

<PAGE>

                              [FOR INFORMATION ONLY


         This registration statement has been filed with the Securities and
Exchange Commission but has not yet become effective. Information contained
herein is subject to completion or amendment.

         As filed with the Securities and Exchange Commission on _____________.]

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

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-SB

                   GENERAL FORM FOR REGISTRATION OF SECURITIES
            OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

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

                            ConMat Technologies, Inc.
                 (Name of Small Business Issuer in its Charter)


            Florida                                      23-2999072            
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)


Franklin Avenue and Grant Streets, Phoenixville, PA        19460 
---------------------------------------------------      ---------           
(Address of Principal Executive Offices)                 (Zip Code)

                                 (610) 935-0225
                            -------------------------
                            Issuer's Telephone Number

        Securities to be registered pursuant to Section 12(b) of the Act:

 Title of Each Class                        Name of Each Exchange on
 to be so Registered                        Which Each Class is to be Registered
 -------------------                        ------------------------------------
 Common Stock                               Nasdaq OTC Bulletin Board

        Securities to be registered pursuant to Section 12(g) of the Act:

                                      None
                                ----------------
                                (Title of Class)


<PAGE>

                             INFORMATION REQUIRED IN
                             REGISTRATION STATEMENT


                                     PART I


Item 1.  Description of Business.

General

         ConMat Technologies, Inc. ("ConMat"), formerly known as EPL Systems,
Inc., was incorporated in Florida in 1989. ConMat is not an operating company
and does not have significant assets or conduct significant business except
through its wholly-owned subsidiary. In December 1998, ConMat acquired 100% of
the common stock of Polychem Corporation ("Polychem") from The Eastwind Group,
Inc. ("Eastwind"). See "Acquisition of Polychem." ConMat's strategy is to build
a material technology company focused on the development and manufacture of
proprietary custom engineered plastics and composite products to industrial end
users with a special emphasis on the wastewater treatment marketplace. ConMat's
acquisition of Polychem is the first step in executing this strategy. ConMat
plans to execute a growth strategy combining internal new product development
and corporate acquisitions. The principal executive offices of ConMat are
located at Franklin Avenue and Grant Streets, Phoenixville, PA 19460. The
telephone number is (610) 935-0225.

As of February 28, 1999, ConMat and Polychem have a total of 76 full-time and 0
part-time  employees.


Acquisition of Polychem

On December 8, 1998, ConMat acquired 100% of the common stock of Polychem from
Eastwind. The basic structure and terms of the transaction were as follows:

         o        ConMat acquired all of the outstanding shares of common stock
                  of Polychem from Eastwind in exchange for (i) 1,000,000 shares
                  of newly issued common stock of ConMat and (ii) 1,333,333
                  shares of newly issued Series A convertible preferred stock of
                  ConMat ("Series A Preferred Stock").

         o        ConMat assumed and discharged the following liabilities of 
                  Eastwind: (i) $160,000 owed to Paul DeJuliis, discharged by
                  the issuance to Paul DeJuliis of 53,333 shares of Series A
                  Preferred Stock; (ii) $100,000 owed to Clifton Capital, Ltd.,
                  discharged by the payment to Clifton Capital, Ltd. of
                  $100,000; and (iii) $500,000 owed to Mentor Special Situation
                  Fund, L.P. ("Mentor"), discharged by the issuance to Mentor of
                  166,667 shares of newly issued Series B preferred stock of
                  ConMat and plus Series B Warrants to purchase 166,667 shares
                  of common stock. In addition, Mentor Management Company
                  exchanged warrants to purchase 30,000 shares of Eastwind
                  common stock for warrants to purchase 30,000 shares of ConMat
                  common stock.

         o        At closing, Eastwind issued to Polychem a promissory note in
                  the amount of $940,000 to evidence the outstanding amount owed
                  by Eastwind to Polychem for prior advances, secured by the
                  pledge of 313,333 shares of Series A Preferred Stock. This
                  amount has been

                                        2

<PAGE>

                  deemed uncollectible and accounted for as distributions by
                  Polychem to Eastwind either in the form of dividends or
                  returns of capital.
Polychem

General. Polychem is a wholly-owned subsidiary of ConMat. Polychem was
originally formed in February 1995 by its former owner for the purpose of
acquiring substantially all of the assets and business of The Polychem Division
of The Budd Company. Polychem, which has been in business since 1955, develops
and manufactures custom engineered plastic molded products which are marketed
primarily to wastewater treatment plants, as well as to other industrial users.

Products. Polychem engineers and produces an extensive line of plastic molded
products that are used in a broad array of industrial markets. Polychem's
typical products include, among others, complete non- metallic rectangular
clarifier component systems for water and wastewater treatment operations. These
systems are comprised of non-metallic chain, sprockets, stub shafts, wear shoes
and other products fabricated to customer specifications; cast nylon elevator
buckets for the handling of foundry sand, aggregate, and glass cullet; phenolic
sprockets and pulleys for agricultural and mining equipment; bearings for steel
mills; extruded thermoset profiles for aircraft applications; and molded
conveyor chains and accessories for food packaging, water and wastewater
treatment and other material handling applications. Most of the nylon buckets,
steel mill bearings and table-top conveyor chains are sold as off-the-shelf
items to steel mills and distributors. The Majority of the balance of Polychem's
products are produced for use in a complete system of wastewater treatment
clarifier equipment that Polychem sells to its customers. Such a complete system
is usually built to customer specifications and sold under an order selected
from competitive bids. The reaction injection molded ("RIM") nylon products and
the injected molded products account for between 80% and 90% of Polychem's
sales; compression molded products comprise the balance of the business.

Manufacturing Processes. Polychem's plant is equipped and organized to handle
three distinct manufacturing processes by which its diverse line of products is
fabricated. Polychem's various products are more easily categorized by these
three processes rather than by product type because each of Polychem's many
products is created through only one of the following processes:

         o        RIM molding, which produces nylon buckets, stub shafts, and
                  sprockets. In RIM molding, a compound containing a catalyst
                  and a compound containing a promoter are mixed in the mold
                  where a reaction takes place; the combination and percentage
                  of base chemicals and additives determine the properties of
                  the final product;

         o        Compression molding, which produces phenolic steel mill
                  bearings, timing gears, timing pulleys and other molded
                  products. In the compression molding process, phenolic
                  macerate or phenolic laminate is placed in heated molds
                  (approximately 325 degrees) and cured for a specific period of
                  time at pressures up to 3000 PSI; and

         o        Injection molding, which produces engineered resin parts used
                  for wastewater drive and collector chain, and tabletop
                  conveyor chain. In injection molding, engineered plastic
                  materials are melted and injected into the mold at a
                  controlled temperature and rate. Once in the mold, the plastic
                  is cooled to a shape reflecting the cavity.

Polychem's plant is laid out so that each of its manufacturing processes
occupies a separate location. In the Molding Department, products are molded in
batches and then sent to the Fabricating Department as complete orders for
machining and assembly. Raw materials for all of the manufacturing processes are
stored in tanks inside and outside the facility. Polychem's plant operates on a
three-shift basis. Most of the

                                        3

<PAGE>


employees have been trained to operate all of the various equipment in their
departments, which gives Polychem additional flexibility in scheduling personnel
to meet production needs as they arise.

Marketing and Customers. Originally the manufacturer of a complete line of
industrial laminates, automotive timing gears, vulcanized fibre and teflon and
silicon tape, Polychem has in recent years shifted its focus to manufacturing
products designed for the wastewater treatment market, and presently the
revenues from wastewater products comprise 85% of Polychem's annual sales
volume. The wastewater treatment market is global in nature, and Polychem
presently sells product internationally in Western Europe, Asia and South
America and is expanding into Eastern Europe, the Middle East and Africa.

In addition to non-metallic clarifier component systems for wastewater
treatment, Polychem markets its traditional products (such as plastic chain,
compression molded phenolic and injection molded plastic components,
RIM-processed nylon buckets, phenolic bearings and corrugated fibre products) to
the food processing, electronics, steel, automotive, chemical, printing,
aerospace, and consumer products industries, among others. Polychem markets its
plastic chain, cast nylon buckets, steel mill bearings and compression molded
phenolics primarily through distributors. The balance of its products, including
its water and wastewater treatment component systems, are sold through
Polychem's sales force and agents. In its most recent fiscal year, Polychem's
sales force generated 62.7% of its annual sales revenue, international
distributors accounted for 15.8% and domestic distributors accounted for 21.6%.
Domestic revenues were approximately 71.4% and international revenues were
approximately 28.6% in that fiscal year.

Competition and Strategy. Polychem's competition tends to be fragmented. Many
other companies, domestically and internationally, produce one or more products
similar to Polychem's products. However, Polychem does not believe any of its
competitors offer a similar variety of light-weight plastic products for a
variety of industries. Experienced competition exists in each of Polychem's
major markets, and many of Polychem's competitors enjoy excellent working
relationships with their customers, produce a variety of quality products, and
have access to significant resources. These factors, along with product
characteristics, reliability, servicing, and pricing form the major competitive
factors in Polychem's markets.

Polychem believes that it has four significant competitors in the area of
non-metallic rectangular wastewater clarifier systems, of which it considers
Envirex to be the most significant. Together, Polychem and Envirex are believed
to possess approximately 70% of this market, in which they share approximately
equally. However, while Polychem provides products only to clarifier systems in
wastewater plants, Envirex has a much broader line of wastewater treatment
products that encompasses all of the major processes in a treatment plant. FMC
and NRG are Polychem's other less substantial (in terms of market share)
competitors, and a fifth company is attempting to enter the market. Both Envirex
and FMC are significantly larger than Polychem. Polychem believes that it has
three competitors in the market for nylon buckets and five competitors in the
market for table-top chains.

Polychem's long-term goals include solidifying its reputation as a leading
provider of quality wastewater treatment equipment products; increasing sales of
its traditional products by improving existing product lines; and seeking new
products to supplement its current line, both from internal research and
development and by acquisition.

Materials and Supplies. Polychem's business of manufacturing a broad line of
engineered plastics products necessitates the ability to obtain various sources
of raw materials, even in periods of short supply. Polychem has accumulated a
strong supply network over the past thirty years. At present, Polychem does not
maintain more than one month's supply of raw materials beyond the amount
required for its scheduled production work.

                                        4

<PAGE>


Environmental Regulations. While no assurances can be given, Polychem does not
anticipate any significant expenses for environmental remediation projects. In
the ordinary course of its business, Polychem incurs some cost for oil
reclamation, hauling of waste products and normal energy costs associated with
recycling and waste disposal. Polychem maintains two environmental permits, one
for a dust collection system and the other for its after burner heater. The
collected dust is transported to an approved landfill and samples of the dust
are periodically analyzed. The heater is used to impregnate phenolic resin into
rolls of fabric, which are then processed into specific products. Methanol from
the heater is processed through an after burner and emits little in the way of
contaminants. Polychem maintains seven above ground storage tanks. Two are used
to store phenolic resins inside the plant; two store fuel oil; and three outside
tanks are used to store other chemicals. There are spill containment systems in
place throughout the facility.

Occasionally, there are minor and isolated spills of heat transfer oil,
caprolactam and phenolic resins. The latter two quickly solidify at room
temperature and the hardened material is removed to an approved landfill; spills
of heat transfer oil are cleaned and properly disposed of with other waste
products. Polychem has submitted a revised spill prevention and response plan to
the Pennsylvania Department of Environmental Resources in May 1994 to which no
comments have been received as of the date of this Prospectus.

The Polychem property in Phoenixville, Pennsylvania was first used as a silk
mill in the early part of this century and then as a manufacturing site for felt
carpet padding. Several environmental audits that have been commissioned over
the past two years have not revealed contamination.

Employees. Polychem employs approximately 76 employees, of whom approximately 43
are employed on an hourly basis. Hourly employees are members of United Textile
Workers of America, AFL-CIO, Phoenixville Plastic Makers' Union, Local No. 130
(the "Union"). Most are semi-skilled workers. The current Union contract expires
at the end of September, 1999.

ConMat has assumed all of Polychem's continuing obligations under its collective
bargaining agreement with the Union, which includes assumption of obligations
under a defined benefit retirement plan for hourly rated employees at its
Phoenixville, Pennsylvania plant. The plan is fully funded in accordance with
certain actuarial assumptions and to meet ERISA funding requirements; however,
there can be no assurances that market performance of plan investments will be
sufficient to meet all plan liabilities as they arise.

Equipment. Polychem owns or leases, through capital leases, all of the equipment
required to conduct its business. The equipment is comprised of compression
molding presses, transfer molding presses, injection molding presses, reactors,
dispensers and RIM press lines for nylon-6 operations, a complete fabrication
shop with computerized numerical control ("CNC") equipment and a computer aided
design ("CAD") center.

Research and Development. Polychem is the owner of a number of United States and
foreign patents and patent applications relating to water treatment plastic
products, chain conveyor links, conveyor chain bearings, sprockets with locking
mechanisms and a bucket grit elevator system. The ownership of such patents
helps Polychem from a marketing standpoint by securing its continued reputation
as an innovative competitor in its industry.

Polychem employs eight application engineers who use CAD equipment to design
custom wastewater treatment non-metallic rectangular clarifier systems or to
alter existing clarifiers to meet changing specification requirements. All new
products are evaluated for patent protection. Recently, Polychem was granted a
patent for a grit bucket system which is now undergoing marketing development.
To date, five successful applications for the system have been found, the most
significant of which is to function as part of a grit collection system in
wastewater treatment where it will be used to remove sand and gravel from

                                        5

<PAGE>


effluent before it reaches the clarifier. The amounts spent on research and
development by Polychem were $141,000 and $155,000 for the years ended January
2, 1999 and January 3, 1998, respectively.

Debt and Encumbrances. On September 30, 1998, Polychem entered into a Lease and
Security Agreement with General Electric Capital Corporation ("GECC") which
provides for a three year $3,500,000 revolving line of credit and a three year
term loan of $1,500,000. All of Polychem's assets have been pledged to secure
the loans advanced or to be advanced under the loan agreement. The term loan is
secured by real estate and equipment. The revolving line of credit is secured by
accounts receivable and inventory. Advances under the revolving line of credit
are subject to a lending formula limiting the availability of funds to the total
of 80% of eligible accounts receivable plus up to 50% eligible inventory less a
$300,000 reserve against availability and subject to a $250,000 cap on current
retainages under 120 days. Interest rates on the loan are at a rate of 4.75% in
excess of the 30 day dealer commercial paper rate on the revolving line of
credit and 6.50% in excess of the 30 day dealer commercial paper rate for the
term loan. As of January 2, 1999, availability under the line of credit was
$286,000 and outstanding borrowings were $1,398,632.


Item 2.  Management's Discussion and Analysis or Plan of Operation.

Forward Looking Statements

Some of the statements contained in this Registration 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.

         ConMat does not promise to update forward-looking information to
reflect actual results or changes in assumptions or other factors that could
affect those statements.

Background and Basis of Presentation

Although ConMat was formed in March 1986, it had no significant operations until
December 8, 1998, when ConMat acquired Polychem from Eastwind. See "Description
of Business - Acquisition of Polychem."

As ConMat had minimal assets and no operations prior to the acquisition of
Polychem, and the management and stockholders of Polychem controlled ConMat
after the transaction, the transaction has been accounted for as a reverse
takeover in which Polychem effectively issued stock for the assets of ConMat and
recapitalized. Therefore, the post-transaction comparative historical financial
statements of ConMat are those of Polychem for the same period with appropriate
footnote disclosure of the change in capital structure, and adjusted for the
following:

                                       6
<PAGE>


         o        In connection with the acquisition, ConMat assumed certain
                  liabilities of Eastwind. Such liabilities are considered to be
                  "contributed" to Polychem by Eastwind upon consummation of the
                  acquisition resulting in a reduction of Polychem's
                  stockholders equity. ConMat's securities issued at acquisition
                  to satisfy these liabilities are recorded at the amounts of
                  the related liabilities relieved.

         o        Amounts owed to Polychem by Eastwind and its subsidiary in the
                  form of notes receivable are considered uncollectible and
                  accounted for as distributions, either in the form of
                  dividends on common stock, or returns of capital to Eastwind
                  in the periods the distributions were made. These amounts will
                  be restored to shareholders' equity if they are collected.

Results of Operations

The following table sets forth, for each of the aforementioned periods, certain
statement of operations items as a percentage of total net sales for the periods
indicated:

<TABLE>
<CAPTION>
                                                         Fiscal Years Ended
                                          ------------------------------------------------
                                          January 2, 1999                  January 3, 1998
                                          ---------------                  ---------------
<S>                                        <C>                                 <C>   
Net Sales                                     100.0%                           100.0%
Cost of Sales                                  73.7                             75.4
Gross Profit                                   26.3                             24.6
Selling and Administrative                     22.7                             17.5
Interest Expense                                6.7                              3.4
Other Expense                                   3.2                              4.2
Income (Loss)                                  (6.3)                            (0.5)
</TABLE>

Total revenues decreased by $3,060,000 or 25%, to $9,070,000 for the Current
Annual Period from $12,130,000 for the Comparable Annual Period. This decline is
attributable in large measure to an extraordinary shift in the timing of the
start of certain projects in Asia on which ConMat anticipates that it will be a
successful bidder. This shift is a direct result of recent economic difficulties
in this region. ConMat believes, however, that these projects will ultimately be
awarded due to their environmental significance. Despite this shift, annual
revenues are expected to increase beyond the level of the current annual period.
ConMat has reduced its reliance on Asia by successfully shifting its sales focus
to projects in other parts of the world where project start dates are more
certain due to better economic stability. As a result, ConMat ended the Current
Annual Period with a booked order backlog of $5,400,000, or an increase of 135%,
over the Comparable Annual Period ending backlog of $2,300,000.

Gross profit decreased by $604,000 or 20%, to $2,384,000 for the Current Annual
Period from $2,988,000 for the Comparable Annual Period as a result of the
decrease in total revenues. Gross profit increased as a percentage of sales to
26.3% for the Current Annual Period from 24.6% for the Comparable Annual Period.
The percentage increase reflects a combination of several cost saving measures
implemented by Management which are expected to have increased benefits in the
future as costs increase more slowly than revenues. These include reductions in
direct labor and lower material costs from decreased reliance on outsourcing.
This allowed for fewer outside purchases of finished product allowing ConMat to
realize savings between the purchase of finished goods versus the conversion of
raw materials. Gross profits are expected to increase versus the Current Annual
Period reflecting an improved mix of more

                                        7

<PAGE>


profitable international versus domestic sales, lower material costs, and
continued improvements in production efficiencies.

Selling and administrative expenses decreased by $64,000 to $2,055,000 or 3.0%,
for the Current Annual Period from $2,119,000 for the comparable Annual Period.
As a percentage, revenues, selling and administrative expenses increased to
22.7% for the Current Annual Period from 17.5% for the Comparable Annual Period.
The level of selling and administrative expense during the Current Annual Period
reflects ConMat's successful efforts to penetrate new markets around the world
and balance its reliance on Asian markets for new revenues. Selling and
administrative expenses are being closely evaluated by Management and are
projected to decrease as a percentage of sales in future periods.

Interest expense for the Current Annual Period includes a one-time charge of
$143,000 for the write off of deferred financing costs associated with the
September 1998 refinancing. Excluding this one time charge, interest expense
increased $61,000 or 15%, to $467,000 for the Current Annual Period from
$406,000 for the Comparable Annual Period. Increased average borrowings as a
result of the aforementioned refinancing were the primary reason for the
increase. Future interest costs are expected to remain fairly stable.

For the Current Annual Period, ConMat experienced a loss of $575,000, which
included corporate charges from Polychem's former parent company of $480,000,
and net cash used of $34,000. For the Comparable Annual Period, ConMat realized
net loss of $64,000, which included corporate charges from Polychem's former
parent company of $640,000, and net cash used of $79,000. ConMat anticipates
that corporate charges for the foreseeable future will be approximately $350,000
per year.

Liquidity and Capital Resources

During the Current Annual Period, despite the aforementioned loss, ConMat
realized net cash from operating activities of $422,000, related primarily to
decreases in accounts receivable and inventory of $887,000 combined, plus a
reduction in prepaid expenses of $80,000 and non-cash charges for depreciation
and amortization of $313,000. These inflows were reduced by an increase in
deferred finance costs of $167,000 and combined decreases in accounts payable
and accrued expense of $51,000. Cash flow from investing activities included
expenditures for new equipment of $177,000. Financing activities used net cash
of $330,000, reflecting net borrowings arising from a new financing after
payment of existing debt plus the scheduled amortization of our term debt, plus
a capital distribution to the former parent of $250,000 and recapitalization
costs of $173,000. In the future all capital distributions will be eliminated as
a result of the recapitalization.

For the Comparable Annual Period, ConMat realized cash from operating activities
of $442,000 related primarily to decreases in accounts receivable of $467,000
and inventory of $434,000, plus increases in accounts payable of $188,000 and
non-cash charges for depreciation and amortization of $233,000. These inflows
were reduced by decreases in accrued liabilities of $446,000 and deferred
revenues of $92,000. Cash flow from investing activities included purchases of
new equipment for $126,000. Net cash of $284,000 was used by financing
activities reflecting the excess of net borrowings under the line of credit
above scheduled principal repayments of the term debt, less repayment of
$360,000 on subordinated notes and dividends to the former parent of $768,000.
In the future these dividends will no longer take place as a result of the
recapitalization.

ConMat's primary source of working capital is an $3,500,000 credit facility
secured by Polychem's assets with borrowings limited to a percent of eligible
receivables and inventory. As of March 31, 1999, the maximum borrowing amount
was $2,439,000 and the outstanding balance was $2,343,000. Management believes
that ConMat has sufficient assets, equipment and facility to attain and absorb
forecast growth in revenues. Maintenance of existing equipment is principally
performed by in-house personnel primarily responsible for such function. ConMat
does not anticipate any material expenditures beyond this effort. ConMat has no
commitments for significant capital expenditures in the foreseeable future.
Management believes that ConMat's cash and capital resources, together with cash
flow from operations, will be sufficient to finance current and forecasted
operations including its capital spending and research and development needs.
ConMat is, however, actively seeking potential strategic acquisitions and,
depending on the size and terms of any such acquisitions, additional financing,
including equity infusions for ConMat, may be required.

                                        8

<PAGE>


Additionally, ConMat is in discussions with several potential lenders about the
possibility of mortgaging its property. If successful, such a financing would
result in lower debt service costs and increased capital reserves.

Year 2000 Compliance

Changing from the year 1999 to 2000 has the potential to cause problems in data
processing and other date-sensitive systems. The Year 2000 date change can
affect any system that uses computer software programs or computer chips,
including automated equipment and machinery. The Year 2000 problem is the result
of computer programs using two digits rather than four to define the year. Any
of Polychem's programs that are time sensitive may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in a major system
failure or miscalculations. At Polychem, computer systems are used to run all
administrative and key design and manufacturing functions. Computer software and
computer chips also are used to run security systems, communications networks
and other essential equipment. Because of its reliance on these systems,
Polychem is following a process to assure that such systems are ready for the
Year 2000 date change.

In June 1998, Polychem entered into an agreement with IBM Corporation and IBM's
authorized software licensee for systems, CNA Systems, Incorporated. Polychem
entered into the agreement, in part, to initiate a Year 2000 plan to ensure that
Polychem's existing information systems were Year 2000 compliant. In connection
with the agreement, Polychem has upgraded its computer system from an IBM System
36 to an IBM AS/400 and has purchased new software applications relating to
sales and marketing, manufacturing, financial management, materials management,
quality control and management information support systems.

During the fourth quarter of 1998, Polychem commenced the editing and
reprogramming of its existing databases. During the first quarter of 1999,
Polychem commenced testing of inter-modular software applications using the
revised databases. Polychem intends to parallel these systems during the second
quarter of 1999 and to complete its Year 2000 preparation by July 1, 1999. [In
connection with the foregoing, Polychem has completed its assessment of which
systems and equipment are most prone to placing Polychem at risk if they are not
Year 2000 compliant (i.e., mission critical systems).]

[Significant vendors have been requested to advise Polychem in writing of their
Year 2000 readiness, including actions to become compliant if they are not
already compliant. Vendors who provide significant technology-related services
to Polychem have modified their systems to become Year 2000 compliant. The
monitoring of certain vendors will continue into 1999.]

Polychem is preparing a contingency plan for how Polychem would resume business
if unanticipated problems arise from non-performance by vendors. Such plans are
expected to be completed by July 1, 1999.

Polychem spent $125,000 during the year ending December 31, 1998 relating to
costs incurred as a result of its Year 2000 Plan. Polychem anticipates incurring
approximately $50,000 in additional costs related to the implementation of the
Year 2000 plan. Management presently believes the Year 2000 issue will not pose
significant operating problems for Polychem. However, if implementation and
testing plans are not completed in a satisfactory and timely manner by Polychem
or third parties on which Polychem is dependent, or other unforeseen problems
arise, the Year 2000 issue could potentially have an adverse effect on the
operations of Polychem.

Item 3.  Description of Property.

Polychem operates from a 220,000 square foot facility in Phoenixville,
Pennsylvania, which it owns, subject to a mortgage with General Electric Capital
Corporation. See "Debt and Encumbrances." Polychem uses approximately 120,000
square feet for manufacturing and warehousing, and 20,000 square feet for
offices. Polychem leases approximately 42,500 square feet of its facility as
warehouse space to Windsor Designs, a wholesale distributor of imported outdoor
furniture. The Windsor Designs lease continues until December 1999 at a rental
rate of $133,980 per year ($3.15 per square foot), net of utilities. Polychem
expects this lease to be renewed. Polychem leases an additional 4,740 square
feet of the facility as equipment storage space to Ethan Horowitz, a residential
cabinet maker. That lease

                                        9
<PAGE>


continues until January, 2003 at a rental rate of $15,100 per year ($3.19 per
square foot). Polychem also leases a tower located on the facility to a group of
cellular phone operators including ComCast Metrophone, PageNet, Nextel and
Omnipoint that the group uses for cellular telephone transmissions. Combined
annual lease income from the tower is $48,000. The leases continue through March
2004. An additional 40,000 square feet of warehouse space is available for lease
at the facility.

Item 4.  Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth information concerning the beneficial ownership
of ConMat's common stock as of March 31, 1999, by each director and executive
officer, all directors and officers as a group, and each person known to ConMat
to beneficially own 5% or more of its outstanding common stock. Except as
otherwise noted, the address for each such person is Franklin Avenue and Grant
Streets, Phoenixville, Pennsylvania 19460.

<TABLE>
<CAPTION>
                                        Name and Address of             Amount and Nature of          Percentage of
     Title of Class                       Beneficial Owner              Beneficial Owner (1)             Class (1)
     --------------                     -------------------             --------------------          -------------
<S>                              <C>                                    <C>                          <C> 
Common Stock, par value           Paul A. DeJuliis                           553,333 (2)                   13.6
$.001 per share
                                  Edward F. Sager, Jr.                       196,667 (3)                    4.8
                                  P.O. Box 560
                                  Yardley, PA  19067

                                  The Eastwind Group, Inc.                 1,000,000                       24.5
                                  Shareholder Trust
                                  c/o Paul A. DeJuliis, Trustee

                                  The Eastwind Group, Inc.                 1,333,333 (4)                   32.7
                                  275 Geiger Road
                                  Philadelphia, PA  19115

                                  The DAR Group, Inc.                        240,000                        5.9
                                  30 Broad Street
                                  43rd Floor
                                  New York, NY  10004

                                  Directors and Executive                    750,000 (2)(3)                18.4
                                  Officers (4 persons)

Series A Preferred Stock, par     Paul A. DeJuliis                            53,333                       3.85
value $.001
                                  The Eastwind Group, Inc.                 1,333,333                      96.15
                                  275 Geiger Road
                                  Philadelphia, PA  19115

Series B Preferred Stock, par     Mentor Special Situation                   166,667 (5)                 100.00
value $.001                       Fund, L.P.
                                  P.O. Box 560
                                  Yardley, PA  19067
</TABLE>
----------

* less than one percent (1%)

                                       10

<PAGE>

(1) Based upon 4,083,333 shares of common stock outstanding or deemed
outstanding as of March 31, 1999, calculated in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934. 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 53,333 shares issuable upon conversion of Series A Preferred Stock
and 250,000 issuable upon the exercises of options. (See "Executive Compensation
- Employment Agreements" for conditions of exercise.) Does not include 1,000,000
shares held by The Eastwind Group, Inc. Shareholder Trust, of which Mr. DeJuliis
is Trustee, as to which he disclaims beneficial ownership.

(3) Includes 166,667 shares issuable upon the exercise of warrants to Mentor
Special Situation Fund, L.P., of which Mr. Sager is a general partner, and
30,000 shares issuable upon the exercise of warrants to Mentor Management
Company, of which Mr. Sager is President.

(4) Includes 1,333,333 shares issuable upon conversion of Series A Preferred 
Stock.

(5) Edward F. Sager, Jr., a director of ConMat is a general partner of Mentor
Special Situation Fund, L.P.

Item 5.    Directors, Executive Officers Promoters and Control Persons.

Certain information concerning the directors and executive officers of ConMat is
set forth below.

<TABLE>
<CAPTION>
        Name                                      Position with Corporation                            Age
        ----                                      -------------------------                            ---
<S>                               <C>                                                               <C>    
Paul A. DeJuliis                   Chief Executive Officer, Secretary  and Chairman of
                                   the Board of Directors                                              43
Theodore R. Rutkowski              President and a Director                                            63
Edward F. Sager, Jr.               Director                                                            51
William J. Crighton                Vice President and Treasurer                                        52
</TABLE>

The following is a brief summary of the business experience of ConMat's
directors and executive officers.

Paul A. DeJuliis - Chairman of the Board of Directors and Chief Executive
Officer - Prior to assuming his current role and since 1991, Mr. DeJuliis was
Chairman and Chief Executive Officer of The Eastwind Group, Inc., a publicly
traded holding company. Previously, Mr. DeJuliis was a partner in Phoenix
Management Services, Inc., a turnaround consulting firm (1989-91),
Vice-President, Corporate Finance for Colmen & Co., a national investment
banking firm (1987-89), and Manager, Corporate Turnaround Consulting Group for
Coopers & Lybrand (1986-87). Mr. DeJuliis has a B.S. in finance and accounting
from the University of Delaware. He is also a certified public accountant.

Theodore R. Rutkowski - President and a Director of ConMat and President of
Polychem - Prior to his current role and since 1975, Mr. Rutkowski served as the
General Manager of the Polychem Division of the Budd Company. Mr. Rutkowski
previously served as President of the Budd Company Trailer Division, which was
subsequently sold to a third party in 1985. In addition, Mr. Rutkowski was
responsible for the restructuring of Greening Donald in Hamilton, Ontario, a
Budd Company subsidiary. Mr. Rutkowski graduated with a bachelor's degree in
accounting from Rutgers University.

Edward F. Sager, Jr. - Director - Mr. Sager has been the President of Mentor
Management Company, general partner of Mentor Special Situation Fund LP, an
investment fund, and President of Mentor Capital Partners Ltd., a venture
capital firm, since 1994. From 1985 to 1994 Mr. Sager was President of Sager &
Associates, a merchant banking firm

                                       11

<PAGE>


providing access to venture capital for small to medium size companies. He is a
graduate of Lafayette College with a B.S. degree in Mechanical Engineering and
he received an MBA in finance from New York University.

William J. Crighton - Vice President and Treasurer of ConMat and Polychem -
Prior to his current role and since 1975, Mr. Crighton served as the divisional
controller of The Polychem division of The Budd Company. Prior to joining
Polychem, Mr. Crighton was employed in the automotive division and technical
center of The Budd Company. Mr. Crighton graduated with a bachelor's degree in
accounting from LaSalle University and holds an MBA from Widener University.

The following is a brief summary of the business experience (with the exception
of Mr. Rutkowski and Mr. Crighton, whose biographical information is set forth
above) of the additional members of management of Polychem, ConMat's operating
subsidiary.

J.R. Hannum - Manager of Internal Sales, Product Development and Engineering -
Mr. Hannum has served in his current role since 1995. Prior thereto, Mr. Hannum
served as General Manager of the Polychem Division of The Budd Company and as
manager of domestic sales, research and development and manufacturing
engineering. Mr. Hannum graduated with a bachelor's degree in engineering from
Villanova University and graduated with a master's degree in engineering from
Penn State University.

Donald L. Hutton - National Sales Manager - Mr. Hutton has served in his current
position since 1995. Prior thereto, he was employed with The Budd Company for 36
years in several roles including advertising manager, manager of distributor
sales and manager of customer services. Mr. Hutton is a graduate of the
University of Delaware.

Item 6.  Executive Compensation.

The following summary compensation table sets forth the total annual
compensation paid to the Chief Executive Officer and each other Executive
Officer of ConMat whose total compensation for the fiscal year ended January 2,
1999 exceeded $100,000:
<TABLE>
<CAPTION>
                                      Salary       Bonus         Other         Long Term               Securities Option
Name and Position                       ($)         ($)           ($)     Compensation Match                   ($)
-----------------                       ---         ---           ---     ------------------            ----------------
<S>                                <C>            <C>            <C>      <C>                          <C>    
Paul A. DeJuliis
Chairman & Chief
Executive Officer (1)                14,667          0             0               0                          250,000

Theodore F. Rutkowski (1)           135,000          0             0               0                                0
</TABLE>

----------

(1)  On December 10, 1998, Mr. DeJuliis purchased 250,000 shares of common stock
     from ConMat for $50,000.

Employment Agreements

On December 8, 1998, ConMat entered into an Employment Agreement with Paul A.
DeJuliis, ConMat's Chief Executive Officer and Chairman of the Board of
Directors. Under the agreement, Mr. DeJuliis 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, Mr.
DeJuliis received (i) 250,000 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. 50,000 of the options are exercisable upon registration of
the underlying shares of common stock. 100,000 of the options are exercisable
following registration of the underlying shares of common stock if ConMat
realizes $750,000 in pre-tax income during a fiscal year. The remaining 100,000
options are exercisable following registration of the underlying shares of
common

                                       12

<PAGE>


stock if ConMat realizes $1,000,000 in pre-tax income during a fiscal year. All
of the options 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.

Item 7.  Certain Relationships and Related Transactions

         None.

Item 8.  Description of Securities

General

The following description of ConMat's common stock and preferred stock is a
summary only. This summary is qualified in its entirety by reference to the
applicable instruments, including without limitation, ConMat's Articles of
Incorporation and Bylaws, and is subject to the Florida Business Corporation
Act.

The authorized capital stock of ConMat consists of 40,000,000 shares of common
stock and 10,000,000 shares of preferred stock. As of February 28, 1999, there
were outstanding 2,250,000 shares of common stock, 1,386,666 shares of Series A
Preferred Stock and 166,667 shares of Series B Preferred Stock.

Common Stock

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders, including the election of
directors, and do not have cumulative voting rights. Accordingly, holders of a
majority of the shares of common stock entitled to vote in any election of
directors may elect all of the directors standing for election. Holders of
common stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the dividend preferences attributable to the
preferred stock. Upon the liquidation, dissolution or winding up of ConMat,
holders of common stock are entitled to receive ratably the net assets of ConMat
available for distribution to such holders after preferred distributions to
holders of preferred stock. Holders of common stock have no preemptive or
redemption rights.

Series A Preferred Stock

Shares of the Series A preferred stock rank prior to the common stock and pari
passu with the Series B preferred stock. The creation of any class or series of
capital stock ranking senior to or pari passu with the Series A preferred stock
requires the consent of a majority of the holders of the Series A preferred
stock.

The holders of the shares of the Series A preferred stock are entitled to
receive 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. Such dividends shall
begin to accrue on outstanding shares of Series A preferred stock from the date
of issuance and shall accrue from day to day, whether or not earned or declared,
until paid. ConMat may, at its sole discretion, pay any or all dividends in
common stock rather than in cash. In the event of any liquidation, dissolution
or winding up of ConMat, holders of the Series A preferred stock shall be
entitled, in preference to the holders of the common stock and pari passu with
the holders of the Series B preferred stock, to be paid first out of assets and
funds of ConMat available for distribution to holders of ConMat's capital stock
in the amount of $3.00 per share.

Shares of Series A preferred stock are convertible at the option of the holder
at any time following 60 days after the date of issuance at the then effective
conversion price. The conversion price shall be 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. ConMat has the right, by written notice to each of the holders of
the Series A preferred stock, to convert all shares of the Series A 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

                                       13

<PAGE>


calendar days. In the case of such a mandatory conversion, each share of Series
A preferred stock will be converted into a number of shares of common stock
determined by dividing the stated value by the then effective conversion price.

The holders of the Series A preferred stock will have no voting power, except as
otherwise required by the Florida Business Corporation Act. To the extent
permitted under the Florida Business Corporation Act, the Series A preferred
stock and Series B preferred stock will be considered a single class of stock
for voting purposes.

The holders of Series A preferred stock have, subject to certain limitations,
registration rights, which obligate ConMat to include shares of common stock
issued or issuable upon conversion of shares of Series A preferred stock in
registration statement filed with the Securities and Exchange Commission.

Series B Preferred Stock

Shares of the Series B preferred stock rank prior to the common stock and pari
passu with ConMat's Series A preferred stock. The creation of any class or
series of capital stock ranking senior to or pari passu with the Series B
preferred stock requires the consent of a majority of the holders of the Series
B preferred stock.

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 outstanding shares of Series B preferred stock from the date of
issuance and will accrue from day to day, whether or not earned or declared,
until paid. In the event of any liquidation, dissolution or winding up of
ConMat, holders of the Series B preferred stock will be entitled, in preference
to the holders of the common stock and pari passu with the holders of the Series
A preferred stock, to be paid first out of assets and funds of ConMat available
for distribution to holders of the ConMat's capital stock in the amount of $3.00
per share, plus all accrued but unpaid dividends.

ConMat may redeem the Series B preferred stock at any time. ConMat is required
to redeem the Series B preferred stock on the earliest of, (i) the date Mr.
DeJuliis ceases for any reason to serve as Chairman and Chief Executive Officer
of ConMat, or (ii) the date Mr. DeJuliis, Mr. Rutkowski and the member of
ConMat's Board of Directors elected by the holders of the Series B preferred
stock cease to constitute a majority of the Board of Directors. The redemption
price is $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. To the extent permitted under the Florida Business
Corporation Act, the Series A preferred stock and Series B preferred stock will
be considered a single class of stock for voting purposes.

In connection with the acquisition of Polychem by ConMat, the holders of the
Series B preferred stock also received warrants to purchase 166,667 shares of
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. Subject to
certain limitations, holders of the warrants have "piggy-back" registration
rights which, upon the request of such holders, obligate ConMat to include the
shares of common stock issuable upon exercise of the warrants in a registration
statement filed with the Securities and Exchange Commission.


                                     PART II

Item 1.  Market Price of and Dividends on the Registrant's Common Equity and 
         Other Stockholder Matters.

Market for Common Stock

                                       14

<PAGE>


The common stock of ConMat is quoted on the Nasdaq OTC Bulletin Board under the
symbol "CNMT" and began trading December 21, 1998.  The following table shows
trading prices for the common stock from inception through April 16, 1999:

Price of Common Stock

       1999                         Low Price               High Price
       ----                         ---------               ----------
First Quarter                         $ 1.63                  $ 4.00
Second Quarter (1)                      3.00                    3.00

       1998
       ----
Fourth Quarter (2)                    $ 1.50                  $ 2.125

----------

(1) Through and including April 16, 1999.

(2) Commencing December 21, 1998

Market quotations reflect inter-dealer prices, without retail markups, markdown
or commissions and may not necessarily reflect actual transactions. As of April
16, 1999, there were approximately 16 holders of record of ConMat's common
stock.

Dividend Policy

ConMat has never paid a cash dividend. There can be no assurance that ConMat
will pay cash dividends in the future. The Board of Directors will determine
ConMat's future dividend policy based on an analysis of factors that the Board
of Directors deems relevant. ConMat expects that such factors will include its
results of operations, financial condition and capital needs.

Item 2.  Legal Proceedings

ConMat Technologies, Inc. ("ConMat") is currently a defendant in a Pennsylvania
state court action filed on January 28, 1999, captioned John R. Thach v. The
Eastwind Group, et al. (Montgomery County C.C.P., Civil Action No. 99- 01195).
Plaintiff maintains that Eastwind, his former employer, breached the terms of
his severance agreement, and that the sale of Polychem to ConMat was part of a
conspiracy to avoid payments to him and has violated Pennsylvania's Uniform
Fraudulent Transfer Act. Among the other named defendants is Paul A. DeJuliis,
President of ConMat and the former Chief Executive Officer of Eastwind.

Initially, the plaintiff sought a temporary restraining order and preliminary
injunction seeking to set aside the sale of Polychem to ConMat. However, by
Order dated February 19, 1999, the Court denied plaintiff's request for
injunctive relief. ConMat and Paul A. DeJuliis subsequently filed preliminary
objections to the complaint seeking to have themselves dismissed as a party to
the action. Currently, the parties are preparing briefs relating to ConMat's
preliminary objections and a decision by the Court is not expected until July,
1999 at the earliest.

Item 3.  Changes in and Disagreements with Accountants

         None.

                                       15

<PAGE>


Item 4.  Recent Sales of Unregistered Securities

In connection with the acquisition of Polychem on December 8, 1998 and pursuant
to Section 4(2) of the Securities Act, ConMat issued (i) 1,000,000 shares of
common stock, (ii) 1,386,666 shares of Series A convertible preferred stock,
(iii) 166,667 shares of Series B convertible preferred stock and (iv) warrants
to purchase 196,667 shares of common stock.

On December 10, 1998, Paul A. DeJuliis, President and Chief Executive Officer of
ConMat, purchased 250,000 shares of common stock at a purchase price of $50,000,
paid by delivery to ConMat of Mr. DeJuliis' promissory note in that amount. The
note has a maturity date of December 10, 2000, bears interest at 5% per annum
and is secured by a pledge of the purchased shares.

Item 5.  Indemnification of Directors and Officers

ConMat's charter provides that to the fullest extent permitted by law, no
director or officer of ConMat shall be personally liable to ConMat or its
shareholders for damages for breach of any duty owed to ConMat or its
shareholders and that ConMat may, in its by-laws or in any resolution of its
stockholders or directors, undertake to indemnify the officers and directors of
ConMat against any contingency or peril as may be determined to be in the best
interests of ConMat, and in conjunction therewith, to procure, at ConMat's
expense, policies of insurance. Florida law, under which ConMat is incorporated,
allows a corporation to indemnify its directors and officers if such director or
officer acted in good faith and in a manner such director or officer reasonably
believed to be in , or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. ConMat maintains a director and officer
liability insurance policy covering each of ConMat's directors and executive
officers.



                                       16

<PAGE>



                                    PART F/S

                            ConMat Technologies, Inc.
                   Index to Consolidated Financial Statements



                                                                     Page
                                                                     ----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS....................F-2


FINANCIAL STATEMENTS

         CONSOLIDATED BALANCE SHEETS..................................F-3

         CONSOLIDATED STATEMENTS OF OPERATIONS........................F-4

         CONSOLIDATED STATEMENT OF CHANGES IN
         STOCKHOLDERS' EQUITY (DEFICIENCY)............................F-5

         CONSOLIDATED STATEMENTS OF CASH FLOWS........................F-6

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................F-7




<PAGE>



               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 (a Florida corporation) as of January 2, 1999,
and January 3, 1998, and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows for the fiscal years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 January 2, 1999, and January 3,
1998, and the consolidated results of their operations and their consolidated
cash flows for the fiscal years then ended, in conformity with generally
accepted accounting principles.


                                                        /s/ Grant Thornton LLP
                                                        ----------------------



Philadelphia, Pennsylvania
March 25, 1999



                                       F-2

<PAGE>

                    ConMat Technologies, Inc. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
         ASSETS                                                                     January  2,      January 3,
                                                                                        1999            1998 
                                                                                    -----------      -----------     
<S>                                                                                 <C>            <C>    
Current assets
    Cash and cash equivalents                                                       $    29,430      $    63,840
    Accounts receivable, net                                                          2,622,261        3,524,622
    Due from related parties                                                                -             10,900
    Inventories                                                                       1,159,545        1,144,202
    Prepaid expenses                                                                     14,768          105,911
    Prepaid income taxes                                                                 35,577           24,677
                                                                                    -----------      -----------
                  Total current assets                                                3,861,581        4,874,152
Property, plant and equipment, net                                                    1,188,823        1,232,162
Deferred income taxes                                                                    78,493           78,493
Other assets                                                                            386,128          286,438
                                                                                    -----------      -----------
                                                                                    $ 5,515,025      $ 6,471,245
                                                                                    ===========      ===========

                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
    Lines of credit                                                                 $ 1,398,632      $ 1,492,511
    Current portion of long-term debt                                                   625,260          680,660
    Current portion of capitalized lease obligations                                    103,744           68,947
    Accounts payable                                                                  1,183,913        1,162,738
    Accrued expenses                                                                    302,374          247,620
                                                                                    -----------      -----------
                  Total current liabilities                                           3,613,923        3,652,476
Long-term debt                                                                        2,075,775        1,897,597
Capitalized lease obligations                                                           151,761          122,293
Other liabilities                                                                       181,900          209,170
                                                                                    -----------      -----------
                  Total liabilities                                                   6,023,359        5,881,536
                                                                                    -----------      -----------

Stockholders' equity (deficiency)
    Preferred stock, $.001 par value, 10,000,000 shares authorized,
       Series A preferred stock, 1,333,333 shares issued and outstanding                  1,386                -
       Series B preferred stock, 166,687 shares issued and outstanding                      167                -
    Common stock, $.001 par value, 40,000,000 shares authorized, 2,250,000
       shares issued and outstanding                                                      2,250                -
    Common stock, $.01 par value, 5,000,000 shares authorized, 1,000
       shares issued and outstanding                                                          -               10
    Additional paid-in capital                                                          277,345          504,490
    Less capital repayment                                                             (250,000)               -
    Accumulated earnings (deficit)                                                     (489,482)          85,209
    Less note receivable for shares sold                                                (50,000)               -  
                                                                                    -----------      -----------
                  Total stockholders' equity (deficiency)                              (508,334)         589,709
                                                                                    -----------      -----------
                                                                                    $ 5,515,025      $ 6,471,245
                                                                                    ===========      ===========
</TABLE>

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

                                       F-3

<PAGE>



                    ConMat Technologies, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>


                                                                                     Fiscal year ended          
                                                                                 ----------------------------
                                                                                 January 2,       January 3,
                                                                                    1999             1998       
                                                                                 -----------      -----------
<S>                                                                              <C>              <C>        
Net sales                                                                        $ 9,069,668      $12,129,981
Cost of goods sold                                                                 6,685,177        9,142,517
                                                                                 -----------      -----------
                  Gross profit                                                     2,384,491        2,987,464
Selling, general and administrative expenses                                       2,055,063        2,119,615
Eastwind corporate support fees                                                      480,000          640,000
                                                                                 -----------      -----------
                  Operating (loss) income                                           (150,572)         227,849
Interest expense                                                                    (609,996)        (406,021)
Rental income                                                                        185,877          177,832
                                                                                 -----------      -----------
                  Loss before income tax expense                                    (574,691)            (340)
Income tax expense                                                                         -          (63,573)
                                                                                 -----------      -----------
                  NET LOSS                                                       $  (574,691)     $   (63,913)
                                                                                 ===========      ===========
Per share data - basic and diluted
    Net loss per share                                                           $     (0.28)     $     (0.03)
                                                                                 ===========      ===========

</TABLE>




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


                                       F-4

<PAGE>

                    ConMat Technologies, Inc. and Subsidiary

     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

             Fiscal years ended January 2, 1999 and January 3, 1998


<TABLE>
<CAPTION>
                                                                       Series A                     Series B        
                                                               -----------------------       ---------------------- 
                                        Common stock                preferred stock              preferred stock    
                                  ------------------------     -----------------------       ---------------------- 
                                   Shares          Amount       Shares         Amount         Shares        Amount  
                                  ---------      ---------     ---------     ---------       ---------    --------- 
<S>                               <C>          <C>              <C>         <C>               <C>         <C>       
Balance, January 1, 1997              1,000      $      10             -     $       -               -    $       - 
Cash dividends on common stock            -              -             -             -               -            - 
Net loss                                  -              -             -             -               -            - 
                                  ---------      ---------     ---------     ---------         -------    --------- 
Balance, January 3, 1998              1,000             10             -             -               -            - 
Reclassification of $.01 common
    stock                            (1,000)           (10)            -             -               -            - 
Issuance of $.001 common stock
    and Series A preferred stock
    in connection with
    reclassification of equity    2,000,000          2,000     1,333,333         1,333               -            - 
Assumption of stockholders'
    liabilities                           -              -             -             -               -            - 
Issuance of Series A preferred
    stock                                 -              -        53,333            53               -            - 
Issuance of Series B preferred
    stock                                 -              -             -             -         166,667          167 
Issuance of common stock            250,000            250             -             -               -            - 
Receivable from stockholder               -              -             -             -               -            - 
Capital repayment                         -              -             -             -               -            - 
Net loss                                  -              -             -             -               -            - 
                                  ---------      ---------     ---------     ---------         -------    --------- 
Balance, January 2, 1999          2,250,000      $   2,250     1,386,666     $   1,386         166,667    $     167 
                                  =========      =========     =========     =========         =======    ========= 

</TABLE>


[RESTUB]

<TABLE>
<CAPTION>
                                  
                                                                       Note          Total
                                     Additional    Accumulated      receivable    stockholders'
                                       paid-in       earnings       for shares       equity      
                                    capital, net     (deficit)         sold       (deficiency)  
                                    ------------   ------------     ----------    -------------  
<S>                                 <C>            <C>              <C>            <C>        
Balance, January 1, 1997            $   504,490    $   917,068      $        -     $ 1,421,568
Cash dividends on common stock                -       (767,946)              -        (767,946)
Net loss                                      -        (63,913)              -         (63,913)
                                    -----------    -----------      ----------     -----------
Balance, January 3, 1998                504,490         85,209               -         589,709
Reclassification of $.01 common
    stock                                     -              -               -             (10)
Issuance of $.001 common stock
    and Series A preferred stock
    in connection with
    reclassification of equity         (176,675)             -               -        (173,342)
Assumption of stockholders'
    liabilities                        (760,000)             -               -        (760,000)
Issuance of Series A preferred
    stock                               159,947              -               -         160,000
Issuance of Series B preferred
    stock                               499,833              -               -         500,000
Issuance of common stock                 49,750              -               -          50,000
Receivable from stockholder                   -              -         (50,000)        (50,000)
Capital repayment                      (250,000)             -               -        (250,000)
Net loss                                      -      (574,691)               -        (574,691)
                                    -----------   -----------       ----------     -----------
Balance, January 2, 1999            $    27,345   $  (489,482)      $  (50,000)    $  (508,334)
                                    ===========   ===========       ==========     =========== 

</TABLE>


                                                                              
The accompanying notes are an integral part of this financial statement.


                                       F-5

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                   Fiscal year ended           
                                                                                            -----------------------------
                                                                                              January 2,       January 3,
                                                                                                 1999             1998      
                                                                                            -------------    ------------
<S>                                                                                         <C>             <C>   
Cash flows from operating activities
    Net loss                                                                                $   (574,691)     $   (63,913)
    Adjustments to reconcile net loss to net cash provided by
          operating activities
       Depreciation and amortization                                                             312,980          233,354
       Changes in assets and liabilities, net of effect from acquisitions
          (Increase) decrease in assets
              Accounts receivable                                                                902,361          467,378
              Inventories                                                                        (15,343)         434,495
              Prepaid expenses                                                                    91,143         (212,334)
              Prepaid income taxes                                                               (10,900)         (33,076)
              Patents, net                                                                       (25,666)         (54,668)
              Deferred financing charges                                                        (166,660)               -
          Increase (decrease) in liabilities
              Accounts payable                                                                    21,175          188,082
              Accrued expenses                                                                   (45,256)        (220,391)
              Other current liabilities                                                                -         (225,607)
              Other liabilities                                                                  (27,270)         (91,589)
                                                                                            ------------      -----------
                  Net cash provided by operating activities                                      461,873          421,731
                                                                                            ------------      -----------
Cash flows from investing activities
    Purchase of property and equipment                                                          (177,005)        (125,651)
    Advances to affiliated companies                                                              10,900          (10,900)
    Other                                                                                              -          (80,000)
                                                                                            ------------      -----------
                  Net cash used in investing activities                                         (166,105)        (216,551)
                                                                                            ------------      -----------
Cash flows from financing activities
    Net (repayments) borrowings under lines of credit                                            (93,879)       1,182,372
    Borrowings on term notes                                                                   1,800,000                -
    Repayments of term notes                                                                  (1,677,222)        (356,400)
    Repayments of capitalized lease obligations                                                  (84,155)         (52,012)
    Proceeds from capitalized lease obligations                                                  148,420           69,922
    Recapitalization costs                                                                      (173,342)               -
    Repayment of subordinated debenture                                                                -         (360,000)
    Dividends on common stock                                                                          -         (767,946)
    Capital distribution                                                                        (250,000)               -  
                                                                                            ------------      -----------
                  Net cash used in financing activities                                         (330,178)        (284,064)
                                                                                            ------------      -----------
                  NET DECREASE IN CASH AND CASH EQUIVALENTS                                      (34,410)         (78,884)
Cash and cash equivalents at beginning of year                                                    63,840          142,724
                                                                                            ------------      -----------
Cash and cash equivalents at end of year                                                    $     29,430      $    63,840
                                                                                            ============      ===========
Supplemental cash flow information
    Cash paid for interest                                                                  $    609,996      $   406,021
                                                                                            ============      ===========
    Cash paid for taxes                                                                     $          -      $    25,000
                                                                                            ============      ===========
    Noncash transactions
       Assumption of stockholders' liabilities                                              $    760,000      $         -  
                                                                                            ============      ===========
</TABLE>

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

                                       F-6

<PAGE>

                    ConMat Technologies, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       January 2, 1999 and January 3, 1998



NOTE A - 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. The wastewater treatment market is global in nature, and Polychem
presently sells products internationally in Western Europe, Asia and South
America, as well as in the United States.

NOTE B - BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of ConMat
and its wholly owned subsidiary, Polychem.

         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).

         Accordingly, the consolidated financial statements of ConMat as of
January 2, 1999, and January 3, 1998, and for the fiscal years then ended, are
the historical financial statements of Polychem for the same periods adjusted
for the following transactions contained in the Share Exchange Agreement
executed at consummation of the Acquisition. The basic structure and terms of
the Acquisition, together with the applicable accounting effects, were as
follows:

     o ConMat acquired all of the outstanding shares of common stock of Polychem
       from Eastwind in exchange for (I) 1,000,000 shares of newly issued common
       stock of ConMat and (II) 1,333,333 shares of newly issued cumulative, 2%,
       Series A convertible preferred stock of ConMat (Series A preferred
       stock). The common stock and Series A preferred stock exchanged, in
       addition to the existing ConMat shares outstanding, collectively resulted
       in the recapitalization of the Company. Earnings per share (EPS)
       calculations include the Company's change in capital structure for all
       periods presented.

                                       F-7

<PAGE>

                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998


     o ConMat assumed and, in certain instances, discharged the following
       liabilities of Eastwind: (I) $160,000 owed to Eastwind's former Chairman
       and Chief Executive Officer, who is the current Chairman and Chief
       Executive Officer of ConMat, discharged by the issuance of 53,333 shares
       of Series A preferred stock; (II) $100,000 owed to Clifton Capital, Ltd.;
       and (III) $500,000 owed to Mentor Special Situation Fund, L.P. (Mentor),
       discharged by the issuance to Mentor of 166,667 shares of newly issued
       cumulative, 8%, Series B preferred stock of ConMat plus warrants to
       purchase 166,667 shares of ConMat common stock, at $3.00 per share. The
       general partner of Mentor is a member of ConMat's Board of Directors.
       ConMat issued an option to purchase 30,000 shares of common stock to this
       director for $1.00 per share.

     o At closing, Eastwind issued to Polychem a promissory note in the amount 
       of $940,000 to evidence certain outstanding amounts owed by Eastwind to
       Polychem for prior advances, secured by the pledge of 313,333 shares of
       Series A preferred stock. This amount, in addition to other amounts owed
       to Polychem by Eastwind, were deemed uncollectible and accounted for as
       distributions, either in the form of dividends on common stock, or
       returns of capital to Eastwind in the periods the distributions were
       made.

The Company incurred $173,342 of costs related to the Acquisition.

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    1.  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.

    2.  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.

    3.  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 last-in, first-out
    (LIFO) method.


                                   (Continued)

                                       F-8

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

    4.  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.

    5.  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.

    6.  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 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.

    The following are the basic and diluted earnings per share calculations for
    the periods presented:

                                                  January 2,         January 3,
                                                     1999               1998 
                                                 ------------       ------------
       Loss per share
         Net loss                                $  (574,691)       $   (63,913)
                                                 ===========        ===========
       Weighted average shares outstanding         2,017,170          2,000,000
                                                 -----------        -----------
       Basic and diluted loss per share          $     (0.28)       $     (0.03)
                                                 ===========        ===========

    Series A preferred stock, convertible into 1,386,666 and 1,333,333 shares of
    common stock, were outstanding during the fiscal years ended January 2,
    1999, and January 3, 1998, respectively, which were not included in the
    computation of diluted earnings per share because to do so would be
    antidilutive.

    There were stock options outstanding at January 2, 1999, to purchase 280,000
    shares of common stock which were not included in the computation of diluted
    earnings per share because to do so would be antidilutive.

                                       F-9

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998


NOTE D - ACCOUNTS RECEIVABLE
                                                   January 2,        January 3,
                                                      1999              1998
                                                  ------------     ------------
       Trade receivables                          $ 2,241,801      $ 3,401,519
       Retainage receivables                          608,481          361,124
       Allowance for doubtful accounts                (75,000)         (85,000)
                                                  -----------      -----------
                                                    2,775,282        3,677,643
       Less retainage receivables due 
        in over one year                              153,021          153,021
                                                  -----------      -----------
                                                  $ 2,622,261      $ 3,524,622
                                                  ===========      ===========

    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. Retainage receivables expected to be collected after
    one year are included in other assets in the accompanying balance sheets.

NOTE E - INVENTORIES
                                                   January 2,        January 3,
                                                      1999             1998
                                                   -----------     ------------
       Raw materials                               $  327,412      $    320,826
       Work-in-process                                362,255           356,763
       Finished goods                                 469,878           466,613
                                                   ----------      ------------
                                                   $1,159,545      $  1,144,202
                                                   ==========      ============

    Had the FIFO method of valuing inventory been used, the value of inventories
    would not have been significantly different as of January 2, 1999, and
    January 3, 1998.

NOTE F - PROPERTY, PLANT AND EQUIPMENT

                                       Estimated        January 2,    January 3,
                                      useful lives         1999          1998 
                                      -------------    -----------   -----------
    Land                                 -             $    56,000   $    56,000
    Buildings and improvements        10 - 15 years        976,155       968,826
    Machinery and equipment            3 -  7 years        860,612       690,935
                                                       -----------   -----------
                                                         1,892,767     1,715,761
      Less accumulated depreciation                        703,944       483,599
                                                       -----------   -----------
                                                       $ 1,188,823   $ 1,232,162
                                                       ===========   ===========

                                                                           
    Depreciation expense was $220,345 and $199,668 for the fiscal years ended
    January 2, 1999, and January 3, 1998, respectively.

    Machinery and equipment as of January 2, 1999, and January 3, 1998, includes
    $448,236 and $299,816, respectively, of equipment under capital leases, with
    accumulated depreciation of $192,731 and $108,576, respectively.

                                      F-10

<PAGE>


                 ConMat Technologies, Inc., Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998



NOTE G - OTHER ASSETS
                                                       January 2,     January 3,
                                                          1999           1998  
                                                      -----------    -----------
     Retainage receivables due in over one year       $   153,021    $   153,021
     Deferred financing, net                              152,773         78,749
     Patents, net                                          80,334         54,668
                                                      -----------    -----------
                                                      $   386,128    $   286,438
                                                      ===========    ===========

NOTE H - LINES 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. The revolving credit line
    bears interest at the index rate, based on the rate for 30-day dealer paper,
    plus 4.75% (9.65% at January 2, 1999). The Agreement also provided for a
    term loan for $1,500,000, secured by real estate and equipment, with
    interest at the index rate plus 6.5% (11.4% at January 2, 1999). At January
    2, 1999, the Company was not in compliance with certain financial covenants
    contained in the Agreement with respect to $2,798,632 of obligations. These
    instances of noncompliance were waived by the commercial lender.

    At January 2, 1999, there was approximately $286,000 available for advances
    under the revolving line of credit.
<TABLE>
<CAPTION>
                                                                                         January 2,        January 3,
                                                                                            1999              1998      
                                                                                       ------------      ------------
<S>                                                                                   <C>               <C>   
     Polychem term note payable to the Budd Company, interest at 8%, principal
        payable in quarterly installments of $81,305, commencing March 1998 
        through March 2003                                                             $ 1,301,035       $ 1,626,093

     Polychem note payable, interest at index rate plus 6.5% (11.4% at January
        2, 1999), payable in 36 monthly installments of $25,000 plus interest,
        with a final payment in September 2001                                           1,400,000                 -

     Polychem note payable to bank, interest at the bank's prime rate plus
        1.5% (10% at January 3, 1998), payable in 18 monthly installments of
        $21,155 and 41 monthly installments of $29,617 plus interest, with a
        final payment in March 2000                                                              -           952,164
                                                                                       -----------       -----------
                                                                                         2,701,035         2,578,257
     Less current portion                                                                  625,260           680,660
                                                                                       -----------       -----------
                                                                                       $ 2,075,775       $ 1,897,597
                                                                                       ===========       ===========
</TABLE>

                                      F-11

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998



NOTE H - LONG-TERM DEBT - Continued

    The carrying amount of the Company's long-term debt approximates market
    value as of January 2, 1999, and January 3, 1998.

    Interest expense of $414,123 and $266,831 on the term notes was charged to
    operations for the years ended January 2, 1999, and January 3, 1998,
    respectively.

NOTE I - CAPITALIZED LEASE OBLIGATIONS

    The Company leases certain equipment under capital leases. The weighted
    average interest rate was 9.96% and 14.2% for the years ended January 2,
    1999, and January 3, 1998, respectively. Interest expense of $23,184 and
    $24,553 on the capitalized lease obligations was charged to operations for
    the years ended January 2, 1999, and January 3, 1998, respectively. Future
    minimum lease payments as of January 2, 1999, are as follows:

       1999                                                       $  122,958
       2000                                                           88,168
       2001                                                           44,356
       2002                                                           25,439
       2003                                                           10,600
                                                                  ----------
    Total minimum lease payments                                     291,521
    Less amounts representing interest                                36,016
                                                                  ----------
    Present value of future minimum lease payments                   255,505
    Less current portion                                             103,744
                                                                  ----------
                                                                  $  151,761
                                                                  ==========

NOTE J - EMPLOYEE BENEFIT PLANS

    1. 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
    January 2, 1999, and January 3, 1998, were $29,093 and $30,270,
    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.
    Discretionary contributions were $-0- and $93,964 for the years ended
    January 2, 1999, and January 3, 1998, respectively.


                                   (Continued)


                                      F-12

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998


NOTE J - EMPLOYEE BENEFIT PLANS - Continued

    2. 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:
                                                       January 2,    January 3,
                                                          1999          1998
                                                      -----------   ------------
      Change in benefit obligation
          Benefit obligation at beginning of year     $ 2,213,711   $ 2,146,767
          Service cost                                     31,139        28,445
          Interest cost                                   148,996       155,221
          Actual gain                                     120,755       102,831
          Benefits paid                                  (185,822)     (219,553)
                                                      -----------   -----------
          Benefits obligation at end of year            2,328,779     2,213,711
      Change in plan assets
        Fair value of plan assets at beginning 
         of year                                        2,157,972     1,907,362
          Actual return on plan assets                    316,663       470,163
          Employer contribution                                 -             -
          Benefits paid                                  (185,822)     (219,553)
                                                      -----------   -----------
          Fair value of plan assets at end of year      2,288,813     2,157,972
          Funded status                                    39,966        55,739
          Unrecognized net actuarial gain                 233,319       221,635
          Unrecognized prior service cost                 (55,872)      (61,393)
                                                      -----------   -----------
          Prepaid (accrued) benefit cost              $   217,413   $   215,981
                                                      ===========   ===========
        Weighted average assumptions as of 
         December 31
          Discount rate                                      6.75%         7.00%
          Expected return on plan assets                     9.00%         9.00%

        Components of net periodic benefit cost
          Service cost                                $   (31,139)   $  (28,445)
          Interest cost                                  (148,996)     (155,221)
          Expected return on plan assets                  316,663       470,163
          Amortization of prior service cost               (5,521)       (5,521)
          Recognized net actuarial loss                  (132,439)     (308,375)
                                                      -----------    ----------
          Net periodic benefit cost                   $    (1,432)   $  (27,399)
                                                      ===========    ==========
                                   (Continued)

                                      F-13

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998


NOTE J - EMPLOYEE BENEFIT PLANS - Continued

    3. 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 actuarial present value of the obligations as of January 2,
    1999, and January 3, 1998. The unfunded accumulated postretirement benefit
    obligation as of January 2, 1999, and January 3, 1998, was $20,000 and
    $25,782, respectively, and the net periodic postretirement benefit cost for
    the years ended January 2, 1999, and January 3, 1998, was immaterial.

NOTE K - INCOME TAXES

    The components of income tax expense are as follows:
                                                   January 2,        January 3,
                                                      1999              1998 
                                                   ----------        ----------
     Current
         Federal                                   $       -         $        -
         State                                             -              7,240
                                                   ---------         ----------
                                                           -              7,240
                                                   ---------         ----------
     Deferred
         Federal                                           -             56,333
         State                                             -                  -
                                                   ---------         ----------
                                                                         56,333
                                                                     ----------
                                                   $       -         $   63,573
                                                   =========         ==========

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

                                                   January 2,        January 3,
                                                      1999              1998 
                                                   ----------        ----------
    Statutory tax (benefit) provision              $(195,395)        $     (116)
    State income tax provision, net of federal 
     tax benefit                                           -              4,778
    Increase (decrease) in valuation allowance       189,492             46,944
    Nondeductible expense                              4,027              5,841
    Other                                              1,876              6,126
                                                   ---------         ----------
                                                   $       -         $   63,573
                                                   =========         ==========

    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.

                                   (Continued)


                                      F-14

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998




NOTE K - INCOME TAXES - Continued

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

                                                    January 2,       January 3,
                                                       1999             1998  
                                                   -----------     ------------
    Deferred tax assets
       Accruals and reserves                       $   25,500      $   28,900
       Inventory                                       62,906          49,498
       Net operating loss carryforwards               166,406             -
       Valuation allowance on deferred tax asset     (236,436)        (46,944)
       Other                                           60,117          47,039
                                                   ----------      ----------
                                                   $   78,493      $   78,493
                                                   ==========      ==========

NOTE L - COMMITMENTS AND CONTINGENCIES

    1.  Operating Leases

    The Company leases certain facilities and equipment under noncancellable
    operating leases that expire through May 2001. Rent expense of $31,148 and
    $30,458 has been charged to operations for the years ended January 2, 1999,
    and January 3, 1998, respectively. Minimum future rental payments under
    leases as of January 2, 1999, are as follows:

        1999                              $  27,204
        2000                                 16,695
        2001                                    490
                                          ---------
                                          $  44,389
                                          =========
    2.  Litigation

    ConMat is currently a defendant in a Pennsylvania state court action filed
    on January 28, 1999. The plaintiff maintains that Eastwind, his former
    employer, breached the terms of his severance agreement, and that the sale
    of Polychem to ConMat was part of a conspiracy to avoid payments to him and
    has violated Pennsylvania's Uniform Fraudulent Act. Among the other named
    defendants is the Chairman and Chief Executive Officer of ConMat who was the
    former Chief Executive Officer of Eastwind.

    Initially, the plaintiff sought a temporary restraining order and
    preliminary injunction seeking to set aside the sale of Polychem to ConMat.
    However, by Order dated February 19, 1999, the Court denied plaintiffs'
    request for injunctive relief. ConMat subsequently filed preliminary
    objections to the complaint seeking to have itself dismissed as a party to
    the action. Currently, the parties are preparing briefs relating to ConMat's
    preliminary objections and a decision by the Court is not expected until
    July 1999 at the earliest.

                                   (Continued)


                                      F-15

<PAGE>


                    ConMat Technologies, Inc. and Subsidiary

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                       January 2, 1999 and January 3, 1998




NOTE L - COMMITMENTS AND CONTINGENCIES - Continued

    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 M - EMPLOYMENT AGREEMENTS

    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 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 are exercisable following registration of the underlying shares of
    common stock. 100,000 of the options are exercisable following registration
    of the underlying common stock if ConMat realizes $750,000 in pre-tax income
    during a fiscal year. The remaining 100,000 options are exercisable
    following registration of the underlying shares of common stock if 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.

    The Stock Option Award is 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 January 2, 1999, would not be materially different from the amount
    reported.

NOTE N - INDUSTRY SEGMENT AND FOREIGN SALES INFORMATION

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

    For the year ended January 2, 1999, Polychem's sales to foreign customers
    were approximately $2,826,505, or 31.2% of consolidated net sales, and
    consist of sales to customers in Asia (15.2%), Europe (11.0%), and North
    America (5.0%). Receivables from these customers were approximately $339,096
    as of January 2, 1999.

    For the year ended January 3, 1998, Polychem's sales to foreign customers
    were approximately $2,722,000, or 22.4% of consolidated net sales, and
    consist of sales to customers in Asia (3.6%), Europe (10.7%), and North
    America (8.1%).


                                      F-16


<PAGE>



                                    PART III


                               Index to Exhibits.
<TABLE>
<CAPTION>

    Exhibit            
    Number                                                Description
    -------                                               ------------
<S>                                      <C>                                                           
    2.1                                  Articles of Incorporation of ConMat Technologies, Inc., as amended.

    2.2                                  By-laws of ConMat Technologies, Inc.

    3.1                                  Specimen common stock certificate.

    3.2                                  Specimen Series A preferred stock certificate.

    3.3                                  Specimen Series B preferred stock certificate.

    3.4                                  Series A Warrant No. 1 from ConMat to Mentor Special Situation Fund, L.P. dated
                                         December 8, 1998.

    3.5                                  Series B Warrant No. 1 from ConMat to Mentor Management Company dated
                                         December 8, 1998

    3.6                                  Option Agreement between ConMat and Paul A. DeJuliis dated December 8, 1998.

   10.1                                  Employment Agreement between ConMat and Paul A. DeJuliis dated December 8,
                                         1998.

   10.2                                  Loan and Security Agreement between Polychem and General Electric Capital
                                         Corporation dated September 30, 1998.

   10.3                                  $3,500,000 Revolving Credit Note payable by Polychem to General Electric Capital
                                         Corporation dated September 30, 1998.

   10.4                                  $1,500,000 Term Note payable to Polychem to General Electric Capital Corporation
                                         dated September 30, 1998.

   10.5                                  Stock Pledge Agreement between ConMat and General Electric Capital Corporation
                                         dated December 8, 1998.

   10.6                                  Guarantee dated December 8, 1998 between ConMat and General Electric Capital
                                         Corporation.

   10.7                                  Waiver and Amendment Agreement among General Electric Capital Corporation,
                                         ConMat, Polychem and Eastwind.

     27                                  Financial Data Schedule

</TABLE>


                                      III-1

<PAGE>


                                    SIGNATURE

    In accordance with Section 12 of the Securities Exchange Act of 1934, the
    Registrant caused this registration statement to be signed on its behalf by
    the undersigned, thereunto duly authorized.


                             ConMat Technologies, Inc.


    Date:                            By: _____________________________________ 
                                           Paul A. DeJuliis
                                           Chief Executive Officer and
                                           Chairman of the Board of Directors







                                      III-2

