ecesis are complete and correct copies of such instruments as       
currently in effect.                                                            

   4.2 Authorization. Each of Polychem and the Shareholder has all requisite
corporate power and authority to enter into, execute and deliver this Agreement 
and any instruments and agreements contemplated herein (collectively, the       
"Related Instruments") required to be executed and delivered by it pursuant to  
this Agreement and to consummate the transactions contemplated hereby and       
thereby. Each of Polychem and Shareholder has taken all action required by law, 
its certificate of incorporation, bylaws, or other constitutive documents or    
otherwise to authorize the execution and delivery of this Agreement and the     
Related Instruments and the consummation of the transactions contemplated hereby
and thereby, except for the approval of the stockholders of the Shareholder. No 
other act or proceeding on the part of Polychem or Shareholder is necessary to  
authorize the execution and delivery of this Agreement or any of the Related    
Instruments or the transactions contemplated hereby or thereby, except for the  
approval of the stockholders of the Shareholder. This Agreement is, and each of 
the Related Instruments, when executed and delivered by Polychem and Shareholder
to Ecesis at the Closing, will be a valid and binding obligation of Polychem and
Shareholder, enforceable against each of them in accordance with its terms.     

4.3 No Violation. Except as set forth on Schedule 4.3, neither the    
execution and delivery by Polychem and Shareholder of this Agreement or any of  
the Related Instruments, nor the consummation by Polychem and Shareholder of the
transactions contemplated hereby or thereby, will (i) violate any provision of  
the certificate of incorporation, bylaws, or other                              

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governing documents of Polychem, or (ii) violate, conflict with, or constitute a
default (or an event or condition which, with notice or lapse of time or both,  
would constitute a default) under, or result in the termination of, or          
accelerate the performance required by, or cause the acceleration of the        
maturity of any liability or obligation pursuant to, or result in the creation  
or imposition of any security interest, lien, charge or other encumbrance upon  
any of the Assets under any note, bond, mortgage, indenture, deed of trust,     
license, lease, contract, commitment, understanding, arrangement, agreement or  
restriction of any kind to which Polychem or Shareholder is a party or by which 
Polychem or Shareholder may be bound or affected or to which any of the Assets  
may be subject, or (iii) violate any statute or law or any judgment, decree,    
order, writ, injunction, regulation or rule of any court or governmental        
authority.                                                                      

    4.4 Capitalization; Subsidiaries. Shareholder owns 100% of the outstanding
capital stock of Polychem. Polychem does not, directly or indirectly, own or    
control capital stock or other equity securities of any corporation,            
partnership, limited liability company, limited liability partnership or other  
entity or other right to purchase or any security convertible into or           
exchangeable for, any such capital stock or other equity interest.              

4.5 No Undisclosed or Contingent Liabilities. Except for the Assumed  
Liabilities, liabilities reflected on the balance sheet of Polychem dated as of 
September 30, 2001 (the "Balance Sheet") and liabilities set forth on Schedule  
4.5, Polychem has no liabilities or obligations of any nature (whether absolute,
accrued, contingent or otherwise and whether due or to become due) and, to      
Polychem's and Shareholder's knowledge, there is no basis for the assertion     
against Polychem of any such other liability or obligation except, in either    
case, for liabilities and obligations of any nature (whether absolute, accrued, 
contingent or otherwise and whether due or to become due) incurred in the       
ordinary course of business since the date of the Balance Sheet.                

 4.6 Consents and Approvals. Except for consents and approvals that have
been obtained and as set forth on Schedule 4.6 and the filing of the Proxy      
Statement, Polychem is not required to obtain, transfer or cause to be          
transferred any consent, approval, license, permit or authorization of, or make 
any declaration, filing or registration with, any third party or any            
governmental authority in connection with (a) the execution and delivery by     
Polychem and Shareholder of this Agreement or the Related Instruments, (b) the  
consummation by Polychem and Shareholder of the transactions contemplated hereby
or thereby or (c) the ownership and operation by Ecesis of the Assets.          

4.7 Good Title Conveyed, Etc. Except as set forth on Schedule 4.7 and 
subject to obtaining the consents set forth in Schedule 4.6, Polychem has       
complete and unrestricted power and the unqualified right to sell, assign,      
transfer and deliver to Ecesis, and upon consummation of the transactions       
contemplated by this Agreement, Ecesis will acquire good and valid title to, the
Assets, free and clear of all mortgages, pledges, liens, security interests,    
conditional sales agreements, encumbrances or charges of any kind. Except as set
forth on Schedule 4.7, the Related Instruments, when duly executed and delivered
by Polychem to Ecesis at the Closing, will effectively vest in Ecesis good and  
valid title to all of the Assets.                                               

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    4.8 No Brokers. Neither Polychem nor Shareholder has taken any action that
would give rise to any claim by any person for brokerage commissions, finder's  
fees or similar payments relating to this Agreement or the transactions         
contemplated hereby.                                                            

     4.9 Proxy Statement. The information supplied or to be supplied by Polychem
and Shareholder for inclusion in the proxy statement (the "Proxy Statement") to 
be sent to the stockholders of the Shareholder in connection with the meeting of
stockholders to consider this Agreement, the sale of the Assets and the         
transactions contemplated thereby (the "Shareholders' Meeting") shall not, on   
the date the Proxy Statement is first mailed to the stockholders of the         
Shareholder, at the time of the Shareholders' Meeting and on the Closing Date,  
contain any statement which, at such time and in light of the circumstances     
under which it is was made, is false or misleading with respect to any material 
fact, or omit to state any material fact necessary in order to make the         
statements made in the Proxy Statement not false or misleading, or omit to state
any material fact necessary to correct any statement in any earlier             
communication with respect to the solicitation of proxies for the Shareholders' 
Meeting which has become false or misleading. If at any time prior to the       
Closing Date any event relating to Polychem, Shareholder or any of their        
Affiliates, officers or directors should be discovered by Polychem which should 
be set forth in any supplement to the Proxy Statement, Polychem shall promptly  
inform Ecesis.                                                                  

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER

Ecesis represents and warrants to Polychem and Shareholder as follows:

5.1 Organization, Etc. Ecesis is a limited liability company duly     
organized, validly existing and in good standing under the laws of the State of 
Delaware. Copies of the certificate of formation and initial operating agreement
of Ecesis have been delivered to Polychem, and such copies are complete and     
correct and in full force and effect on the date of this Agreement.             

    5.2 Authorization. Ecesis has all requisite power and authority to execute
and deliver this Agreement and the Related Instruments to which it is a party   
and to consummate the transactions contemplated hereby and thereby. Ecesis has  
taken all action required by law and its certificate of formation or initial    
operating agreement or bylaws or otherwise to authorize the execution and       
delivery of this Agreement and the Related Instruments to which it is a party   
and to consummate the transactions contemplated hereby and thereby. This        
Agreement is a valid and binding obligation of Ecesis, enforceable against      
Ecesis in accordance with its terms. Each of the Related Instruments to which   
Ecesis is a party, when executed and delivered by the parties thereto at the    
Closing, will be a valid and binding obligation, enforceable against Ecesis in  
accordance with its terms.                                                      

5.3 No Violation. Neither the execution and delivery by Ecesis of this
Agreement and the Related Instruments to which it is a party, nor the           
consummation by Ecesis of the transactions contemplated hereby or thereby, will 
(i) violate any provision of the certificate of formation or initial operating  
agreement of Ecesis or (ii) violate, conflict with, or constitute a default (or 
an event or condition which, with notice or lapse of time or both, would        
constitute a default) under, or result in the termination of, or accelerate the 
performance required by, or cause the acceleration of the maturity of any       
liability or obligation pursuant to, or result in the creation or imposition of 
any security interest, lien, charge or other encumbrance upon any of the        

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property or assets of Ecesis under any note, bond, mortgage, indenture, deed of 
trust, license, lease, contract, commitment, understanding, arrangement,        
agreement or restriction of any kind or character to which Ecesis is a party or 
by which it may be bound or affected or to which any of its property or assets  
may be subject, or (iii) violate any statute or law or any judgment, decree,    
order, writ, injunction, regulation or rule of any court or governmental        
authority.                                                                      

 5.4 Consents and Approvals. Except for consents and approvals that have
been obtained and as set forth on Schedule 5.4, Ecesis is not required to       
obtain, transfer or cause to be transferred any consent, approval, license,     
permit or authorization of, or make any declaration, filing or registration     
with, any third party or any governmental authority in connection with (a) the  
execution and delivery by Ecesis of this Agreement, (b) the consummation by     
Ecesis of the transactions contemplated hereby or thereby, or (c) the ownership 
and operation by Ecesis of the Assets.                                          

  5.5 Good Title Conveyed, Etc. Ecesis has complete and unrestricted power
and the unqualified right to sell, assign, transfer and deliver to Polychem, and
upon consummation of the transactions contemplated by this Agreement, Polychem  
will acquire good and valid title to, the Series A Preferred and the Warrant,   
free and clear of all mortgages, pledges, liens, security interests, conditional
sales agreements, encumbrances or charges of any kind.                          

   5.6 No Brokers. Ecesis has not taken any action that would give rise to a
claim by any person for brokerage commissions, finder's fees or similar payments
relating to this Agreement or the transactions contemplated hereby.             

ARTICLE VI. COVENANTS 

  6.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, Polychem and Shareholder will (a) afford Ecesis and its agents    
full and free access to Polychem's personnel, properties, contracts, books and  
records, and other documents and data, (b) furnish Ecesis and its agents with   
copies of all such contracts, books and records, and other existing documents   
and data as Ecesis may reasonably request and (c) furnish Ecesis and its agents 
with such additional financial, operating and other data and information as     
Ecesis may reasonably request.                                                  

   6.2 Operation of the Business. Between the date of this Agreement and the
Closing Date, Polychem and Shareholder will:                                    

(a) Conduct the Business only in the ordinary course of business;     

(b) Use commercially reasonable efforts to preserve intact the current
business organization, keep available the services of the current officers,     
employees, and agents of Polychem, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Polychem;                                           

     (c) Confer with Ecesis concerning operational matters of a material nature;
and                                                                             

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  (d) Otherwise report periodically to Ecesis concerning the status of the
Business, the Assets and the operations and finances of Polychem.               

   6.3 Required Approvals. As promptly as practicable after the date of this
Agreement, Polychem and Shareholder will use commercially reasonable efforts to 
obtain all consents and make any filings reasonably necessary in order to       
consummate the transactions contemplated by this Agreement. Between the date of 
this Agreement and the Closing Date, Ecesis, Polychem and Shareholder will (a)  
cooperate with respect to all filings that any party hereto shall elect to make 
or is required by law to make in connection with the transactions contemplated  
by this Agreement and (b) cooperate in obtaining all consents identified in     
Schedule 4.6 and Schedule 5.4.                                                  

   6.4 Exclusivity. Until such time, if any, as this Agreement is terminated
pursuant to Article IX, neither Polychem nor Shareholder will directly or       
indirectly solicit, initiate, or encourage any inquiries or proposals from,     
discuss or negotiate with, provide any non-public information to, or consider   
the merits of any unsolicited inquiries or proposals from, any Person relating  
to any transaction involving the sale of the business or assets of Polychem or  
any of the capital stock or membership interests of Polychem, or any merger,    
consolidation, business combination, or similar transaction involving Polychem. 

     6.5 Proxy Statement. As promptly as practicable after the execution of this
Agreement, Shareholder shall prepare and file with the Securities and Exchange  
Commission (the "SEC") the Proxy Statement. The Proxy Statement shall include   
the recommendations of the Board of Directors of Shareholder in favor of this   
Agreement, the sale of the Assets and the transactions contemplated thereby.    
Polychem and Shareholder shall use their reasonable efforts to cause the Proxy  
Statement to be filed with the SEC and shall immediately deliver to Ecesis any  
and all comments to the Proxy Statement received from the SEC upon receipt      
thereof. As promptly as practicable after the filing of the final Proxy         
Statement with the SEC, Polychem and Shareholder shall use their reasonable     
efforts to cause the Proxy Statement to be disseminated to the stockholders of  
Shareholder.                                                                    

  6.6 Shareholders' Meeting. Shareholder shall take all necessary steps in
accordance with its articles of incorporation and by-laws to call, give notice  
of, convene and hold the Shareholders' Meeting as soon as practicable after the 
final Proxy Statement is filed and disseminated to the stockholders of          
Shareholder for the purpose of approving this Agreement and the sale of the     
Assets and for such other purposes as may be necessary. Unless this Agreement   
shall have been validly terminated as provided herein, the Board of Directors of
Shareholder will (i) recommend to its stockholders the approval of this         
Agreement, the sale of the Assets and the transactions contemplated thereby and 
any other matters to be submitted to the stockholders of Shareholder in         
connection therewith, to the extent that such approval is required by applicable
law in order to consummate such transactions, and (ii) use its reasonable, good 
faith efforts to obtain the approval of its stockholders of this Agreement, the 
sale of the Assets and the transactions contemplated thereby and to solicit from
its stockholders proxies in favor of such matters.                              

    6.7 Fiduciary Duty. Notwithstanding any other provision of this Agreement,
if the Board of Directors of Shareholder determines in good faith that it is    
required to do so in order to comply with its fiduciary duties, the Board of    
Directors may withdraw or modify its recommendation to the stockholders of      
Shareholder and cause Shareholder or Polychem to take such action with respect  
to the matters set forth in Sections 6.5 and 6.6 hereof as the Board of         
Directors shall in good faith deem reasonably necessary or appropriate in       
connection with such determination.                                             

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   6.8 Use of Name. At the Closing, Polychem shall cause an amendment to its
certificate of incorporation to be filed with the Secretary of State of the     
Commonwealth of Pennsylvania changing its name to a name bearing no resemblance 
and that is not confusingly similar to "Polychem." After the Closing, neither   
Polychem nor Shareholder shall use or permit any of its or their Affiliates to  
use such name or any variants or derivatives thereof or any other name that is  
confusingly similar. Polychem shall execute and deliver to Ecesis, at or before 
the Closing, all consents requested by Ecesis to enable Ecesis to use such name 
and shall otherwise cooperate with Ecesis in connection therewith.              

     6.9 Commercially Reasonable Efforts. Between the date of this Agreement and
the Closing Date, Ecesis, Polychem and Shareholder will use commercially        
reasonable efforts to cause the conditions in Articles VII and VIII to be       
satisfied.                                                                      

ARTICLE VII. CONDITIONS TO OBLIGATIONS OF ECESIS

The obligations of Ecesis to purchase the Assets are subject to the   
satisfaction, at or before the Closing, of each of the following conditions:    

   7.1 Representations and Warranties. The representations and warranties of
Polychem and Shareholder contained herein, and the statements contained in any  
schedule, instrument, list, certificate or writing delivered by Polychem and    
Shareholder pursuant to this Agreement shall be true, complete and accurate in  
all material respects as of the date when made and, as of the Closing Date as   
though such representations and warranties were made at and as of such dates,   
except for any changes expressly permitted by this Agreement.                   

     7.2 Performance. Polychem and Shareholder shall have performed and complied
in all material respects with all covenants, agreements, obligations and        
conditions required by this Agreement to be performed or complied with by       
Polychem and Shareholder at or prior to the Closing. Polychem and Shareholder   
agree that the Assets are unique and that damages would not be an adequate      
remedy for their breach of this Agreement. Therefore, in the event that Polychem
and/or Shareholder fail to refuse to satisfy conditions to Closing, or to       
otherwise perform their obligations hereunder, Polychem and Shareholder agree   
that Ecesis may enforce specific performance of this Agreement by appropriate   
proceedings in any court.                                                       

    7.3 No Proceeding or Litigation. There shall not be threatened, instituted
or pending any suit, action, investigation, inquiry or other proceeding by or   
before any court or governmental or other regulatory or administrative agency or
commission requesting or looking toward an order, judgment or decree that (a)   
restrains or prohibits the consummation of the transactions contemplated hereby,
(b) could have a material adverse effect on Ecesis' ability to exercise control 
over or manage the Assets after the Closing or (c) could have a Material Adverse
Effect.                                                                         

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7.4 Officers' Certificate. Polychem shall have delivered to Ecesis a  
certificate, dated as of the Closing Date, executed by its Chief Executive      
Officer and Chief Financial Officer certifying the fulfillment of the conditions
specified in Sections 7.1, 7.2, and 7.3.                                        

   7.5 Secretary's Certificates. Each of Polychem and Shareholder shall have
delivered to Ecesis a certificate, dated as of the Closing Date, executed by its
Secretary, certifying as to its certificate of incorporation, bylaws, or other  
governing documents and resolutions adopted by its board of directors with      
respect to the transactions contemplated hereby.                                

7.6 Documents. The Related Instruments and all other documents to be  
delivered by Polychem and Shareholder to Ecesis at the Closing shall have been  
so delivered and shall be satisfactory in form and substance to Ecesis.         

    7.7 Consents and Approvals. All licenses, permits, consents, approvals and
authorizations of all third parties and governmental bodies and agencies shall  
have been obtained that are necessary in connection with (a) the execution and  
delivery of this Agreement or the Related Instruments, (b) the consummation of  
the transactions contemplated hereby or thereby or (c) the ownership and        
operation by Ecesis of the Assets, and copies of all such licenses, permits,    
consents, approvals and authorizations shall have been delivered to Ecesis.     

7.8 Shareholder Approval. The stockholders of Shareholder shall have  
approved this Agreement, the sale of the Assets to Ecesis and the transactions  
contemplated thereby.                                                           

ARTICLE VIII. CONDITIONS TO OBLIGATIONS 
 OF POLYCHEM AND SHAREHOLDER

The obligations of Polychem and Shareholder under this Agreement are  
subject to the satisfaction, at or before the Closing, of each of the following 
conditions:                                                                     

   8.1 Representations and Warranties. The representations and warranties of
Ecesis contained herein shall be true, complete and accurate in all material    
respects as of the date when made and at and as of the Closing Date as though   
such representations and warranties were made at and as of such date, except for
any changes expressly permitted by this Agreement. Notwithstanding anything to  
the contrary set forth herein, if as of the Closing Date either party knew, or  
through the exercise of reasonable diligence should have known, of any breach by
the other party of a representation or warranty and proceeds with Closing, such 
breach shall be deemed waived.                                                  

   8.2 Performance. Ecesis shall have performed and complied in all material
respects with all covenants, agreements, obligations and conditions required by 
this Agreement to be so performed or complied with by it at or prior to the     
Closing, including without limitation timely payment of royalties.              

8.3 No Injunction. On the Closing Date, there shall be no effective   
injunction, writ, preliminary restraining order or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the    
transactions contemplated hereby.                                               

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8.4 Shareholder Approval. The stockholders of Shareholder shall have  
approved this Agreement, the sale of the Assets to Ecesis and the transactions  
contemplated thereby.                                                           

ARTICLE IX. TERMINATION 

    9.1 Termination Events. This Agreement may, by notice given prior to or at
the Closing, be terminated:                                                     

   (a) By either Ecesis or Polychem if a material breach of any provision of
this Agreement has been committed by the other party and such breach has not    
been waived;                                                                    

   (b) By either Ecesis or Polychem if the Board of Directors of Shareholder
determines in good faith that its fiduciary duties require that it refrain from 
recommending (or withdraw or modify adversely to Ecesis its prior               
recommendation) that the stockholders of Shareholder approve the transactions   
contemplated by this Agreement;                                                 

 (c) (i) by Ecesis if any of the conditions in Article VI or VII has not
been satisfied as of the Closing Date or if satisfaction of such a condition is 
or becomes impossible (other than through the failure of Ecesis to comply with  
its obligations under this Agreement) and Ecesis has not waived such condition  
on or before the Closing Date; or (ii) by Polychem, if any of the conditions in 
Article VIII has not been satisfied of the Closing Date or if satisfaction of   
such a condition is or becomes impossible (other than through the failure of    
Polychem or Shareholder to comply with its obligations under this Agreement) and
Polychem has not waived such condition on or before the Closing Date;           

(d) By mutual consent of Ecesis and Polychem; or                      

 (e) By either Ecesis or Polychem if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to    
comply fully with its obligations under this Agreement) on or before 120 days   
from the date hereof or such later date as the parties may agree upon.          

    9.2 Effect of Termination. Each party's right of termination under Section
9.1 is in addition to any other rights it may have under this Agreement or      
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further  
obligations of the parties under this Agreement will terminate, except that the 
obligations in Section 11.2 will survive; provided, however, that if this       
Agreement is terminated by a party because of the breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's 
obligations under this Agreement is not satisfied as a result of the other      
party's failure to comply with its obligations under this Agreement, the        
terminating party's right to pursue all legal remedies will survive such        
termination unimpaired. If the Closing does not occur (a) Ecesis' aggregate     
liability for damages to Polychem or Shareholder for any breach of this         
Agreement shall be limited to the amount of the Deposit plus reasonable         
attorneys fees and costs and (b) the aggregate liability of Polychem and        
Shareholder to Ecesis for damages for any breach of this Agreement shall be     
limited to $150,000 plus reasonable attorneys fees and costs.                   

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ARTICLE X. INDEMNIFICATION AND CONTRIBUTION 

 10.1 Survival of Representations and Covenants. All representations and
warranties made by any party to this Agreement or pursuant hereto shall survive 
the Closing hereunder and any investigation made by or on behalf of any party   
hereto for a period of two years following the Closing Date; provided, however, 
that in the case of fraud, all such representations and warranties shall survive
indefinitely and provided that the representations and warranties under Sections
4.1, 4.2, 4.3(i) and (iii), 4.8, 5.1, 5.2, 5.3(i) and (iii) and 5.6 shall       
survive indefinitely. Subject to Section 9.2, the Closing shall not have the    
effect of terminating any covenant or obligations of the parties hereto which   
are applicable after the Closing.                                               

10.2 Indemnification.                                                 

 (a) Subject to the terms and conditions of this Article X, Polychem and
Shareholder shall indemnify, defend and hold harmless Ecesis from and against   
all demands, claims, actions or causes of action, assessments, losses, damages, 
liabilities, costs and expenses, including interest, penalties and reasonable   
attorneys' fees and expenses (collectively, "Damages"), asserted against,       
resulting to, imposed upon or incurred by Ecesis, directly or indirectly, by    
reason of or resulting from (i) other than the Assumed Liabilities, any         
liabilities or obligations of Polychem (whether absolute, accrued, contingent or
otherwise) existing as of the Closing or arising out of facts, conditions or    
circumstances existing at or prior thereto, whether or not such liabilities,    
obligations or claims were known at the time of the Closing, including without  
limitation, any liability or obligation arising out of the ownership of the     
Assets or the conduct of the Business prior to the Closing; (ii) a breach of any
representation, warranty, covenant or agreement of Polychem contained in or made
pursuant to this Agreement or any Related Instrument; and (iii) any claim       
asserted against Ecesis or any of its Affiliates with respect to any taxes      
relating to Polychem's operations or properties (collectively, "Ecesis'         
Claims").                                                                       

 (b) Subject to the terms and conditions of this Article X, Ecesis shall
indemnify, defend and hold harmless Polychem and Shareholder from and against   
all Damages asserted against, resulting to, imposed upon or incurred by         
Polychem, directly or indirectly, by reason of or resulting from (i) the Assumed
Liabilities; and (ii) a breach of any representation, warranty, covenant or     
agreement of Ecesis contained in or made pursuant to this Agreement             
(collectively, "Polychem's Claims") (Ecesis' Claims and Polychem's Claims       
collectively referred to as "Claims," each, a "Claim").                         

 (c) Notwithstanding any provision in this Article X to the contrary, no
party hereto shall be required to indemnify any Person pursuant to this Article 
X unless and until the aggregate amount of Claims as to which indemnification   
would be required from such party (but for the provisions of this Section       
10.2(c)) exceeds $25,000 (the "Indemnity Threshold"), and thereafter such party 
shall be required in the manner and to the extent otherwise provided in this    
Article X, to indemnify any Person and to pay all amounts required to be paid by
such party in respect of such Claims, irrespective of the Indemnity Threshold.  
The amount of each Claim shall be adjusted to provide the Indemnifying Party (as
defined below) the benefit of (i) any insurance coverage provided with respect  
to a Claim and (ii) any tax benefit realized by the Indemnified Party (as       
defined below) with respect to a Claim.                                         

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    10.3 Third Party Claims. The obligations and liabilities of Ecesis, on the
one hand, and Polychem and Shareholder, on the other hand, as indemnifying      
parties (each, an "Indemnifying Party") to indemnify Polychem and the           
Shareholders and Ecesis, respectively (each, an "Indemnified Party"), under     
Section 10.2 with respect to Claims made by third parties shall be subject to   
the terms and conditions set forth in this Section 10.3. The Indemnified Party  
shall give written notice to the Indemnifying Party of any Claim with respect to
which it seeks indemnification promptly after the discovery by such party of any
matters giving rise to such Claim for indemnification; provided that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under Section 10.2 unless it shall have   
been prejudiced by the omission to provide such notice. In case any action,     
suit, claim or proceeding is brought against an Indemnified Party, the          
Indemnifying Party shall be entitled to participate in the defense thereof and, 
to the extent that it may wish, to assume the defense thereof, with counsel     
reasonably satisfactory to the Indemnified Party. After notice from the         
Indemnifying Party of its election so to assume the defense thereof, the        
Indemnifying Party will not be liable to the Indemnified Party under Section    
10.2 for any legal or other expense subsequently incurred by the Indemnified    
Party in connection with the defense thereof; provided, however, that (a) if the
Indemnifying Party shall elect not to assume the defense of such claim or action
or (b) if the Indemnified Party reasonably determines that there may be a       
conflict between the positions of the Indemnifying Party and the Indemnified    
Party in defending such claim or action, then separate counsel shall be entitled
to participate in and conduct such defense, and the Indemnifying Party shall be 
liable for any reasonable legal or other expenses incurred by the Indemnified   
Party in connection with such defense. The Indemnifying Party shall not be      
liable for any settlement of any action, suit, claim or proceeding effected     
without its written consent, which consent shall not be unreasonably withheld or
delayed. The Indemnifying Party shall not, without the Indemnified Party's prior
written consent, settle or compromise any action, suit, claim or proceeding to  
which the Indemnified Party is a party or consent to entry of any judgment in   
respect thereof, unless the Indemnifying Party discharges or assumes any and all
liabilities or obligations in connection with such settlement and the settlement
(i) includes an unconditional release of the Indemnified Party from all         
liability, (ii) requires only the payment of money and (iii) does not include an
admission of guilt.                                                             

     10.4 Contribution. In the event that the foregoing indemnity is unavailable
to an Indemnified Party for any reason, the Indemnifying Party shall contribute 
to any such Damages and shall do so in such proportion as is appropriate to     
reflect the relative fault of each party in connection with the conduct that    
resulted in the Damages. The parties agree that it would not be just or         
equitable if contributions were determined by pro rata allocation or by any     
other method of allocation that does not take account of relative fault and     
other equitable considerations.                                                 

   10.5 Remedies Cumulative. Except as expressly provided in this Agreement,
the remedies provided herein shall be cumulative and shall not preclude         
assertion by any party hereto of any other rights or the seeking of any other   
remedies against any other party hereto.                                        

ARTICLE XI. NONCOMPETE AND NONDISCLOSURE

    11.1 Noncompetition. Polychem and the Shareholder covenant and agree that,
for a period of five (5) years after the Closing Date, Polychem and the         
Shareholder shall not, anywhere in the world, directly or indirectly engage in, 
assist or have an interest in (whether as                                       

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proprietor, partner, investor, lender, shareholder, member, officer, director or
any other type of owner or principal whatsoever), or enter into the employment  
of or act as an agent for, or advisor or consultant to, any Person engaged in   
the business of manufacturing, marketing and distributing products which compete
with the Products. For purposes hereof, the term "shareholder" shall not include
beneficial ownership of less than three percent (3%) of the combined voting     
power of all issued and outstanding voting securities of a publicly-held        
corporation whose stock is, or at the time of acquisition of such securities    
was, traded on a major stock exchange or quoted on NASDAQ.                      

  11.2 Nondisclosure. Polychem and the Shareholder covenant and agree that
they will not at any time following disclose, directly or indirectly, or make   
available to any Person, or in any manner use for their own benefit, any        
Confidential Information or trade secrets relating to the Products or the       
Business, including, without limitation, business strategies, operating plans,  
acquisition strategies (including the identities of (and any other information  
concerning) possible acquisition candidates), pro forma financial information,  
market analysis, acquisition terms and conditions, personnel information,       
product information (whether existing, former, or proposed), trade secrets,     
sources of leads and methods of obtaining new business, know-how, customer lists
and relationships, supplier lists and relationships, manufacturing and          
distribution methods or any other methods of doing and operating the Business,  
or other non-public proprietary and confidential information relating to the    
Business, except to the extent that such information (i) is obtained from a     
third party whom the disclosing party has no reason to believe is bound by a    
duty of confidentiality, (ii) relates to information that is or becomes         
generally known to the public other than as a result of a breach of this        
Agreement, or (iii) is required to be disclosed by law or judicial              
administrative process (in which case prior to such disclosure the disclosing   
party shall promptly provide prior written notice of such required disclosure to
Ecesis in order to afford Ecesis the opportunity to seek an appropriate         
protective order preventing such disclosure).                                   

    11.3 Injunctive Relief. Polychem and the Shareholder agree that any breach
of this Article XI by them will cause irreparable damage to the business of     
Ecesis and that in the event of such breach Ecesis shall have, in addition to   
any and all remedies of law, the right to an injunction, specific performance or
other equitable relief in any court of competent jurisdiction to prevent the    
violation of his obligations hereunder. Nothing herein contained shall be       
construed as prohibiting Ecesis from pursuing any other remedy available for    
such breach or threatened breach. The prevailing party in any litigation arising
under this Article XI shall be entitled to recover his or its attorneys' fees   
and expenses in addition to all other available remedies.                       

ARTICLE XII. MISCELLANEOUS

   12.1 Press Releases and Public Announcements. The parties shall cooperate
in the preparation of a joint press release to be issued following the Closing. 
Unless required by law, Ecesis, on the one hand, nor Polychem or Shareholder, on
the other hand, shall issue any press release or make any public announcement   
relating to the subject matter of this Agreement prior to the Closing without   
the prior written approval of the other party.                                  

12.2 Confidentiality. Polychem, Shareholder and Ecesis shall hold, and
shall cause their respective members, employees, consultants and advisors to    
hold, in strict confidence, unless compelled to disclose by judicial or         
administrative process or by other requirements of                              

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law, all documents and information concerning the other parties furnished to it 
by any other party or its representatives in connection with the transactions   
contemplated by this Agreement (except to the extent that such information shall
be shown to have been (a) previously known by the party to which it was         
furnished, (b) in the public domain through no fault of such party or (c) later 
lawfully acquired from other sources by the party to which it was furnished),   
and each party shall not release or disclose such information to any other      
person, except its auditors, attorneys, financial advisors, bankers and other   
consultants and advisors in connection with the transactions contemplated by    
this Agreement. Each party shall be deemed to have satisfied its obligation to  
hold confidential information concerning or supplied by the other party if it   
exercises the same care as it takes to preserve confidentiality for its own     
similar information.                                                            

  12.3 Further Assurances. From time to time, at the request of Ecesis and
without further consideration, Polychem and Shareholder shall execute and       
deliver to Ecesis such documents and take such other action as Ecesis may       
reasonably request in order to consummate the transactions contemplated hereby  
and to vest in Ecesis good and valid title to the Assets.                       

  12.4 Parties in Interest. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the respective successors and permitted   
assigns of the parties hereto. Except as otherwise expressly provided herein,   
the rights and obligations of Ecesis hereunder may not be assigned without the  
prior written consent of Polychem and Shareholder, and the rights and           
obligations of Polychem and Shareholder hereunder may not be assigned without   
the prior written consent of Ecesis.                                            

12.5 Entire Agreement. This Agreement, the exhibits, the schedules and
other writings among the parties hereto contain the entire understanding of the 
parties with respect to the subject matter hereof and thereof and supersede all 
prior understandings and agreements with respect to the subject matter hereof   
and thereof, including without limitation, any and all term sheets between the  
parties hereto.                                                                 

12.6 Amendments and Waivers. No consent hereunder may be given and no 
provision hereof may be waived except by a written instrument signed by the     
party to be charged with such consent or waiver. This Agreement may not be      
amended except by a written instrument duly executed by all of the parties      
hereto. Any amendment or waiver effected in accordance with this Section 12.6   
shall be binding upon all of the parties hereto.                                

     12.7 Headings. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or  
interpretation of this Agreement.                                               

12.8 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have  
been duly given if delivered personally, mailed (registered or certified mail,  
postage prepaid, return receipt requested) or by facsimile transmission with    
written confirmation (if a copy of such facsimile transmission is               
contemporaneous sent by first class mail) as follows:                           

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                                                                [Download Table]

                                                                               
If to Ecesis:                   Ecesis LLC                                     
                                Franklin Avenue and Grant Street               
                                Phoenixville, PA  19460                        
                                Attention: Paul A. DeJuliis, President         
                                Facsimile No.:  (610) 935-7151                 

with a copy to:                 McCausland, Keen & Buckman                     
                                Radnor Court, Suite 160                        
                                259 North Radnor-Chester Road                  
                                Radnor, PA 19087                               
                                Attention:  Marc S. Maser, Esquire             
                                Facsimile No.:  (610) 341-1099                 

If to Polychem or Shareholder:  Polychem Corporation                           
                                Franklin Avenue and Grant Street               
                                Phoenixville, PA  19460                        
                                Attention:  Edward F. Sager, Jr., President    
                                Facsimile No.:  (610) 935-7151                 

with a copy to:                 Klehr, Harrison, Harvey, Branzburg & Ellers LLP
                                260 South Broad Street                         
                                Philadelphia, PA  19102                        
                                Attention:  Lawrence D. Rovin, Esquire         
                                Facsimile No.:  (215) 568-6603                 

or to such other address as the person to whom notice is to be given may have   
previously furnished to the others in writing in the manner set forth above,    
provided that notice of a change of address shall be deemed given only upon     
receipt.                                                                        

   12.9 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,      
without regard to its or any other jurisdiction's conflicts of laws principles. 
Any legal action or proceeding with respect to this Agreement or for recognition
and enforcement of any judgment in respect hereof brought by any party hereto or
its successors or assigns shall be brought and determined in the federal or     
state courts located in Philadelphia, Pennsylvania, and each party hereto       
submits with regard to any such action or proceeding for itself and in respect  
to its property, generally and unconditionally, to the exclusive jurisdiction of
such courts, and agrees that service of process in any such action or proceeding
shall be effective if mailed to such party at the address specified herein. To  
the fullest extent permitted by law, each party hereto irrevocably waives, and  
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement any claim that (a) it
is not personally subject to the jurisdiction of such courts for any reason, (b)
that it or its property is exempt or immune from jurisdiction of any court or   
from any legal process commenced in such courts (whether through service of     
notice, attachment prior to judgment, attachment in aid of execution of         
judgment, execution of judgment or otherwise), (c) the suit, action or          
proceeding in any such court is brought in an inconvenient forum, (d) the venue 
of such suit, action or proceeding is improper and (e) this Agreement, or the   
subject matter hereof, may not be enforced in or by such courts.                

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 12.10 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person, other than the parties 
hereto and their successors or permitted assigns, any rights or remedies under  
or by reason of this Agreement.                                                 

12.11 Counterparts. This Agreement may be executed by facsimile and in
counterparts, each of which shall be deemed an original, but all of which       
together shall constitute one and the same instrument.                          

12.12 Expenses. Each party hereto will bear its own costs and expenses
(including fees and expenses of legal counsel, accountants, investment bankers, 
brokers or other representatives or consultants) incurred in connection with    
this Agreement and the transactions contemplated hereby.                        

12.13 Construction. Ecesis, Polychem and Shareholder have participated
jointly in the negotiation and drafting of this Agreement. In the event an      
ambiguity or question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the parties hereto and no presumption or     
burden of proof will arise favoring or disfavoring any party by virtue of the   
authorship of any of the provisions of this Agreement.                          

12.14 Incorporation of Exhibits and Schedules. The exhibits and the   
schedules identified in this Agreement are incorporated herein by reference and 
made a part hereof.                                                             

12.15 Right of Set-off. Notwithstanding any provision hereof to the   
contrary, Ecesis shall be entitled to set-off (i) any amounts due to Ecesis from
Polychem or from Shareholder hereunder, whether by reason of indemnification    
under Section 10.2(a), or otherwise, against (ii) amounts due to Polychem       
hereunder (including without limitation indemnification under Section 10.2(b) or
amounts due under the Promissory Note). Any set-off shall be applied against    
amounts payable to Polychem or Shareholder in the chronological order all       
amounts of every kind payable to Polychem or Shareholder are due until the      
set-off is complete. Amounts due to Polychem or Shareholder may be set off      
against amounts due from Polychem or Shareholder. Notwithstanding any provision 
hereof or of the Promissory Note to the contrary, upon the occurrence of any    
event or existence of any condition which Ecesis reasonably believes will result
in a claim for indemnification under Section 10.2(a), Ecesis may withhold from  
amounts otherwise due under the Promissory Note an amount equal to Ecesis'      
reasonable estimate of the amount of such claim until such time as the actual   
amount of Ecesis' indemnification claim, and right of set-off hereunder, is     
determined.                                                                     

ARTICLE XIII. OTHER DEFINED TERMS 

  13.1 Other Defined Terms. As used in this Agreement, the following terms
have the meanings indicated:                                                    

     "Affiliate" of a specified person means a person that directly or
    indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, the person specified.                

   "control", for the purposes of the definitions of Affiliate and
   Related Person, means the possession, direct or indirect, of the power to
   direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or    
otherwise, and shall be construed as such term is used in the rules   
promulgated under the Securities Act.                                 

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         "Copyrights" means all registered and unregistered copyrights in both
published works and unpublished works.                                

"including" means including but not limited to.             

        "Intellectual Property" shall mean any and all intellectual property
now or hereafter owned by or licensed to Polychem by third parties    
  including, without limitation, any and all inventions, Patents, know-how
 (including without limitation formulas, processes, techniques, methods,
     technology, products, apparatuses, materials and compositions), trademarks,
     trademark registrations, trademark applications, service marks, trade names
     and all other names and slogans embodying business or product, goodwill (or
both), copyrights, mask works, Trade Secrets, computer software,      
documentation, instruction manuals, operating manuals, method plans,  
procedures, models, molds, specifications, Websites and all other     
intellectual property rights, whether or not subject to statutory     
registration or protection.                                           

        "Marks" means Polychem's name, all assumed fictional business names,
   trading names, registered and unregistered trademarks, service marks, and
applications therefore.                                               

      "Material Adverse Effect" means any material adverse effect on the
     operations, financial condition, assets, liabilities, earnings or prospects
   of the Business, the Assets or the ownership or operation of the Business
or the Assets by the Ecesis.                                          

        "Patents" means all patents, patent applications, and inventions and
discoveries that may be patentable.                                   

     "Person" means an individual, a partnership, corporation, limited
 liability company, limited liability partnership, trust, unincorporated
organization, other entity or group.                                  

        "Products" means those plastic products currently being produced and
sold by Polychem, as described on Exhibit "E" hereto.                 

      "Trade Secrets" means all know-how, trade secrets, confidential or
   proprietary information, customer lists, software, technical information,
    data, process technology, plans, drawings, designs, blue prints and molds.

    "Websites " means all rights in internet websites (including the
content thereof) and internet domain names presently used by Polychem.

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        IN WITNESS WHEREOF, this License and Asset Purchase Agreement has been
duly executed and delivered by the undersigned as of the date first written     
above.                                                                          

                Ecesis LLC

                                           By:__________________________________
                                  Name: Paul A. DeJuliis
                            Title: President

                          Polychem Corporation

                                           By:__________________________________
                                      Name: Edward F. Sager, Jr.
                            Title: President

                               ConMat Technologies, Inc.

                                           By:__________________________________
                                      Name: Edward F. Sager, Jr.
                            Title: President

PRER14A 78th Page of 106 TOC 1st Previous Next ↓Bottom Just 78th
Annex B 
------- 

                                                                           DRAFT

                                                                _____ ____, 2002

The Board of Directors                                                          
ConMat Technologies, Inc.                                                       
Franklin Avenue and Grant Street                                                
Phoenixville, PA  19360                                                         

Attention: Edward F. Sager, Jr.                                                 

Dear Mr. Sager:                                                                 

       You have requested the opinion of Ogorek & Company Inc. ("Ogorek") as
to the fairness, from a financial point of view, as of the date hereof, to the  
shareholders of ConMat Technologies, Inc. ("ConMat") of the consideration to be 
paid to Polychem Corporation ("Polychem"), a wholly owned subsidiary of ConMat, 
for the proposed sale of all of Polychem's product lines of custom engineered   
plastic molded products and certain related assets (the "Sale") as more fully   
described in the Licenses and Asset Purchase Agreement dated March 20, 2002 (the
"Purchase Agreement"), by and among Ecesis LLC, a Delaware limited liability    
company, Polychem, and ConMat. Pursuant to the Purchase Agreement, Polychem will
receive approximately $1,650,000 from Ecesis. The purchase price will consist of
(i) $500,000 in cash paid at closing of the Sale, (ii) $1,150,000 pursuant to a 
promissory note delivered to Polychem at closing, and by delivering to Polychem 
of 382,500 shares of ConMat's Series C Preferred Stock and warrants to purchase 
382,500 shares of ConMat common stock owned by Ecesis. As described in the      
Purchase Agreement, at December 31, 2001, the Series C Preferred Stock has a    
liquidation preference of $ 1,199,478 and accrued and unpaid dividends of       
$118,303.                                                                       

  Ogorek, as part of its financial advisory business, is regularly
engaged in the valuation of assets, securities and companies in connection with 
various types of asset and security transactions, including mergers,            
acquisitions, and valuations for various other purposes, and in the             
determination of adequate consideration in such transactions.                   

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Mr. Edward F. Sager, Jr.                                                        
_____ ___, 2002                                                                 
Page 2                                                                          

  Ogorek has no present or contemplated future interest in ConMat,
Polychem or Ecesis and neither employment nor compensation in connection with   
this report is in any way contingent upon the conclusions reached.              

         In arriving at our opinions, we considered the following factors, among
others, which we deemed relevant:                                               

       1. Historical financial performance, current financial conditions and
future prospects of Polychem.                           

 2. Industry information and trends as they related to Polychem,
      including, but not limited to, industry acquisition multiples.

   3. Stock market performance and trading activity of ConMat, where
          applicable, and comparison to similar public companies, including,
     but not limited to, price to earnings ratios, other valuation
multiples, and future growth prospects.                 

     4. Information, to the extent available, on mergers and acquisition
transactions involving similar companies.               

  5. Discounted cash flow analysis and liquidation analysis, where
applicable, for Polychem.                               

       6. Licenses and Asset Purchase Agreement dated March 20, 2002 and its
Exhibits.                                               

    7. Supply Agreement, dated March 20, 2002, among Polychem, Ecesis,
Ensinger Vekton, Inc. and Putnam Precision Molding, Inc.

        Our financial analysis was based upon, but not limited to, a review of
the following sources of information examined during the course of this         
engagement:                                                                     

1. Preliminary Proxy Statement dated _______ and its Exhibits.

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Mr. Edward F. Sager, Jr.                                                        
_____ ___, 2002                                                                 
Page 3                                                                          

         2. SEC filings by Polychem, including 10K's for the calendar years 1999
            and 2000, as well as, 10Q's and other SEC Reports filed in the years
1999 through 2001.                                      

  3. Internally projected income statements and balance sheets for
 Polychem for 2002 and 2003. We also reviewed management's
    assumptions for projections for the years 2004 through 2006.

   4. Plan of Liquidation and Distribution dated _______ prepared by
management.                                             

5. ConMat/Polychem Plan of Reorganization.                    

         6. Settlement Agreement dated October 25, 2001 and modified December 5,
     2001, by and among John W. Morris (Chapter 11 Trustee for the
Eastwind Group), Paul A. DeJulius, ConMat and Polychem. 

    7. Appraisal of the real estate asset of Polychem as of _________.

         8. Dow Jones news articles and press releases for the period January 1,
1999 through March 31, 2002.                            

      During the course of our engagement, we met with certain persons and
discussed the Purchase Agreement and Polychem's operations, historical financial
statements and future prospects, who in our judgment, were capable of providing 
us with information necessary to complete the assignment. These interviews and  
meetings included, but were not limited to Mr. Paul A. DeJuliis, member of      
Ecesis and a former Chairman and Director of ConMat and Polychem; Richard R.    
Schutte, member of Ecesis and former President, Chief Operating Officer and     
Director of ConMat and Polychem; and Edward F. Sager, Jr., President and        
Director of ConMat and Polychem.                                                

As part of our review process and opinion, we also visited the
Company's headquarters in Phoenixville, PA.                                     

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Mr. Edward F. Sager, Jr.                                                        
_____ ___, 2002                                                                 
Page 4                                                                          

     Our opinion is given in reliance on information and representations
provided or given by ConMat's and Polychem's officers, directors, auditors and  
other agents, and on filings, releases and other information issued by ConMat   
and Polychem including financial statements, financial projections as well as   
certain information from recognized independent sources. We have not            
independently verified this information concerning these companies nor other    
data which we have considered in our review and, for purposes of the opinion set
forth below, we have assumed that the Agreement is, in all respects, lawful     
under applicable corporate and tax law.                                         

 With regards to financial and other information relating to the
projected performance of Polychem, we have assumed that such information has    
been reasonably prepared and reflects the best currently available estimates and
judgments of the management of Polychem and ConMat as to Polychem's most likely 
future performance. With respect to valuations, we have not assumed any         
responsibility for any independent valuation or appraisal of any of the assets  
or liabilities of Polychem or ConMat. In using independent valuations or        
appraisals in our analysis, we have accepted these valuations and appraisals as 
they have been submitted to us by management and have not independently verified
such information. In rendering this opinion, we have assumed that in preparation
of the proxy statement, no conditions will be imposed that will have a material 
adverse affect on the contemplated benefits of the Purchase Agreement to the    
Shareholders of ConMat.                                                         

      This opinion is necessarily based on economic, market, financial and
other conditions as they exist, and on information made available to us, as of  
the date of this letter. It should be understood that, although subsequent      
developments may affect this opinion, we do not have any obligation to update,  
revise or reaffirm this opinion. We are expressing no opinion herein as to the  
prices at which the common shares of ConMat will actually trade at any point of 
time. Our opinion does not constitute a recommendation to the Independent       
Director of the Board of Directors of ConMat and does not constitute a          
recommendation to any shareholder as to how such shareholder should vote on the 
Purchase Agreement.                                                             

         This letter is for information of the Independent Director of the Board
of Directors of ConMat only in his evaluation of the Agreement and may not be   
relied upon by any other person. This letter is not to be equated or referred   
to, in whole or in part, in any registration statement, prospectus, or in any   
other document used in connection with the offering or sales of securities, nor 
shall this letter be used for any other purposes without our prior written      
consent, except that this opinion may be included in its entirety as an appendix
to ConMat's proxy statement furnished to the ConMat shareholders in connections 
with the proposed Purchase Agreement. The opinion may be summarized and referred
to in other sections of the proxy statement subject to our review and approval. 

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Mr. Edward Sager                                                                
_____ ___, 2002                                                                 
Page 5                                                                          

       Based on the foregoing and such other factors as we deem relevant, it
is our opinion that, as of the date hereof, the consideration to be received    
pursuant to the Purchase Agreement is fair, from a financial point of view, to  
the shareholders of ConMat.                                                     

                                       Very truly yours,

                                           ---------------------
                                           Ogorek & Company Inc.
-------------------                                                             
Richard Ogorek, CPA                                                             

-----------------------                                                         
Paul Mulholland, CPA, CVA                                                       

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                                                                         Annex C
                                                                         -------

SETTLEMENT AGREEMENT
--------------------

        This Settlement Agreement (the "Agreement") is entered into as of this
____ day of October, 2001, as modified as of this 5th day of December, 2001, by 
and between the following parties:                                              

        1. John W. Morris, Esquire, Chapter 11 Trustee for The Eastwind Group,
Inc. (the "Trustee");                                                           

2. Paul A. DeJuliis ("DeJuliis");                             

3. ConMat Technologies, Inc. ("ConMat"); and                  

        4. Polychem Corporation ("Polychem;" DeJuliis, ConMat and Polychem are
sometimes collectively referred to hereafter as the "Settling Defendants").     

Background
----------

         A. On October 27, 2000, the Eastwind Group, Inc. (the "Debtor") filed a
voluntary petition for reorganization pursuant to Chapter 11 of Title 11 of the 
United States Code (the "Bankruptcy Code").                                     

       B. The Trustee was thereafter appointed by Order of the United States
Bankruptcy Court for the Eastern District of Pennsylvania dated February 2,     
2001.                                                                           

       C. The Trustee has standing to commence and prosecute certain actions
arising under the Bankruptcy Code.                                              

        D. On May 24, 2001, the Trustee became the substituted plaintiff in an
adversary proceeding that substituted for and amended a proceeding commenced by 
John R. Thach against the Settling Defendants and others by filing the          
Substituted Complaint of John W. Morris, Chapter 11 Trustee of The Eastwind     
Group, Inc. (the "Complaint").                                                  

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       E. In the Complaint, the Trustee asserted claims against the Settling
Defendants and others to recover certain alleged fraudulent transfers, to       
turnover property of the estate and to recover damages.                         

  F. In the Complaint, in addition to the Settling Defendants, the
Trustee named as defendants Howard M. Appel, William B. Miller, Edward F. Sager,
Jr., Andrew P. Panzo, HMA Associates, a/k/a HMA Associates, Inc. HMA            
Investments, Inc., SPH Investments, Inc., SPH Equities, Inc. Stephen P.         
Harrington, F.A.C. Enterprises, Inc., IP Services, Inc., a/k/a IF Consulting,   
Ltd., Millworth Investments, Inc., Exchequer Services Corp., ESC Services,      
Corp., a/k/a ESC, Cecile T. Coady, Centaur Financial Group, The D.A.R. Group,   
Inc., Michael J. Cirillo, Clifton Capital, Ltd., Mentor Capital Partners, Ltd., 
Mentor Management Company, Mentor Special Situation Fund, LP, Sager &           
Associates, George P. Stasen and Odyssey Capital Group, LP (collectively        
referred to hereafter as the "Non-Settling Defendants").                        

        G. The Settling Defendants dispute the Trustee's right to recover such
transfers and otherwise assert defenses to the Trustee's claims and causes of   
action.                                                                         

     H. In addition to the Trustee's claims against Settling Defendants,
John R. Thach ("Thach"), ProFutures Special Equities Fund, L.P. ("ProFutures"), 
and John Park ("Park") (Thach, ProFutures and Park are sometimes collectively   
referred to hereafter as the "Claimants") have asserted various claims against  
the Settling Defendants and others and those claims are the subject of pending  
litigation captioned as:                                                        

                 (1) John R. Thach v. The Eastwind Group, Inc., et al., Bkrtcy
Ct., E.D. Pa. No. 00-33372SR, adv. No. 00-906 (the "Thach Action").             

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              (2) ProFutures Special Equities Fund, L.P. v. The Eastwind
Group, Inc., et al., U.S.D.C., E.D. Pa., No. 00-CV-1888 (the "ProFutures        
Action").                                                                       

                (3) John Park v. The Eastwind Group, Inc., et al., Mont. Co.
CCP, No. 2000-08245 (the "Park Action").                                        

(Hereafter collectively, the "Pending Actions").              

       I. The Settling Defendants deny any liability to the Claimants on the
claims asserted in the Pending Actions.                                         

       J. The Trustee and the Settling Defendants have determined to resolve
all claims, causes of action and disputes existing between them, all without    
admission of liability, on the terms and conditions hereinafter described,      
subject to Bankruptcy Court approval.                                           

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally    
bound, hereby agree as follows:                                                 

Covenants 
--------- 

     1. Execution and Effective Date. The parties hereto shall sign this
Agreement no later than five (5) business days after counsel for the Trustee and
the Settling Defendants agree on the form of this Agreement. The Effective Date 
of this Agreement will be the date on which (1) no further appeals from an order
approving the settlement, in accordance with and subject to paragraph 2 below,  
may be taken; and (2) the Trustee has satisfied or the parties have waived the  
conditions set out in paragraph 3 below.                                        

         2. Contingency on Court Approval. This Agreement shall have no force or
effect unless and until this Agreement is approved by the Bankruptcy Court and  
either (i) no further appeals from such order may be taken or (ii) the Trustee  
and Settling Defendants have jointly elected to treat the bankruptcy court      

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approval date as the Effective Date, notwithstanding the pendency of an appeal. 
If there is any appeal and the foregoing election is not made to treat the      
agreement as effective from bankruptcy court approval, or if the agreement or   
payments or performances thereunder are stayed or delayed pending appeal, or    
upon any order vacating or reversing the approval of the bankruptcy court, then 
the Trustee elect thereupon to rescind this agreement by written notice to the  
Settling Defendants within 15 days of such occurrence. If, for any reason, this 
Agreement is not approved by the Bankruptcy Court, this Agreement is null and   
void and of no further force and effect, and all litigation shall resume and    
proceed as if no settlement ever had been negotiated.                           

      3. Condition Relating to Settlement of Pending Actions. As set forth
below, the Trustee, with the cooperation of the Settling Defendants, shall seek 
to settle the Pending Actions, either in full, or in such manner as resolves or 
otherwise limits the exposure of the Settling Defendants on the claims asserted 
in the Pending Actions to the satisfaction of the Trustee and the Settling      
Defendants. Notwithstanding the foregoing, if (a) a settlement of the Thach     
Action has not been achieved by the date that is thirty (30) days after the date
of the Bankruptcy Court's approval of this Agreement, or, in the Trustee's      
judgment is not achievable by such time without terms that would be, in the     
Trustee's judgment, unduly adverse to the estate and its creditors and parties  
in interest; and if (b) the absence of such settlement is, in the Trustee's     
judgment, likely to result in unduly burdensome costs and expense to the estate 
(for indemnification and otherwise under this Agreement), then either the       
Trustee or the Settling Defendants may, at their option, enforce the condition  
set out in this paragraph and rescind this Agreement by delivering written      
notice to the other, such notice to be delivered not later than thirty-five (35)

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days after the date of the Bankruptcy Court's approval of this Agreement. Upon  
receipt of such notice, this Agreement would be rendered null and void, and all 
funds or other deliveries made by the Settling Defendants to the Trustee would  
be returned to them immediately without prejudice, along with interest earned on
any funds delivered. On other hand, if such settlement of the Thach Action has  
not been achieved by thirty (30) days after the date of the Bankruptcy Court's  
approval of this Agreement, and the Trustee and/or the Settling Defendants have 
not delivered written notice of rescission of this Agreement within thirty-five 
(35) days after the date of the Bankruptcy Court's approval of this Agreement,  
then the parties will be deemed to have waived the condition set forth in this  
paragraph and this Agreement will be enforced. If the parties have waived the   
condition set forth in this paragraph, the parties agree and acknowledge that   
the Trustee has indemnification obligations as to the Thach Action that are in  
addition to its obligations as to the other Pending Actions, as is set forth in 
paragraphs 10, 11, and 12 of this Agreement.                                    

         4. Settlement Payment. Upon satisfaction of the conditions set forth in
paragraphs 1, 2 and 3, above, and the Trustee's satisfaction or waiver of the   
condition set out in paragraph 3, ConMat shall pay, and the Settling Defendants 
shall cause ConMat to pay to the Trustee, the sum of $1,500,000 (the "Settlement
Payment"), payable as follows:                                                  

               (a) $150,000 (the "Initial Payment") shall be paid, by wire
transfer to the Trustee's DIP account, within ten (10) days after satisfaction  
of the conditions set forth in paragraph 2 above and the Trustee's waiver of the
condition set forth in paragraph 3 above.                                       

              (b) $350,000 (the "Second Payment") shall be paid, by wire
transfer to the Trustee's DIP account, within ten (10) days from the earlier of 
(i) ninety (90) days from the date the Bankruptcy Court approves this Agreement 

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or (ii) ConMat shareholders formally approve a management buyout (the           
"Management Buyout") of Polychem's specialty and water treatment product lines  
and related patents, technologies, customer lists, distribution, backlog,       
industry names and molds, on substantially the terms set forth on Exhibit "A"   
attached hereto.                                                                

                 (c) The balance of $1,000,000 (the "Remaining Balance") shall
be evidenced by a promissory note in the form attached hereto as Exhibit "B"    
(the "Note") to be executed and delivered by ConMat and Polychem no later than  
five (5) business days from the date the Bankruptcy Court approves the          
Agreement. As set forth in the Collateral Pledge of Stock Agreement by Eastwind 
Stockholder's Trust, Collateral Pledge of Stock Agreement by ConMat             
Technologies, Inc., ConMat Security Agreement, Polychem Security Agreement, and 
Polychem Mortgage, copies of which are attached to the Note as Exhibits B-1     
through B-5, the Note shall be secured by (I) the capital stock of ConMat owned,
controlled, or held in trust or alleged trust for shareholders of Debtor subject
to the condition that the order approving this Agreement shall also approve such
turnover; (II) all of the assets of ConMat; (III) all of the capital stock and  
all of the assets of Polychem; (IV) and a mortgage on Polychem's property (the  
"Collateral"), with Item I of the aforesaid security being free and clear of any
other interest lien or claim of any party other than the claims asserted in this
pending adversary proceeding; and Items II, III and IV of the aforesaid security
being subordinate only to (a) the security interests of General Electric Capital
Corporation ("GECC") under its revolving trade credit facility for Polychem in  
the current outstanding amount of $2,750,000 (the "GECC Loan"), (b) the security
interests and judgment lien of the Budd Company, ("Budd") against Polychem,     
under its security agreement with Polychem dated October _____, 2001 (the "Budd 
Security Agreement") as security for Polychem's prior principal and judgment    

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indebtedness to Budd of approximately $906,436 (the "Budd debt") and (c) the    
first mortgage held by Pennsylvania Public School Employees' Retirement Board   
("PSERS") as security for its real estate loan to Polychem in the current       
outstanding amount of $1,830,370.38 (the "PSERS Loan"), under their respective  
loan and security documents with Polychem. It shall be a condition to the       
effectiveness of this Agreement, waivable only by the Trustee, that GECC, PSERS 
and Budd have confirmed, in a form acceptable to the Trustee, including but not 
limited to appropriate intercreditor agreement(s) consistent herewith, that they
do not object to this Agreement or the security documents. Recourse under the   
Note shall be limited to the Collateral. The principal balance due and owing    
under the Note shall be due and payable upon the earlier of (i) July 15, 2002;  
or (ii) to the extent of net proceeds therefrom and subject to the rights of    
GECC, PSERS and Budd as set out above, upon consummation of any sale of the     
capital stock of Polychem, the management buyout described in Section 4(b) or   
any other material portion of the business or assets thereof, whether by way of 
merger, consolidation, sale of stock, sale of assets or similar transaction.    

               (d) In addition to, and not in limitation of the rights set
out in the attached security and collateral documents, the foregoing payments   
dates shall be accelerated, and shall be deemed due and payable in full, without
need for further action by or notice from the Trustee, upon the bankruptcy or   
receivership of Polychem or ConMat or the taking of possession, receivership,   
control execution, or entry of judgment against Polychem or ConMat, or their    
assets or capital stock by GECC, PSERS or Budd.                                 

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               (e) (e) The Trustee and the Settling Defendants confirm, as
clarification, that the attached security and collateral documents are intended,
inter alia, to forbid the Settling Defendants from causing or permitting a      
dilution of the Trustee's interest and collateral position in the stock or      
assets of ConMat during the pendency of this Settlement Agreement.              

        5. Turnover of Shares in Eastwind Stockholder's Trust. As is set forth
in paragraph 4(c)(I), above, in connection with the approval of this Agreement  
the Trustee shall obtain an order from the Bankruptcy Court directing (a)       
DeJuliis to turnover the ConMat stock certificate held in the Eastwind          
Stockholder's Trust ("Trust"); and (b) relieving DeJuliis of any further        
obligations under the Trust from and after entry of the Bankruptcy Court's order
approving this Agreement. Upon entry of such Order, DeJuliis will immediately   
deliver possession of the Trust shares to Trustee subject to paragraph 7 of this
Agreement.                                                                      

        6. Apportionment of Settlement Payment for ProFutures and Park. Unless
the ProFutures and/or Park Actions have been otherwise settled and released,    
then the parties agree and acknowledge that a portion of the Settlement Payment 
payable to the Trustee in such amount as the Trustee may establish as reasonable
for this purpose, but not to exceed $200,000, is to be allocated and set aside  
by the Trustee to be used toward payment of the claims in the ProFutures and    
Park Actions, through settlement or otherwise, and to fund the indemnification  
obligations of the Trustee with respect to these actions, as is set forth in    
paragraphs 10, 11 and 12 of this Agreement. The Trustee agrees that Settling    
Defendants responsibility to settle the Pending Actions is limited to the       
Settlement Payment only. The aforesaid allocation and amount set aside, and the 
related indemnification obligations of the Trustee shall be reduced dollar for  
dollar to the extent that the Settlement Payment is not paid in full.           

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       7. Return of ConMat Stock. Upon satisfaction of the Note, the Trustee
shall return the Collateral and shall transfer, assign and convey to ConMat all 
shares of ConMat common or preferred stock owned or controlled by the Debtor,   
including without limitation, the shares of ConMat common stock held in the     
Eastwind Stockholder's Trust, by delivery of stock certificates representing    
such shares, endorsed by the Trustee without recourse for transfer. This        
transfer of ConMat stock by the Trustee to ConMat shall not include any shares  
acquired or transferred to the Trustee by Non-Settling Defendants at any time   
from or after September 1, 2001.                                                

     8. Release of Settling Defendants by Trustee and Debtor. For and in
consideration of the Settlement Payment (and subject to the condition that the  
full amount thereof be paid in good funds to the Trustee, including but not     
limited to the Remaining Balance under the Note) and releases, conditions and   
other mutual covenants set forth in this Agreement, the Trustee, on his own     
behalf and on behalf of the Debtor, its estate and parties in interest thereto, 
and the Trustee's, the estate's, the Debtor's or its subsidiaries' current and  
former shareholders, officers, directors, predecessors, other trustees,         
advisors, employees, agents, consultants, representatives and attorneys, and the
Debtor's respective administrators, successors and assigns, and anyone claiming 
through them or on their behalf (collectively, the "Trustee Releasing Parties"),
hereby remises, releases and forever discharges the Settling Defendants,        
together with their officers, directors, employees, agents, consultants, current
attorneys, heirs, spouses, executors, administrators, successors and assigns    
(collectively, the "ConMat Released Parties"), from and against all claims that 
the Trustee or Eastwind has, or could have asserted in the Complaint or in the  

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Pending Actions, against the ConMat Released Parties or any of them, singly or  
in any combination. Nothing in the foregoing release shall be deemed to release 
claims against the Non-Settling Defendants, or persons or entities owned,       
controlled, operated or managed by them, or their respective attorneys,         
advisors, insurers, officers, directors, shareholders (other than the Settling  
Defendants), subsidiaries and affiliates (other than the Settling Defendants),  
or their heirs, spouses, executors, administrators, successors and assigns      
(collectively, the "Non-Released Parties").                                     

         9. Release of Trustee and Debtor by the Settling Defendants. For and in
consideration of the release of the claims against them set forth in the        
Complaint and the releases and other mutual covenants set forth in this         
Agreement, each of the Settling Defendants, together with their parents,        
subsidiaries, affiliates, shareholders, officers, directors, employees, agents, 
representatives, attorneys, heirs, spouses, executors, administrators,          
successors and assigns, and anyone claiming through them or on their behalf     
(collectively, the "ConMat Releasing Parties"), hereby remise, release and      
forever discharge the Trustee, the Debtor and its estate, together with the     
Trustee and the Debtor's subsidiaries and/or affiliated companies, and the      
current and former shareholders, officers, directors, predecessors, trustees,   
advisors, partners, employees, agents, consultants, representatives and         
attorneys of each of the foregoing (collectively, the "Trustee Released         
Parties") and the Trustee Released Parties' respective administrators,          
successors and assigns, from and against all claims that the Settling Defendants
have, or could have asserted against the Trustee Released Parties, or some or   
any of them, singly or in any combination, in connection with (i) the Complaint 
or the Pending Actions, subject to any claims for indemnification by Settling   

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Defendants as set forth in paragraphs 10, 11 and 12 below; (ii) any claim that  
has been or could be raised in any filed or unfiled proof of claim (or other    
administrative, secured, priority, unsecured, rejection, or other claim asserted
or assertable) in Eastwind's bankruptcy case, regardless of whether such claim  
relates in any way to the Complaint or the Pending Actions.                     

         10. Judgment Reduction and Joint Tortfeasor Indemnification Provisions.
If any of the Non-Settling Defendants assert and/or ultimately establish a claim
against any of the Settling Defendants for contribution or indemnification in   
connection with any claim or cause of action instituted by the Trustee against  
the Non-Settling Defendants involving or relating to any claim arising out of or
relating to the Complaint, the Pending Actions or the Debtor or that otherwise  
is released pursuant to this Agreement, then the Trustee specifically agrees to:
(a) defend, indemnify and hold harmless the Settling Defendants to the extent of
their liability for such contribution and indemnification. (b) to eliminate to  
the extent reasonably possible the need for Settling Defendants to incur legal  
fees in defense of such contribution or indemnification claims; and (c) reduce  
the amount of any judgment, settlement or other award obtained by the Trustee to
eliminate the right of any person or entity to collect any claim, demand or     
judgment for contribution or indemnification from the Settling Defendants       
arising out of the Complaint or any future action the Trustee may assert against
such person or entity.                                                          

      11. Thach Settlement/Indemnification. The Trustee shall use vigorous
and reasonable efforts to obtain a release of the Settling Defendants from Thach
for all claims in the Thach Action. If the Trustee obtains a release of the     
claims in the Thach Action, the Settling Defendants will enter into mutual      
releases with Thach, in substantially similar form to the mutual releases       

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exchanged hereunder between the Trustee and the Settling Defendants. If the     
Trustee cannot obtain a release from Thach of the Thach Action then pursuant to 
paragraph 3 above, either the Trustee or the Settling Defendants may elect to   
rescind the Agreement on or before the dates set out in paragraph 3 above.      
Otherwise, the Trustee will agree to indemnify the Settling Defendants from     
their share of liability in the Thach Action. The foregoing indemnification     
obligations and obligations to save harmless from claims raised in the Thach    
Action shall include an obligation by the Trustee to provide a defense to the   
Settling Defendants, or, if not, to pay or reimburse reasonable attorney's fees 
or costs incurred or to be incurred in connection therewith. The Trustee's      
motion for approval of this Agreement shall set out, and such approval shall be 
a condition to the effectiveness of this Agreement, that this Agreement bars    
Thach from separately pursuing the Debtor and/or Trustee's claims against any of
the Settling Defendants.                                                        

         12. ProFutures and Park Settlements/Indemnifications. The Trustee shall
use vigorous and reasonable efforts to obtain a release of the Settling         
Defendants from ProFutures and Park for all claims in the ProFutures and Park   
Actions. If the Trustee obtains a release of the claims in the ProFutures and   
Park Actions, the Settling Defendants will enter into mutual releases with      
ProFutures and/or Park, in substantially similar form to the mutual releases    
exchanged hereunder between the Trustee and the Settling Defendants. If the     
Trustee cannot obtain a release from the claims in the ProFutures and/or Park   
Actions, then, pursuant to paragraph 6, above, the Trustee will agree to        
indemnify the Settling Defendants from their share of liability on the claims in
the ProFutures and Park Actions up to the $200,000 limit set forth in paragraph 
6 above. To the extent that such funds are not used by the Trustee to settle or 
pay the ProFutures and Park claims they are available for the reasonable defense
costs of the Settling Defendants hereafter incurred in the defense of the       

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ProFutures and Park Actions. The Trustee's motion for approval of this Agreement
shall set out and, to the extent required, similar motion(s) before any other   
applicable courts shall set out that this Agreement bars Park and ProFutures    
from separately pursuing the Debtor and/or Trustee's claims against any of the  
Settling Defendants.                                                            

      13. Covenant Not to Sue. Other than actions upon and to enforce this
Agreement , and subject to the condition as to the Trustee's covenant that the  
full amount thereof be paid in good funds to the Trustee, including but not     
limited to the Remaining Balance under the Note, The Trustee and the Settling   
Defendants covenant and agree that they shall not ever commence any actions or  
proceedings of any kind against one another to recover upon claims that are     
released under this Agreement and, further, that all such claims and causes of  
action are deemed fully, finally and completely settled hereby.                 

14. Parties to Bear Own Expenses. The Trustee and the Settling
Defendants agree, unless provided otherwise as to events from and after approval
of this Agreement under the annexed collateral and security documents, to bear  
their own expenses, including attorney fees, in connection with the negotiation 
and entry into this Agreement and all related matters.                          

       15. General Representations and Warranties. Each party represents and
warrants to the others as follows, subject to the requirement that the Trustee  
must seek and obtain Court approval for this Agreement:                         

               (a) Power and Authorization. It has all requisite power and
authority (corporate and otherwise) to enter into this Agreement, and is duly   
authorized by all necessary action the execution and delivery hereof by the     
officer or individual whose name is signed on its behalf below.                 

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                 (b) No Conflict. Its execution and delivery of this Agreement
and the performance of its obligations hereunder, do not and will not conflict  
with or result in a breach of or a default under its organizational instruments 
or any other agreement, instrument, order, law or regulation applicable to it or
by which it may be bound.                                                       

                (c) Enforceability. This Agreement has been duly and validly
executed and delivered by it and constitutes its valid and legally binding      
obligation, enforceable in accordance with its terms, except as enforcement may 
be limited by bankruptcy, insolvency or other laws of general application       
relating to or affecting the enforcement of creditors' rights and except as     
enforcement is subject to general equitable principles. If any term or provision
of this Agreement shall be judicially determined to be illegal, unenforceable,  
or invalid or otherwise void, the parties intend that the remaining provisions  
shall continue in full force and effect.                                        

        16. Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes all     
prior agreements and understandings, whether written or oral, between them with 
respect to the subject matter hereof. Each party has executed this Agreement    
without reliance upon any promise, representation or warranty other than those  
expressly set forth herein. Each party acknowledges that (i) it has carefully   
read this Agreement, (ii) it has had the assistance of legal counsel of its     
choosing (and such other professionals and advisors as it has deemed necessary) 
in the review and execution hereof, (iii) the meaning and effect of the various 
terms and provision hereof have been fully explained to it by such counsel, (iv)
it has conducted such investigation, review and analysis as it has deemed       
necessary to understand the provisions of this Agreement and the transactions   
contemplated hereby, and (v) it has executed this Agreement of its own free     
will.                                                                           

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         17. Amendment. No amendment of this Agreement shall be effective unless
embodied in a written instrument executed by all of the parties.                

         18. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive and procedural laws of the Commonwealth
of Pennsylvania without regard to conflict of laws principles.                  

       19. Dispute Resolution. Exclusive jurisdiction to resolve any dispute
arising out of this Agreement shall be retained by the United States Bankruptcy 
Court for the Eastern District of Pennsylvania, and all parties hereby consent  
to the jurisdiction of that Court to resolve any such dispute.                  

  20. Headings. The headings of sections and subsections have been
included for convenience only and shall not be considered in interpreting this  
Agreement.                                                                      

 21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which 
together shall constitute one and the same Agreement. This Agreement may be     
executed and delivered via electronic facsimile transmission with the same force
and effect as if it were executed and delivered by the parties simultaneously in
the presence of one another.                                                    

        22. Interpretation and Construction. This Agreement has been fully and
freely negotiated by the parties hereto, shall be considered as having been     
drafted jointly by the parties hereto, and shall be interpreted and construed as
if so drafted, without construction in favor of or against any party on account 
of its participation in the drafting hereof.                                    

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       23. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns.                                                         

        24. Assignment of Rights Under Insurance Policies. As of the Effective
Date, Settling Defendants, individually and collectively, irrevocably assign,   
convey and transfer to the Trustee any and all rights they have under, arising  
from, or relating to the following policies of insurance, and any successor,    
renewal or amendatory policies thereto:                                         

                (a) National Union Fire Insurance Company of Pittsburgh, Pa.
Directors, Officers and Corporate Liability Insurance Policy number 856-56-64.  

                (b) National Union Fire Insurance Company of Pittsburgh, Pa.
Directors, Officers and Corporate Liability Insurance Policy number 485-98-75.  

                 (c) Zurich American Insurance Company, Directors and Officers
Liability and Reimbursement Policy number DOC 3770836 00 (to the extent relating
to the Pending Actions and the claims raised in the Trustee's Complaint, and the
events and occurrences therein).                                                

         This assignment expressly includes any right of reimbursement, payment,
indemnification or otherwise of each of the Settling Defendants, including but  
not limited to all claims and rights to reimbursement, payment, indemnification,
recovery or otherwise with respect to these policies for defense and litigation 
costs and attorney's fees, whether heretofore or hereafter incurred by any of   
them or on their behalf.                                                        

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       IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first written above.                                       

            /s/ John W. Morris
                                  ----------------------------------------
                                  John W. Morris, Esq., Chapter 11 Trustee
                     for The Eastwind Bankruptcy

              /s/ Paul A. DeJuliis
                          --------------------------------
          Paul A. DeJuliis

                  CONMAT TECHNOLOGIES, INC

              /s/ Paul A. DeJuliis
                         -------------------------------
                         By: Paul A. DeJuliis, President

              POLYCHEM CORPORATION

              /s/ Paul A. DeJuliis
                          --------------------------------
              By: Paul A. DeJuliis

PRER14A 100th Page of 106 TOC 1st Previous Next ↓Bottom Just 100th
Annex D 
------- 

 PLAN OF
 LIQUIDATION AND DISSOLUTION
 OF POLYCHEM CORPORATION

1. Plan of Dissolution. This Plan of Liquidation and Dissolution (the 
"Plan") is intended to accomplish the complete liquidation and dissolution of   
Polychem Corporation, a Pennsylvania corporation (the "Company'") through the   
distribution by it of all of its assets in accordance with the laws of the      
Commonwealth of Pennsylvania. Said liquidation and dissolution shall be         
accomplished in the manner stated in this Plan. Subject to any rights of third  
parties, the Board of Directors may, notwithstanding shareholder authorization  
of the Plan and of the dissolution of the Company, amend this Plan from time to 
time.                                                                           

     2. Approval of Plan. This Plan shall become effective immediately after all
of the following have occurred (a) the Board of Directors has called a Special  
Meeting of the Shareholders of the Company for the purpose of allowing the      
shareholders to consider and act on the liquidation of the Company and its      
dissolution pursuant to Section _______, or has otherwise submitted such matter 
to a vote of the shareholders of the Company and (b) the shareholders of the    
Company have approved such liquidation and dissolution and have adopted this    
Plan by an affirmative vote of at least a majority of the outstanding shares of 
Common Stock of the Company at the Annual Meeting to which due notice is given. 

  3. Time Period. The sale, exchange, transfer or other disposition of the
assets, properties and rights of the Company shall be initiated and completed as
expeditiously as practicable after the approval and adoption of the Plan by the 
shareholders of the corporation.                                                

   4. Distribution of Assets. After approval and adoption of the Plan by the
Company's shareholders, the Company, by its duly authorized officers, shall:    

       (a) Collect the proceeds of that certain License and Asset Purchase
Agreement dated March 20, 2002 by and among ConMat Technologies, Inc., Polychem 
Corporation and Ecesis LLC (the "License and Asset Purchase Agreement");        

         (b) Collect all monies owed to the Company and convert, to the extent
practicable, all other assets of the Company, including without limitation all  
accounts receivable, inventory, equipment, real estate and ancillary product    
lines, to cash;                                                                 

    (c) Pay or make adequate provision for payment, of all debts and
liabilities of the Company, including all expenses of the sale of its assets and
of the liquidation and dissolution provided for in this Plan;                   

 (d) To the extent deemed necessary by the Board of Directors,
establish and set aside a reasonable amount (the "Contingency Reserve") to meet 
claims against the Company, including ascertained or contingent liabilities and 
expenses;                                                                       

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(e) Give notice to known and unknown creditors;             

   (f) Distribute to the shareholders pro rata by ownership of the
outstanding common stock of the Company all of the Company's assets (other than 
the Contingency Reserve) in complete cancellation and redemption of the         
outstanding stock of the Company in one or more distributions;                  

         (g) At the later of (a) expiration of the statutory period for claims
by creditors or (b) resolution of all matters provided for by the Contingency   
Reserve, and after payment of the costs of the establishment and maintenance    
associated the Contingency Reserve, distribute to shareholders pro rata by      
ownership of the outstanding common stock of the Company the remainder of the   
Company's assets;                                                               

          (h) Be formally dissolved in accordance with the applicable provisions
of the laws of the Commonwealth of Pennsylvania and the Federal Government,     
including, but not limited to, the filing of a Articles of Dissolution with the 
Secretary of the Commonwealth of Pennsylvania and the filing of Form 966 with   
the Internal Revenue Service.                                                   

5. Authority of Board and Officers. The adoption of the Plan by its   
shareholders shall constitute full and complete authority for the Board of      
Directors and the proper officers of the Company, without further shareholder   
action, to do and perform any and all acts and to make, execute and deliver any 
and all agreements, conveyances, assignments, transfers, certificates and other 
documents of any kind and character which such officers deem necessary or       
appropriate: (i) to sell, dispose, convey, transfer and deliver the assets of   
the Company, (ii) to satisfy or provide for the satisfaction of the obligations 
of the Company; (iii) to distribute any remaining assets of the Company to its  
shareholders or for their benefit to the extent provided above and (iv) to      
dissolve the Company in accordance with the laws of the Commonwealth of         
Pennsylvania and cause its withdrawal from all jurisdictions in which it is     
authorized to do business.                                                      

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Annex E 
------- 

 The 2001 Florida Statutes

 Title XXXVI
BUSINESS ORGANIZATIONS Chapter 607

607.1301 Dissenters' rights; definitions.-- 
The following definitions apply to ss. 607.1302 and 607.1320: 

(1) "Corporation" means the issuer of the shares held by a dissenting 
shareholder before the corporate action or the surviving or acquiring           
corporation by merger or share exchange of that issuer.                         

    (2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'    
authorization date, excluding any appreciation or depreciation in anticipation  
of the corporate action unless exclusion would be inequitable.                  

(3) "Shareholders' authorization date" means the date on which the    
shareholders' vote authorizing the proposed action was taken, the date on which 
the corporation received written consents without a meeting from the requisite  
number of shareholders in order to authorize the action, or, in the case of a   
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary       
corporation.                                                                    

History -- s. 118, ch. 89-154.                                                  

 * * * *

607.1302  Right of shareholders to dissent.--                                   

 (1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of   
the following corporate actions:                                                

      (a) Consummation of a plan of merger to which the corporation is a
party:                                                                          

         1. If the shareholder is entitled to vote on the merger, or

           2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled to vote 
on action taken, except for the applicability of s. 607.1104;                   

        (b) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation, other than in the usual and regular course  
of business, if the shareholder is entitled to vote on the sale or exchange     
pursuant to s. 607.1202, including a sale in dissolution but not including a    
sale pursuant to court order or a sale for cash pursuant to a plan by which all 
or substantially all of the net proceeds of the sale will be distributed to the 
shareholders within 1 year after the date of sale;                              

       (c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;                                                                    

         (d) Consummation of a plan of share exchange to which the corporation
is a party as the corporation the shares of which will be acquired, if the      
shareholder is entitled to vote on the plan;                                    

         (e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely      
affect such shareholder by:                                                     

             1. Altering or abolishing any preemptive rights attached to any
of his or her shares;                                                           

              2. Altering or abolishing the voting rights pertaining to any of
his or her shares, except as such rights may be affected by the voting rights of
new shares then being authorized of any existing or new class or series of      
shares;                                                                         

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            3. Effecting an exchange, cancellation, or reclassification of
any of his or her shares, when such exchange, cancellation, or reclassification 
would alter or abolish the shareholder's voting rights or alter his or her      
percentage of equity in the corporation, or effecting a reduction or            
cancellation of accrued dividends or other arrearages in respect to such shares;

   4. Reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or abolishing any provision relating  
to any sinking fund for the redemption or purchase of any of his or her shares, 
or making any of his or her shares subject to redemption when they are not      
otherwise redeemable;                                                           

               5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been cumulative;       

      6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or                                              

              7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation; or    

 (f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to     
dissent and obtain payment for his or her shares.                               

    (2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which are 
adversely affected by the amendment.                                            

     (3) A shareholder may dissent as to less than all the shares registered
in his or her name. In that event, the shareholder's rights shall be determined 
as if the shares as to which he or she has dissented and his or her other shares
were registered in the names of different shareholders.                         

      (4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed 
sale or exchange of property, to the holders of shares of any class or series   
which, on the record date fixed to determine the shareholders entitled to vote  
at the meeting of shareholders at which such action is to be acted upon or to   
consent to any such action without a meeting, were either registered on a       
national securities exchange or designated as a national market system security 
on an interdealer quotation system by the National Association of Securities    
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.          

     (5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the 
shareholder or the corporation.                                                 

History -- s. 119, ch. 89-154; s. 5, ch. 94-327; s. 31, ch. 97-102.             

 * * * *

607.1320  Procedure for exercise of dissenters' rights.--                       

      (1) (a) If a proposed corporate action creating dissenters' rights under
s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting      
notice shall state that shareholders are or may be entitled to assert           
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302, and  
607.1320. A shareholder who wishes to assert dissenters' rights shall:          

            1. Deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for his or her shares if   
the proposed action is effectuated, and                                         

              2. Not vote his or her shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute such a notice of  
intent to demand payment.                                                       

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        (b) If proposed corporate action creating dissenters' rights under
s. 607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for the shareholder's written consent or, if    
such a request is not made, within 10 days after the date the corporation       
received written consents without a meeting from the requisite number of        
shareholders necessary to authorize the action.                                 

(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or       
adoption of the plan of merger, as the case may be, to each shareholder who     
filed a notice of intent to demand payment for his or her shares pursuant to    
paragraph (1)(a) or, in the case of action authorized by written consent, to    
each shareholder, excepting any who voted for, or consented in writing to, the  
proposed action.                                                                

(3) Within 20 days after the giving of notice to him or her, any  
shareholder who elects to dissent shall file with the corporation a notice of   
such election, stating the shareholder's name and address, the number, classes, 
and series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such       
election to dissent within the period set forth shall be bound by the terms of  
the proposed corporate action. Any shareholder filing an election to dissent    
shall deposit his or her certificates for certificated shares with the          
corporation simultaneously with the filing of the election to dissent. The      
corporation may restrict the transfer of uncertificated shares from the date the
shareholder's election to dissent is filed with the corporation.                

    (4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice  
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his 
or her shares. After such offer, no such notice of election may be withdrawn    
unless the corporation consents thereto. However, the right of such shareholder 
to be paid the fair value of his or her shares shall cease, and the shareholder 
shall be reinstated to have all his or her rights as a shareholder as of the    
filing of his or her notice of election, including any intervening preemptive   
rights and the right to payment of any intervening dividend or other            
distribution or, if any such rights have expired or any such dividend or        
distribution other than in cash has been completed, in lieu thereof, at the     
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice    
otherwise to any corporate proceedings that may have been taken in the interim, 
if:                                                                             

(a) Such demand is withdrawn as provided in this section;   

      (b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;                        

      (c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or       

          (d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.                         

(5) Within 10 days after the expiration of the period in which    
shareholders may file their notices of election to dissent, or within 10 days   
after such corporate action is effected, whichever is later (but in no case     
later than 90 days from the shareholders' authorization date), the corporation  
shall make a written offer to each dissenting shareholder who has made demand as
provided in this section to pay an amount the corporation estimates to be the   
fair value for such shares. If the corporate action has not been consummated    
before the expiration of the 90-day period after the shareholders' authorization
date, the offer may be made conditional upon the consummation of such action.   
Such notice and offer shall be accompanied by:                                  

   (a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more than 
12 months prior to the making of such offer; and                                

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        (b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which 
it was in existence.                                                            

  (6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90 days    
after the making of such offer or the consummation of the proposed action,      
whichever is later. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in such shares.                                

(7) If the corporation fails to make such offer within the period 
specified therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which    
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent            
jurisdiction in the county in this state where the registered office of the     
corporation is located requesting that the fair value of such shares be         
determined. The court shall also determine whether each dissenting shareholder, 
as to whom the corporation requests the court to make such determination, is    
entitled to receive payment for his or her shares. If the corporation fails to  
institute the proceeding as herein provided, any dissenting shareholder may do  
so in the name of the corporation. All dissenting shareholders (whether or not  
residents of this state), other than shareholders who have agreed with the      
corporation as to the value of their shares, shall be made parties to the       
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who 
is a resident of this state in the manner provided by law for the service of a  
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is      
permitted by law. The jurisdiction of the court is plenary and exclusive. All   
shareholders who are proper parties to the proceeding are entitled to judgment  
against the corporation for the amount of the fair value of their shares. The   
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers 
shall have such power and authority as is specified in the order of their       
appointment or an amendment thereof. The corporation shall pay each dissenting  
shareholder the amount found to be due him or her within 10 days after final    
determination of the proceedings. Upon payment of the judgment, the dissenting  
shareholder shall cease to have any interest in such shares.                    

       (8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.                                     

      (9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of 
such costs and expenses may be apportioned and assessed as the court deems      
equitable against any or all of the dissenting shareholders who are parties to  
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept    
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall  
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds   
the amount which the corporation offered to pay therefor or if no offer was     
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.           

     (10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as       
provided in this section, may be held and disposed of by such corporation as    
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise        
provides. The shares of the surviving corporation into which the shares of such 
dissenting shareholders would have been converted had they assented to the      
merger shall have the status of authorized but unissued shares of the surviving 
corporation.                                                                    

History -- s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102.            

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 CONMAT TECHNOLOGIES, INC.

COMMON STOCK PROXY

 This Proxy is solicited on behalf of the Board of Directors

         I hereby constitute and appoint Edward F. Sager, Jr., Kenneth W. Evans,
Jr. and John R. Toedtman, and each of them acting individually, my true and     
lawful agents and proxies, with full power of substitution in each, to vote all 
shares of Common Stock held of record by me at the Special Meeting of           
Stockholders of ConMat Technologies, Inc. to be held on ___________, 2002 and   
any adjournments or postponements thereof. I direct said proxies to vote as     
specified on the reverse side.                                                  

      Unless otherwise specified, all shares will be voted for each of the
proposals to be acted upon at the Special Meeting of Stockholders. This Proxy   
also delegates discretionary authority to vote with respect to any matters as to
which a choice is not specified by the Stockholder and any matters that ConMat  
did not have notice of a reasonable time before ConMat mailed the proxy         
materials relating to the Stockholder's Meeting.                                

Please mark, sign, date and return the Proxy Card promptly.   
[Reverse Side]

1.   Proposal I, to consider and vote upon a proposal to approve the sale of all
     of Polychem Corporation's product lines of custom engineered plastic molded
products and certain related assets pursuant to the License and Asset 
 Purchase Agreement, dated March 20, 2002, by and among ConMat, Polychem
Corporation, a Pennsylvania corporation and wholly-owned subsidiary of
ConMat and Ecesis LLC, a Delaware limited liability company;          

FOR                              AGAINST                       ABSTAIN

/ /                               / /                            / /  

2.   Proposal II, to consider and vote upon a proposal to approve a plan of     
liquidation and dissolution of Polychem Corporation;                  

FOR                              AGAINST                       ABSTAIN

/ /                                / /                          / /   

The undersigned hereby revokes all previous proxies for the Special Meeting of
Stockholders and acknowledges receipt of the Notice of Meeting and
Proxy Statement of ConMat Technologies, Inc.

                        Date:__________________________________,

                       _______________________________________

                       _______________________________________

                       By:____________________________________

NOTE: Please sign this proxy exactly as name(s) appear in address.
When signing as attorney-in-fact, executor, administrator,
 trustee or guardian, please add your title as such.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRER14A’ Filing	Date	First	Last	Other Filings

	9/1/09	42
	12/31/05	49
	8/25/04	43
	6/15/03	27
	12/31/02	14	43
	11/27/02	13
	8/27/02	27
Filed on:	8/12/02
	7/15/02	16	89
	6/15/02	39
	6/14/02	27
	5/31/02	42
	5/10/02	31		4
	5/1/02	4
	3/31/02	11	80	10QSB
	3/20/02	3	106
	3/13/02	3	41
	2/27/02	15	47
	2/19/02	11
	1/1/02	43
	12/31/01	20	78	10KSB, NT 10-K
	12/15/01	39
	12/5/01	5	80
	11/8/01	11
	10/25/01	5	80
	10/1/01	39
	9/30/01	42	63	10QSB
	9/1/01	16	91
	7/17/01	10
	6/30/01	39		10QSB
	5/31/01	50
	5/24/01	47	83
	4/30/01	27
	3/31/01	54		10QSB, NT 10-Q
	2/2/01	83
	1/22/01	47
	1/1/01	20
	12/31/00	28	50	10KSB, NT 10-K
	11/29/00	47
	11/6/00	50
	10/27/00	47	83
	9/28/00	50
	6/30/00	49		10QSB
	5/25/00	47
	4/11/00	47
	3/31/00	30		10QSB
	1/1/00	49
	12/31/99	34	35	10KSB
	11/30/99	48		SB-2
	8/25/99	42
	2/19/99	47
	1/28/99	47
	1/1/99	80
	12/8/98	37	47
	9/30/98	42
	1/4/98	37
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Filing Submission 0000950116-02-001778 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Conmat Technologies Inc – ‘PRER14A’ on 8/12/02

On: Monday, 8/12/02, at 12:29pm ET · Accession #: 950116-2-1778 · File #: 0-30166

Revised Preliminary Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Revised Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents