1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10/A

                                AMENDMENT NO. 1

                  GENERAL FORM FOR REGISTRATION OF SECURITIES
                   PURSUANT TO SECTION 12(B) OR 12(G) OF THE
                        SECURITIES EXCHANGE ACT OF 1934



                         CARDIOTECH INTERNATIONAL, INC.
             (Exact Name of Registrant as Specified in its Charter)


             MASSACHUSETTS                                   04-3186647
    (State or Other Jurisdiction of                       (I.R.S. Employer
    Incorporation or Organization)                       Identification No.)


              11 STATE STREET, WOBURN, MASSACHUSETTS      01801
             (Address of Principal Executive Offices)    (Zip Code)


                                  617-933-4772
              (Registrant's Telephone Number, Including Area Code)


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


                                      None

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of Class)

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                         CARDIOTECH INTERNATIONAL, INC.

                                     PART I

                 INFORMATION INCLUDED IN INFORMATION STATEMENT

              CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
                              AND ITEMS OF FORM 10



          Form 10                                 Caption in
Item     Item Caption                          Information Statement
- ----     ------------                          ---------------------
                                         
1.       Business                              Summary - The Company; Risk Factors;
                                               Selected Consolidated Historical and Pro
                                               Forma Financial Data; Management's
                                               Discussion and Analysis of Financial
                                               Condition and Results of Operations;
                                               Business

2.       Financial Information                 Capitalization; Selected Consolidated
                                               Historical and Pro Forma Financial Data;
                                               Management's Discussion and Analysis
                                               of Financial Condition and Results of
                                               Operations; and Exhibit A - CardioTech
                                               Consolidated Financial Statements

3.       Properties                            Business - Properties

4.       Security Ownership of Certain         Security Ownership of
         Beneficial Owners and Management      Principal Stockholders
                                               and Management

5.       Directors and Executive Officers      Management

6.       Executive Compensation                Management - Executive Compensation

7.       Certain Relationships and             The Distribution -
         Related Transactions                  Relationship Between
                                               PMI and CardioTech After the
                                               Distribution; Certain Transactions

8.       Legal Proceedings                     Business - Legal Proceedings

9.       Market Price of and Dividends         The Distribution -
         on the Registrant's Common            Trading of CardioTech
         Equity and Related Stockholder        Common Stock; Description
         Matters                               of Capital Stock


   3


                                         
10.      Recent Sales of Unregistered          Certain Transactions
         Securities

11.      Description of Registrant's           Description of Capital
         Securities to be Registered           Stock


12.      Indemnification of Directors          Indemnification of
         and Officers                          Directors and
                                               Officers

13.      Financial Statements and              Index to Consolidated
         Supplementary Data                    Financial Statements

14.      Changes in and Disagreements with     Not Applicable
         Accountants on Accounting and
         Financial Disclosure

15.      Financial Statements and              Index to Consolidated Exhibits
         Exhibits                              Financial Statements



   4
                           [POLYMEDICA LETTERHEAD]

                                                    _______________, 1996



Dear Stockholder:

     On __________, 1996, the Board of Directors of PolyMedica Industries, Inc.,
a Massachusetts corporation ("PMI"), declared a stock dividend for the purpose
of making a distribution (the "Distribution") by PMI to its stockholders of all
of the outstanding shares of Common Stock of CardioTech International, Inc.
("CardioTech"), held by PMI (3,490,638 shares or approximately 91.7% of the
outstanding shares).  If you are a PMI stockholder on ___________, 1996, you
will also become a stockholder of CardioTech.

     CardioTech was established as a separate subsidiary of PMI in March 1993 to
focus on PMI's existing biomaterials business, with particular emphasis on
accelerating the research, development and commercialization of small bore
vascular graft products through external funding and a more focused and
strategic product development effort.  These activities build on research and
development begun by PMI in 1990 to apply PMI's proprietary polyurethane
technologies to develop specialized biomaterials and high-value medical devices
incorporating those materials.

     Today, CardioTech's vascular graft product nearest to commercialization is
a vascular access graft.  Patients with acute renal failure undergoing
hemodialysis require easy routine access to the blood stream.  CardioTech
believes that the vascular access graft it is developing offers the potential
for improved clinical performance.  CardioTech has developed a manufacturing
process involving cold coagulation casting that results in a microporous
compliant graft, with compressible walls and an inherent ability to "self-seal."
PMI believes that reducing puncture site bleeding by using a self-sealing
polyurethane material may lower morbidity rates.

     The Board of Directors of PMI believes that the Distribution is in the best
interests of PMI, CardioTech and PMI stockholders because it will provide both
companies with greater access to the capital markets by permitting the
investment community to evaluate each company more effectively.  In addition,
the Board believes that the Distribution will (i) enable management of each
company to adopt strategies and pursue objectives directly focused on its
business and products; (ii) enhance the ability of each company to attract and
motivate existing and potential key employees by providing them with equity
compensation tied directly to the results of their efforts; (iii) eliminate
PMI's expenses associated with the development of CardioTech's products; (iv)
enable the Board of Directors of PMI to avoid conflicts in the use of limited
capital resources by the two companies; and (v) enhance the ability of the two
companies to enter into strategic alliances and joint ventures.

     If you are a holder of PMI Common Stock on __________, 1996, the record
date for the Distribution, you will receive one share of CardioTech Common Stock
for approximately each two and one fifth shares of PMI Common Stock you own on
that date.  It is expected that certificates representing CardioTech Common
Stock will be mailed to you on or about __________, 1996.  CardioTech has
applied to have its Common Stock listed on the American Stock Exchange under the
symbol "CTE".  Additional shares of CardioTech Common Stock may be mailed to you
on or about ___________, 1996 depending upon the closing price of the CardioTech
Common Stock during the period from ___________, 1996 to ___________, 1996.  You
will receive an additional notice if such a supplementary distribution will be
made.

     The enclosed Information Statement provides important information regarding
the Distribution and CardioTech's organization, business, properties and
historical and pro forma financial information.  Stockholders are encouraged to
read this material carefully.

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     Holders of PMI Common Stock on the record date for the Distribution are not
required to take any action to participate in the Distribution.  PMI is not
soliciting your proxy because stockholder approval of the Distribution is not
required.


                                   Sincerely,



                                   Steven J. Lee
                                   President and
                                   Chief Executive Officer



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                   Subject to Completion, dated May __,  1996

                             INFORMATION STATEMENT

                         CARDIOTECH INTERNATIONAL, INC.

                   Distribution of up to 3,977,517 Shares of
                    Common Stock (par value, $.01 per share)


     This Information Statement is being furnished to stockholders of PolyMedica
Industries, Inc., a Massachusetts corporation ("PMI"), in connection with the
distribution (the "Distribution") by PMI to its stockholders of all of the
outstanding shares of common stock, $.01 par value ("CardioTech Common Stock"),
of its majority-owned subsidiary CardioTech International, Inc., a
Massachusetts corporation ("CardioTech"), held by PMI (3,490,638 shares or
approximately 91.7% of the outstanding shares).  The balance of the outstanding
shares of CardioTech Common Stock (314,610 shares) are owned by certain officers
and employees of PMI and CardioTech. PMI may be entitled to receive up to
486,879 additional shares of CardioTech Common Stock based upon the average
closing price of the Common Stock during the first five trading days following
the Distribution as a result of its rights under a stock subscription agreement
between PMI and CardioTech (the "Adjustment Shares").  See "The Distribution -
Restructuring of CardioTech Prior to the Distribution."  If any Adjustment
Shares are issued, they will be distributed pro rata to PMI stockholders.

     It is expected that the Distribution will be made beginning on or about
___________, 1996, to holders of record of common stock, $.01 par value, of PMI
("PMI Common Stock") on ___________, 1996 (the "Record Date"), on the basis of
one share of CardioTech Common Stock for approximately each two and one fifth
shares of PMI Common Stock held. All Adjustment Shares, if any are issued, will
be distributed beginning on or about _______, 1996, to holders of record of PMI
Common Stock on the Record Date.  See "The Distribution - Manner of Effecting
the Distribution."  No consideration will be required to be paid by PMI
stockholders for the shares of CardioTech Common Stock to be received by them in
the Distribution, nor will they be required to surrender or exchange shares of
PMI Common Stock in order to receive CardioTech Common Stock.

     No public trading market for the CardioTech Common Stock currently exists.
Application has been made to list the CardioTech Common Stock on the American
Stock Exchange under the symbol "CTE".  See "The Distribution - Listing and
Trading of CardioTech Common Stock."

     In reviewing this Information Statement, you should carefully consider the
matters described under the caption "Risk Factors."  Neither PMI nor CardioTech
will receive any cash or other proceeds from the distribution of CardioTech
Common Stock. __________________

            STOCKHOLDER APPROVAL IS NOT REQUIRED IN CONNECTION WITH
              THE DISTRIBUTION.  WE ARE NOT ASKING YOU FOR A PROXY
                 AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
                                ________________

         The date of this Information Statement is ____________, 1996.


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     No person is authorized to give any information or to make any
representation other than those contained in this Information Statement, and if
given or made, such information or representations must not be relied upon as
having been authorized.  This Information Statement does not constitute an offer
to sell or a solicitation of any offer to buy any securities.  This Information
Statement presents information concerning CardioTech believed by CardioTech to
be accurate as of the date set forth on the cover hereof.  This Information
Statement presents information concerning PolyMedica believed by PolyMedica to
be accurate as of the date set forth on the cover hereof.  Changes may occur in
the presented information after that date.  Neither CardioTech nor PolyMedica
plans to update said information except in the course of fulfilling their
respective normal public reporting and disclosure obligations.



                               TABLE OF CONTENTS

Item                                                       Page
                                                        
SUMMARY....................................................   4
THE COMPANY................................................  10
THE DISTRIBUTION...........................................  11
  Reasons for the Distribution.............................  11
  Restructuring of CardioTech Prior to the Distribution....  12
  Manner of Effecting the Distribution.....................  15
  Certain Federal Income Tax Consequences of
   the Distribution........................................  16
  Listing and Trading of CardioTech Common Stock...........  16
  Relationship Between PMI and CardioTech After
   the Distribution........................................  17
RISK FACTORS...............................................  18
CAPITALIZATION.............................................  23
SELECTED CONSOLIDATED HISTORICAL CARDIOTECH
 FINANCIAL DATA ...........................................  24
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 OF CARDIOTECH.............................................  25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS.......................  29
  Overview.................................................  29
  Results of Operations....................................  29
  Liquidity and Capital Resources..........................  30
BUSINESS...................................................  32
  Vascular Grafts .........................................  32
  Biomaterials.............................................  33
  Manufacturing............................................  34
  Marketing ...............................................  34
  Competition..............................................  34
  Research and Development.................................  35
  Government Regulation....................................  35
  Employees................................................  36
  Properties...............................................  36
  Legal Proceedings........................................  37


                                       2

   8

                                                                          
MANAGEMENT.................................................................   38
  Executive Officers and Directors.........................................   38
  Employment Agreement.....................................................   40
  CardioTech Option Plan...................................................   41
  Federal Income Tax Aspects of Stock Options..............................   42
CERTAIN TRANSACTIONS.......................................................   44
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
 AND MANAGEMENT............................................................   45
DESCRIPTION OF CAPITAL STOCK...............................................   47
INDEMNIFICATION OF DIRECTORS AND OFFICERS..................................   49
TAX CONSIDERATIONS OF THE DISTRIBUTION.....................................   50
AVAILABLE INFORMATION......................................................   52
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................................   53
EXHIBIT A - CardioTech Consolidated Financial Statements...................  A-1
EXHIBIT B - PMI Selected Historical and Pro Forma Consolidated
  Financial Information and Management's Discussion and Analysis of
  Financial Condition and Results of Operations............................  B-1
EXHIBIT C - Opinion of Cruttenden Roth Inc.................................  C-1


                                       3

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                                    SUMMARY

     The following is a brief summary of the matters covered in this Information
Statement and is qualified by the more detailed information included elsewhere
herein, which should be read in its entirety.  Certain terms used in this
Summary are defined elsewhere in the Information Statement.  Except as otherwise
noted, all information contained in this Information Statement reflects
amendments to CardioTech's Articles of Organization, effected on March 19, 1996
and May 9, 1996 (i) to effect a net 41.95 for one stock split of the CardioTech
Common Stock (reflecting a 54.7328 for one stock split effected on March 19,
1996 and a 0.766453701 for one reverse stock split effected on May 9, 1996) (see
Note E of the Notes to the CardioTech Consolidated Financial Statements), 
(ii) to increase the number of authorized shares of CardioTech Common Stock to
20,000,000 shares, and (iii) to authorize a class of 5,000,000 shares of
Preferred Stock.



                                The Distribution

                                
Distributing Company               PolyMedica Industries, Inc., a Massachusetts
                                   corporation ("PMI").

Distributed Company                CardioTech International, Inc., a Massachusetts
                                   corporation ("CardioTech"). CardioTech employs
                                   certain proprietary polyurethane technologies that it
                                   believes have a wide variety of applications in the
                                   design and manufacture of small bore implantable
                                   synthetic vascular grafts and other medical devices (the
                                   "Biomedical Technology").  CardioTech's business
                                   plan is to develop, manufacture and market such
                                   vascular grafts and specialized proprietary
                                   polyurethanes for other medical device applications.
                                   See "Business."

Shares to be Distributed           Approximately 3,490,638 shares of CardioTech
                                   Common Stock, representing approximately 91.7% of
                                   the CardioTech Common Stock outstanding on the
                                   Record Date.  In addition, all additional shares of
                                   CardioTech Common Stock issued to PMI pursuant to
                                   a Common Stock Subscription Agreement between
                                   PMI and CardioTech (the "Adjustment Shares") will be
                                   distributed to PMI stockholders.  See "The Distribution
                                   -- Restructuring of CardioTech Prior to the
                                   Distribution."  CardioTech also intends to grant options
                                   to members of its Board of Directors and to certain of
                                   its executive officers to purchase CardioTech Common
                                   Stock under the CardioTech Option Plan effective as of
                                   the Distribution Date.  See "Management --
                                   CardioTech Option Plan."

Record Date                        ________________, 1996.

Distribution Date                  On or about __________, 1996.  On the Distribution
                                   Date, the distribution agent will begin distributing
                                   certificates representing CardioTech Common Stock to
                                   PMI stockholders.  PMI stockholders will not be
                                   required to make any payment or to take any other
                                   action to receive their CardioTech Common Stock.  If
                                   any Adjustment Shares are issued, such shares will be




                                       4

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                                   distributed on or about ____ days after the Distribution
                                   Date.  See "The Distribution -- Restructuring of
                                   CardioTech Prior to the Distribution" and "The
                                   Distribution -- Manner of Effecting the Distribution."

Distribution Ratio                 One share of CardioTech Common Stock for
                                   approximately each two and one fifth shares of PMI
                                   Common Stock.  If any Adjustment Shares are issued,
                                   they will be distributed pro rata to holders of PMI
                                   Common Stock on the Record Date.

Fractional Shares of               No fractional shares of CardioTech Common Stock
CardioTech Common Stock            will be distributed.  A cash payment will be made to
                                   PMI stockholders otherwise entitled to a fractional
                                   share of CardioTech Common Stock as a result of the
                                   Distribution.  See "The Distribution -- Manner of
                                   Effecting the Distribution."

Trading Market                     Application has been made to include the CardioTech
                                   Common Stock on the American Stock Exchange
                                   under the symbol "CTE".

Technology Transfer;               PMI has granted CardioTech exclusive and
PMI Support                        non-exclusive, perpetual, worldwide, royalty-free
                                   licenses to certain Biomedical Technology not already
                                   owned by CardioTech and entered into a Facilities and
                                   Services Agreement to provide CardioTech with
                                   certain facilities and services.  See "The Distribution --
                                   Relationship Between PMI and CardioTech after the
                                   Distribution."

Risk Factors                       Stockholders should consider certain factors discussed
                                   under "Risk Factors."

Reasons for the Distribution       The Board of Directors of PMI has concluded, based
                                   upon its review of alternatives and consideration of
                                   advice provided by professional advisors, that the
                                   Distribution is in the best interests of PMI, CardioTech
                                   and the PMI stockholders because it will provide both
                                   companies with greater access to the capital markets by
                                   permitting the investment community to evaluate each
                                   company more effectively.  In addition, the Board
                                   believes that the Distribution will (i) enable
                                   management of each company to adopt strategies and
                                   pursue objectives directly focused on its business and
                                   products; (ii) enhance the ability of each company to
                                   attract and motivate existing and potential key
                                   employees by providing them with equity compensation 
                                   tied directly to the results of their efforts;
                                   (iii) eliminate PMI's expenses associated with the
                                   development of CardioTech's products; (iv) enable the
                                   Board of Directors to avoid conflicts in the use of
                                   limited capital resources by the two companies; and
                                   (v) enhance the ability of each of the two companies to



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                                   enter into strategic alliances and joint ventures. See
                                   "The Distribution -- Reasons for the Distribution" and
                                   "Management."

Certain Federal Income Tax         PMI believes, based upon advice of its counsel, that the
Consequences                       distribution of the CardioTech Common Stock in the
                                   Distribution will qualify as a "tax-free" spinoff under
                                   Section 355 of the Internal Revenue Code of 1986, as
                                   amended (a "Section 355 Spinoff").  If the Distribution
                                   qualifies as a Section 355 Spinoff, neither PMI nor its
                                   stockholders will recognize gain or loss as a result of
                                   the Distribution of CardioTech Common Stock (other
                                   than certain immaterial amounts of gain related to
                                   fractional shares).  If the Internal Revenue Service
                                   were to assert that the Distribution did not so qualify,
                                   PMI would recognize taxable gain on the Distribution
                                   as if it had sold the CardioTech Common Stock at its
                                   fair market value and a PMI stockholder would
                                   recognize taxable income in an amount equal to the fair
                                   market value of the CardioTech Common Stock
                                   received.  STOCKHOLDERS ARE URGED TO
                                   CONSULT THEIR OWN TAX ADVISORS.  See
                                   "Tax Considerations of the Distribution."

Relationship with PMI              In connection with the Distribution, CardioTech and
after the Distribution             PMI have entered into or will enter into certain
                                   intercompany agreements including, without limitation,
                                   a Distribution Agreement, a License Agreement, a Tax
                                   Matters Agreement and a Facilities and Services
                                   Agreement.  See "The Distribution -- Relationship
                                   Between PMI and CardioTech After the Distribution."



                                  THE COMPANY

     CardioTech employs proprietary polyurethane technologies that it believes
have a wide variety of applications in the design and manufacture of small bore
implantable synthetic vascular grafts and other medical devices (the
"Biomaterials Technology").  CardioTech's business plan is to continue to
develop, manufacture and market its polymer technologies with particular
emphasis on the development of implantable synthetic grafts for a broad variety
of applications, including vascular access grafts, peripheral grafts and
coronary artery bypass grafts.


                                  RISK FACTORS

     This Information Statement contains forward-looking statements that involve
a number of risks and uncertainties.  There are a number of factors that could
cause CardioTech's actual results to differ materially from those forecast or
projected in such forward-looking statements.  These factors include, without
limitation, those set forth below under the caption "Risk Factors."  Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date hereof.  CardioTech undertakes no obligation to
publicly release the result of any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.





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                 SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
                          FINANCIAL DATA OF CARDIOTECH

     The summary historical and pro forma consolidated financial information of
CardioTech should be read in conjunction with the CardioTech consolidated
financial statements contained in Appendix A and the CardioTech pro forma
consolidated financial statements contained elsewhere in this Information
Statement.

     The consolidated balance sheet data presented below as of March 31, 1994
and 1995 and the consolidated statement of operations data presented below for
each of the years in the three-year period ended March 31, 1995 have been
derived from CardioTech's consolidated financial statements, which have been
audited by Coopers & Lybrand L.L.P.  The balance sheet data presented below as
of December 31, 1995 and the consolidated statement of operations data for the
years ended March 31, 1991 and 1992 and the nine-month periods ended December
31, 1994 and 1995 have been derived from the unaudited consolidated financial
statements of CardioTech.  In the opinion of CardioTech management, the
unaudited consolidated financial statements have been prepared on the same basis
as the audited consolidated financial statements and include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the financial position and the results of operations for these periods.
Operating results for the nine months ended December 31, 1995 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 1996.  This data should be read in conjunction with the Consolidated
Financial Statements, related notes and other financial information included
elsewhere in this Information Statement.

     The following pro forma financial information reflects adjustments to the
historical consolidated statements of operations as if the Amended and Restated
Common Stock Subscription Agreement had been consummated and the Distribution
had occurred at the beginning of each period presented and adjustments to the
historical consolidated balance sheet as if the Amended and Restated Common
Stock Subscription Agreement had been consummated and the Distribution had
occurred at December 31, 1995.  Pro forma net loss per share does not take into
account shares to be issued in connection with the Amended and Restated Common
Stock Subscription Agreement. The historical and pro forma consolidated
financial statements of CardioTech do not necessarily reflect the results of
operations or financial position that would have been obtained had CardioTech
been an independent company.

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            SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF
                         CARDIOTECH INTERNATIONAL, INC.


     The financial information set forth below is intended to present
management's estimates of the results of consolidated operations and financial
condition of CardioTech as if it had operated as a stand-alone company since
inception.  Certain of the costs and expenses presented in these consolidated
financial statements represent intercompany allocations and management estimates
of the cost of services provided by PMI and its subsidiaries.  As a result, the
consolidated financial statements presented may not be indicative of the results
that would have been achieved had CardioTech operated as a nonaffiliated entity.




                                                                                                        Nine months ended
                                                          For the years ended March 31,                     December 31,
                                           ---------------------------------------------------------  ---------------------
                                             1991        1992        1993        1994        1995        1994        1995
                                           --------   ---------   ---------   ----------  ----------  ---------   ---------

                                                                                             
STATEMENT OF OPERATIONS DATA:
Research revenues........................  $380,677   $ 429,123   $ 422,590   $  285,876  $  407,510  $ 272,617   $ 143,310
Operating expenses:
  Research and development(1)............   217,498     369,347     377,231      699,919     708,723    511,444     633,442
  Selling, general and administrative....   204,142     214,657     228,680      375,886     297,727    208,990     251,923
  Total operating expenses...............   421,640     584,004     605,911    1,075,805   1,006,450    720,434     885,365
Net loss.................................   (40,963)   (154,881)   (183,321)    (789,929)   (598,940)  (447,817)   (742,055)




                                                               At March 31,         At December 31,
                                                            ------------------      ---------------
                                                              1994      1995             1995
                                                            -------    -------      ---------------
                                                                             
BALANCE SHEET DATA(2):

Total current assets......................................  $   504    $   504        $   504
Working capital...........................................      504        504            504
Total assets..............................................   52,222     44,150         37,854
Stockholders' equity......................................   52,222     44,150         37,854



(1) Included in research and development expenses for the year ended March 31,
    1994 is a $114,000 charge for incomplete technology which was purchased in
    connection with the acquisition of Newtec Vascular Products Limited.

(2) Balance Sheet Data prior to 1994 is not meaningful.  All intercompany
    activity related to the Company's operations and all amounts receivable to
    and payable by the Company are processed by PMI, its parent, and the net
    amount is recorded as Due to Parent in Stockholders' Equity.


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  SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF CARDIOTECH
                              INTERNATIONAL, INC.


See "Pro Forma Consolidated Financial Statements of CardioTech" for a
description of pro forma adjustments.




                                                        Nine months ended     Year ended
                                                        December 31, 1995   March 31, 1995
                                                        -----------------   --------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA:

                                                                      
   Research revenues...................................     $  143,310         $  407,510
   Operating expenses:
      Research and development.........................        633,442            708,723
      Selling, general and administrative..............        450,673            562,727
                                                            ----------         ----------
      Total operating expenses.........................      1,084,115          1,271,450
                                                            ----------         ----------
   Net loss............................................     $ (940,805)        $ (863,940)
                                                            ==========         ==========
   Loss per common share...............................     $     (.33)        $     (.31)

   Number of common shares.............................      2,831,491          2,831,491




                                                               December 31, 1995
                                                               -----------------
PRO FORMA CONSOLIDATED BALANCE SHEET DATA:

                                                                
Total current assets......................................         $3,830,504
Working capital...........................................         $3,430,504
Total assets..............................................         $4,014,854
Stockholders' equity......................................         $3,614,854




  SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF PMI

     Exhibit B to this Information Statement contains certain selected
historical consolidated financial information with respect to PMI for its last
five fiscal years and for the nine months ended December 31, 1995, as compared
with the nine months ended December 31, 1994, and PMI Management's discussion
and analysis of financial condition and results of operations.  Also included in
Exhibit B are summary pro forma statements of operations for PMI for the year
ended March 31, 1995 and the nine months ended December 31, 1995, and a pro
forma balance sheet for PMI as at December 31, 1995.

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                                  THE COMPANY

     CardioTech was established as a separate subsidiary of PMI in March 1993
(originally named PolyMedica Biomaterials, Inc.) to focus on PMI's existing
biomaterials business, with a particular emphasis on accelerating the research,
development and commercialization of small bore vascular graft products through
external funding and a more focused and strategic product development effort.
These activities build on research and development begun by PMI in 1990 to apply
PMI's proprietary polyurethane technologies to develop specialized biomaterials
and high-value medical devices incorporating those materials.

     CardioTech synthesizes, designs and manufactures medical-grade polymers,
particularly polyurethanes that are useful in the development of grafts and
other implantable devices because they can be synthesized to exhibit
compatibility with human blood and tissue. CardioTech uses proprietary
polyurethane manufacturing technology to fabricate small bore vascular grafts
made of ChronoFlex, a family of polyurethanes that has been demonstrated to be
biodurable, blood and tissue compatible and non-toxic. CardioTech owns one
United States patent, three United States patent applications, four European
patent applications and four other foreign patent applications relating to its
vascular graft manufacturing technology. In addition, PMI has granted to
CardioTech an exclusive, perpetual, worldwide, royalty-free license for the use
of one polyurethane patent and related technology in the field consisting of the
development, manufacture and sale of implantable medical devices and biodurable
polymer material to third parties for use in medical applications (the
"Implantable Devices and Materials Field"). PMI also owns, jointly with
Thermedics, Inc. ("Thermedics"), one U.S. patent, one European patent
application and three other foreign applications for certain polyurethane
technology (the "Joint Technology") and has granted to CardioTech a non-
exclusive perpetual world-wide royalty-free sublicense of the Joint Technology,
for use in the Implantable Devices and Materials Field.

     Vascular grafts are used to replace or bypass occluded, damaged, dilated or
severely diseased arteries and are sometimes used to provide access to the
bloodstream for patients undergoing hemodialysis treatments.  However, existing
small bore graft technologies suffer a variety of disadvantages in the treatment
of certain medical conditions depending upon the need for biodurability,
compliance (elasticity) and other characteristics necessary for long-term
interface with the human body.

     CardioTech is developing a family of small bore vascular graft devices
using specialized ChronoFlex polyurethane materials that it believes will
provide significantly improved performance in the treatment of vascular
disorders.  CardioTech is focusing its efforts on the development of vascular
access grafts, tapered peripheral grafts and coronary artery bypass grafts.  The
grafts have three layers, similar to natural arteries, and are designed to
replicate the physical characteristics of human blood vessels.  CardioTech
fabricates its grafts using a specialized polymer derived from the ChronoFlex
family of biomaterials.  CardioTech believes that grafts made of these
specialized ChronoFlex materials demonstrate radial compliance similar to that
of natural arteries, permitting them to expand and contract with each heartbeat.
A compliant graft reduces the stresses generated at the suture line where the
graft is attached to the artery, thereby minimizing the development of scar
tissue, which can occlude the blood flow through the graft and the artery.

     CardioTech also collaborates with other medical device manufacturers in
developing specialized versions of its premium polymer-based biomaterials for
use in both acute and chronically-implanted medical devices.  It then
manufactures and sells the polymer-based biomaterials to the manufacturers for
use in the manufacture of their devices.

     CardioTech is conducting trials designed to assess the patency (free blood
flow) of the vascular access graft in animals.  If this initial assessment is
successful, and if a historical comparison with existing surgical alternatives
provides the justification, CardioTech will seek European regulatory approval to
convert the study into a clinical trial in Europe in late 1996.  This clinical
trial will compare patency and complication rates of the ChronoFlex-based
vascular access graft with grafts made from expanded polytetrafluoroethylene
("ePTFE"), the biomaterial currently used for vascular access grafts.


                                       10

   16
                                THE DISTRIBUTION

REASONS FOR THE DISTRIBUTION

     The Board of Directors of PMI has concluded that the Distribution is in the
best interests of PMI, CardioTech and the PMI stockholders because it will
provide both companies with greater access to the capital markets to enable them
to obtain financing for their respective businesses by permitting the investment
community to evaluate each company more effectively.  In addition, the Board
believes that the Distribution also will (i) enable management of each company
to adopt strategies and pursue objectives directly focused on its business and
products; (ii) enhance the ability of each company to attract and motivate
existing and potential key employees by providing them with equity compensation
tied directly to the results of their efforts; (iii) eliminate PMI's expenses
associated with the development of CardioTech's business; (iv) enable the Board
of Directors of PMI to avoid conflicts in the use of limited capital resources
by the two companies; and (v) enhance the ability of the two companies to enter
into strategic alliances and joint ventures.

     The Distribution is designed to separate two distinct companies with
different missions and financial, investment and operating characteristics so
that each can adopt strategies and pursue objectives appropriate to its specific
business.  The Distribution is intended to enable the management of each company
to concentrate its attention and resources on its core business without regard
to the objectives and policies of the other company.

     The Board of Directors of PMI believes the common ownership of PMI's
manufacturing and distribution business and its medical device development and
specialized biomaterials business has hindered each business' ability to obtain
necessary financing.  The Board believes the primary reason for this difficulty
is that a manufacturing business is evaluated by the financial markets on the
basis of its earnings. Although PMI's net product sales from its wound care,
pharmaceutical and consumer healthcare businesses were $10.6 million, $22.2
million and $26.6 million in its fiscal years ended March 31, 1993, 1994 and
1995, respectively, a significant portion of the earnings have been used to fund
the research and development activities relating to the medical device
development and biomaterials business.  As a result, the combined earnings of
the companies have been significantly depressed, thereby limiting the combined
companies' ability to raise significant amounts of financing from outside
sources to support research and development.

     In contrast to manufacturing and distribution businesses, medical device
development businesses are generally judged by the financial markets based upon
their potential for growth once their products become marketable.  However, in
the case of PMI and CardioTech, the combined companies cannot be viewed by the
financial markets as medical device development businesses because the majority
of their combined activities relate to the wound care, pharmaceutical and
consumer healthcare businesses.  Thus, the combination of the operating
businesses of PMI with the medical device development efforts of CardioTech has
effectively precluded the combined companies from being favorably viewed by
either the portion of the market investing in manufacturing and distribution
companies or the portion of the market investing in medical device development
companies.  For this reason, the Board of Directors of PMI has determined that
the separation of PMI and CardioTech will enhance each company's ability to
raise financing and will allow the companies to obtain the financing on better
terms than if they were to continue on a combined basis.

     The Distribution also best addresses the following concerns of PMI's Board
of Directors: (i) that PMI stockholders be permitted to participate in the
future business potential of CardioTech; (ii) that PMI's earnings reflect solely
the performance of its core businesses; (iii) that investments in the
development of synthetic vascular graft technology be continued at a level
determined by management of CardioTech to be appropriate without regard to the
requirements of PMI's wound care, pharmaceutical and other businesses; and (iv)
that PMI and CardioTech exist as independent companies so as to enhance their
abilities to attract investment capital on acceptable terms.  The terms of the
Distribution were established by members of the managements of PMI and
CardioTech.

                                       11

   17
RESTRUCTURING OF CARDIOTECH PRIOR TO THE DISTRIBUTION

     Prior to the Distribution, PMI consolidated its vascular graft and other
biomaterials activities within CardioTech and consolidated the wound care,
pharmaceutical and consumer healthcare businesses within PMI and its other
subsidiaries.  This consolidation was achieved primarily by the transfer of
certain PMI patents relating to vascular graft manufacturing technologies in
connection with the Amended and Restated Common Stock Subscription Agreement
between PMI and CardioTech (the "Subscription Agreement") described below and by
PMI and CardioTech entering into a License Agreement pursuant to which PMI
granted CardioTech a perpetual, worldwide, royalty-free license for the use of
PMI's ChronoFlex polyurethane technology and certain other biomaterials in the
Implantable Devices and Materials Field.  PMI and CardioTech also terminated
certain licenses covering PMI technology not related to the vascular graft and
biomaterials business.  See " -- Relationship Between PMI and CardioTech after
the Distribution -- License Agreement."

     In connection with the Restructuring, PMI entered into the Subscription
Agreement pursuant to which PMI purchased an aggregate of 973,758 newly issued
shares of CardioTech Common Stock (subject to adjustment) for an aggregate
purchase price of $3,830,000 in cash, equipment having an estimated fair market
value of approximately $147,000, cancellation of intercompany loans from PMI to
CardioTech aggregating approximately $2,449,800 and the transfer of certain
vascular graft manufacturing patents (collectively, the "PMI Consideration").
The value of the PMI Consideration was estimated by the Board of Directors of
PMI to be approximately $6,426,800.  CardioTech intends to use the cash proceeds
of this purchase to fund its initial working capital and research and
development activities, and believes that such amount will be sufficient to fund
such activities for a period of approximately two years after the Distribution
Date.

     PMI has cancelled all amounts of intercompany debt owed by CardioTech to
PMI (including costs of the Restructuring and Distribution) incurred from the
inception of CardioTech through the estimated Distribution Date. The total of
all such indebtedness cancelled is $4,083,000 or $2,449,800 after deduction of
the estimated tax benefit from the operating losses funded by such loans,
assuming a 40% tax rate, all of which benefit is being retained by PMI.

     The Board of Directors of PMI determined that an adjustment based upon the
actual trading prices of the CardioTech Common Stock after the Distribution was
appropriate because it believed that such trading prices would be a significant
indicator of the value of the CardioTech Common Stock after the Restructuring.
The Board concluded that the number of shares of CardioTech Common Stock to be
issued to PMI should be adjusted in the event that the average closing price of
CardioTech Common Stock for the five trading days after the Distribution Date
(the "Average Trading Price") indicated a market capitalization for CardioTech
different from the Mid-Point Valuation (as defined below), based upon whether
the Average Trading Price is up to twenty percent (20%) greater than the
Mid-Point Valuation (the "Maximum Valuation") or up to twenty percent (20%) less
than the Mid-Point Valuation (the "Minimum Valuation").  Based upon the number
of shares of CardioTech Common Stock outstanding prior to the Restructuring, the
valuation of $6,426,800 attributed by the Board of Directors to the PMI
Consideration and the foregoing factors, the Board of Directors determined that
the issuance to PMI of a minimum of 973,758 shares (which assumes the Maximum
Valuation of CardioTech), to be adjusted based upon the Average Trading Price by
the issuance of up to a maximum of 486,879 additional shares (which assumes the
Minimum Valuation of CardioTech), would be fair to the shareholders of PMI and
CardioTech.

     Accordingly, the Subscription Agreement provides that the number of shares
of CardioTech Common Stock to be issued to PMI is subject to adjustment (the
"Adjustment") based upon the Average Trading Price.  If the Average Trading
Price is less than $4.40 per share, CardioTech will be required to issue to PMI
a number of shares equal to the difference between (i) the result obtained by
dividing $6,426,800 by the Average Trading Price (ii) and 973,758, up to a
maximum of 486,879 additional shares (the "Adjustment Shares").  Subsequent to
the Adjustment, PMI will distribute all Adjustment Shares to PMI shareholders as
of the Record Date on a pro rata bases.  See " -- Manner of Effecting the
Distribution."

                                       12

   18
     Because certain executive officers and directors of PMI also held minority
stock interests in CardioTech, the Board of Directors of PMI retained Cruttenden
Roth, Incorporated ("CRI") to render an opinion as to whether or not the number
of shares of CardioTech Common Stock (including the Adjustment Shares (as
defined below), the "CardioTech Consideration") to be issued to PMI by
CardioTech pursuant to the Subscription Agreement was fair, from a financial
point of view, to PMI and its shareholders.  The fairness opinion of CRI,
including the factors considered, the assumptions made and the procedures
followed, is attached hereto as Exhibit C.

     CRI is a nationally recognized investment banking firm engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.  CRI was selected as
financial advisor based upon such expertise and its reputation in investment
banking. As compensation for rendering the fairness opinion in connection with
the Subscription Agreement, PMI has paid CRI a fee of $187,500.  CRI also has
been separately engaged to perform other services on behalf of PMI for which CRI
has received compensation.  In addition, PMI has agreed to reimburse CRI for its
reasonable expenses, including reasonable counsel fees, and to indemnify CRI
against certain liabilities and expenses, including liabilities arising under
the federal securities laws, in connection with CRI's engagements.  In the
course of CRI's securities business it may trade the securities of PMI and
CardioTech for its own account and for the account of customers and,
accordingly, may at any time hold a long or short position in such securities.

     In connection with its fairness opinion, CRI conducted a review of certain
financial information and prepared certain financial analyses with respect to
CardioTech and the proposed transaction.  CRI presented and discussed its final
analyses at the meeting of the Board of Directors of PMI on March 18, 1996.  The
following paragraphs summarize the significant financial analyses performed by
CRI in arriving at its opinion as to the fairness, from a financial point of
view, of the CardioTech Consideration to be received by PMI pursuant to the
Subscription Agreement.

     CRI estimated a range of values of CardioTech, on a pro forma basis after
giving effect to the Restructuring, from $13.2 million to $30.8 million, or a
midpoint estimate of $22.0 million (the "Mid-Point Valuation"), of CardioTech
Common Stock on a fully distributed basis under conditions existing on March 18,
1996.  In reaching its estimate, CRI assumed the CardioTech Common Stock would
be fully and widely distributed among investors and are subject only to normal
trading activity after the Distribution.  However, trading following the
Distribution may be characterized by a redistribution among investors during
which market prices may be volatile or adversely affected. Estimates of fully
distributed values are speculative and subject to uncertainties and
contingencies, and do not purport to be appraisals or necessarily reflect the
prices at which trading will actually occur or the manner in which any
securities may trade at any time.

     CRI primarily used "discounted cash flow" analysis and "comparable company"
analysis in estimating the range of values for the CardioTech Common Stock on a
fully distributed bases.  CRI also analyzed certain acquisition and spinoff
transactions, but generally did not consider the results of such analyses to be
as meaningful as the "discounted cash flow" analysis and the "comparable
company" analysis in arriving at its estimate of the range of values for the
CardioTech Common Stock on a fully distributed basis.

     DISCOUNTED CASH FLOW ANALYSIS.  CRI measured the estimated present value of
the future streams of unlevered free cash flows that CardioTech would produce
through 2002, assuming that CardioTech performed in accordance with financial
forecasts and projections furnished to CRI by CardioTech management.  Free cash
flow for each of the six fiscal years ending 1997 to 2002 was derived from net
income, plus depreciation, amortization and income taxes, less capital
expenditures, and plus or minus changes in working capital, as the case may be.
The methods and assumptions used in preparing the CardioTech management's
projections involved certain elements of subjective judgments on the part of
CardioTech management, some or all of which may prove to be incorrect.

     To estimate the total present value of CardioTech's free cash flow, CRI
summed and discounted to present value the projected stream of free cash flows
indicated by CardioTech management using a discount rate from the weighted
average cost of capital that ranged from 44% to 49%.  The equity cost of capital
was obtained from the Capital Asset Pricing Model where the five-year Treasury
Bill was used as the risk free rate and the product of the


                                       13

   19
S&P 500 Index over the last five months was multiplied by a measure of risk
relative to the S&P 500 (Beta) of comparable companies (the "Comparable Group")
that CRI and CardioTech management considered relevant. Although no company in
the Comparable Group is identical to CardioTech, included among the companies
comprising the Comparable Group were Datascope Corp., Corvita Corporation,
Possis Medical, Thoratec Laboratories, C.R. Bard, Endovascular Technology and
Instent, Inc.  The was no projected debt for the Company at fiscal year 2002.
CRI estimated a terminal value by applying multiples ranging from 6.0 to 8.0 to
discounted free cash flow, adjusted for debt and cash, in the year 2002.  These
multiples were based on current trading multiples for companies included in the
Comparable Group.  This analysis indicated a present value per share of
CardioTech Common Stock to be outstanding on a pro forma basis immediately after
giving effect to the Restructuring in a range from $13.2 million to $22.0
million.

     COMPARABLE COMPANY ANALYSIS.  CRI compared selected projected financial and
operating data for CardioTech to the corresponding data of companies in the
Comparable Group.  CRI calculated enterprise value multiples as a function of
revenue and EBITDA.  CRI calculated market value multiples as a function of net
income, book value, revenue and assets.  From Comparable Group enterprise value
multiples in ranges from 1.8x to 112.9x last twelve month's revenue and (291.0)x
to 10.2x EBITDA, multiples for CardioTech's fiscal 1997 revenue and EBITDA were
derived at 38.7x and (25.6)x, respectively.  The aggregate values for CardioTech
implied by such multiples were $22.14 million and $41.77 million, respectively.
After CRI applied an additional 20% discount on such values due to CardioTech's
pre 510K technology, the aggregate values for CardioTech implied by such
multiples were $17.72 million and $33.41 million, respectively.  From Comparable
Group market value multiples in ranges from (164.2)x to 27.8x last twelve
month's net income, 2.1x to 64.1x book value, 1.8x to 137.9x revenue and 1.7x to
49.7x assets, multiples for CardioTech's fiscal 1997 net income, book value,
revenue and assets were derived at (24.4)x, 11.8x, 41.5x and 11.8x,
respectively.  The aggregate values for CardioTech implied by such multiples
were $29.82 million, $23.97 million, $24.83 million and $19.06 million,
respectively.  After CRI applied an additional 20% discount on such values due
to CardioTech's pre 510K technology, the aggregate values for CardioTech implied
by such multiples were $23.85 million, $19.8 million, $19.86 million and $15.25
million, respectively.  This analysis indicated a value per share of CardioTech
Common Stock to be outstanding on a pro forma basis immediately after giving
effect to the Restructuring in a range from $14.1 million to $30.8 million.

     Because of the inherent differences between the operations of CardioTech
and the operations of the selected companies comprising the Comparable Group,
CRI believed that a purely quantitative comparable company analysis would not be
meaningful.  An appropriate use of a comparable company analysis in this
instance would involve qualitative judgments concerning the differences between
the financial and operating characteristics of the companies and CardioTech and
other factors that could affect the public trading values of the selected
companies and CardioTech.

     The foregoing summary does not purport to be a complete description of
CRI's analyses and its reports and presentations to the Board of Directors of
PMI.  CRI believes that its analyses must be considered as a whole and that
selecting portions of CRI's analyses and of the factors considered by CRI,
without considering all factors and analyses, could create an incomplete or
misleading view of the process underlying CRI's opinion.  Furthermore, in
arriving at its fairness opinion, CRI did not attribute any particular weight to
any analysis or factor considered by it, but rather made qualitative judgments
as to the significance or relevance of each analysis and factor.  The
preparation of a fairness opinion is a complex process and not necessarily
susceptible to partial analysis or summary description.

     In performing its analyses, CRI made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of CardioTech.  CRI also used in
its analyses projections of future performance, results and conditions which are
inherently unpredictable and must be considered not certain of occurrence as
projected.  The analyses performed by CRI are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by such analyses.  Such analyses were prepared solely
as part of CRI's analysis of the fairness, from a financial point of view, of
the CardioTech Consideration to be received by PMI pursuant to the Subscription
Agreement, and were provided to the Board of Directors of PMI in connection with
the delivery of CRI's opinion.  In addition, CRI's fairness opinion and
presentation to the Board of Directors of PMI was one of many factors taken into
consideration by the Board of Directors of PMI in making its determination to
approve the terms of the Subscription Agreement.


                                       14

   20
The CRI opinion, which is addressed to the Board of Directors of PMI, is
directed only to the fairness, from a financial point of view, of the CardioTech
Consideration to be received by PMI pursuant to the Subscription Agreement and
does not address any other terms of the Distribution or any related agreements
or arrangements, including any transactions which might occur among PMI and
CardioTech and their respective affiliates after the consummation of the
Distribution.  The CRI opinion also does not address PMI's underlying business
decision to effect the Distribution.

MANNER OF EFFECTING THE DISTRIBUTION

     The general terms and conditions relating to the Distribution are set forth
in the Plan and Agreement of Distribution, dated as of __________, 1996 (the
"Distribution Agreement"), and the other Intercompany Agreements between PMI and
CardioTech.  Under the terms and conditions of the Distribution Agreement, PMI
will effect the Distribution by providing for the delivery of the CardioTech
Common Stock held by PMI to the Distribution Agent for distribution to the PMI
stockholders.  The Distribution will be made on the basis of one share of
CardioTech Common Stock for each 2.21 shares of PMI Common Stock held on the
Record Date.  Certificates representing shares of CardioTech Common Stock will
be mailed or delivered by the Distribution Agent beginning shortly after the
Distribution Date.  No fractional shares of CardioTech Common Stock will be
received by PMI stockholders. Fractional shares, if any, will be aggregated and
sold, on behalf of the stockholders entitled to receive such shares, by
Distribution Agent.  The Distribution Agent will use the net proceeds from the
sale of fractional shares to make cash payments to those stockholders otherwise
entitled to receive fractional shares in proportion to their respective
interests in such fractional shares.

     Holders of PMI Common Stock will not be required to pay cash or any other
consideration for the CardioTech Common Stock received in the Distribution or to
surrender or exchange certificates representing shares of PMI Common Stock in
order to receive the CardioTech Common Stock.  Holders of PMI Common Stock will
continue to own their shares of PMI Common Stock and, if such stockholders were
stockholders of record on the Record Date, they will also receive shares of
CardioTech Common Stock.  The Distribution will not otherwise change the number
of, or the rights associated with, outstanding shares of PMI Common Stock.

     PMI may receive up to an additional 973,758 shares of CardioTech Common
Stock in connection with the Adjustment, which would subsequently be distributed
to holders of PMI Common Stock as of the Record Date.  See "--Restructuring of
CardioTech Prior to the Distribution."  If any Adjustment Shares are to be
issued, PMI will send its stockholders a notice indicating the distribution
ratio for the Adjustment Shares and the proposed distribution date for such
Adjustment Shares.  Certificates representing the shares of CardioTech Common
Stock constituting the Adjustment Shares (if any) are expected to be mailed or
delivered by the Distribution Agent beginning 10 days after the Distribution
Date.

     On January 23, 1993, John Hancock Mutual Life Insurance Company ("Hancock")
purchased from PMI warrants to purchase PMI Common Stock (the "Hancock
Warrants").  Under the terms of the Hancock Warrants, the holders thereof are
entitled to receive any securities distributed by PMI to which the holder of
such warrants would have been entitled upon exercise of such warrants.
Accordingly, CardioTech will issue to Hancock warrants to purchase shares of
CardioTech Common Stock on the same terms as the Hancock Warrants (the "Mirror
Warrants") and has reserved for issuance a total of 245,438 shares of CardioTech
Common Stock upon the exercise of the Mirror Warrants (subject to adjustment in
the event of a stock split, stock dividend and certain dilutive issuances).
Under the terms of the Mirror Warrants, CardioTech will be entitled to receive a
portion of the proceeds from the exercise of the Hancock Warrants equal to a
ratio the numerator of which is the average market capitalization of CardioTech
to the average market capitalization of PMI based on the average closing price
of CardioTech Common Stock and PMI Common Stock during the five business days
following the Distribution Date and the denominator of which is one plus such
ratio.

     All shares of CardioTech Common Stock distributed to PMI stockholders in
the Distribution will be fully paid and nonassessable and the holders thereof
will not be entitled to preemptive rights.  See "Description of Capital Stock."



                                       15

   21
     Upon the completion of the Distribution, there will be 3,805,248 shares of
CardioTech Common Stock outstanding (4,292,127 shares if the maximum number of
Adjustment Shares are issued).  All of the shares of CardioTech Common Stock
distributed to PMI stockholders in the Distribution will be immediately eligible
for resale in the public market without restriction under the Securities Act of
1933, as amended (the "Securities Act"), except that any shares owned by
"affiliates" of CardioTech, as that term is defined in Rule 144 adopted under
the Securities Act ("Affiliates"), may generally only be resold (i) in
compliance with the applicable provisions of Rule 144, (ii) under an effective
registration statement under the Securities Act, or (iii) pursuant to an
exemption from the registration requirements of the Securities Act.  Affiliates
of CardioTech following the Distribution will include individuals or entities
that control, are controlled by, or are under common control with CardioTech and
may include certain officers and directors of CardioTech, as well as principal
stockholders of CardioTech.

     Under Rule 144, an Affiliate is entitled to sell, within any three-month
period, a number of shares of CardioTech Common Stock that does not exceed the
greater of 1% of the then outstanding shares of CardioTech Common Stock
(approximately 38,052 shares immediately after the Distribution assuming no
Adjustment Shares are issued) or the average weekly trading volume of the
CardioTech Common Stock during the four calendar weeks preceding the date on
which notice of such sale was filed under Rule 144, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied.

     Upon consummation of the Distribution, Affiliates of CardioTech will hold
approximately 353,531 shares of CardioTech Common Stock.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

     PMI believes, based upon advice of its counsel, that the Distribution will
qualify as a Section 355 Spinoff.  If the Distribution qualifies as a Section
355 Spinoff, neither PMI nor its stockholders would recognize gain or loss as a
result of the Distribution (other than certain immaterial amounts of gain
related to fractional shares).  If the Internal Revenue Service were to
successfully assert that the Distribution did not so qualify, PMI would
recognize taxable gain on the Distribution as if it had sold the CardioTech
Common Stock at its fair market value and a PMI stockholder would recognize
taxable income in an amount equal to the fair market value of the CardioTech
Common Stock received.  STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS.  See "Tax Considerations of the Distribution."

LISTING AND TRADING OF CARDIOTECH COMMON STOCK

     PMI presently owns 91.7% of the outstanding shares of CardioTech Common
Stock, with the balance owned by certain officers and employees of CardioTech
and PMI.  No trading prices are available with respect to such shares. There can
be no assurance as to the price at which PMI Common Stock or CardioTech Common
Stock may be traded after the Distribution or whether their initial combined
price will be higher or lower than the price of the PMI Common Stock prior to
the Distribution.  After the Distribution, approximately 3,805,248 shares of
CardioTech Common Stock will be issued and outstanding (4,292,127 shares if the
maximum number of Adjustment Shares are issued).  In addition, CardioTech
intends to grant options to purchase approximately 828,000 shares of CardioTech
Common Stock under the CardioTech Option Plan to certain executive officers and
members of the Board of Directors of CardioTech, effective as of the
Distribution Date.  See "Management -- CardioTech Option Plan".

     Application has been made to list the CardioTech Common Stock on the
American Stock Exchange under the symbol "CTE".  Based on the expected number of
holders of PMI Common Stock of record as of the Record Date, CardioTech is
expected to initially have approximately 580 stockholders of record on the
Distribution Date. The Transfer Agent and Registrar for the CardioTech Common
Stock will be The First National Bank of Boston.  There can be no assurance that
an active trading market in CardioTech Common Stock will develop or, if a market
does develop, at what prices CardioTech Common Stock will trade.  See "Risk
Factors--Absence of Public Market; Possible Volatility of Stock Price; Possible
Delisting."

                                       16

   22
     A "when-issued" trading market in CardioTech Common Stock may develop prior
to the Distribution Date. A "when-issued" trading market occurs when trading in
shares begins prior to the time stock certificates are actually available or
issued.

RELATIONSHIP BETWEEN PMI AND CARDIOTECH AFTER THE DISTRIBUTION

     In order to facilitate CardioTech's transition following the Distribution,
PMI and CardioTech have entered or will enter into the Intercompany Agreements.
The following is a summary of certain provisions of such agreements and is
qualified in its entirety by reference to the full text of such agreements, all
of which have been filed as exhibits to the Registration Statement of which this
Information Statement is a part.

     Distribution Agreement.  The Distribution Agreement provides for the
principal corporate transactions required to effect the Distribution, including,
among other things, the preparation of a registration statement registering the
CardioTech Common Stock under the Securities Exchange Act of 1934 (the "Exchange
Act").  The Distribution Agreement also allocates the costs related to the
implementation of the Distribution between PMI and CardioTech and provides that
each company will share equally any liabilities under the federal and any state
securities laws incurred as a result of the distribution of this Information
Statement.

     License Agreement. PMI has granted to CardioTech an exclusive, perpetual,
world-wide, royalty-free license for CardioTech to use the patent and all other
necessary intellectual property owned exclusively by PMI, and a non-exclusive
perpetual world-wide, royalty-free license of PMI's rights in the Joint
Technology, for use in the Implantable Devices and Materials Field
(collectively, "PMI Licensed Technology"). PMI, at its own expense, will file
patent or other patent applications for the protection of all new inventions
formulated, made or conceived by PMI during the term of the license that relate
to PMI Licensed Technology and all such inventions will be part of the
technology licensed to CardioTech. CardioTech, at its own expense, will file
patent or other applications for the protection of all new inventions
formulated, made, or conceived by CardioTech during the term of the license that
relate to PMI Licensed Technology and all such inventions shall be exclusively
licensed to PMI for use by PMI in fields other than the Implantable Devices and
Materials Field.

     Any material breach of the License Agreement by CardioTech will result in
CardioTech being obligated to pay PMI $1,000 per day from the date 90 days after
notice of the breach or default until the date on which CardioTech cures such
material breach or default.  CardioTech may seek monetary damages against PMI
for any breach of the license agreement by PMI.

     Tax Matters Agreement.  The Tax Matters Agreement provides, among other
things, that PMI will be responsible for all federal, state, local and foreign
tax liabilities of CardioTech for periods ending on or prior to the Distribution
Date and CardioTech will be responsible for all tax liabilities of CardioTech
subsequent to that time.  The Tax Matters Agreement further provides that for
the tax year of PMI that includes the Distribution Date and the tax year of
CardioTech that commences immediately following the Distribution Date, PMI will
claim on its federal income tax returns certain specified tax benefits and
CardioTech will not claim any of such tax benefits through the Distribution
Date.

     Facilities and Services Agreement.  PMI will continue to provide certain
administrative services, including purchasing, accounting, management and data
processing services to CardioTech and will make available certain facilities and
equipment to CardioTech.  PMI will be reimbursed $15,000 per month by CardioTech
for the provisions of such services.  The agreement has a term of one year.


                                       17

   23
                                  RISK FACTORS

     Holders of PMI Common Stock should be aware that the Distribution and
ownership of CardioTech Common Stock involve certain risks, including those
described below, which could adversely affect the value of their holdings.
Neither PMI nor CardioTech makes, nor is any other person authorized to make,
any representations as to the future market value of the CardioTech Common
Stock.

     Early Stage of Development of Implantable Synthetic Vascular Grafts.
Although CardioTech is generally engaged in the business of developing and
marketing uses for its polymer-based biomaterials, its primary focus is on the
development and marketing of small bore implantable synthetic vascular grafts.
CardioTech is in the early stages of pre-clinical testing of its first proposed
synthetic vascular graft product, and, accordingly, has not begun to market or
generate any revenue from the use of its vascular graft technology.  These
products will require significant additional investment, research, development,
pre-clinical and clinical testing and regulatory approval prior to
commercialization.  A commitment of substantial resources to conduct clinical
trials will be required if CardioTech is to complete the development of its
synthetic vascular grafts.  See "Business-Government Regulation."  There can be
no assurance that any of these products will be successfully developed and, if
developed, will meet applicable regulatory standards, obtain required regulatory
approvals, be capable of being produced in commercial quantities at reasonable
costs or be successfully marketed.  Success in this market is dependent on
CardioTech's ability to complete satisfactorily the development of
polyurethane-based vascular grafts which will be safe and effective and will
have benefits not available in autologous vein grafts or presently available
synthetic vascular grafts and no assurance can be given that it will be
successful in doing so. None of CardioTech's vascular graft or other products is
expected to be commercially available for several years.

     Absence of Revenue from Vascular Grafts.  CardioTech's future growth will
largely depend on its ability to raise capital to support research and
development activities and commercialize its vascular graft technology.  To
date, CardioTech has not generated any revenue from the sale of vascular grafts.
PMI has provided approximately $4.5 million in funding to CardioTech from 1991
through May 1, 1996, the majority of which has been expended for research and
development expenses.  For the past several years, profits from PMI's wound
care, pharmaceutical and consumer healthcare businesses have been used to
finance the development of CardioTech's vascular graft technology.  CardioTech
expects that losses from the development, testing and manufacture of its
vascular graft technology will increase as it conducts additional animal testing
and commences clinical trials and seeks regulatory approvals.  CardioTech
expects to continue to incur operating losses unless and until such time as
product sales and/or royalty payments generate sufficient revenue to fund its
continuing operations.

     Limited Revenue From Other Activities.  CardioTech is also engaged in the
development, and attempted development, of other uses for its premium
polymer-based biomaterials in collaboration with other medical-device
manufacturers.  Although such activities may generate revenues from medical
device manufacturers for development services performed by CardioTech or in
connection with the sale of biomaterials, CardioTech's primary focus will be on
small bore vascular graft technology. Accordingly, revenues from these sources
are expected to be relatively small in the short term.

     Additional Financing Requirements and Access to Capital.  Prior to the
Distribution, PMI will invest approximately $3,830,000 in cash in CardioTech in
connection with the Subscription Agreement, which CardioTech believes will be
sufficient to fund its initial working capital and research and product
development activities for approximately two years from the Distribution Date.
CardioTech will require substantial funds for further research and development,
future pre-clinical and clinical trials, regulatory approvals, establishment of
commercial-scale manufacturing capabilities and the marketing of its products.
CardioTech will seek to obtain additional funds for these purposes through
public or private equity or debt financings, collaborative arrangements or from
other sources. There can be no assurance that additional funding will be
available at all or on acceptable terms to permit successful commercialization
of CardioTech's technology and products.  If adequate funds are not available,
CardioTech may be required to curtail significantly one or more of its research
or development programs, or obtain funds through arrangements with collaborative
partners or others that may require CardioTech to relinquish rights to certain
of its technologies, product candidates or products.

                                       18

   24
     Limited Rights in Technology; Uncertainty of Patents and Proprietary
Rights.  CardioTech owns one United States patent and four patents in various
European countries relating to vascular graft manufacturing technology.  In
addition, PMI has granted CardioTech a perpetual, worldwide, royalty-free
license to use the Biomaterials Technology in the Implantable Devices and
Materials Field.  However, PMI and CardioTech each have rights to use the
Biomaterials Technology to fabricate medical products (other than implantable
medical devices) themselves or in joint ventures with third parties.  In
addition, PMI has retained the rights to make sales of ChronoFlex and such
biomaterials for non-medical applications.  As a result, PMI may compete with
CardioTech if CardioTech decides to commercialize applications of the
Biomaterials Technology in fields other than those in which it has been granted
an exclusive license.  Also, Thermedics, as joint owner with PMI of a patent and
patent applications relating to certain polyurethane technology, is free to use
such rights or license them to others in any field, including the Implantible
Devices and Materials Field.

     CardioTech's success will depend, in large part, on its ability to maintain
its existing patents, obtain new patents, maintain trade secret protection and
operate without infringing on the proprietary rights of third parties or having
third parties circumvent CardioTech's rights.  PMI has filed and obtained United
States and foreign patents covering aspects of the Biomaterials Technology.
There can be no assurance that any of CardioTech's or PMI's existing patents
will not be challenged or future patent applications will result in the issuance
of patents, that CardioTech will develop additional proprietary products that
are patentable, that any additional patents issued to CardioTech will provide
CardioTech with any competitive advantages or will not be challenged by any
third parties, that the patents of others will not impede the ability of
CardioTech to do business or that third parties will not be able to circumvent
CardioTech's patents and licensed technology.  Furthermore, there can be no
assurance that others will not independently develop or duplicate similar
technology or products, or, if patents are issued or licensed to CardioTech,
design around the patents issued or licensed to CardioTech.

     CardioTech may be required to obtain licenses from third parties to avoid
infringing patents or other proprietary rights.  No assurance can be given that
any licenses required under any such patents or proprietary rights would be made
available, if at all, on terms acceptable to CardioTech.  If CardioTech does not
obtain such licenses, it could encounter delays in product introductions, or
could find that the development, manufacture or sale of products requiring such
licenses could be prohibited.  In addition, CardioTech could incur substantial
costs in defending itself in suits brought against it with respect to patents it
might infringe or in filing suits against others to have such patents declared
invalid.

     Some of CardioTech's know-how and technology may not be patentable.  To
protect its rights, CardioTech requires employees, consultants, advisors and
collaborators to enter into confidentiality agreements.  There can be no
assurance, however, that these agreement will provide meaningful protection for
CardioTech's trade secrets, know- how or other proprietary information in the
event of any unauthorized use or disclosure.  Further, CardioTech's business may
be adversely affected by competitors who independently develop competing
technologies, especially if CardioTech obtains no, or only narrow, patent
protection.  See "Business - Patents and Proprietary Information."

     Technological Change and Competition.  The medical device industry is
subject to rapid and substantial technological change.  Several companies
currently sell synthetic graft products for certain specific applications in the
United States and worldwide and have done so for many years.  Although
CardioTech believes that the attributes of its polyurethane-based grafts will
allow its products to compete effectively, these companies can be expected to
defend their market positions vigorously.  Moreover, while CardioTech is aware
of only two competitors developing polyurethane-based vascular grafts currently,
potential competitors of CardioTech in the United States and abroad are numerous
and include, among others, both large and small synthetic materials companies,
medical device firms, universities and other research institutions. There can be
no assurance that CardioTech's potential competitors will not succeed in
developing technologies and products that are more effective than any that are
being developed by CardioTech or that would render CardioTech's technologies and
products obsolete or noncompetitive.  Many of these potential competitors have
substantially greater financial and technical resources and production and
marketing capabilities than CardioTech.


                                       19

   25
     Many of CardioTech's competitors have significantly greater experience than
CardioTech in conducting pre-clinical testing and clinical trials of medical
devices and obtaining Food and Drug Administration ("FDA") and other regulatory
approvals of products for use in health care.  Moreover, a competitor developing
polyurethane-based grafts is presently conducting clinical trials in both the
United States and Europe relating to such products.  Accordingly, CardioTech's
competitors may succeed in obtaining FDA approval for products more rapidly than
CardioTech.  If CardioTech commences significant commercial sales of its
vascular graft products, it will also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which it has limited experience.
See "Business - Competition."

     Attraction and Retention of Key Employees and Scientific Collaborators.
CardioTech is highly dependent on the principal members of its management and
scientific staff, the loss of whose services could have a material adverse
effect on CardioTech.  Furthermore, recruiting and retaining qualified
scientific personnel to perform research and development work in the future will
also be critical to CardioTech's success.  Although CardioTech believes it will
be successful in attracting and retaining skilled and experienced scientific
personnel, there can be no assurance that CardioTech will be able to attract and
retain such personnel on acceptable terms given the competition among numerous
medical device companies, universities and non-profit research institutions for
experienced scientists.  See "Management."  CardioTech's anticipated growth and
expansion into areas and activities requiring additional expertise such as
clinical testing, governmental approvals, production and marketing, are expected
to place increased demands on CardioTech's resources.  These demands are
expected to require the addition of new management personnel and the development
of additional expertise by existing management personnel.  The failure to
acquire such services or to develop such expertise could materially adversely
affect CardioTech's business.

     Limited Manufacturing Capability.  The development and manufacture of
CardioTech's products are subject to current good laboratory practices ("GLP")
and good manufacturing practices ("GMP") requirements prescribed by the FDA or
other standards prescribed by the appropriate regulatory agency in the country
of use.  Although CardioTech currently has the ability to produce quantities of
synthetic vascular grafts sufficient to support its current needs and its needs
for early-stage clinical trials, it may need to acquire additional manufacturing
facilities and improve its manufacturing technology in order to meet the volume
and cost requirements for later clinical trials and will require additional
manufacturing facilities in order to undertake commercial production of vascular
grafts if it elects to do so.  There can be no assurance that CardioTech will be
able to obtain or manufacture such products in a timely fashion at acceptable
quality and prices, that it or its suppliers can comply with GLP or GMP, as
applicable, or that it or its suppliers will be able to manufacture an adequate
supply of product.  See "Business - Manufacturing."

     Absence of Sales and Marketing Experience.  CardioTech expects to market
its synthetic vascular grafts either through a small, targeted direct sales
group or co-marketing arrangements with third parties, if and when such products
approach FDA marketing approval.  To date, CardioTech has had no experience in
sales, marketing or distribution of vascular grafts or other implantable
devices.  In order to market vascular grafts directly, CardioTech would need to
develop a marketing staff and sales force with technical expertise.  There can
be no assurance that CardioTech will be able to build such a marketing staff or
sales force, that the cost of establishing such a marketing staff or sales force
will not exceed any product revenue or that CardioTech's direct sales and
marketing efforts will be successful.  In addition, if CardioTech succeeds in
bringing one or more products to market, it may compete with other companies
that currently have extensive and well-funded marketing and sales operations.
There can be no assurance that CardioTech's marketing and sales efforts would
compete successfully against such other companies. To the extent CardioTech
enters into co-marketing arrangements, any revenue received by CardioTech will
be dependent on the efforts of third parties and there can be no assurance that
such efforts will be successful.  See "Business - Marketing."

     Reliance on PMI for Administrative Services.  Prior to the Distribution,
CardioTech received administrative and other services through its parent, PMI.
The annual expense to CardioTech of operating as a public company after the
Distribution may thus be greater than the cost of management services provided
by PMI.  This would be due to the loss of the economies of scale associated with
the provision of accounting, cash management, personnel, regulatory compliance,
employee benefits, insurance and other services by PMI, as compared to the cost
to CardioTech of replacing all of these necessary functions on a stand-alone
basis.  Accordingly, although PMI will provide CardioTech with certain
management and administrative services for a limited period of time after the
Distribution, there can be


                                       20

   26
no assurance that CardioTech will develop the necessary management and
administrative depth to successfully operate its business or that any increased
costs to CardioTech of replacing services and personnel heretofore provided by
PMI will not have an adverse effect on CardioTech's business or results of
operations.  See "The Distribution-Relationship Between PMI and CardioTech After
the Distribution" and "Certain Transactions."

     Extensive Government Regulation.  The production and marketing of
CardioTech's products and ongoing research and development activities are
subject to extensive regulation by numerous governmental authorities in the
United States and other countries.  Prior to marketing, any synthetic vascular
grafts developed by CardioTech must undergo rigorous pre-clinical testing and
clinical trials, as well as an extensive regulatory approval process mandated by
the FDA for marketing in the United States or foreign regulatory agencies for
marketing in their respective jurisdictions.  FDA approval may take many years
and require the expenditure of substantial resources.  In addition,
modifications to regulations and changes in interpretation of regulations occur
regularly and can materially and adversely affect the timing and cost of
CardioTech's product introductions.  CardioTech has limited experience in
conducting and managing the pre-clinical and clinical trials necessary to obtain
government approvals.  There can be no assurance that the results of such
clinical trials will be consistent with the results obtained in pre-clinical
studies or that the results obtained in later phases of clinical trials will be
consistent with those obtained in earlier phases.  There also can be no
assurance that polyurethane-based synthetic vascular grafts or other implantable
products will be shown to be safe and effective or that regulatory approval for
any such product will be obtained on a timely basis, if at all. Delays in
obtaining regulatory approvals would adversely affect the marketing of products
developed by CardioTech and CardioTech's ability to receive product revenue or
royalties.  Although CardioTech intends to make use of fast-track regulatory
approval programs when possible, there can be no assurance that CardioTech will
be able to obtain the clearances and approvals necessary for clinical testing or
for manufacturing and marketing its products.  Existing or additional government
regulation could prevent or delay regulatory approval of CardioTech's products
or affect the pricing or marketing of such products.  See "Business - Government
Regulation."

     CardioTech's activities relating to the development of uses for its
polymer-based biomaterials and implantable medical devices in collaboration with
other medical-device manufacturers may also be subject to regulatory approval
processes similar to those described above relating to vascular grafts.

     Quarterly Fluctuations.  CardioTech's quarterly operating results are
likely to vary significantly depending on factors such as the results of
pre-clinical or clinical trials and, if CardioTech is able to commercialize its
vascular graft products, the timing of significant orders for vascular grafts.
CardioTech's expense levels are based in part on its expectations as to future
revenue.  If revenue levels are below expectations, operating results will be
adversely affected.

     Health Care Reimbursement.  CardioTech's ability to commercialize small
bore vascular grafts successfully will depend in part on the extent to which
reimbursement for the cost of such products and related treatment will be
available from government health administration authorities, private health
coverage insurers and other organizations. Third-party payors are increasingly
challenging the price of medical products and services.  Significant uncertainty
exists as to the reimbursement status of newly approved health care products,
and there can be no assurance that adequate third-party coverage will be
available for CardioTech to maintain price levels sufficient for the realization
of an appropriate return on its investment in product development.

     Product Liability.  The testing, marketing and sale of human healthcare
products entail an inherent risk of allegations of product liability, and there
can be no assurance that substantial product liability claims will not be
asserted against CardioTech.  CardioTech currently has limited product liability
insurance coverage.  CardioTech will seek to obtain additional product liability
insurance for human clinical trials if and when its vascular graft products are
commercialized; however, there can be no assurance that adequate insurance
coverage will be available at acceptable costs, if at all, or that a product
liability claim would not materially adversely affect the business or financial
condition of CardioTech.

                                       21

   27
     Absence of Public Market; Possible Volatility of Stock Price; Possible
Delisting.  Prior to the Distribution, there has been no public market for the
CardioTech Common Stock, although a "when-issued" trading market may develop
prior to the Distribution Date.  There can be no assurance regarding the prices
at which the CardioTech Common Stock will trade before or after the Distribution
Date.  The market prices for securities of emerging companies has historically
been highly volatile.  Announcements of technological innovations or new
commercial products by CardioTech or its competitors, regulatory developments,
disputes concerning patent or proprietary rights, publicity regarding actual or
potential medical results relating to products under development by CardioTech
or its competitors, public concern as to the safety of CardioTech's products,
and economic and other external factors, as well as period-to-period
fluctuations in financial results, may have a significant impact on the market
price of CardioTech Common Stock.

     CardioTech has filed an application for listing the CardioTech Common Stock
on the American Stock Exchange ("AMEX") but has not yet been approved for
listing.  There can be no assurance that the CardioTech Common Stock will be
listed on AMEX.  If the CardioTech Common Stock is listed on AMEX, CardioTech
will be subject to AMEX's maintenance requirements.  A failure of CardioTech
Common Stock to meet AMEX's maintenance requirements may result in a delisting
of such securities.  In particular, CardioTech may have difficulty maintaining
the minimum market capitalization requirements of AMEX because such
capitalization is dependent on the price at which the shares of CardioTech
Common Stock trade from time to time.  The liquidity of securities not listed on
an exchange or delisted securities, which would probably trade in the
over-the-counter markets, may be impaired, not only in the number of shares that
could be bought or sold, but also through delays in the timing of transactions,
reductions in securities analysts' and media coverage of CardioTech, and lower
prices than might otherwise be attained.

     Possible Issuances of Preferred Stock.  Shares of Preferred Stock may be
issued by CardioTech in the future without stockholder approval and upon such
terms as the Board of Directors may determine.  The rights of holders of
CardioTech Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of Preferred Stock that may be issued in the future.
The issuance of Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of the outstanding stock of CardioTech.
CardioTech has no present plans to issue any shares of Preferred Stock.  See
"Description of Capital Stock -- Preferred Stock."

     Absence of Dividends.  CardioTech has never paid cash dividends on the
CardioTech Common Stock and does not anticipate paying any cash dividends in the
foreseeable future.

                                       22

   28
                                 CAPITALIZATION

     The following table sets forth, as of December 31, 1995, the capitalization
of CardioTech and its pro forma capitalization after giving effect to the
Restructuring and the Distribution. The pro forma information may not reflect
the debt and capitalization of CardioTech in the future or as it would have been
if CardioTech had been a separate, stand-alone company at December 31, 1995.



                                                              As of December 31, 1995
                                                    --------------------------------------------
                                                                     Pro Forma
                                                         Actual   Adjustments(1)     Pro Forma
                                                    -----------   --------------  --------------
                                                                         
Common Stock, $.01 par value,
   100,000 shares authorized,
   67,500 shares issued and outstanding (actual);
   20,000,000 shares authorized,
   3,805,248 shares issued and
   outstanding (pro forma)                          $       675    $    37,377    $    38,052(2)

Preferred Stock, $.01 par value,
   5,000,000 shares authorized, no
   shares issued and outstanding
   (pro forma)                                               --             --             --

Due to parent                                         2,622,307     (2,622,307)            --

Additional paid-in capital                                   --      6,961,930      6,961,930

Accumulated deficit                                  (2,585,128)      (800,000)    (3,385,128)
                                                    -----------    -----------    -----------
   Total capitalization                             $    37,854    $ 3,577,000    $ 3,614,854
                                                    ===========    ===========    ===========



(1)  The pro forma adjustments assume that CardioTech is valued at $22
     million prior to the Distribution.  This valuation is at the mid-point of
     the range of values determined to be fair by the Advisor.  Based upon this
     valuation, CardioTech's Common Stock was split resulting in a total of
     3,805,248 shares outstanding.  PMI has invested $3,830,000 in cash and
     $147,000 of equipment, and has forgiven all net amounts due to PMI. At the
     Distribution Date, the amount Due to Parent will be permanently invested.
     As PMI and CardioTech have agreed to share equally the estimated $800,000
     in fees and expenses associated with the Distribution, $400,000 (the
     portion to be paid by PMI) has been included as an increase in additional
     paid-in capital. The $800,000 of fees and expenses have been included as
     an increase to accumulated deficit as they are expenses of CardioTech.

(2)  Excludes 828,000 shares of CardioTech Common Stock issuable upon the
     exercise of stock options to be granted on the Distribution Date pursuant
     to the CardioTech Option Plan and 245,438 shares issuable upon exercise of
     the Mirror Warrants.

                                       23

   29
                 SELECTED HISTORICAL CARDIOTECH FINANCIAL DATA

     The consolidated balance sheet data presented below as of March 31, 1994
and 1995 and the consolidated statement of operations data presented below for
each of the years in the three-year period ended March 31, 1995 have been
derived from CardioTech's consolidated financial statements, which have been
audited by Coopers & Lybrand L.L.P.  The consolidated balance sheet data
presented below as of December 31, 1995 and the consolidated statement of
operations data for the years ended March 31, 1991 and 1992 and the nine-month
periods ended December 31, 1994 and 1995 have been derived from the unaudited
consolidated financial statements of CardioTech.  In the opinion of CardioTech
management, the unaudited consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and include
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the financial position and the results of operations for
these periods.  Operating results for the nine months ended December 31, 1995
are not necessarily indicative of the results that may be expected for the year
ending March 31, 1996.  This data should be read in conjunction with the
Consolidated Financial Statements, related notes and other financial information
included elsewhere in this Information Statement.

     The financial information set forth below is intended to present
management's estimate of the results of consolidated operations and financial
condition of CardioTech as if it had operated as a stand-alone company since its
inception.  Certain of the costs and expenses presented in these consolidated
financial statements represent intercompany allocations and management estimates
of the cost of services provided by PMI and its subsidiaries.  As a result, the
consolidated financial statements presented may not be indicative of the results
that would have been achieved had CardioTech operated as a nonaffiliated entity.




                             CARDIOTECH INTERNATIONAL, INC.
                           SELECTED CONSOLIDATED FINANCIAL DATA

                                                                                                             Nine months ended
                                                           For the years ended March 31,                        December 31,
                                           -------------------------------------------------------------   ---------------------
                                             1991          1992         1993        1994         1995        1994         1995
                                           --------     ---------    ---------   ----------   ----------   ---------   ---------
                                                                                                  
STATEMENT OF OPERATIONS DATA:

Research revenues........................  $380,677     $ 429,123    $ 422,590   $  285,876   $  407,510   $ 272,617   $ 143,310
Operating expenses:
  Research and development(1)............   217,498       369,347      377,231      699,919      708,723     511,444     633,442
  Selling, general and administrative....   204,142       214,657      228,680      375,886      297,727     208,990     251,923
  Total operating expenses...............   421,640       584,004      605,911    1,075,805    1,006,450     720,434     885,365
Net loss.................................   (40,963)     (154,881)    (183,321)    (789,929)    (598,940)   (447,817)   (742,055)




                                                      At March 31,           At December 31,
                                                  ------------------         ---------------
                                                     1994       1995              1995
                                                  -------    -------         ---------------
                                                                    
BALANCE SHEET DATA(2):

Total current assets........................      $   504    $   504              $  504
Working capital.............................          504        504                 504
Total assets................................       52,222     44,150              37,854
Stockholders' equity........................       52,222     44,150              37,854



(1) Included in research and development expenses for the year ended March 31,
    1994 is a $114,000 charge for incomplete technology which was purchased in
    connection with the acquisition of Newtec Vascular Products Limited.

(2) Balance Sheet Data prior to 1994 is not meaningful.  All intercompany
    activity related to the Company's operations and all amounts receivable to
    and payable by the Company are processed by PMI, its parent, and the net
    amount is recorded as Due to Parent in Stockholders Equity.


                                       24

   30
           PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF CARDIOTECH

     The historical consolidated financial statements of CardioTech found on
pages A-1 through A-12 of this Information Statement reflect periods during
which CardioTech did not operate as an independent publicly-owned company.
Therefore, such historical financial statements may not necessarily reflect the
consolidated results of operations or financial position that would have existed
had CardioTech been an independent publicly-owned company during those periods.
The following pro forma financial statements reflect adjustments to the
historical consolidated statements of operations as if the Subscription
Agreement had been consummated and the Distribution had occurred at the
beginning of each period presented and adjustments to the historical
consolidated balance sheet as if the Subscription Agreement had been consummated
and the Distribution had occurred at December 31, 1995.  Pro forma net loss per
share does not take into account shares to be issued in connection with the
Subscription Agreement. The pro forma financial statements of CardioTech should
be read in conjunction with the historical consolidated financial statements and
the notes thereto contained elsewhere in this Information Statement.  The pro
forma financial information is presented for informational purposes only and
does not necessarily reflect the future results of operations or financial
position of CardioTech or what the results of operations or financial position
would have been had CardioTech been an independent publicly-held company during
the periods reflected.


                                       25

   31


               PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS OF
                         CARDIOTECH INTERNATIONAL, INC.
                                  (UNAUDITED)

                                                    Year ended March 31, 1995
                                             ---------------------------------------
                                                            Pro Forma         Pro
                                             Historical   Adjustments(a)     Forma
                                             ----------   --------------  ----------
                                                                 
Research revenues.........................   $  407,510            --     $  407,510
Operating expenses:
  Research and development................      708,723            --        708,723
  Selling, general and administrative.....      297,727       265,000(b)     562,727
                                             ----------    ----------     ----------
  Total operating expenses................    1,006,450       265,000      1,271,450
                                             ----------    ----------     ----------

Net loss..................................   $ (598,940)   $ (265,000)    $ (863,940)
                                             ==========    ==========     ==========
Loss per common share.....................                                $     (.31)
                                                                          ==========
Number of common shares...................                  2,831,491      2,831,491
                                                           ==========     ==========



                                               Nine months ended December 31, 1995
                                             ----------------------------------------
                                                             Pro Forma         Pro
                                             Historical   Adjustments(a)      Forma
                                             ----------   --------------   ----------
                                                                  
Research revenues........................     $ 143,310           --       $  143,310
Operating expenses:
  Research and development...............       633,442           --          633,442
  Selling, general and administrative.          251,923      198,750(b)       450,673
                                              ---------   ----------       ----------
  Total operating expenses...............       885,365      198,750        1,084,115
                                              ---------   ----------       ----------
Net loss.................................     $(742,055)  $ (198,750)      $ (940,805)
                                              =========   ==========       ==========
Loss per common share....................                                  $     (.33)
                                                                           ==========
Number of common shares..................                  2,831,491        2,831,491
                                                          ==========       ==========


                 See accompanying notes to pro forma financial statements.


                                       26

   32


                          PRO FORMA CONSOLIDATED BALANCE SHEET
                            OF CARDIOTECH INTERNATIONAL, INC.
                                       (UNAUDITED)


                                                     December 31, 1995
                                        -------------------------------------------
                                                         Pro Forma          Pro
                                          Historical   Adjustments(a)      Forma
                                        ------------   --------------   -----------
                                                               
ASSETS

Current assets:
   Cash                                 $       504     $ 3,830,000     $ 3,830,504
Property and equipment, net                  37,350         147,000         184,350
                                        -----------     -----------     -----------
                                        $    37,854     $ 3,977,000     $ 4,014,854
                                        ===========     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Current Liabilities:
   Accounts payable                              --         400,000         400,000
                                        -----------     -----------     -----------
Stockholders' equity:
   Common stock                                 675          37,377          38,052
   Due to parent                          2,622,307      (2,622,307)             --
   Additional paid-in capital                    --       6,961,930       6,961,930
   Accumulated deficit                   (2,585,128)       (800,000)     (3,385,128)
                                        -----------     -----------     -----------
                                             37,854       3,577,000       3,614,854
                                        -----------     -----------     -----------
                                        $    37,854     $ 3,977,000     $ 4,014,854
                                        ===========     ===========     ===========


                     See accompanying notes to pro forma financial statements

                                       27

   33
        NOTES TO CARDIOTECH PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


(a)  The pro forma adjustments assume that CardioTech is valued at $22 million
     prior to the Distribution.  This valuation is at the mid-point of the range
     of values provided by the Advisor.  Based upon this valuation, CardioTech's
     stock was split so that there would be 3,805,248 shares outstanding.  Prior
     to the Distribution, PMI has invested $3,830,000 in cash, $147,000 of
     equipment and has forgiven all net amounts due to PMI. As PMI and
     CardioTech have agreed to share equally the estimated $800,000 in fees and
     expenses associated with the Distribution, $400,000 (the portion to be paid
     by PMI) has been included as an increase in additional paid-in capital and
     $400,000 (the portion to be paid by CardioTech) as an increase in accounts
     payable. The $800,000 of fees and expense have been included as an increase
     to accumulated deficit as they will be nonrecurring expenses of CardioTech.

(b)  Represents estimated annual costs of $265,000 that would be incurred by
     CardioTech as a public company. Such costs include insurance premiums of
     $130,000, legal fees of $40,000, exchange listing fees of $35,000, audit
     fees of $20,000 and other related costs.

     The Restructuring and the Distribution will occur prior to the Distribution
Date.  Such costs are estimated to be $800,000 and are nonrecurring in nature.
Accordingly, the pro forma statements of operations exclude all costs related
thereto.

                                       28

   34
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


OVERVIEW

     CardioTech International, Inc. ("CardioTech") was incorporated as a
majority-owned subsidiary of PolyMedica Industries, Inc. ("PMI") in March 1993
under the name PolyMedica Biomaterials, Inc., to continue the biomaterials and
vascular graft business which had been operated as a division of PMI starting in
1990.  It was renamed CardioTech International, Inc. in March 1996 in
anticipation of the Distribution.

     CardioTech was established as a separate subsidiary to focus on PMI's
existing biomaterials business, with a particular emphasis on accelerating the
research, development and commercialization of vascular graft products and other
proprietary biomaterials.  CardioTech's medical device product nearest to
commercialization is a vascular access graft.  CardioTech has developed a unique
manufacturing process involving cold coagulation casting that results in a
micropourous compliant graft, with compressible walls and an inherent ability to
"self seal."  CardioTech believes that reducing puncture site bleeding by using
a self-sealing polyurethane material may lower morbidity rates.  To date, there
have been no sales of CardioTech's vascular grafts.

     In addition to the graft research and development program, since 1990
CardioTech has been engaged in various internal and joint venture programs with
corporate partners for the development and sale of ChronoFlex and other
proprietary biomaterials for use in medical devices manufactured by third
parties.  This activity has generated research revenues for CardioTech.

     CardioTech is headquartered in Massachusetts and operates from
manufacturing and laboratory facilities located in Massachusetts and the United
Kingdom.

     As CardioTech is now focusing more of its research and development
resources on the vascular graft program, period to period comparisons of changes
in research revenues are not necessarily indicative of results to be expected
for any future period.

RESULTS OF OPERATIONS

     CardioTech generates research revenues in connection with the development
and sale of ChronoFlex and other proprietary biomaterials for use in medical
devices manufactured by third parties.  In certain instances, exclusivity,
royalty and licensing fees have been earned from various strategic partners with
whom CardioTech had contracts.

     Costs and expenses for CardioTech consist of research and development
expenses, which include scientific staff, facility costs, supplies and other
costs related to the ongoing development efforts of CardioTech as well as costs
incurred in connection with ChronoFlex development contracts, and selling,
general and administrative expenses which include all costs associated with the
promotion of advanced biomaterials to potential industry partners, management
and administrative expenses.

Nine Months Ended December 31, 1995 Compared to Nine Months Ended December 31,
1994

     CardioTech's quarterly operating results are likely to vary significantly
depending on factors such as the timing of new agreements with strategic
partners, costs associated with pre-clinical and clinical trials for its
vascular access grafts, the results of those trials and the timing of
promotional costs to support introduction of future products.

     Research revenues were $143,000 and $273,000 for the nine months ended
December 31, 1995 and 1994. The fluctuation in research revenues was
attributable to the completion of one research and development contract and the
evolution of a research and development contract into a supply agreement in the
1995 period.

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   35
     Research and development expenses were $633,000 and $511,000 for the nine
months ended December 31, 1995 and 1994.  The increase in these expenses
principally related to higher pre-clinical costs incurred in 1995 in connection
with CardioTech's development of a vascular access graft for hemodialysis
patients.

     Selling, general and administrative ("SG&A") expenses were $252,000 and
$209,000 for the nine months ended December 31, 1995 and 1994.  The increases
over 1994 principally relate to costs associated with the promotion of advanced
biomaterials to potential strategic partners.

Fiscal Year Ended March 31, 1995 Compared to the Fiscal Years Ended March 31,
1994 and 1993

     Research revenues were $408,000, $286,000 and $423,000 for the years ended
March 31, 1995, 1994 and 1993.  The fluctuations in research revenues were
attributable to changes in the mixture of ongoing development contracts during
each period.

     Research and development expenses were $709,000, $700,000 and $377,000 for
the years ended March 31, 1995, 1994 and 1993.  The increase in fiscal 1994 was
principally due to: (i) the recording of a charge of $114,000 for the purchase
of in-process research and development in connection with the September 1993
acquisition of Newtec Vascular Products Limited ("Newtec") and (ii) the
inclusion of research and development expenses for Newtec's ongoing vascular
graft program for the remainder of fiscal 1994.  Research and development
expenses in fiscal 1995 include a full year of vascular graft development.

     SG&A expenses were $298,000, $376,000 and $229,000 for the years ended
March 31, 1995, 1994 and 1993.  In fiscal 1994, CardioTech incurred new
operating costs in connection with the Newtec acquisition, certain legal costs
regarding a development agreement and higher promotional costs for its advanced
biomaterials.  In fiscal 1995, SG&A expenses were lower than fiscal 1994
primarily due to a decrease in legal fees and promotional expenses.

LIQUIDITY AND CAPITAL RESOURCES

     CardioTech's future growth will depend on its ability to raise capital to
support research and development activities and to commercialize its vascular
graft technology.  To date, CardioTech has not generated any revenue from the
sale of vascular grafts, although it has received a minor amount of research
revenues relating to its other biomaterials applications.  Since inception,
funding from PMI has been used to finance the development of CardioTech's
technologies.  CardioTech expects to continue to incur operating losses unless
and until product sales and/or royalty payments generate sufficient revenue to
fund its continuing operations.

     CardioTech will require substantial funds for further research and
development, future pre-clinical and clinical trials, regulatory approvals,
establishment of commercial-scale manufacturing capabilities, and the marketing
of its products.  CardioTech's capital requirements depend on numerous factors,
including but not limited to, the progress of its research and development
programs, the progress of pre-clinical and clinical testing, the time and costs
involved in obtaining regulatory approvals, the cost of filing, prosecuting,
defending and enforcing any intellectual property rights, competing
technological and market developments, changes in CardioTech's development of
commercialization activities and arrangements, and the purchase of additional
facilities and capital equipment.

     After the Distribution, CardioTech will conduct its operations with
approximately $3,830,000 in cash contributed by PMI.  CardioTech estimates such
amounts will be sufficient to fund its initial working capital and research and
development activities for approximately two years from the Distribution Date.

     Past spending levels are not necessarily indicative of future spending
levels.  From the inception of CardioTech's business through December 31, 1995,
PMI has funded approximately $2.6 million in operating losses to support
CardioTech's research activities.  Future expenditures for product development,
especially relating to outside testing and clinical trials, are discretionary
and, accordingly, can be adjusted to available cash.

                                       30

   36
     CardioTech will seek to obtain additional funds through public or private
equity or debt financings, collaborative arrangements, or from other sources.
There can be no assurance that additional financing will be available at all or
on acceptable terms to permit successful commercialization of CardioTech's
technology and products.  If adequate funds are not available, CardioTech may be
required to curtail significantly one or more of its research and development
programs, or obtain funds through arrangements with collaborative partners or
others that may require CardioTech to relinquish rights to certain of its
technologies, product candidates or products.


                                       31

   37
                                    BUSINESS

     CardioTech was established as a separate subsidiary of PMI in March 1993 to
focus on PMI's existing biomaterials business, with a particular emphasis on
accelerating the research, development and commercialization of small bore
vascular graft products through external funding  and a more focused and
strategic product development effort.  These activities build on research and
development begun by PMI in 1990 to apply PMI's proprietary polyurethane
technologies to develop specialized biomaterials and high-value medical devices
incorporating those materials.

     CardioTech synthesizes, designs and manufactures medical-grade polymers,
particularly polyurethanes that are useful in the development of vascular graft
technology and other implantable medical devices because they can be synthesized
to exhibit compatibility with human blood and tissue.  CardioTech uses
proprietary manufacturing technology to fabricate small bore synthetic vascular
grafts made of ChronoFlex, a family of polyurethanes that has been demonstrated
to be biodurable, blood, tissue compatible and non-toxic.  CardioTech owns a
number of patents relating to its vascular graft manufacturing technology.  In
addition, PMI has granted to CardioTech a non-exclusive perpetual, worldwide,
royalty-free license for the use of PMI's ChronoFlex polyurethane patents and
related technology for use in the Implantable Devices and Materials Field.

VASCULAR GRAFTS

     Blood is pumped from the heart throughout the body via arteries.  Blood is
returned to the heart at relatively low pressure via veins, which have thinner
walls than arteries and have check valves which force blood to move in one
direction.  Because a specific area of the body is often supplied by a single
main artery, rupture, severe narrowing or occlusion of the artery supplying
blood to that area is likely to cause an undesirable or catastrophic medical
outcome.

     Vascular grafts are used to replace or bypass occluded, damaged, dilated or
severely diseased arteries and are sometimes used to provide access to the
bloodstream for patients undergoing hemodialysis treatments.  However, existing
small bore graft technologies suffer a variety of disadvantages in the treatment
of certain medical conditions depending upon the need for biodurability,
compliance (elasticity) and other characteristics necessary for long-term
interface with the human body.

     CardioTech is developing a family of small bore vascular graft devices
using specialized ChronoFlex polyurethane materials that it believes will
provide significantly improved performance in the treatment of arterial
disorders.  CardioTech is focusing its efforts on the development of vascular
access grafts, tapered peripheral grafts and coronary artery bypass grafts.  The
grafts have three layers similar to that of natural arteries designed to
replicate the physical characteristics of human blood vessels.

     Vascular Access Grafts.  Several acute and chronic diseases, including
kidney disease, diabetes and hypertension, attack and may destroy normal kidney
function, resulting in acute renal failure.  According to the United States
Renal Data Systems database, there were 187,000 patients in the United States at
the end of 1995 undergoing hemodialysis, which removes blood from the body and
routes it to an artificial kidney machine where it is cleansed and returned to
the patient.  Patients with acute renal failure undergoing hemodialysis require
easy routine access to the blood stream.  Vascular access grafts must be
punctured in two places three times each week with large gauge needles to
withdraw and replace blood cycled through an artificial kidney machine.  The
synthetic vascular access grafts currently marketed by third parties are made
from an expanded polytetrafluoroethylene ("ePTFE") material which loses
integrity after repeated punctures and therefore renders the patient susceptible
to bleeding and infection. If synthetic grafts bleed profusely when needles used
for hemodialysis treatments are removed, then a technician may need to apply
pressure to the graft for up to 20 minutes to expedite clotting.  CardioTech
believes that the vascular access graft it is developing offers the potential of
improved clinical performance over the currently available synthetic ePTFE
grafts.  CardioTech's patented manufacturing process involves cold coagulation
casting and results in a tear-resistant graft with compressible walls and an
inherent ability to "self-seal."  CardioTech believes that using a self-sealing
polyurethane material will minimize blood loss after dialysis treatment reducing
procedure and administrative time per patient and their associated costs and
also lowering infection rates.


                                       32

   38
     CardioTech is currently conducting trials designed to assess the patency
(free blood flow) of the vascular access graft in animals.  If the initial
assessment is successful, and if a historical comparison with existing surgical
alternatives provides the justification, CardioTech will seek European
regulatory approval to convert the study into a clinical trial in Europe in late
1996.  This trial will compare patency and complication rates of the
ChronoFlex-based vascular access graft with grafts made from ePTFE.

     Tapered Peripheral Grafts.  CardioTech is currently working to develop a
tapered peripheral graft to be used to treat diabetics plagued with poor
circulation in their legs.  Poor circulation is usually the result of a
deteriorated main artery in the leg, a condition which often results in
amputations due to inadequate blood supply to the lower extremities.  Currently,
there is no acceptable surgical treatment available to alleviate this condition.
CardioTech's graft is designed to bypass the artery that runs behind the knee.
CardioTech believes it has the expertise and capability to manufacture a graft
that tapers from an inside diameter of approximately 6mm for the portion above
the knee to an inside diameter of approximately 4mm for the portion below the
knee, roughly the same dimensions as the natural artery.

     Coronary Artery Bypass Grafts.  Currently, obstructed coronary arteries are
either partially cleared through the use of angioplasty or treated surgically
through a coronary bypass operation using a portion of the saphenous vein from
the patient's leg.  This surgical procedure requires a graft with an inside
diameter of 6mm or less.  To date, CardioTech believes that no commercially
viable synthetic small bore vascular grafts suitable for the bypass of
obstructed coronary arteries have been developed.  The American Heart
Association and the National Center for Health Statistics estimated that there
were 468,000 coronary artery bypass operations performed in the United States in
1992.  The saphenous veins used today suffer from a series of disadvantages
including thrombosis (either early or late), obstruction by clotting, aneurysm
formation, creep, suture line deterioration, abnormal healing leading to
embolism, and infection.  Accordingly, CardioTech perceives a significant market
opportunity for a small-bore biodurable polyurethane vascular graft.  In 1993,
CardioTech acquired small-bore vascular graft intellectual property and
manufacturing equipment which is located in its United Kingdom facility.

     CardioTech fabricates its grafts using its ChronoFlex line of
polyurethane-based biomaterials.  CardioTech believes that grafts made of
ChronoFlex materials demonstrate radial compliance similar to that of natural
arteries, permitting them to expand and contract with each heartbeat.  A
compliant graft reduces the stresses generated at the suture line where the
graft is attached to the artery, thereby minimizing the development of scar
tissue, which can occlude small arteries.

     PMI has granted to CardioTech an exclusive, perpetual, world-wide,
royalty-free license for CardioTech to use the patent and all other necessary
intellectual property owned exclusively by PMI, and a non-exclusive perpetual
world-wide, royalty-free license of PMI's rights in the Joint Technology, for
use in the Implantable Devices and Materials Field.

     CardioTech also relies on trade secrets and proprietary know-how.  To
protect such information, CardioTech requires all employees and consultants to
enter into confidentiality agreements limiting the disclosure and use of such
information.  However, there can be no assurance that confidentiality agreements
will be effective in protecting trade secrets or that third parties will not
independently develop substantially equivalent or better technology.

BIOMATERIALS

     CardioTech also develops, manufactures and sells a range of polymer-based
materials customized for use in the manufacture of certain medical devices to
other medical device manufacturers.  CardioTech sells these custom premium
polymers under the tradenames ChronoFilm, ChronoFlex, ChronoThane, ChronoPrene,
HydroThane, PolyBlend and PolyWeld.  Since 1990, PMI has provided development
services and sold related biomaterials for medical device customers.  Such
customers have included Medtronic, Inc. and Vascor, Inc.  In 1992, PMI entered
into a long term development and materials supply agreement with Bard Access
Systems, Inc. pursuant to which Bard purchases ChronoFlex for use in the
manufacture of a line of catheters and implantable vascular access ports that
are used to deliver doses of pharmaceuticals over an extended period of time or
to deliver chemotherapy agents to specific organs and PMI will assign this
agreement to CardioTech prior to the Distribution.


                                       33

   39
     CardioTech also currently manufactures and sells its proprietary HydroThane
biomaterials to medical device manufacturers that are evaluating HydroThane for
use in their products.  HydroThane is a thermoplastic, water-absorbing,
polyurethane elastomer, that posses properties that CardioTech believes make it
well suited for the complex requirements of a variety of catheters.  In addition
to its physical properties, CardioTech believes HydroThane exhibits an inherent
degree of bacterial resistance, clot resistance and biocompatibility.  When
hydrated, HydroThane has elastic properties similar to living tissue.

     Research revenues related to biomaterials were approximately $408,000 and
$143,000 for the year ended March 31, 1995 and the nine months ended December
31, 1995, respectively.  For the year ended March 31, 1995, 49%, 19% and 18% of
research revenues were generated from Bard Access Systems, Inc., Medtronic Inc.
and the National Institutes of Health, respectively.

MANUFACTURING

     CardioTech currently manufactures limited quantities of ChronoFlex and
HydroThane for sale to medical device manufacturers.  To date, CardioTech's
manufacturing activities with respect to the specialized ChronoFlex materials
used in vascular grafts have consisted primarily of manufacturing small
quantities of such products for use in clinical trials.  CardioTech currently
has the ability to produce quantities of vascular grafts sufficient to support
its current testing needs.  CardioTech also has the ability to produce
quantities of vascular grafts sufficient to support its needs for early-stage
clinical trials.  However, CardioTech may need to acquire manufacturing
facilities and improve its manufacturing technology in order to meet the volume
and cost requirements for later clinical trials and will require additional
manufacturing facilities in order to undertake commercial production of vascular
grafts if it elects to do so. To achieve profitability, CardioTech's products
must be manufactured in commercial quantities in compliance with regulatory
requirements and at acceptable costs.  Production in commercial quantities will
require CardioTech to expand its manufacturing capabilities significantly and to
hire and train additional personnel.  CardioTech has no experience in
large-scale manufacturing, and there can be no assurance that CardioTech will be
able to make the transition to commercial production successfully.

     The development and manufacture of CardioTech's products are subject to GLP
and GMP requirements prescribed by the FDA and other standards prescribed by the
appropriate regulatory agency in the country of use. There can be no assurance
that CardioTech will be able to obtain or manufacture products in a timely
fashion at acceptable quality and prices, that it or any suppliers can comply
with GLP or GMP, as applicable, or that it or such suppliers will be able to
manufacture an adequate supply of product.  See "Risk Factors -- Limited
Manufacturing Capability."

MARKETING

     CardioTech plans to market its vascular graft products for which it obtains
regulatory approvals either through a small targeted direct sales group or
through licensing arrangements with large medical device companies.
Implementation of this strategy will depend on many factors, including the
market potential for CardioTech's products and financial resources.  See "Risk
Factors - Absence of Sales and Marketing Experience."

COMPETITION

     Competition in the medical device industry in general is intense and based
primarily on scientific and technological factors, the availability of patent
and other protection for technology and products, the ability to commercialize
technological developments and the ability to obtain governmental approval for
testing, manufacturing and marketing products.

     CardioTech will compete with products offered by W.L. Gore and Associates
("W.L Gore"), Impra, Inc. ("Impra"), Corvita Corporation ("Corvita") and
Thoratec Corporation ("Thoratec").  CardioTech believes that W.L. Gore and
Impra, whose synthetic graft products have been sold in the United States and
worldwide for many years, sell approximately 90% of the intermediate diameter
peripheral synthetic vascular grafts and vascular access grafts used throughout
the world.  While CardioTech believes that the attributes of its vascular grafts
will allow it to compete


                                       34

   40
effectively, both W.L. Gore and Impra can be expected to defend their market
positions vigorously, and both have substantially greater financial, technical
and other resources than CardioTech.  Corvita is developing a broad range of
polyurethane based synthetic vascular grafts, including vascular access grafts
and has commenced clinical trials of certain of its synthetic vascular graft
products in both the United States and Europe.  Thoratec has developed a small
bore polyurethane vascular access graft and has begun limited clinical trials in
foreign countries.  The Joint Technology may be licensed or otherwise made
available to competitors of CardioTech.

     Competition among these products will be based, among other things, on
product efficacy, safety, reliability, availability, price and patent position.
An important factor will be the timing of the market introduction of
CardioTech's or competitive products.  Accordingly, the relative speed with
which CardioTech can develop products, complete the clinical trials and approval
processes and supply commercial quantities of the products to the market is
expected to be an important competitive factor.  CardioTech's competitive
position will also depend upon its availability to attract and retain qualified
personnel, to obtain patent protection or otherwise develop proprietary products
or processes, and to secure sufficient capital resources for the often
substantial period between technological conception and commercial sales.

RESEARCH AND DEVELOPMENT

     CardioTech's research and development efforts are focused on developing its
synthetic vascular graft technologies.  CardioTech's development decisions are
based on (1) development costs, (2) product need, (3) third-party interest and
funding availability and (4) regulatory considerations.  CardioTech believes it
will need substantial additional financing to conduct human clinical trials, and
produce vascular access graft and other planned products. No assurance can be
given, however, that such financing, or other financing, will be available on
terms attractive to CardioTech, if at all.

GOVERNMENT REGULATION

     CardioTech's research and development activities are subject to regulation
for safety, efficacy and quality by numerous governmental authorities in the
United States and other countries.  In the United States, the development,
manufacturing and marketing of synthetic vascular grafts are subject to
regulation for safety and efficacy by the FDA in accordance with the Food, Drug
and Cosmetic Act.  Synthetic vascular grafts are subject to rigorous FDA
regulation, including pre-clinical and clinical testing.  The process of
completing clinical trials and obtaining FDA approvals for a medical device is
likely to take a number of years, requires the expenditure of substantial
resources and is often subject to unanticipated delays.  There can be no
assurance that any product will receive such approval on a timely basis, if at
all.

     The steps required to qualify a medical device for marketing in the United
States are complex.  Medical products regulated by the FDA are generally
classified as drugs and/or medical devices.  Medical devices are classified as
Class I, II or III devices.  CardioTech believes that its synthetic vascular
grafts will be regulated as Class III medical devices.  In general, Class I
devices require compliance with labeling and record keeping regulations and are
subject to other general controls.  Class II devices may be subject to special
controls, such as market surveillance and are subject to general controls. Class
II devices also may not be subject to clinical testing for purposes of
pre-market notification to the FDA.  Class III devices, such as CardioTech's
vascular graft products, require clinical testing to assure safety and
effectiveness prior to marketing and distribution.

     At least 90 days prior to marketing, devices must be subject to pre-market
notification to the FDA to determine the product's classification and regulatory
status.  If a product is found to be "substantially equivalent" to a Class I or
Class II device, or a Class III device not subject to a Pre-Marketing
Application (PMA) requirement, it may be marketed without further FDA review.
The FDA may require the submission of clinical data as a basis for determining
whether a device is "substantially equivalent."  Such clinical data is often
developed under an Investigational Drug Exemption (IDE).  Marketing may commence
only when the FDA issues a written order finding that the device is
"substantially equivalent."  If a device is found to be "not substantially
equivalent," the device


                                       35

   41
manufacturer must file a PMA with the FDA based on testing intended to
demonstrate that the product is both safe and effective.  CardioTech believes
that its products will require the issuance of a PMA from the FDA prior to
commercial sale.

     The PMA process requires the performance of human clinical studies under an
IDE.  Upon completion of required clinical studies, results are presented to the
FDA in a PMA application.  In addition to the results of clinical
investigations, the PMA applicant must submit other information relevant to the
safety and effectiveness of the device, including the results of pre-clinical
tests; a full description of the device and its components; a full description
of the methods, facilities and controls used for manufacturing; and proposed
labelling.  The FDA staff then determines whether to accept the application for
filing.  If accepted for filing, the application is further reviewed by the FDA
and then usually reviewed by an FDA scientific advisory panel of physicians and
others with expertise in the relevant field.  The FDA will also conduct an
inspection to determine whether an applicant conforms with the FDA's current
GMP.  If the FDA's evaluation is favorable, the FDA will subsequently publish an
order granting the PMA for the device. Although the initial PMA review process
is required to be completed within 180 days from the date that the PMA
application is accepted for filing, the FDA routinely raises additional issues
which must be addressed prior to the approval of a PMA, which significantly
extends the review process.

     There can be no assurance that the FDA will approve any of CardioTech's
products currently under research for marketing, or if they are approved, that
they will be approved on a timely basis.  Furthermore, CardioTech or the FDA may
suspend clinical trials at any time upon a determination that the subjects or
patients are being exposed to an unacceptable adverse health risk ascribable to
CardioTech's products.  If clinical studies are suspended, CardioTech may be
unable to continue the development of the investigational products affected.

     Whether or not FDA approval has been obtained, approval of a medical device
by comparable foreign governmental regulatory authorities must be obtained prior
to the commencement of clinical trials and subsequent marketing of such products
in such countries.  Under European Community ("EC") Law, the safety, efficacy
and quality of CardioTech's products must be demonstrated prior to marketing,
including extrinsic clinical testing of such products.  National laws in each of
the EC member states govern clinical trials of products, adherence to good
manufacturing practice, advertising, promotion and other matters.  Certain EC
member countries permit the sale of medical devices based upon approvals
received in other EC member states.  There can be no assurance that approvals
will be granted on a timely basis and the failure to receive such approvals
could have a material adverse effect on the business, financial condition and
results of operation of CardioTech.

EMPLOYEES

     As of the Distribution Date, CardioTech will have six full-time employees,
of whom three will be in research and development and three in executive,
finance and administration.  Two full-time employees have doctorates. Certain
services will be provided by PMI to CardioTech on a transitional basis pursuant
to the Facilities and Services Agreement.  See "The Distribution - Relationship
Between PMI and CardioTech After the Distribution." CardioTech has no collective
bargaining agreement with its employees, and believes that its employee
relations are good.

PROPERTIES

     CardioTech's executive offices are located in Woburn, Massachusetts, a
facility owned by PMI.  CardioTech leases a total of approximately 7,800 square
feet at PMI's facilities in Woburn, Massachusetts and Tarvin, United Kingdom.
PMI leases these properties to CardioTech pursuant to the Facilities and
Services Agreement.  See "The Distribution - Relationship Between PMI and
CardioTech After the Distribution."  CardioTech believes that its current
facilities are adequate for the next twelve months, after which the Facilities
and Services Agreement will expire and CardioTech may need to seek replacement
facilities.  Although CardioTech believes that alternative facilities can be
leased on acceptable terms, there is no assurance that CardioTech will be able
to do so.

LEGAL PROCEEDINGS

     CardioTech is not a party to any legal proceedings.


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                                   MANAGEMENT


EXECUTIVE OFFICERS AND DIRECTORS

     The following table provides information about the current executive
officers and directors of CardioTech:

Name                        Age    Position with CardioTech
- ----                        ---    ------------------------
Michael Szycher, Ph.D.       57    Chairman of the Board, Chief
                                   Executive Officer and Treasurer

Alan Edwards                 48    Director and Executive Vice
                                   President

Richard J. Zdrahala, Ph.D.   52    Vice President -- Research and
                                   Development

Gene T. Gargiulo             47    Director

Arthur A. Siciliano, Ph.D.   52    Director


     DR. SZYCHER is Chairman of the Board, Chief Executive Officer and Treasurer
of CardioTech.  Dr. Szycher has served as a director of CardioTech since 1993.
He served as Chairman of PMI since October 1989, Chief Technical Officer of PMI
since November 1990 and a director of PMI since its inception and will resign
such positions as of the Distribution Date.

     MR. EDWARDS is Executive Vice President and a director of CardioTech, a
position he has held since March, 1996.  Since September 1993, Mr. Edwards has
served as President of CardioTech's subsidiary.  Prior to September 1993, he was
the Managing Director and Company Secretary of Newtec.  He has spent the last
seventeen years in senior management positions with vascular graft companies,
ten of these with the W.L. Gore.  Mr. Edwards has been a director of CardioTech
since March 1996.

     DR. ZDRAHALA is Vice President of Research and Development of CardioTech, a
position he has held since March, 1996.   From 1992 to September 1995, Dr.
Zdrahala served as the Associate Director of Advanced Development of Mendox
Medicals, Inc., a vascular graft manufacturer.

     MR. GARGIULO has served as Managing Director of Research and Institutional
Sales at Brookehill Equities, Inc. since 1994.  Prior to joining Brookehill in
1994, Mr. Gargiulo was Executive Vice President - Director of Research at
Barington Capital Group, L.P.  From 1984 to 1993, Mr. Gargiulo was Vice
President of Equity Research at First Boston Corporation and covered the
hospital supply industry.  Mr. Gargiulo has been a director of CardioTech since
March 1996.

     DR. SICILIANO has served as Executive Vice President of PMI since July
1994, Senior Vice President of PMI since January 1993 and Vice President,
Pharmaceutics of PMI since July 1991.  Dr. Siciliano served as Vice President,
Manufacturing of PMI from June 1990 to July 1991.  From PMI's inception until
June 1990, he served as its Chief Operating Officer.  Dr. Siciliano has been a
director of CardioTech since March 1996.

                                       37

   43
                           SUMMARY COMPENSATION TABLE

     The following table sets forth the cash and noncash compensation paid by
PMI during each of the last three fiscal years to CardioTech's Chief Executive
Officer and the four most highly compensated executive officers of CardioTech
who received compensation in excess of $100,000 during the year ended March 31,
1995 for services provided to PMI.  CardioTech will pay the compensation of its
executive officers after the Distribution Date.




                                                                                           Long-Term
                                                                                          Compensation
                                                   Annual Compensation                       Awards
                                                   -------------------                    ------------
                                                                             Other         Securities
                                                                             Annual        Underlying      All Other
                                                  Salary       Bonus      Compensation       Options     Compensation
Name and Principal Position             Year       ($)        ($)(1)        ($)(2)          (#)(3)          ($)(4)
- ---------------------------             ----     --------    --------    -------------    ------------   ------------
                                                                                       
Michael Szycher, Ph.D..............     1995     $231,785    $132,500        $4,500          131,250        $2,421
 Chairman, Chief                        1994      214,048     120,000         4,620           13,125         2,223
 Executive Officer and                  1993      198,357     120,000         4,497          156,009         1,181
 Treasurer



      (1)  These amounts were either paid or accrued in the year shown.

      (2)  Represents PMI's matching cash contribution paid or accrued under
           PMI's 401(k) Plan.  Other compensation in the form of perquisites and
           other personal benefits has been omitted in those instances where
           such perquisites and other personal benefits constituted less than
           the lesser of $50,000 or 10% of the total salary and bonus the named
           executive officer for such year.

      (3)  Represents options granted under PMI's 1990 Stock Option Plan.

      (4)  Represents the taxable portion of group term life insurance paid by
           PMI.

                                       38

   44

     The following table sets forth certain information regarding options to
purchase PMI Common Stock granted during the year ended March 31, 1995 by PMI to
the executive officer named in the Summary Compensation Table:



                                      OPTION GRANTS IN LAST FISCAL YEAR

                                                                                    
                                          Individual Grants                               Potential
                              ---------------------------------------------------      Value at Assumed
                                Number of   Percentage of                            Annual Rates of Stock
                               Securities   Total Options  Exercise                  Price Appreciation for
                               Underlying    Granted to       or                          Option Term(4)
                                 Options    Employees in   Base Price  Expiration    ----------------------
Name                          Granted(#)(1)   year 1995    ($/Sh)(2)    Date(3)         5%        10%
- ----                          ------------- -------------  ----------  ----------       --        ---
                                                                              
Michael Szycher, Ph.D....        131,250        27.90%       $4.40      6/9/04       $363,187   $920,386

<FN>

(1)  Of the above grant, 52,500 shares vest immediately with the remainder
     vesting over twelve installments, commencing three months after the date of
     grant.

(2)  The exercise price is equal to the fair market value of PMI's Common Stock
     on the date of grant. 

(3)  Options expire at the end of the option term, which is ten years from the date of grant. 

(4)  Amounts represent hypothetical gains that could be achieved for options if exercised at 
     the end of the option term. These gains are based on assumed rates of stock price 
     appreciation of 5% and 10% compounded annually from the date options are granted. 




     The following table sets forth certain information regarding the exercise
of options to purchase PMI Common Stock during the fiscal year ended March 31,
1995 and options to purchase PMI Common Stock held as of March 31, 1995 by the
executive officer named in the Summary Compensation Table:

                                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                    AND FISCAL YEAR-END OPTION VALUES



                                                              Number of
                                                       Securities Underlying        Value of Unexercised
                                                         Unexercised Options         In-the-Money Options
                                  Shares     Value      At Fiscal year End(#)       Fiscal year End($)(1)
                              Acquired on  Realized  --------------------------  --------------------------
Name                           Exercise(#)   ($)     Exercisable  Unexercisable  Exercisable  Unexercisable
- ----                          ------------ --------  -----------  -------------  -----------  -------------
                                                                               
Michael Szycher, Ph.D......        0          0         302,066       79,052       425,150       $701,103
<FN>

(1)  Total value of "in-the-money" unexercised options is based on the
     difference between the last sales price of PMI's Common Stock on the AMEX
     on March 31, 1995 ($6.25 per share) and the exercise price of the
     "in-the-money" options, multiplied by the number of "in-the-money" option
     shares.


EMPLOYMENT AGREEMENT

     CardioTech has entered into an employment agreement with Dr. Szycher (the
"Employment Agreement"), pursuant to which Dr. Szycher serves as Chief Executive
Officer of the Company. CardioTech will use its best efforts to cause Dr.
Szycher to be elected a member, and Chairman, of the Board of Directors.
Pursuant to the terms of the Employment Agreement, Dr. Szycher receives an
annual base salary, which is initially $150,000 and which will be reviewed
annually by the Board of Directors. Dr. Szycher may also entitled to receive an
annual bonus payment in an amount, if any, to be determined by the Compensation
Committee of the Board of Directors. The Employment


                                       39

   45

Agreement terminates on May 13, 1998. Thereafter, the term of the Employment
Agreement will be deemed to continue on a month-to-month basis if not expressly
extended while Dr. Szycher remains employed by CardioTech. Both Dr. Szycher and
CardioTech have the right to terminate the Employment Agreement at any time,
with or without cause (as defined in the Employment Agreement), upon thirty (30)
days' prior written notice. In the event that CardioTech terminates the
Employment Agreement without cause, or Dr. Szycher terminates his employment for
good reason following a change in control (as such terms are defined in the
Employment Agreement) or CardioTech fails to renew the Employment Agreement
within two (2) years following the occurrence of a change in control, Dr.
Szycher will be entitled to receive 2.99 times his annual base salary at
termination. Dr. Szycher will not compete with CardioTech for one (1) year
following termination of his employment.

CARDIOTECH OPTION PLAN

     CardioTech's 1996 Employee, Director and Consultant Stock Option Plan (the
"CardioTech Option Plan") was approved by CardioTech's Board of Directors and
stockholders in March 1996. A total of 1,100,000 shares of CardioTech Common
Stock have been reserved for issuance under the CardioTech Option Plan, of which
options exercisable for 828,000 shares will be granted effective as of the
Distribution Date to members of CardioTech's Board of Directors and to certain
of its executive officers at the fair market value of CardioTech Common Stock on
the date of the grant. Of such options, options to purchase 400,000 shares of
CardioTech Common Stock will be granted to Dr. Szycher pursuant to the
CardioTech Option Plan.

     Options granted under the CardioTech Option Plan may be either (i) options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) non-qualified
stock options. Incentive stock options may be granted under the CardioTech
Option Plan to employees of CardioTech and its affiliates. Non-qualified stock
options may be granted to consultants, Directors, employees or officers of
CardioTech and its affiliates. The CardioTech Option Plan also provides for the
automatic grant of non-qualified options to non-employee Directors of
CardioTech. Any new non-employee Director, upon joining the Board, is granted a
ten-year option to purchase 14,000 shares of CardioTech Common Stock (the
"Initial Grant") at the then current fair market value of the Common Stock,
vesting over one (1) year, assuming continued membership on the Board.
Thereafter, on each anniversary of the Initial Grant, the non-employee Director
will receive an additional ten-year option to purchase 14,000 shares of
CardioTech Common Stock, with an exercise price equal to the then fair market
value of the Common Stock, which will vest over a one-year period, assuming
continued Board membership.

     Generally, under the CardioTech Option Plan, an option is not transferable
by the optionholder except by will or by the laws of descent and distribution.
No option may be exercised more than 90 days following termination of employment
or service as a director unless the termination is due to death or disability,
in which case the option is exercisable for a maximum of 180 days after such
termination, in the case of a non-employee director, and one year after such
termination, in all other instances. Options granted under the CardioTech Option
Plan expire ten years from the date of grant or five years from the date of
grant in the case of incentive stock options issued to employees holding more
than 10% of the total voting power of CardioTech.

     The CardioTech Option Plan is administered by the Compensation Committee of
the Board of Directors, which is composed of disinterested directors of
CardioTech. Subject to the provisions of the CardioTech Option Plan, the
Compensation Committee has the authority to select the optionees and determine
the terms of the options granted, including: (i) the number of shares subject to
each option, (ii) when the option becomes exercisable, (iii) the exercise price
of the option (which in the case of an incentive stock option cannot be less
than the market price of the CardioTech Common Stock as of the date of grant or,
in the case of employees holding more than 10% of the voting power of
CardioTech, 110% of the market price of the CardioTech Common Stock as of the
date of grant), (iv) the duration of the option, and (v) the time, manner and
form of payment upon exercise of an option.

     The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options which become exercisable in any
calendar year under any incentive stock option plan of CardioTech by an employee
or officer may not exceed $100,000. Incentive stock options granted under the
CardioTech Option Plan may not be granted at a price less than 100% of the fair
market value of the CardioTech Common Stock on the date of grant (or 110% of
fair market value in the case of employees or officers holding 10% or more of
the voting stock of


                                       40

   46

CardioTech). Incentive stock options granted under the CardioTech Option Plan
expire not more than ten years from the date of grant, or not more than five
years from the date of grant in the case of incentive stock options granted to
an employee or officer holding 10% or more of the voting stock of CardioTech. An
option granted under the CardioTech Option Plan is exercisable, during the
optionholder's lifetime, only by the optionholder and is not transferable by him
except by will or by the laws of descent and distribution.

FEDERAL INCOME TAX ASPECTS OF STOCK OPTIONS

     The following is a general summary of the federal income tax treatment of
the options issuable under the CardioTech Option Plan.

     Incentive Stock Options. No taxable income will be recognized by an
optionee upon the grant or exercise of an incentive stock option granted under
the CardioTech Option Plan (provided that the difference between the option
exercise price and the fair market value of the stock on the date of exercise
must be included in the optionee's "alternative minimum taxable income" as
described below), and no corresponding business expense deduction will be
available to CardioTech. Generally, if an optionee holds shares acquired upon
the exercise of incentive stock options until the later of (i) two years from
the grant of the option and (ii) one year from the date of transfer of the
purchased shares to him or her (the "Statutory Holding Period"), any gain to the
optionee upon a sale of such shares will be treated as capital gain and
CardioTech will not be entitled to a corresponding business expense. The gain
recognized upon the sale of the stock is the difference between the option price
and the sale price of the stock. The net federal income tax effect on the holder
of incentive stock options is to defer, until the stock is sold, taxation of any
increase in the stock's value from the time of grant to the time of exercise,
and to cause all such increase to be treated as capital gain.

     If the optionee sells the shares prior to the expiration of the Statutory
Holding Period (a "disqualifying disposition"), he or she will realize taxable
income at ordinary tax rates in an amount equal to the lesser of (i) the fair
market value of the shares on the date of exercise less the option price, or
(ii) the amount realized on the sale less the option price, and CardioTech will
receive a corresponding business expense deduction. Any additional gain will be
treated as long-term capital gain if the shares are held for more than one year
prior to the sale and as short-term capital gain if the shares are held for a
shorter period. If the optionee sells the stock for less than the option price,
he or she will recognize a capital loss equal to the difference between the sale
price and the option price. The loss will be a long-term capital loss if the
shares are held for more than one year prior to the sale and as a short-term
capital loss if the shares are held for a shorter period.

     Special rules may apply to options held by directors and officers. If the
optionee making a disqualifying disposition is a person subject to the reporting
requirements of Section 16(a) of the Exchange Act (a "Reporting Person"), and
the option was exercised within six months of the date of grant, the amount of
taxable income realized at ordinary income tax rates (and the amount of
CardioTech's business expense deduction) will be equal to the lesser of (i) the
fair market value of the shares on the date that is six months after the date of
grant less the option price, or (ii) the amount realized on sale less the option
price.

     For purposes of the "alternative minimum tax" applicable to individuals,
the exercise of an incentive stock option is treated in the same manner as the
exercise of a non-statutory option. Thus, an optionee must, in the year of
option exercise, include the difference between the exercise price and the fair
market value of the stock on the date of exercise in alternative minimum taxable
income. The alternative minimum tax is imposed upon an individual's alternative
minimum taxable income at rates of 26% to 28%, but only to the extent that such
tax exceeds the taxpayer's regular income tax liability for the taxable year.

     Non-Statutory Stock Options. No taxable income is recognized by the
optionee upon the grant of a non-statutory stock option under the CardioTech
Option Plan. The optionee must recognize as ordinary income in the year in which
the option is exercised the amount by which the fair market value of the
purchased shares on the date of exercise exceeds the option price (and
CardioTech is required to withhold an appropriate amount for tax purposes).
However, the following special rules apply to Reporting Persons. If such a
person (executive offices and directors of CardioTech) exercises the option
within six months of the date of grant, upon exercise of such option, no income
will


                                       41

   47

be recognized by the optionee until six months have expired from the date the
option was granted, and the income then recognized will include any appreciation
in the value of the shares during the period between the date of exercise and
the date six months after the date of grant, unless the optionee makes an
election under Section 83(b) of the Code to have the difference between the
exercise price and fair market value at the time of exercise recognized as
ordinary income as of the time of exercise.

     CardioTech will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee. Any additional gain or any
loss recognized upon the subsequent disposition of the purchased shares will be
a capital gain or loss, and will be a long-term gain or loss if the shares are
held for more than one year.














































                                       42

   48
                              CERTAIN TRANSACTIONS


     PMI and CardioTech have entered or will enter into certain Intercompany
Agreements. See "The Distribution - Relationship Between PMI and CardioTech
After The Distribution."

     In the three years preceding the filing of this Information Statement,
CardioTech has sold the following securities that were not registered under the
Securities Act.

     In connection with the formation of CardioTech in 1993, PMI purchased
2,516,881 shares of CardioTech Common Stock, representing 88.89% of the
outstanding shares, of CardioTech Common Stock. The following executive officers
of CardioTech and PMI purchased the indicated number of shares of common stock
of CardioTech: Mr. Lee (94,886 shares; 3.35%) Dr. Szycher (102,185 shares,
3.61%); Dr. Reed (43,752 shares, 1.55%); Dr. Siciliano (41,948 shares; 1.48%);
Mr. Walters (21,352 shares; 0.75%) and Mr. Zappa (10,487 shares, 0.37%). The
shares were purchased by PMI and such executive officers of CardioTech and PMI
in April 1993 (except for Mr. Zappa, who purchased his shares in October 1993)
for the price of $.00024 per share, the fair market value of the stock on the
date of purchase.

     On March 19, 1996 and May 9, 1996, CardioTech agreed to issue an additional
973,758 (subject to adjustment) shares of CardioTech Common Stock in the
aggregate to PMI pursuant to the terms and conditions of the Subscription
Agreement in connection with the Restructuring. See "The Distribution -
Restructuring of CardioTech Prior to the Distribution." CardioTech will issue to
Hancock the Mirror Warrants. See "The Distribution - Manner of Effecting the
Distribution."

     No person acted as an underwriter with respect to the transactions set
forth above. In each of the foregoing instances, CardioTech relied on Section
4(2) of the Securities Act for the exemption from the registration requirements
of the Securities Act, because no public offering was involved.





























                                       43

   49

           SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT


     PMI will own 3,490,638 of the outstanding shares of CardioTech Common Stock
immediately prior to the Distribution. The following table sets forth the number
of shares and percentage of CardioTech Common Stock expected to be received on
the Distribution Date by (i) each person who is expected by CardioTech to
beneficially own more than five percent of CardioTech Common Stock, (ii) each of
CardioTech's directors and the executive officers named in the Summary
Compensation Table, and (iii) all of CardioTech's directors and executive
officers as a group following the Distribution Date based on certain information
known to CardioTech with respect to such persons' beneficial ownership of shares
of PMI Common Stock as of April 30, 1996. The table assumes that ownership of
PMI Common Stock by such persons will not change before the Record Date.



                                                  Shares of CardioTech
                                                   Beneficially Owned
                                                  ---------------------
Name                                              Number(1)     Percent
- ----                                              ---------     -------
                                                          
Kennedy Capital Management(2)                     237,557       5.9%
  425 N. Dallas Road, Suite 181
  St. Louis, MO 63141

U.S. Bancorp(3)                                   233,710       5.8%
  111 S.W. Fifth Avenue
  Portland, OR 97204

John Hancock Mutual Life Insurance Company(4)     245,438       6.1%
  200 Clarendon Street
  Boston, MA 02116

Michael Szycher, Ph.D.(5)                         192,871       4.8%

Alan Edwards(6)                                         0       *

Richard J. Zdrahala, Ph.D                               0       *

Gene Gargiulo                                           0       *

Arthur A. Siciliano, Ph.D.(7)                      70,205       1.8%

All directors and executive officers as a group   263,076       6.6%
   (5 persons)

<FN>
- ------------------ 
*Less than 1%

(1)  The persons named in the table have sole voting and investment power with
     respect to all shares shown as beneficially owned by them, subject to the
     information contained in the footnotes to this table. Amounts shown include
     shares issuable pursuant to the exercise of options or warrants exercisable
     within 60 days after April 30, 1996. The inclusion herein of any shares
     deemed beneficially owned does not constitute an admission of beneficial
     ownership of those shares.

(2)  Based upon a Schedule 13G filed by Kennedy Capital Management pursuant to
     the Exchange Act and the rules promulgated thereunder reporting the
     beneficial ownership by it of 525,000 shares of PMI Common Stock. Kennedy
     Capital Management has shared voting power and shared investment power with
     respect to all shares of Common Stock beneficially owned by them.





                                       44

   50

(3)  Based upon a Schedule 13G filed by U.S. Bancorp pursuant to the Exchange
     Act and the rules promulgated thereunder reporting the beneficial ownership
     by it of 516,500 shares of PMI Common Stock. U.S. Bancorp shared voting
     power and shared investment power with respect to all shares of Common
     Stock beneficially owned by them.

(4)  Reflects the issuance of 245,438 shares of CardioTech Common Stock issuable
     upon the exercise of a stock purchase warrant with CardioTech issues as a
     result of the adjustment provisions of certain warrants issued by PMI in
     connection with the sale by a subsidiary of the PMI of $25 million 10.65%
     Guaranteed Senior Secured Notes due January 31, 2003, to the John Hancock
     Mutual Life Insurance Company.

(5)  Does not include 368,781 shares of PMI Common Stock that are subject to
     currently exercisable stock options to purchase shares of PMI Common Stock.
     If such options are exercised prior to the Distribution Date, Dr. Szycher
     will be entitled to receive 166,869 additional shares of CardioTech Common
     Stock.

(6)  Does not include 9,168 shares of PMI Common Stock that are subject to
     currently exercisable stock options to purchase shares of PMI Common Stock.
     If such options are exercised prior to the Distribution Date, Mr. Edwards
     will be entitled to receive 4,148 additional shares of CardioTech Common
     Stock as a result of his ownership of such shares of PMI Common Stock.

(7)  Does not include 156,010 shares of PMI Common Stock that are subject to
     currently exercisable stock options to purchase shares of PMI Common Stock.
     If such options are exercised prior to the Distribution Date, Dr. Siciliano
     will be entitled to receive 70,593 additional shares of CardioTech Common
     Stock as a result of his ownership of such shares of PMI Common Stock.

































                                       45

   51
                          DESCRIPTION OF CAPITAL STOCK


     The authorized capital stock of CardioTech consists of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock").

COMMON STOCK

     Holders of CardioTech Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
CardioTech Common Stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of CardioTech Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of funds legally available therefor, subject to any
preferential dividend rights of outstanding Preferred Stock. Upon the
liquidation, dissolution or winding up of CardioTech, the holders of CardioTech
Common Stock are entitled to receive ratably the net assets of CardioTech
available after the payment of all debts and liabilities and subject to the
prior rights of any outstanding Preferred Stock. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights. Holders of CardioTech
Common Stock are, and the shares being distributed in the Distribution will be,
when distributed, fully paid and nonassessable. The rights, preferences and
privileges of holders of CardioTech Common Stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which CardioTech may designate and issue in the future.

PREFERRED STOCK

     The Board of Directors may, without further action of the stockholders of
CardioTech, issue Preferred Stock in one or more series and fix the rights and
preferences thereof, including the dividend rights, dividend rates, conversion
rights, voting rights, pre-emptive rights, terms of redemption (including
sinking fund provisions), redemption prices and liquidation preferences.

     The Certificate of Incorporation of CardioTech grants the Board of
Directors authority to issue Preferred Stock and to determine its rights and
preferences without the need for further stockholder approval to eliminate
delays associated with a stockholder vote on specific issuances. The issue of
Preferred Stock, while providing desirable flexibility in connection with
possible financings, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of CardioTech. CardioTech has no
present plans to issue any shares of Preferred Stock and there are no such
shares of Preferred Stock outstanding.

MASSACHUSETTS LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

     Under Chapter 110F of the Massachusetts General Laws, a Massachusetts
corporation with more than 200 stockholders may not engage in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person becomes an interested
stockholder, unless (i) the interested stockholder obtains the approval of the
Board of Directors prior to becoming an interested stockholder, (ii) the
interested stockholder acquires 90% of the outstanding voting stock of the
corporation (excluding shares held by certain affiliates of the corporation) at
the time it becomes an interested stockholder or (iii) the business combination
is approved by both the Board of Directors and the holders of two-thirds of the
outstanding voting stock of the corporation (excluding shares held by the
interested stockholder). An "interested stockholder" is a person who, together
with affiliates and associates, owns (or at any time within the prior three
years did own) 5% or more of the outstanding voting stock of the corporation. A
"business combination" includes a merger, a stock or asset sale, and certain
other specified transactions resulting in a financial benefit to the interested
stockholder.

     The By-Laws of CardioTech include a provision that excludes CardioTech from
the applicability of Massachusetts General Laws Chapter 110D, entitled
"Regulation of Control Share Acquisitions." In general, this statute provides
that any stockholder of a corporation subject to this statute who acquires 20%
or more of the


                                       46

   52

outstanding voting stock of a corporation subject to the statute may not vote
such stock unless stockholders of the corporation so authorize. The Board of
Directors may amend CardioTech's By-Laws at any time to subject CardioTech to
this statute prospectively.

     Massachusetts General Laws Chapter 156B, Section 50A requires that publicly
held Massachusetts corporations have a classified board of directors consisting
of three classes as nearly equal in size as possible. In accordance with such
law, CardioTech's Articles of Organization provide for the division of the Board
of Directors into three classes as nearly equal in size as possible with
staggered three-year terms. The Articles of Organization and CardioTech's
By-Laws provide that directors may only be removed either for cause by the vote
of the holders of 80% of the outstanding voting power of CardioTech or by the
vote of at least three-quarters of the directors then serving. The affirmative
vote of the holders of 80% of the voting power is required to amend or repeal
the provision creating a classified board or to adopt any provision inconsistent
with it.

     CardioTech's By-Laws require that nominations for the Board of Directors
made by a stockholder comply with particular notice procedures. A notice by a
stockholder of a planned nomination must be given not less than 60 and not more
than 90 days prior to a scheduled meeting, provided that if less than 70 days'
notice is given of the date of the meeting, a stockholder will have ten days
within which to give such notice. The stockholder's notice of nomination must
include particular information about the stockholder, the nominee and any
beneficial owner on whose behalf the nomination is made. CardioTech may require
any proposed nominee to provide such additional information as is reasonably
required to determine the eligibility of the proposed nominee.

     The By-Laws require that a stockholder seeking to have any business
conducted at a meeting of stockholders must give notice to CardioTech not less
than 60 and not more than 90 days prior to the scheduled meeting, provided in
certain circumstances that a ten-day notice rule applies. The notice from the
stockholder must describe the proposed business to be brought before the meeting
and include information about the stockholder making the proposal, any
beneficial owner on whose behalf the proposal is made, and any other stockholder
known to be supporting the proposal.

     CardioTech's Articles of Organization also include provisions eliminating
the personal liability of CardioTech's directors for monetary damages resulting
from breaches of their fiduciary duty to the extent permitted by the
Massachusetts Business Corporation Law. CardioTech's By-Laws include provisions
indemnifying CardioTech's directors and officers to the fullest extent permitted
by Massachusetts law, including under circumstances in which indemnification is
otherwise discretionary, and permitting the Board of Directors to grant
indemnification to employees and agents to the fullest extent permitted by
Massachusetts law. CardioTech intends to enter into indemnity agreements with
each of its directors and certain executive officers. Those agreements will
require, with limited exceptions, that CardioTech indemnify such individuals to
the fullest extent permitted by Massachusetts law.

     The provisions in CardioTech's By-Laws pertaining to stockholders,
directors and indemnification (including the provisions described above
pertaining to nominations, the presentation of business before a meeting of the
stockholders and the removal of directors) may not be amended and no provision
inconsistent therewith may be adopted without the approval of either the Board
of Directors or holders of at least 80% of the voting power of CardioTech.

     The Articles of Organization provide that certain transactions, such as the
sale, lease or exchange of all or substantially all of CardioTech's property and
assets and the merger or consolidation of CardioTech into or with any other
corporation, may be authorized by the approval of a majority of the shares of
each class of stock entitled to vote thereon, rather than by two-thirds as
otherwise provided by statute, provided that the transactions have been
authorized by a majority of the members of the Board of Directors and the
requirements of any other applicable provisions of the Articles of Organization
have been met.

     The Articles of Organization contain a "fair price" provision (the "Fair
Price Provision") which provides that certain Business Combinations with any
Interested Stockholder (as each term is defined in the Fair Price Provision) may
not be consummated without an 80% stockholder vote, unless approved by at least
a majority of the Disinterested


                                       47

   53

Directors (as defined in the Fair Price Provision) and, in certain
circumstances, certain minimum price and procedural requirements are met. An
"Interested Stockholder" is defined to include any individual or entity who is
(or who is an affiliate and during the prior two years was) the beneficial owner
of more than 15% of the voting stock of CardioTech. A Business Combination
includes (i) a merger or consolidation, (ii) the sale or other disposition of
10% or more of CardioTech's assets, (iii) the issuance of stock having a value
in excess of 10% of CardioTech's assets, (iv) any reclassification or
recapitalization which increases the proportionate share holdings of an
Interested Stockholder, and (v) the adoption of a plan of liquidation or
dissolution proposed by or on behalf of an Interested Stockholder. A significant
purpose of the Fair Price Provision is to deter a purchaser from using
two-tiered pricing and similar unfair or discriminatory tactics in an attempt to
acquire CardioTech. The affirmative vote of the holders of 80% of the voting
power is required to amend or repeal the Fair Price Provision or adopt any
provision inconsistent with it.

     The provisions of Massachusetts law, the Articles of Organization and
By-Laws discussed above would make more difficult or discourage a proxy contest
or the assumption of control by a holder of a substantial block of CardioTech's
stock or the removal of the incumbent Board of Directors. Such provisions could
also have the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of CardioTech, even though such an
attempt might be beneficial to Cardiotech and its stockholders. In addition,
since the Articles of Organization and By-Laws are designed to discourage
accumulations of large blocks of Cardiotech's stock by purchasers whose
objective is to have such stock repurchased by CardioTech at a premium, such
provisions could tend to reduce the temporary fluctuations in the market price
of CardioTech's stock which are caused by such accumulations. Accordingly,
stockholders could be deprived of certain opportunities to sell their stock at a
temporarily higher market price.

DIVIDENDS

     CardioTech currently anticipates that it will retain all of its earnings
for use in the development of its business and does not anticipate paying any
cash dividends in the foreseeable future.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for CardioTech Common Stock is the First
National Bank of Boston.


                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

     As permitted by Section 67 of the Massachusetts Business Corporation Law,
CardioTech's By-Laws provide it may indemnify its officers and directors. Such
indemnification may include payment by CardioTech of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by the
person indemnified to repay such payment if such person is adjudicated to be not
entitled to indemnification under the Massachusetts Business Corporation Law,
which undertaking may be accepted without reference to the financial ability of
such person to make repayment. Any such indemnification may be provided although
the person to be indemnified is no longer an officer, director, employee or
agent of CardioTech.

     CardioTech will not indemnify any person with respect to any matter as to
which such person shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his or her action was in the
best interest of CardioTech.

     CardioTech intends to enter into indemnity agreements with each of its
directors and certain executive officers. Those agreements will require, with
limited exceptions, that CardioTech indemnify such individuals to the fullest
extent permitted by the Massachusetts Business Corporation Law.

     In addition, CardioTech's Articles of Organization limit the liability of
directors to the maximum extent permitted by the Massachusetts Business
Corporation Law. Massachusetts law permits a corporation's articles of
organization to provide that the directors of a Massachusetts corporation will
not be personally liable to such


                                       48

   54

corporation or its stockholders for monetary damages for breach of their
fiduciary duties as directors, except for liability (i) for any breach of their
duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions, or for certain loans to officers and directors of
the corporation that are not repaid, as provided in Section 61 and Section 62,
respectively, of the Massachusetts Business Corporation Law; or (iv) for any
transaction from which the director derives an improper personal benefit.

     CardioTech intends to purchase a liability insurance policy that insures:
(i) CardioTech, under certain circumstances, in the event it indemnifies a
director or officer of CardioTech pursuant to the foregoing provisions of
CardioTech's By-Laws or otherwise; and (ii) directors and officers, under
certain circumstances, against liability and costs (including the cost of
defending any action) incurred by directors or officers in their capacity as
such.

                     TAX CONSIDERATIONS OF THE DISTRIBUTION

     The following discussion sets forth certain federal income tax
considerations under the Internal Revenue Code of 1986, as amended (the "Code"),
relating to the Distribution. It is intended to be for general information only
and does not address all possible federal income tax consequences of the
Distribution and does not address the unique federal income tax consequences
that may be relevant to particular PMI stockholders (e.g., foreign persons,
dealers in securities and those person who received their PMI Common Stock in
compensatory transactions). Nor does the discussion address state, local or
foreign tax considerations.

     The discussions contained herein is based upon an opinion of Hale and Dorr,
counsel to PMI. Although such opinion is based upon the best judgment of counsel
as to how a court would rule if presented with the issues, it is not binding
upon either the Internal Revenue Service (the "IRS") or the courts. Accordingly,
NO ASSURANCE CAN BE GIVEN THAT THE IRS WILL NOT BE ABLE TO SUCCESSFULLY
CHALLENGE SOME OR ALL OF THE CONCLUSIONS SET FORTH BELOW. ALL STOCKHOLDERS ARE
THEREFORE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES
OF THE DISTRIBUTION.

     Counsel has advised PMI that the Distribution will qualify as a Section 355
Spinoff. However, as discussed in more detail below, such conclusion is, in
turn, based upon the conclusion that the Distribution will meet certain
requirements of Code Section 355 that are subjective in nature or with respect
to which there is a relative absence of authority addressing their application
on facts similar to those presented by the Distribution. Accordingly, it is
possible that the IRS and the courts could reach a different conclusion.

     If the Distribution constitutes a Section 355 Spinoff:

          (i) No gain or loss will be recognized by (and no income will be
     includable in the income of) a holder of PMI Common Stock upon the receipt
     of CardioTech Common Stock; provided, however, that holders who receive
     cash in lieu of fractional shares of CardioTech Common Stock will be
     treated as if they had received the fractional shares and then resold them
     in a transaction in which gain or loss (capital gain or loss if the PMI
     Common Stock was held as a capital asset) was recognized.

          (ii) A stockholder's basis of the PMI Common Stock immediately before
     the Distribution will be allocated between such stock and the CardioTech
     Common Stock distributed thereon in accordance with their relative fair
     market values;

          (iii) The holding period of the CardioTech Common Stock received in
     the Distribution will include the holding period of the PMI Common Stock
     with respect to which it was distributed, provided the PMI Common Stock is
     held as a capital asset; and

          (iv) PMI and CardioTech will not recognize any unrealized gain or loss
     inherent in the Common Stock or the CardioTech assets upon the Distribution
     other than certain immaterial amounts related to fractional shares.



                                       49

   55

     If the Distribution fails to qualify as a Section 355 Spinoff:

          (i) PMI will recognize gain, if any, measured by the difference
     between PMI's tax basis in the CardioTech Common Stock distributed in the
     Distribution and the fair market value (on the Distribution Date) of that
     stock;

          (ii) Each PMI stockholder will be considered to have received a
     taxable corporate distribution in an amount equal to the sum of the amount
     of cash and the fair market value (on the Distribution Date) of CardioTech
     Common Stock distributed to such stockholder as discussed below;

          (iii) The holding period of the CardioTech Common Stock received in
     the Distribution will begin on the Distribution Date; and

          (iv) Each PMI stockholder will have a tax basis in the CardioTech
     Common Stock distributed to him or her equal to the fair market value on
     the CardioTech Common Stock on the Distribution Date.

     The Distribution, if taxable, would generally be treated as ordinary
dividend income to a PMI stockholder to the extent of PMI's current and
accumulated earnings and profits and would therefore generally be subject to
back-up withholding with respect to individuals who, prior to the Distribution,
had not provided their correct taxpayer identification numbers on the IRS's Form
W-9 or a substitute thereof.

     If the Distribution were found to be taxable, it is likely that PMI would
have sufficient current and accumulated earnings and profits to result in the
entire amount of the Distribution constituting a dividend for federal income tax
purposes. However, to the extent the amount of the Distribution exceeded the
amount of earnings and profits, the excess would be treated first as a
basis-reducing, tax-free return of capital to the extent of a stockholder's
basis in his or her PMI Common Stock (determined separately for blocks of stock
not purchased at the same time and at the same price) and then as capital gain
(assuming the PMI Common Stock is held as a capital asset by the PMI
stockholder). For corporate stockholders, the portion of the taxable
Distribution that constituted a dividend would be eligible for the
dividends-received deduction (subject to certain limitations contained in the
Code) and could be subject to the Code's extraordinary dividend provisions
which, if applicable, would require a reduction in a corporate holder's basis in
the PMI Common Stock to the extent of such deduction.

     The Code and applicable regulations impose both subjective and objective
requirements that must be met in order for a distribution of stock of a
subsidiary to qualify as a Section 355 Spinoff. As noted above, because of the
subjective nature of some of these requirements and the lack of relevant legal
authority on others, it is not completely certain that the Distribution will
qualify as a Section 355 Spinoff. While satisfaction of any or all of the
requirements of a Section 355 Spinoff may be subject to challenge by the IRS,
the principal uncertainty as to whether the Distribution will qualify as a
Section 355 Spinoff involves three specific requirements: the "active trade or
business test," the "business purpose text" and the "device test."

     The active trade or business test will be satisfied only if, among other
things, following the Distribution, PMI and CardioTech are each considered to be
engaged in an active trade or business that had been actively conducted for the
five-year period preceding the Distribution. The regulations define an active
trade or business as a specific group of activities which (i) are carried on for
the purpose of earning income or profit, and (ii) include "every operation that
forms a part of, or a step in, the process of earning income or profit."
According to the regulations, such group of activities "ordinarily" must include
the collection of income.

     Following the Distribution, the business that will be conducted by PMI and
its remaining subsidiaries should constitute an active trade or business carried
on for at least five years by them. Accordingly, the active trade or business
text will be satisfied with respect to the Distribution provided that the
activities to be conducted by CardioTech will also be considered to be such an
active trade or business. Hale and Dorr believes that the activities of
CardioTech will constitute the requisite active trade business. However, the
scope of the activities that constitute an active trade or business for purposes
of Section 355 of the Code is unclear. If CardioTech is considered to be engaged
in the trade or business of developing and marketing specialized polymer-based
products, the active trade or business


                                       50

   56

test should be met. In addition, if CardioTech were considered only to be
engaged in a trade or business consisting of the development and marketing of
ChronoFlex for medical-related uses, the active trade or business test still
would likely be met. However, if the trade or business conducted by CardioTech
were even more narrowly defined to include, for example, only vascular grafts,
the active trade or business test would not be met since PMI and its affiliates
have not been engaged in such business for at least five years. Although counsel
has advised PMI that it believes such a narrow view of CardioTech's historic
trade or business is factually incorrect and likely inappropriate as a matter of
law, given the lack of authority expressly addressing the issue on similar
facts, there can be no assurances that counsel's opinion could not be
successfully challenged by the IRS.

     The business purpose test will require, among other things, a showing the
(i) the Distribution was carried out for a "real and substantial non-federal
tax" corporate (rather than stockholder) purpose that was "germane to the
business" of PMI or CardioTech; (ii) there was no practical tax-free alternative
to the Distribution for achieving such purpose; and (iii) the Distribution was
"required by business exigencies." Although counsel believes that the stated
reasons for the Distribution should satisfy the business purpose test, because
of the subjectivity of the test, the IRS may not adopt a similar view. See "The
Distribution -- Reasons for the Distribution."

     The device test requires that the Distribution not be "a transaction used
principally as a device for the distribution of the earnings and profits" of
PMI, CardioTech, or both. Application of this test is uncertain because the
regulations simply state that the device test will be applied on the basis of
all surrounding facts and circumstances, but do not provide specific guidelines
for determining whether a transaction constitutes a device. Although PMI is
undertaking the Distribution for substantial business reasons (see 'The
Distribution -- Reasons for the Distribution") and has represented that the
Distribution does not have a principal purpose of avoiding federal income tax on
the distribution of PMI's earnings and profits, because of the subjectivity of
the device test, no assurances can be given that the IRS or the courts would
concur.

     The foregoing is only a summary of certain federal income tax
considerations of the Distribution under current law and is intended for general
information only. Each stockholder should consult his or her tax advisor as to
(i) whether to report the Distribution as a Section 355 Spinoff and (ii) the
particular consequences of the Distribution to such stockholder, in light of his
or her personal circumstances, including the application of state, local and
foreign tax laws.

                              AVAILABLE INFORMATION

     CardioTech intends to furnish to holders of CardioTech Common Stock annual
reports containing consolidated financial statements prepared in accordance with
generally accepted accounting principles and audited and reported on, with an
opinion expressed, by an independent public accounting firm, as well as
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial information.

     This Information Statement does not contain all the information set forth
in the Registration Statement and the exhibits and schedules thereto, as certain
items are omitted in accordance with the rules and regulations of the
Commission. Reference is made to such Registration Statement and the exhibits
and schedules thereto, which may be inspected, without charge, at the office of
the Commission at 450 Fifth St., N.W., Washington, D.C. 20549, and copies of
which may be obtained from the Commission at prescribed rates. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.










                                       51

   57

                                                                                                        EXHIBIT A

INDEX OF FINANCIAL STATEMENTS                                                                              Page
                                                                                                           ----
                                                                                                        
Report of  Independent Accountants                                                                          A-2

Consolidated Balance Sheets as of March 31, 1994 and 1995 and December 31, 1995 (unaudited)                 A-3

Consolidated Statements of Operations for each of the three years in the period ended March 31, 1995
and for the nine months ended December 31, 1994 and 1995 (unaudited)                                        A-4

Consolidated Statements of Stockholders' Equity for each of the three years in the period ended March
31, 1995 and for the nine months ended December 31, 1994 and 1995 (unaudited)                               A-5

Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 1995
and for the nine months ended December 31, 1994 and 1995 (unaudited)                                        A-6

Notes to Consolidated Financial Statements                                                                  A-7





                                       A-1


   58







Report of Independent Accountants

To the Board of Directors and Stockholders of CardioTech International, Inc.:

We have audited the accompanying consolidated balance sheets of CardioTech
International, Inc. as of March 31, 1994 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended March 31, 1995. 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 from
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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CardioTech
International, Inc. as of March 31, 1994 and 1995, and results of its operations
and its cash flows and for the three years in the period ended March 31, 1995 in
conformity with generally accepted accounting principles.

The Company is a majority-owned subsidiary of PolyMedica Industries, Inc. As
explained in Note B to the financial statements, certain of the costs and
expenses presented in the financial statements represent intercompany
allocations and management estimates of the costs of services provided by
PolyMedica Industries, Inc. As a result, the financial statements presented may
not be indicative of the financial position or results of operations that would
have been achieved had the Company operated as a nonaffiliated entity.

Boston, Massachusetts                                   Coopers & Lybrand L.L.P.
March 18, 1996, except as to the 
information presented in the 
second paragraph of Note E for 
which the date is May 9, 1996

                                       A-2


   59



                         CardioTech International, Inc.
                           Consolidated Balance Sheets



                                                                 March 31, 1994  March 31, 1995  December 31, 1995
                                                                 --------------  --------------  -----------------
                                                                                                   (Unaudited)
ASSETS

Current assets:

                                                                                                  
    Cash                                                         $       504      $       504      $       504

Property and equipment, net                                           51,718           43,646           37,350
                                                                 -----------      -----------      -----------

         Total assets                                            $    52,222      $    44,150      $    37,854
                                                                 ===========      ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Stockholders' equity:

    Preferred stock, $.01 par value, 5,000,000 shares
       authorized; none issue and outstanding
    Common stock, $.01 par value, 20,000,000 shares
       authorized; 2,831,491 shares issued and outstanding             2,831            2,831            2,831
    Due to parent                                                  1,293,524        1,884,392        2,620,151
    Accumulated deficit                                           (1,244,133)      (1,843,073)      (2,585,128)
                                                                 -----------      -----------      -----------


       Total stockholders' equity                                     52,222           44,150           37,854
                                                                 -----------      -----------      -----------

                  Total liabilities and stockholders' equity     $    52,222      $    44,150      $    37,854
                                                                 ===========      ===========      ===========


The accompanying notes are an integral part of the consolidated financial
statements.

                                       A-3


   60



                         CardioTech International, Inc.
                      Consolidated Statements of Operations



                                                                                                    Nine Months Ended
                                                        Years Ended March 31,                          December 31,
                                                1993            1994              1995            1994             1995
                                           -------------------------------------------------------------------------------
                                                                                                       (Unaudited)
                                                                                                        
Research revenues                          $   422,590      $   285,876      $   407,510      $   272,617      $   143,310

Operating expenses:
   Research and development                    377,231          699,919          708,723          511,444          633,442
   Selling, general and administrative         228,680          375,886          297,727          208,990          251,923
                                           -----------      -----------      -----------      -----------      -----------
   Total operating expenses                    605,911        1,075,805        1,006,450          720,434          885,365
                                           -------------------------------------------------------------------------------

Net loss                                      (183,321)        (789,929)        (598,940)        (447,817)        (742,055)
                                           ===============================================================================

Pro forma financial information:

Pro forma loss per share                                                     $      (.31)                      $      (.33)

Pro forma shares outstanding                                                   2,831,491                         2,831,491



The accompanying notes are an integral part of the consolidated financial
statements.

                                       A-4


   61



                         CardioTech International, Inc.
                 Consolidated Statements of Stockholders' Equity
       For the years ended March 31, 1993, 1994 and 1995, and for the nine
                   months ended December 31, 1995 (unaudited)



                                     Common stock                                          Total
                                   -----------------
                                        Number                            Due to         Accumulated  Stockholders'
                                      of shares         Amount            Parent         Deficit          Equity
                                   -------------------------------------------------------------------------------
                                                                                                
Balance at March 31, 1992                                                $270,883       ($270,883)              $0

       Issuance of common stock       2,831,491      $     2,831           (2,156)                             675

       Net loss                                                                          (183,321)        (183,321)

       Advance from parent                                                182,646                          182,646
                                   -------------------------------------------------------------------------------

Balance at March 31, 1993             2,831,491            2,831          451,373        (454,204)               0

       Net loss                                                                          (789,929)        (789,929)

       Advance from parent                                                842,151                          842,151
                                   -------------------------------------------------------------------------------

Balance at March 31, 1994             2,831,491            2,831        1,293,524      (1,244,133)          52,222

       Net loss                                                                          (598,940)        (598,940)

       Advance from parent                                                590,868                          590,868
                                   -------------------------------------------------------------------------------

Balance at March 31, 1995             2,831,491            2,831        1,884,392      (1,843,073)          44,150

       Net loss                                                                          (742,055)        (742,055)

       Advance from parent                                                735,759                          735,759
                                   -------------------------------------------------------------------------------

Balance at December 31, 1995
       (unaudited)                    2,831,491      $     2,831      $ 2,620,151     ($2,585,128)     $    37,854
                                   ===============================================================================








The accompanying notes are an integral part of the consolidated financial
statements.

                                       A-5


   62



                         CardioTech International, Inc.
                      Consolidated Statements of Cash Flows

                               



                                                                                                    Nine Months Ended
                                                              Years Ended March 31,                     December 31,
                                                       1993           1994           1995           1994           1995
                                                    ---------      ---------      ---------      ---------      ---------
                                                                                                         (Unaudited)
                                                                                                        
Cash flows from operating activities:
   Net loss                                         $(183,321)     $(789,929)     $(598,940)     $(447,817)     $(742,055)
   Adjustments to reconcile net loss
     to net cash flows from
     operating activities:
       Depreciation                                      --            4,547          8,912          6,182          6,296
       Loss on disposal of fixed assets                  --            2,330          3,434           --             --
                                                    ---------      ---------      ---------      ---------      ---------

       Net cash flows from operating
                  activities                         (183,321)      (783,052)      (586,594)      (441,635)      (735,759)

Cash flows from financing activities:
  Advance from parent                                 182,646        783,556        586,594        441,635        735,759
  Proceeds from issuance of common stock                  675           --             --             --             --
                                                    ---------      ---------      ---------      ---------      ---------

       Net cash flows from financing activities       183,321        783,556        586,594        441,635        735,759
                                                    ---------      ---------      ---------      ---------      ---------

       Net increase in cash                              --              504           --             --             --
                                                    ---------      ---------      ---------      ---------      ---------

       Cash at beginning of period                       --             --              504            504            504
                                                    ---------      ---------      ---------      ---------      ---------

       Cash at end of period                        $    --        $     504      $     504      $     504      $     504
                                                    =========      =========      =========      =========      =========

Supplemental cash flow information:
   Noncash transactions:
     Transfer of property and
        equipment from parent                            --        $  58,595           --             --             --





The accompanying notes are an integral part of the consolidated financial
statements.

                                       A-6


   63


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

A.  Nature of Business:

   CardioTech International, Inc. (including its subsidiary, collectively
"CardioTech") develops, manufactures and markets its polymer technologies with
particular emphasis on the development of implantable synthetic grafts for a
broad variety of applications, including vascular access grafts, peripheral
grafts and coronary artery bypass grafts. It is headquartered in Massachusetts
and operates from manufacturing and laboratory facilities located in
Massachusetts and the United Kingdom.

Basis of Presentation

   CardioTech's business, which is the basis for these financial statements, is
a spinoff of a portion of the business of PolyMedica Biomaterials, Inc.
("Biomaterials"), a majority-owned subsidiary of PolyMedica Industries, Inc.
("PMI") which was incorporated in March 1993. The accompanying financial
statements, which are derived from the historical books and records of PMI,
include the assets, liabilities, revenues and expenses of CardioTech at
historical cost. The other portion of Biomaterials business will be retained by
PMI.

   CardioTech's spunoff business operated as a division of PMI starting in 1990.
In September 1993, it purchased certain assets of Newtec Vascular Products
Limited ("Newtec"), a company that had conducted development work on small bore
vascular grafts. Newtec operated as a division of PMI until June 1995 when it
was incorporated as a wholly-owned subsidiary of CardioTech.

   These financial statements are intended to present management's estimates of
the results of consolidated operations and financial condition of CardioTech as
if it had operated as a stand-alone company since inception. As explained below
in this note, certain of the costs and expenses presented in these consolidated
financial statements represent intercompany allocations and management estimates
of the cost of services provided by PMI and its subsidiaries. As a result, the
consolidated financial statements presented may not be indicative of the results
that would have been achieved had CardioTech operated as a nonaffiliated entity.

B.  Summary of Significant Accounting Policies:

Future Operations

   CardioTech's future growth will largely depend on its ability to raise
capital to support research and development activities and to commercialize its
vascular graft technology. To date, CardioTech has not generated any revenue
from the sale of vascular grafts, although it has received a minor amount of
research revenue related to its other biomaterials applications. Since
inception, funding from PMI has been used to finance the development of
CardioTech's technologies. CardioTech expects to continue to incur operating
losses until vascular graft product sales and/or royalty payments generate
sufficient revenue to fund its continuing operations.

   CardioTech will require substantial funds for further research and
development, future pre-clinical and clinical trials, regulatory approvals,
establishment of commercial-scale manufacturing capabilities, and the marketing
of its products. CardioTech's capital requirements depend on numerous factors,
including but not limited to the progress of its research and development
programs, the progress of pre-clinical and clinical testing, the time and costs
involved in obtaining regulatory approvals, the cost of filing, prosecuting,
defending and enforcing any intellectual property rights, competing

                                       A-7


   64


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

technological and market developments, changes in CardioTech's development of
commercialization activities and arrangements, and the purchase of additional
facilities and capital equipment.

   After the Distribution, CardioTech will conduct its operations with
approximately $3.8 million in cash contributed by PMI. CardioTech estimates such
amounts will be sufficient to finance its operations at its current level of
development activity for approximately two years from the Distribution.

   CardioTech will seek to obtain additional funds through public or private
equity or debt financings, collaborative arrangements, or from other sources.
There can be no assurance that additional financing will be available at all or
on acceptable terms to permit successful commercialization of CardioTech's
technology and products. If adequate funds are not available, CardioTech may be
required to curtail significantly one or more of its research and development
programs, or obtain funds through arrangements with collaborative partners or
others that may require CardioTech to relinquish rights to certain of its
technologies, product candidates, or products.

Interim Financial Information

   The unaudited consolidated financial statements included herein have been
prepared by CardioTech pursuant to the rules and regulations of the Securities
and Exchange Commission and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
presentation of interim period results. 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 and 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. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. CardioTech believes, however, that its disclosures are
adequate to make the information presented not misleading. The results for the
interim periods presented are unaudited and are not necessarily indicative of
results to be expected for the full fiscal year.

Due to Parent, Advance from Parent

   All intercompany charges related to CardioTech's operations and all amounts
receivable to and payable by CardioTech are processed by PMI, its parent, and
records the net amount as Advance from Parent in Stockholders' Equity. Amounts
due to parent will be permanently invested by the parent in connection with the
Common Stock Subscription Agreement.

Pro Forma Net Loss per Common Share

   The pro forma net loss per common share is calculated using the estimated
number of outstanding shares (2,831,491) of CardioTech before the Distribution
and stock split as described in Note E and reflects estimated additional costs
that would have been incurred by CardioTech had it been an independent public
company for the periods presented. CardioTech estimates such costs to be
$265,000 annually.

                                       A-8


   65


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

Research Revenue

                  Research revenue is generated in connection with the
development and sale of ChronoFlex and other proprietary biomaterials for use in
medical devices. In certain instances, exclusivity, royalty and license fees are
earned from various strategic partners with whom CardioTech has contracts.
CardioTech recognizes these fees as revenue in accordance with the terms of the
contracts. Contracted development fees from corporate partners are recognized
upon completion of service or the attainment of technical benchmarks, as
appropriate.

Research and Development Expenses

                  Research and development expenses are charged to expense as
incurred.

Income Taxes

                  Deferred tax assets and liabilities are recognized based on
temporary differences between the financial statements and tax basis of assets
and liabilities using enacted tax rates expected to be in effect when they are
realized. A valuation reserve against net deferred assets is recorded, if, based
upon weighted available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. For income purposes, CardioTech's
results have been consolidated with the results of PMI. Therefore, no estimated
income tax benefits have been reflected. After the Distribution, CardioTech's
results of operations will no longer be combined with PMI. Accordingly,
CardioTech will not receive any benefit from net operating losses incurred
through the date of the Distribution.

C.  Arrangements with PMI and Subsidiaries:

                  Since CardioTech's inception, all facilities and support
services, including research and administrative support, have been provided by
PMI. For these services, CardioTech was charged $180,000, $842,000, $591,000,
$445,000, and $736,000 for the years ended March 31, 1993, 1994 and 1995 and for
the nine months ended December 31, 1994 and 1995, respectively. These charges
represent an allocation of CardioTech's proportionate share of PMI's overhead
costs using formulas which management believes are reasonable based upon
CardioTech's use of facilities and services. All other costs for all periods
presented, including payroll costs, are directly attributed to CardioTech and
have been paid by PMI and charged to CardioTech.

                  In connection with the Distribution, CardioTech expects to
enter into the following agreements with PMI:

Distribution Agreement

                  This agreement provides for the principal corporate
transactions required to effect the Distribution, including, among other things,
the preparation of a registration statement registering the CardioTech common
stock under the Exchange Act and an undertaking by CardioTech to prepare a
registration statement registering the shares of CardioTech common stock to be
issued upon the exercise of the CardioTech warrants under the Securities Act.

                  This agreement also allocates the costs related to the
implementation of the Distribution between PMI and CardioTech and provides that
each company will share equally any liabilities under the federal and any state
securities laws incurred as a result of the distribution of the Information
Statement.

Facilities and Services Agreement

                  This agreement provides that PMI will continue to provide
certain administrative services including purchasing, benefits administration,
accounting, management and data processing services to CardioTech and will make
available certain facilities and equipment to CardioTech. PMI will be reimbursed
monthly by CardioTech for the direct costs and expenses incurred in connection
with the provisions of such services. The agreement has a term of one year.
CardioTech is committed to make monthly fixed payments of $15,000, or $180,000
annually.

                                       A-9


   66


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

License Agreement

                  PMI has granted to CardioTech a non-exclusive, perpetual,
world-wide, royalty-free license for CardioTech to use all of the necessary
patent and other intellectual property owned by PMI in the implantable devices
and materials field (collectively, "PMI Licensed Technology"). PMI, at its own
expense, will file patent or other applications for the protection of all new
inventions formulated, made or conceived by PMI during the term of the license
that related to PMI Licensed Technology and all such inventions will be part of
the technology licensed to CardioTech. CardioTech, at its own expense, will file
patent or other applications for the protection of all new inventions
formulated, made, or conceived by CardioTech during the term of the license that
related to PMI Licensed Technology and all such inventions shall be exclusively
licensed to PMI for use by PMI in fields other than the implantable devices and
materials field.

Tax Matters Agreement

         The Tax Matters Agreement provides, among other things, that PMI will
be responsible for all federal, state, local and foreign tax liabilities of
CardioTech for periods ending on or prior to the Distribution Date and
CardioTech will be responsible for all tax liabilities of CardioTech subsequent
to that time. The Tax Matters Agreement further provides that for the tax year
of PMI that includes the Distribution Date and the tax year of CardioTech that
commences immediately following the Distribution Date, PMI will claim on its
federal income tax returns certain specified tax benefits and CardioTech will
not claim any of such tax benefits through the Distribution Date.

D.  Property and Equipment:

         Property and equipment are recorded at cost. Depreciation is computed
using the straight-line method based on the estimated useful lives of the
various assets which range from five to seven years. Upon retirement or disposal
of fixed assets, the costs and accumulated depreciation are removed from the
accounts, and any gain or loss is reflected in income. Expenditures for repairs
and maintenance are charged to expense as incurred.

         Property and equipment consist of the following:



                                             March 31,     March 31,    December 31,
                                              1994           1995          1995
                                              ----           ----          ----

                                                                     
Laboratory equipment                         $ 44,796      $ 44,796      $ 44,796

Furniture, fixtures and office equipment       11,312        12,330        12,330
                                             --------      --------      --------

                                               56,108        57,126        57,126

Less accumulated depreciation                  (4,390)      (13,480)      (19,776)
                                             --------      --------      --------

                                             $ 51,718      $ 43,646      $ 37,350
                                             ========      ========      ========



         Depreciation expense for property and equipment for the years ended
March 31, 1993, 1994 and 1995 and for the nine months ended December 31, 1994
and 1995 was approximately $0, $4,500, $8,900, $6,200 and $6,300, respectively.

                                      A-10


   67


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

E.  Stockholders' Equity:

         CardioTech was incorporated in March 1993 and issued 67,500 shares of
its common stock, of which 60,000 shares were issued to PMI and 7,500 shares
were issued to certain founders. There were 100,000 shares of Common Stock
authorized for issuance. See Notes H and I.

         On March 19 and May 9, 1996, CardioTech amended its Articles of
Organization to: (i) effect a net 41.95 for one stock split of CardioTech
Common Stock (reflecting a 54.73 for one stock split effected on March 19, 1996
and a 0.77 for one reverse stock split effected on May 9, 1996), (ii) increase
the number of authorized shares of CardioTech Common Stock to 20,000,000 shares
and (iii) authorize a class of 5,000,000 shares of Preferred Stock. The
financial statements have been restated to reflect these amendments.

F.  Purchase of Certain Assets from Newtec Vascular Products Limited:

         In September 1993, PMI purchased certain assets from Newtec for
$176,500 and transferred the assets to CardioTech. These assets principally
consisted of laboratory equipment, patents and know-how related to vascular
graft technology. The purchase price was allocated to the tangible and
intangible assets based on the fair market value of those assets. At the time of
the purchase, CardioTech evaluated the purchased technology and considered the
additional development work necessary to produce safe, reliable and effective
grafts for commercial sale. Based on CardioTech's evaluation, it was determined
that the purchased technology was incomplete and, because the technology had no
alternative future use (in other research and development projects or
otherwise), the portion of the purchase price allocated to the patent and
related know-how, or $113,600, was charged to research and development expense
in September 1993.

G.  Major Customers:

          Customers comprising more than 10% of CardioTech's research revenues
are shown as follows:



                                              Year Ended                     Nine Months Ended
                                               March 31,                        December 31,
                                               ---------                        ------------
                                    1993         1994         1995          1994           1995
                                    ----         ----         ----          ----           ----
                                                                             
          Customer A                 33%          38%          49%           46%            43%
          Customer B                 31%          28%          19%           23%            --
          Customer C                 12%          --           --            --             --
          Customer D                 15%          --           --            --             --
          Customer E                 --           --           18%           16%            30%


H.  Related Party Transactions:

          As of December 31, 1995, the following executive officers and 
directors of PMI owned a total of 7,500 shares of CardioTech: Michael Szycher,
Ph.D., Steven J. Lee, Arthur A. Siciliano, Ph.D., Andrew M. Reed, Ph.D. , Eric
G. Walters and Robert J. Zappa.  See Note I.

          One officer of PMI currently serves on CardioTech's board of 
Directors.

I.  Subsequent Events (unaudited):

          On March 19 and May 9, 1996, CardioTech entered into a Common Stock
Subscription Agreement pursuant to which CardioTech agreed to issue 973,758
shares of CardioTech Common Stock for $3.8 million in cash, equipment having
an estimated market value of $147,000, the transfer of certain vascular graft
manufacturing patents, and the forgiveness of all amounts due PMI. After PMI
acquired these shares, it owned 3,490,638 shares, or 91.7% of CardioTech
Common Stock. All of such shares will be distributed by PMI to its stockholders.

          The Board of Directors of PMI expects to declare a stock dividend
for the purpose of making a distribution (the "Distribution") to PMI's
stockholders of all of the outstanding shares it owns in CardioTech. PMI
believes that the distribution of CardioTech Common Stock in the Distribution
will qualify as a "tax-free" spinoff under Section 355 of the Internal
Revenue Code of 1986, as amended.

                                      A-11


   68


                         CardioTech International, Inc.
                   Notes to Consolidated Financial Statements
       (Information as of and for the nine months ended December 31, 1994
                            and 1995 is unaudited.)

          CardioTech's 1996 Employee, Director and Consultant Stock Option Plan
(the "Plan") was approved by CardioTech's Board of Directors and stockholders in
March 1996. A total of approximately 1,100,000 shares of CardioTech Common Stock
have been reserved for issuance under the Plan, of which options exercisable for
approximately 828,000 shares will be granted effective as of the Distribution
Date to members of CardioTech's Board of Directors and to certain of its
executive officers at the fair market value of CardioTech Common Stock on the
date of the grant. Of such options, options to purchase approximately 400,000
shares of CardioTech Common Stock will be granted to Dr. Szycher pursuant to the
Plan.

                                      A-12
   69

                                                                  EXHIBIT B
                                                                  ---------

                           POLYMEDICA INDUSTRIES, INC.

                      SELECTED CONSOLIDATED FINANCIAL DATA


     The balance sheet data presented below as of March 31, 1992, 1993, 1994 and
1995 and the statement of operations data presented below for each of the years
in the five-year period ended March 31, 1995 have been derived from the
consolidated financial statements of PolyMedica Industries, Inc., which have
been audited by Coopers & Lybrand L.L.P. The balance sheet data presented below
as of March 31, 1991 and December 31, 1995 and the consolidated financial data
for the nine month periods ended December 31, 1994 and 1995 have been derived
from the unaudited consolidated financial statements of the Company. In the
opinion of management, the unaudited financial statements have been prepared on
the same basis as the audited consolidated financial statements and include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the nine months ended December 31, 1995 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 1996. This data should be read in conjunction with the other financial
information included elsewhere in this Information Statement.


                                                                                                                  Nine Months
                                                                                                                     Ended
                                                                     Year Ended March 31,                         December 31,
                                             ------------------------------------------------------------    ----------------------
                                                1991         1992        1993        1994          1995         1994        1995   
                                             ------------------------------------------------------------    ----------------------
                                                      (in thousands, except per share data)

                                                                                                           
Statement of Operations Data:
Revenues:
  Net product sales                          $  4,610     $  6,041     $  9,814     $ 21,785     $ 25,110     $ 18,787     $ 18,891
  Royalties, exclusivity,
  development and license fees                    438          744        1,208          696        1,910          714          436
                                             --------     --------     --------     --------     --------     --------     --------

Total revenues                                  5,048        6,785       11,022       22,481       27,020       19,501       19,327

Cost of product sales                           3,341        3,915        5,230        8,943       10,014        7,331        7,458
Non-recurring inventory charge                   --           --          1,077          163         --           --           --
                                             --------     --------     --------     --------     --------     --------     --------
Total revenues, less cost of
  product sales and non-recurring
    inventory charge                            1,707        2,870        4,715       13,375       17,006       12,170       11,869

Operating expenses:
  Selling, general and
    administrative                              2,551        5,437        7,462       11,375       11,922        8,959        7,134
  Research and development                        288        1,097          795        1,239        1,138          744        1,178
                                             --------     --------     --------     --------     --------     --------     --------
Income (loss) from operations                  (1,132)      (3,664)      (3,542)         761        3,946        2,467        3,557

Other income and expense:
  Investment income                                99          198          841          349          566          376          620
  Interest expense                               (121)        (342)        (770)      (2,714)      (2,668)      (2,003)      (1,997)
  Other income (expense)                         --           --           (468)       1,279         --           --           --
                                             --------     --------     --------     --------     --------     --------     --------
Income (loss) before income taxes              (1,154)      (3,808)      (3,939)        (325)       1,844          840        2,180

Provision for income taxes                       --           --           --             90           55           55           55
                                             --------     --------     --------     --------     --------     --------     --------

Net income (loss)                            $ (1,154)    $ (3,808)    $ (3,939)    $   (415)    $  1,789     $    785     $  2,125
                                             ========     ========     ========     ========     ========     ========     ========
                                            
Net income (loss) per
  common share                               $   (.33)    $   (.94)    $   (.56)    $   (.06)    $    .26     $    .12     $    .29
                                             ========     ========     ========     ========     ========     ========     ========

Weighted average number of
  common shares outstanding                     3,491        4,071        6,982        6,866        6,790        6,581        7,330



                                         B-1


   70






                                                                        At March 31,                                 At December 31,
                                           -------------------------------------------------------------------       --------------
    BALANCE SHEET DATA:                       1991          1992           1993           1994          1995              1995
                                           -------------------------------------------------------------------       --------------

                                                                                                       
Cash and investments (1)                    $1,305        $35,165        $11,469        $13,261        $14,006          $19,761
Total assets                                 5,058         42,714         64,144         64,532         65,753           71,118
Total liabilities                            2,260          2,698         28,173         29,188         29,027           28,569
Total debt                                   1,144            763         24,595         24,510         24,433           24,487
Total stockholders' equity                   2,798         40,016         35,971         35,344         36,726           42,549

<FN>

(1) Includes cash, cash equivalents and marketable securities.


                                       B-2






   71


                           POLYMEDICA INDUSTRIES, INC.

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

OVERVIEW

     PolyMedica Industries, Inc. (the "Company") generates revenues from sales
of medical devices and products, consisting of advanced wound dressings,
consumer healthcare products and prescription and non-prescription
pharmaceutical products. In determining net product sales, the Company records
an allowance for future returns of its products as an adjustment to gross sales.
In addition, it generates revenues from royalties, exclusivity, development and
license fees on certain of its products and from research and development
activities for specific product improvements.

     The Company sells its products through a combination of national
distributors, wholesalers and retail chains. It has established exclusive
relationships with Bristol-Myers Squibb, Mylan Labortatories, Inc. ("Mylan"),
Hisamitsu Pharmaceutical Co., Inc. ("Hisamitsu") and other distributors for the
sale of its advanced wound dressings to institutional customers, such as
hospitals, nursing homes and other healthcare providers. Consumer healthcare and
pharmaceutical products are sold through a network of more than 100 independent
sales representatives and national wholesalers such as McKesson Drug Company,
Bergen Brunswig Corporation and FoxMeyer Corporation and to retailers including
CVS HC Inc., Jack Eckerd Co., OSCO (American Drug Stores, Inc.) and Rite-Aid
Corp. The Company promotes sales of its products through national advertising in
consumer and professional publications, on television and at professional and
trade group meetings, as well as through retail advertising.

     Although certain of the Company's products are seasonal in nature, the
Company does not believe its net product sales, in the aggregate, are generally
subject to material seasonal fluctuations. Thermometer sales to consumers are
higher during the winter cold and flu season. The Company's non-prescription
urological products show higher retail sales during the warmer months, as well
as from Patch Kits for People , which are used for outdoor sports activities
during the summer and fall seasons. The Company expects uneven ordering patterns
from the U.S. distributors of its wound care products as annual minimum purchase
requirements pursuant to distribution agreements with the Company are fulfilled
in order for those distributors to maintain territorial exclusivity. The Company
believes that the changes in ordering patterns are due to inventory level
adjustments at those distributors.

     The Company is completing approvals on a comprehensive line of new wound
dressing products to be sold directly to the professional market. This is an
expansion of the Company's marketing and distribution focus. The Company's goal
is to provide superior wound management in each major reimbursement category and
to use its competitive edge as an efficient, vertically-integrated manufacturer
of wound care products to offer high technology, low-cost wound dressings
directly to wholesalers and distributors already in its healthcare distribution
network.

     The Company operates from manufacturing, distribution, and research and
development facilities located in Massachusetts, Colorado and the United
Kingdom. Virtually all of the Company's product sales are denominated in U.S.
dollars. The Company produces proprietary polyurethane materials from which it
manufactures advanced wound dressings as well as vascular grafts currently under
development. The Company's research and development activities are principally
funded from ongoing operations and consist of the design, development and
manufacture of polyurethane-based medical products derived from proprietary
technology and manufacturing processes.

     Integral to the Company's growth strategy is the acquisition of
complementary products and businesses. The Company has successfully integrated
five acquisitions since 1990.

     Period to period comparisons of changes in net product sales are not
necessarily indicative of results to be expected for any future period.

                                       B-3


   72

RESULTS OF OPERATIONS

Nine Months Ended December 31, 1995 Compared to Nine Months Ended 
December 31, 1994

     The Company's net income increased by 171.3% to $2.13 million, or $.29 per
common share, in the nine months ended December 31, 1995. This performance
represents an increase from net income of $785,000, or $.12 per common share,
reported in the nine months ended December 31, 1994.

     Operating margins increased to 18.4%, or $3.56 million, in the nine months
ended December 31, 1995, as compared with 12.6%, or $2.47 million, in the nine
months ended December 31, 1994.

     Total wound care net product sales of MITRAFLEX and SPYROFLEX increased by
5.0% to $5.08 million in the nine months ended December 31, 1995 as compared
with $4.84 million in the nine months ended December 31, 1994. The overall 5.0%
increase in net product sales was principally the result of an increase in total
unit volume, stated on a 4" x 4" equivalent basis, offset by a lower average
unit price. Net product sales of SPYROFLEX to Mylan increased by 16.6% to $2.36
million in the nine months ended December 31, 1995 as compared with $2.02
million in the nine months ended December 31, 1994, primarily as a result of a
28.0% increase in unit sales, partially offset by a decrease in average unit
price. Net product sales of MITRAFLEX remained stable in the nine months ended
December 31, 1995 as compared with the nine months ended December 31, 1994. Net
product sales in the United Kingdom decreased by 17.1% to $794,000 in the nine
months ended December 31, 1994 as compared with $958,000 in the nine months
ended December 31, 1995, primarily due to a 27.6% decrease in unit sales. The
decrease was primarily due to shipments of stocking orders of new OTC wound care
product to European purchasers. The decrease in overall average unit price in
the nine months ended December 31, 1995 as compared with the nine months ended
December 31, 1994 was the result of volume discounts to one distributor, a
change in the mix of product sizes and the inclusion of sales of a new,
lower-priced wound care product.

     Consumer healthcare net product sales increased by 14.0% to $4.55 million
in the nine months ended December 31, 1995 as compared with $3.99 million in the
nine months ended December 31, 1994. This increase was primarily due to larger
sales volumes of digital and glass fever thermometers and ear, nose and throat
kits and the introduction of the Patch Kits for People consumer wound care
product line.

     Net product sales of the Company's prescription and non-prescription
pharmaceutical products decreased by 6.8% to $9.09 million in the nine months
ended December 31, 1995 as compared with $9.75 million in the nine months ended
December 31, 1994. The Company believes that this decrease is due to the affect
of promotional pricing programs for the nine months ended December 31, 1994
which were not repeated for the nine months ended December 31, 1995, as well as
the effect of a strategic decision in fiscal 1995 to focus on the profitability
of these products.

     Royalty, exclusivity, development and license fees decreased by 38.9% to
$436,000 in the nine months ended December 31, 1995 as compared with $714,000 in
the nine months ended December 31, 1994. This decrease is primarily due to
reductions in fees earned (i) from the Company's exclusive distributor of wound
care products in the United Kingdom, (ii) for the development of ChronoFlex for
specific product applications and (iii) from the Company's program with a
distributor for the exclusive licensing and distribution of certain new wound
dressings during the nine months ended December 31, 1994.

     As a percentage of net product sales, overall gross margins were relatively
unchanged at 60.5% in the nine months ended December 31, 1995 and 61.0% in the
nine months ended December 31, 1994.

     SG&A expenses decreased by 20.4% in the nine months ended December 31, 1995
to $7.13 million as compared with $8.96 in the nine months ended December 31,
1994. Included in SG&A expenses were depreciation and amortization, wages,
benefit costs, and outside professional services totalling $3.41 million in the
nine months ended December 31, 1995, or 47.8% of SG&A expenses, as compared with
$4.12 million or 45.8% of SG&A expenses in the nine months ended December 31,
1994. Amortization expense decreased by $663,000 in the nine months ended
December 31, 1995, as compared with the nine months ended December 31, 1994, as
a result of the

                                       B-4


   73
extension in March 1995 of a covenant not to compete made by Alcon, and the
related amortization period by five years to ten years. In addition, marketing
and sales expenses for the promotion of pharmaceutical products decreased by
55.2% to $1.03 million in the nine months ended December 31, 1995, as compared
with $2.30 million in the nine months ended December 31, 1994, due to a
strategic decision in fiscal 1995 to focus on the profitability of these
products.

     Research and development expenses increased by 58.6% to $1.18 million in
the nine months ended December 31, 1995, as compared with $774,000 in the nine
months ended December 31, 1994. This increase is primarily due to an
acceleration of the Company's ongoing vascular graft development projects and
costs associated with the initiation of pilot production testing of the
Company's in-house pharmaceutical manufacturing equipment.

     Investment income increased by 64.9% to $620,000 in the nine months ended
December 31, 1995, as compared with $376,000 in the nine months ended December
31, 1994, as the Company earned interest on larger average cash balances, in
part due to proceeds from the Company's common stock offering in November 1995,
at higher overall interest rates. Interest expense was relatively unchanged in
the nine months ended December 31, 1995 as compared with the nine months ended
December 31, 1994, as the Company accrued interest expense in both periods on
the Hancock Notes.

Year Ended March 31, 1995 ("fiscal 1995") Compared to Year ended March 31, 1994 
("fiscal 1994")

     Total revenues increased by 20.2% to $27.02 million in fiscal 1995 as
compared with $22.48 million in fiscal 1994.

     Total wound care net product sales increased by 121.0% to $6.73 million in
fiscal 1995 as compared with $3.05 million in fiscal 1994. The overall 121.0%
increase in net product sales was substantially the result of an increase in
total unit volume for all wound dressings, stated on a 4" x 4" equivalent basis.
Net product sales of FLEXZAN to Mylan increased 429.8% to $2.73 million in
fiscal 1995 as compared with $515,000 in fiscal 1994 primarily as a result of a
409.5% increase in unit sales in fiscal 1995 as compared with fiscal 1994. Net
product sales of MITRAFLEX, principally to Bristol-Myers Squibb, increased by
14.5% to $2.57 million in fiscal 1995 as compared with $2.25 million in fiscal
1994 principally as a result of a 13.2% increase in unit sales in fiscal 1995 as
compared with fiscal 1994. In addition, European wound care net product sales,
which products are primarily manufactured and sold from the Company's United
Kingdom facility, increased to $1.43 million in fiscal 1995, a fivefold increase
as compared with $284,000 in fiscal 1994, due to sales of new products
introduced into the European consumer and sports marketplace.

     Consumer healthcare net product sales decreased by 3.4% to $5.46 million in
fiscal 1995 as compared with $5.65 million in fiscal 1994. Sales in fiscal 1995
of these products, principally thermometers, were affected by unusually warm
fall and winter temperatures, resulting in a below-normal cough and cold season.

     Net product sales of the Company's prescription and non-prescription
pharmaceutical products decreased by 1.6% to $12.65 million in fiscal 1995 as
compared with $12.86 million in fiscal 1994. The Company believes that this
difference reflected changes in the timing of orders.

     Royalty, exclusivity, development and license fees grew by 174.5% to $1.91
million in fiscal 1995 as compared with $696,000 in fiscal 1994. This increase
was due primarily to $1.00 million which the Company received in January 1995
from Merck & Co., Inc. ("Merck"), the then-exclusive United States distributor
of MITRAFLEX, in connection with the transfer of exclusive distribution rights
from Merck to Bristol-Myers Squibb.

     As a percentage of net product sales, overall gross margins (excluding a
non-recurring inventory charge in the amount of $163,000 in fiscal 1994)
increased to 60.1% in fiscal 1995 from 58.9% in fiscal 1994. Included in fiscal
1995 cost of product sales were a one-time manufacturing charge from Alcon and
certain obsolescence reserves. Gross margins in fiscal 1994 were reduced by
inventory charges for a discontinued product.

                                       B-5


   74

     SG&A expenses increased by 4.8% in fiscal 1995 to $11.92 million as
compared with $11.37 million in fiscal 1994. Included in SG&A expenses were
depreciation and amortization, wages, benefit costs, and outside professional
fees totalling $5.69 million in fiscal 1995, or 47.8% of SG&A expenses. This
amount is comparable to $5.38 million, or 47.3% of SG&A expenses, in fiscal
1994.

     Excluding a fiscal 1994 one-time valuation writedown for certain laboratory
and pilot processing equipment in the United Kingdom wound care facility of
$267,000, research and development expenses increased by 17.2% to $1.14 million
in fiscal 1995 as compared with $971,000 in fiscal 1994.

     In fiscal 1994, the Company reached an agreement with Alcon in which the
requirement for Alcon to manufacture a certain size of ANESTACON was terminated.
The Company received $1.28 million from Alcon as a result of this agreement and
recorded it as Other Income.

     Investment income increased by 62.1% to $566,000 in fiscal 1995 as compared
with $349,000 in fiscal 1994, as the Company earned interest both on larger
average cash balances and from higher overall interest rates. Interest expense
was relatively unchanged at $2.67 million in fiscal 1995 as compared with $2.71
million in fiscal 1994, as the Company accrued and paid interest in both periods
on the Hancock Notes.

     The Company's net income increased to $1.79 million, or $.26 per common
share, in fiscal 1995. This performance represents an increase from a net loss
of $415,000, or $.06 per common share, in fiscal 1994.

Year Ended March 31, 1994 ("fiscal 1994") Compared to Year Ended March 31, 1993 
("fiscal 1993")

     Total revenues increased by 104.0% to $22.48 million in fiscal 1994 as
compared with $11.02 million in fiscal 1993. Included in fiscal 1993 were three
and one-half months of pharmaceutical product sales compared with twelve months
in fiscal 1994, which is the principal reason for the substantial revenue
increase in fiscal 1994.

     Total wound care net product sales of MITRAFLEX, SPYROFLEX and FLEXZAN
increased by 25.3% to $3.05 million in fiscal 1994 as compared with $2.43
million in fiscal 1993. The overall 25.3% increase in net product sales was
principally the result of an increase in total unit volume for all wound
dressings stated on a 4" x 4" equivalent basis, partially offset by a decrease
in average unit price. This increase in net product sales and unit volume was
primarily a result of first time sales of FLEXZAN of $515,000. In addition, net
product sales of MITRAFLEX increased by 7.3% to $2.25 million in fiscal 1994 as
compared with $2.10 million in fiscal 1993, principally as a result of a 27.5%
increase in unit sales and partially offset by a decrease in average unit price.
The decrease in average unit price in fiscal 1994 was principally due to the
inclusion of larger shipments of lower-priced FLEXZAN in fiscal 1994.

     Consumer healthcare net product sales increased by 27.0% to $5.65 million
in fiscal 1994 as compared with $4.45 million in fiscal 1993. This increase was
largely attributable to the expanded sales in the categories of digital and
glass thermometers both in branded and private label markets and the performance
of new home healthcare kits.

     Net product sales of the Company prescription and non-prescription
pharmaceutical products were $12.86 million in fiscal 1994 and $2.93 million for
the three and one-half month-period from the acquisition of these products in
December 1992 to March 1993.

     Royalty, exclusivity, development and license fees decreased by 42.4% to
$696,000 in fiscal 1994 as compared with $1.21 million in fiscal 1993. Included
in fiscal 1993 was a $200,000 signing fee paid by Mylan for the appointment of
Mylan as the exclusive distributor for FLEXZAN and a $231,750 signing fee paid
by Hisamitsu in connection with the appointment of Hisamitsu as the exclusive
distributor of SPYROFLEX in Japan.

     As a percentage of net product sales, overall gross margins (excluding
non-recurring inventory charges in the amount of $163,000 and $1.08 million in
fiscal 1994 and fiscal 1993, respectively) increased to 58.9% in fiscal 1994
from 46.7% in fiscal 1993, reflecting a full year in fiscal 1994 of higher
pharmaceutical gross margins and improved wound care gross margins. These
increases were partially offset by an inventory obsolescence write-off of
$378,000

                                       B-6


   75

for a discontinued product in fiscal 1994, which adjusted the value of such
existing discontinued product inventory to zero.

     SG&A expenses increased by 52.4% in fiscal 1994 to $11.37 million as
compared with $7.46 million fiscal 1993. Included in SG&A expenses were
depreciation and amortization, wages, benefit costs, and outside professional
fees totalling $5.38 million in fiscal 1994, or 47.3% of SG&A expenses. This
amount was comparable to $3.97 million or 55.4% of SG&A expenses in fiscal 1993.
Significant reasons for the increase were a full year of intangibles
amortization in fiscal 1994 for the pharmaceutical division acquired in
December, 1992 and the introduction in fiscal 1994 of a marketing plan for the
promotion of prescription and non-prescription pharmaceutical products.

     Research and development expenses increased by 55.8% to $1.24 million in
fiscal 1994 from $795,000 in fiscal 1993. The increase was mainly due to an
investment by the Company in the vascular graft development project to test the
feasibility of ChronoFlex for small-bore (4-6mm) vascular grafts as well as a
write-off of certain development equipment.

     In fiscal 1994, the Company reached an agreement with Alcon in which the
requirement for Alcon to manufacture a certain size of ANESTACON was terminated.
The Company received $1.28 million as a result of this agreement and recorded it
as Other Income.

     Investment income decreased by 58.5% to $349,000 in fiscal 1994 as compared
with $841,000 in fiscal 1993, as the Company earned interest on lower average
cash balances in fiscal 1994 as compared with fiscal 1993 due to the acquisition
of the WEBCON product line in December 1992, a portion of the purchase price for
which was paid from corporate cash. Interest expense increased to $2.71 million
in fiscal 1994 from $770,000 in fiscal 1993 as the Company accrued and paid
interest for a full year in fiscal 1994 on the Hancock Notes.

     The Company incurred a net loss in fiscal 1994 of $415,000 as compared with
the net loss of $3.94 million in fiscal 1993. On a per share basis, the Company
lost $0.06 per share in fiscal 1994 as compared with $.56 loss per share in
fiscal 1993.

LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, the Company has raised $50.71 million in gross equity
capital, of which $39.00 million was from its March 1992 initial public
offering, $4.55 million from a November 1995 public offering of 700,000 shares
of common stock and $7.16 million from prior private placement financings. In
January 1993, the Company sold to Hancock $25.00 million of 10.65% Guaranteed
Senior Secured Notes due January 31, 2003.

     As of December 31, 1995, the Company had working capital of $24.24 million,
including cash and cash equivalents of $19.76 million.

     The Company generated $3.35 million of cash flow from operations in the
nine months ended December 31, 1995, as compared with a generation of $677,000
in the nine months ended December 31, 1994. A major factor contributing to the
increase in cash flow from operations during the nine months ended December 31,
1995 was the decrease in net purchases of inventory when compared to the nine
months ended December 31, 1994, as the Company reached its goal of higher
finished goods inventory balances of its pharmaceutical products as it moves to
in-house production.

     In February 1996, the Company purchased 15,000 shares of its common stock
on the open market for approximately $96,325 under the 1 million share program
previously authorized by the Company's Board of Directors. Cumulative
repurchases of treasury stock under this program were 78,000 shares at an
aggregate cost of $340,700.

     Pilot production of certain pharmaceutical products is continuing at the
Company's Woburn, Massachusetts facility. The Company believes that this
laboratory and manufacturing complex will support both pharmaceutical
manufacturing and advanced materials development. In addition, due to the growth
in demand for the wound care

                                       B-7


   76

products manufactured in its Colorado and United Kingdom facilities, the Company
is currently investing in additional manufacturing equipment for its wound care
operations, which it expects to continue doing during fiscal 1996. In the nine
months ended December 31, 1995, the Company purchased an aggregate of $1.39
million of property, plant and equipment, which was funded by working capital.

     Under the terms of the Hancock Notes, Hancock has a security interest in
all of the assets of two of the Company's directly and indirectly owned
subsidiaries, PolyMedica Pharmaceuticals (U.S.A.), Inc. ("PMP USA") and
PolyMedica Pharmaceuticals (Puerto Rico), Inc. ("PMP PR") which amounted to
approximately $51 million as of December 31, 1995. The Company is also subject
to certain financial covenants and ratios.

     In January 1996, the Company signed an amendment to the Hancock Notes with
Hancock. Under the terms of the amendment, scheduled semi-annual repayments of
principal commence at $1.00 million each in fiscal 1998, increase to $2.08
million each beginning in January 2000 and are completed with a $7.50 million
payment at January 31, 2003. Pursuant to the amendment, the exercise price for
the Hancock warrant, exercisable for 536,993 shares of common stock of the
Company, was reduced from $8.38 to $7.00 per share and the interest rate of the
Hancock Notes was increased to 10.9%. In addition, the Company obtained less
restrictive dividend terms and revised financial covenants.

     The Company expects that its current working capital and funds generated
from future operations will be adequate to meet its liquidity and capital
requirements for current operations. In the event that the Company undertakes to
make acquisition of complementary businesses or products, the Company may
require substantial additional funding beyond currently available working
capital and funds generated from operations. Currently, the Company is
conducting an active search for strategic acquisition of complementary
businesses or products in which the Company can profit from its strong operating
margins by maximizing operating efficiencies. The Company has no present
commitments or agreements with respect to any such acquisition.

     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). The
Company is required to adopt SFAS 121 in fiscal 1997. Management believes that
the impact of the adoption of SFAS 121 will not be material.

     In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") was issued and will
require the Company to elect either expense recognition under FAS 123 or its
disclosure-only alternative for stock-based employee compensation. The expense
recognition provision encouraged by FAS 1234 would require fair-value based
financial accounting to recognize compensation expense for employee stock
compensation plans. FAS 123 must be adopted in the Company's fiscal 1996
financial statements with comparable disclosures for the prior years. The
Company has determined that it will elect the disclosure-only alternative. The
Company will be required to disclose the pro forma net income or loss and per
share amounts in the notes to the financial statements using the fair value
based method beginning in fiscal 1996 with comparable disclosures for fiscal
1995. The Company has not determined the impact of these pro forma adjustments.

     At March 31, 1995, the Company had approximately $5.3 million of net
operating loss carryforwards for income tax purposes. Pursuant to the Tax Reform
Act of 1986, the Company believes that the use of these net operating loss
carryforwards in any particular year will be limited as a result of changes in
ownership which occurred in prior periods.

INFLATION

     The moderate rate of inflation has not had a material effect on the
Company's operations.

                                       B-8


   77

                           POLYMEDICA INDUSTRIES, INC.

                         PRO FORMA FINANCIAL INFORMATION


     The pro forma financial data reflects adjustments to the historical
consolidated statements of operations, as if the Distribution had occurred at
the beginning of the period presented and adjustments to the historical
consolidated balance sheet as if the Distribution occurred at December 31, 1995.
The historical and pro forma consolidated financial statements of PolyMedica
Industries, Inc. do not necessarily reflect the results of operations or
financial position that would have been obtained had PolyMedica been an
independent company.


                 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS 
                                   (unaudited)
                      (In thousands, except per share data)

                                                 Year ended March 31, 1993
                                            ----------------------------------
                                                          CardioTech
                                                         Statement of     Pro
                                            Historical   Operations(a)   Forma
                                            ----------   -------------   -----

                                                                   
Total revenues                               $11,022      $  (423)     $10,599

Cost of product sales                          5,230         --          5,230
                                             -------      -------      -------

Non-recurring inventory charge                 1,077         --          1,077

Total revenues, less cost of product sales     4,715         (423)       4,292

Operating expenses:

  Selling, general, and administrative         7,462         (229)       7,233
  Research and development                       795         (377)         418
                                             -------      -------      -------

  Total operating expense                      8,257         (606)       7,651
                                             -------      -------      -------

Income (loss) from operations                 (3,542)         183       (3,359)

Other income and expenses:

  Investment income                              841         --            841
  Interest expense                              (770)        --           (770)
  Other income (expense)                        (468)        --           (468)
                                             -------      -------      -------

  Total other income/expense                    (397)        --           (397)
                                             -------      -------      -------

Income (loss) before income taxes             (3,939)         183       (3,756)
Provision for income taxes                        --           --           --
                                             -------      -------      -------

Net income (loss)                            $(3,939)     $   183      $(3,756)
                                             =======      =======      ======= 

Net income (loss) per common share           $  (.56)                  $  (.54)
                                             =======                   ======= 

Weighted average number of
  common shares outstanding                    6,982                     6,982
                                             =======                   ======= 



            See accompanying notes to pro forma financial statements.

                                       B-9


   78



                                                Year ended March 31, 1994
                                            ----------------------------------
                                                          CardioTech
                                                         Statement of    Pro
                                            Historical   Operations(a)  Forma
                                            ----------------------------------

                                                                   
Total revenues                               $22,481      $  (286)     $22,195

Cost of product sales                          8,943         --          8,943
                                             -------      -------      -------

Non-recurring inventory charge                   163         --            163

Total revenues, less cost of product sales    13,375         (286)      13,089

Operating expenses:

  Selling, general, and administrative        11,375         (376)      10,999
  Research and development                     1,239         (700)         539
                                             -------      -------      -------

  Total operating expense                     12,614       (1,076)      11,538
                                             -------      -------      -------

Income from operations                           761          790        1,551

Other income and expenses:

  Investment income                              349         --            349
  Interest expense                            (2,714)        --         (2,714)
  Other income (expense)                       1,279         --          1,279
                                             -------      -------      -------

  Total other income/expense                  (1,086)        --         (1,086)
                                             -------      -------      -------

Income (loss) before income taxes               (325)         790          465
Provision for income taxes                        90           40          130
                                             -------      -------      -------

Net income (loss)                            $  (415)     $   750      $   335
                                             =======      =======      =======

Net income (loss) per common share           $  (.06)                  $   .05
                                             =======                   =======

Weighted average number of
  common shares outstanding                    6,866                     6,866
                                             =======                   =======
                                               


            See accompanying notes to pro forma financial statements.

                                      B-10


   79


                                                 Year ended March 31, 1995
                                           ----------------------------------
                                                         CardioTech
                                                        Statement of     Pro
                                           Historical   Operations(a)   Forma
                                           ----------   -------------   -----

                                                                   
Total revenues                               $27,020      $  (408)     $26,612

Cost of product sales                         10,014           --       10,014
                                             -------      -------      -------

Total revenues, less cost of product sales    17,006         (408)      16,598

Operating expenses:

  Selling, general, and administrative        11,922         (298)      11,624
  Research and development                     1,138         (708)         430
                                             -------      -------      -------

  Total operating expense                     13,060       (1,006)      12,054
                                             -------      -------      -------

Income from operations                         3,946          598        4,544

Other income and expenses:

  Investment income                              566           --          566
  Interest expense                            (2,668)          --       (2,668)
                                             -------      -------      -------

  Total other income/expense                  (2,102)          --       (2,102)
                                             -------      -------      -------

Income before income taxes                     1,844          598        2,442
Provision for income taxes                        55           18           73
                                             -------      -------      -------

Net income                                   $ 1,789      $   580      $ 2,369
                                             =======      =======      =======

Net income per common share                  $   .26                   $   .35
                                             =======                   =======

Weighted average number of
  common shares outstanding                    6,790                     6,790
                                             =======                   =======


            See accompanying notes to pro forma financial statements.

                                      B-11


   80




                                            Nine months ended December 31, 1995
                                            -----------------------------------
                                                           CardioTech
                                                          Statement of    Pro
                                             Historical   Operations(a)  Forma
                                             ----------   -------------  -----

                                                                   
Total revenues                                $19,327      $  (143)     $19,184

Cost of product sales                           7,458           --        7,458
                                              -------      -------      -------

Total revenues, less cost of product sales     11,869         (143)      11,726
                                              -------      -------      -------

Operating expenses:

  Selling, general, and administrative          7,134         (252)       6,882
  Research and development                      1,178         (633)         545
                                              -------      -------      -------

  Total operating expense                       8,312         (885)       7,427
                                              -------      -------      -------

Income from operations                          3,557          742        4,299
                                              -------      -------      -------

Other income and expenses:

  Investment income                               620           --          620
  Interest expense                             (1,997)          --       (1,997)
                                              -------      -------      -------

  Total other income/expense                   (1,377)          --       (1,377)
                                              -------      -------      -------

Income before income taxes                      2,180          742        2,922
Provision for income taxes                         55           19           74
                                              -------      -------      -------

Net income                                    $ 2,125      $   723      $ 2,848
                                              =======      =======      =======

Net income per common share                   $   .29                   $   .39
                                              =======                   =======

Weighted average number of
  common shares outstanding                     7,330                     7,330
                                              =======                   =======



            See accompanying notes to pro forma financial statements.

                                      B-12


   81



                       PRO FORMA CONSOLIDATED BALANCE SHEET OF
                             POLYMEDICA INDUSTRIES, INC.
                                     (unaudited)
                               (Dollars in Thousands)

                                                             December 31, 1995
                                                   -------------------------------------  
                                                                   Pro Forma        Pro
         ASSETS                                    Historical     Adjustments      Forma
                                                   ----------     -----------      -----
                                                                           
Current assets:
  Cash and cash equivalents                           $19,761      $(3,830)(c)     $15,931
  Accounts receivable - trade, net of allowance
    for doubtful accounts of $104                       3,100           --           3,100
  Accounts receivable -- other                             85           --              85
  Inventories                                           4,917           --           4,917
  Prepaid expenses and other current assets               463           --             463
                                                      -------      -------         -------

       Total current assets                            28,326       (3,830)         24,496

Property, plant, and equipment, net                     6,068         (184)(b)       5,884
Intangible assets, net                                 36,211           --          36,211
Other assets, net                                         513           --             513
                                                      -------      -------         -------

       Total assets                                   $71,118      $(4,014)        $67,104
                                                      =======      =======         =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable -- trade                           $   395      $    --         $   395
  Accrued expenses                                      3,687           --           3,687
                                                      -------      -------         -------

       Total current liabilities                        4,082           --           4,082

Senior debt, net of unamortized discount of $513       24,487           --          24,487
                                                      -------      -------         -------

       Total liabilities                               28,569           --          28,569
                                                      -------      -------         -------

Commitments

Stockholders' equity:
  Preferred stock $.01 par value; 2,000,000
    shares authorized, none issued or outstanding        --           --              --
  Common stock, $.01 par value, 20,000,000
    shares authorized, 7,674,245 issued                    76         --                76
  Treasury stock, at cost, 144,905 shares                (939)        --              (939)
  Additional paid-in capital                           52,248       (4,014)         48,234
  Accumulated deficit                                  (8,254)        --            (8,254)
  Notes receivable from officers                         (415)        --              (415)
  Currency translation adjustment                        (167)        --              (167)
                                                      -------      -------         -------

       Total stockholders' equity                      42,549       (4,014)         38,535
                                                      -------      -------         -------

       Total liabilities and stockholders'
       equity                                         $71,118      $(4,014)        $67,104
                                                      =======      =======         =======



            See accompanying notes to pro forma financial statements.

                                      B-13


   82

               NOTES TO POLYMEDICA PRO FORMA FINANCIAL STATEMENTS

(a)  The pro forma adjustments eliminate revenues and expenses of CardioTech for
     the periods shown. Adjustment to provision for income taxes eliminates the
     tax benefits resulting from the inclusion of CardioTech's results of
     operations for the periods shown.

(b)  The reduction of property, plant and equipment consists of $37,000 of
     equipment owned by a subsidiary of CardioTech and $147,000 of equipment
     transferred by the Company to CardioTech in connection with the
     Restructuring prior to the Distribution.

(c)  Prior to the Distribution, PMI will invest $3,830,000 in cash and $147,000
     in equipment in CardioTech and will forgive all net amounts due to PMI. PMI
     will receive CardioTech Common Stock pursuant to the Restructuring.


     PMI will treat the operating losses of CardioTech and the costs relating to
the Restructuring and Distribution as charges from discontinued operations in
its statement of operations for the fiscal year ending March 31, 1996.

                                      B-14
   83
                                                                      EXHIBIT C
                                                                      ---------





                          CRUTTENDEN ROTH, INCORPORATED
                           18301 Von Karman, Suite 100
                            Irvine, California 92715


                                 March 18, 1996


Board of Directors 
PolyMedica Industries, Inc. 
11 State Street 
Woburn, Massachusetts 01801

Ladies and Gentlemen:

     The Board of Directors (the "Board") of PolyMedica Industries, Inc.
("PolyMedica," and together with its subsidiaries, the "Company") has retained
Cruttenden Roth, Incorporated ("CRI") to advise PolyMedica in connection with
its proposed restructuring (the "Restructuring") in which PolyMedica will
distribute (the "Distribution") to its shareholders all of its ownership
interests in its subsidiary, CardioTech International, Inc. ("CardioTech"),
which will retain or acquire all of the assets and liabilities of the Company
associated with the development and marketing of polyurethane-based medical
products, including in particular certain vascular graft products (the
"Biomedical Business"). All of the Company's other existing business will be
retained by the Company (the "Retained Business"). Information about the
Restructuring is included in the information statement (the "Information
Statement") contained in the registration statement on Form 10 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission on or about March 19, 1996, a definitive form of which will be sent
to PolyMedica's shareholders in connection with the Restructuring.

     We understand that in connection with the Restructuring and as more
particularly described in the Information Statement, the Company and CardioTech
will enter into a Common Stock Subscription Agreement (the "Subscription
Agreement") pursuant to which the Company will purchase 476,449 newly issued
shares (the "New Shares") (subject to adjustment) of common stock of CardioTech
for an aggregate purchase price of $1,500,000 in cash, equipment having an
estimated fair market value of approximately $147,000, cancellation of
intercompany loans from the Company to CardioTech aggregating approximately
$1,301,267 and the transfer of certain

   84

Board of Directors
March 18, 1996
Page 2




vascular graft manufacturing patents (collectively, the "PolyMedica
Consideration"). In addition to the New Shares, and for no additional
consideration from the Company, CardioTech will issue to the Company additional
shares of common stock of CardioTech based upon the average closing price of
CardioTech's common stock for the five trading days after the Distribution, up
to a maximum of 238,225 additional shares (the "Adjustment Shares"). The New
Shares and the Adjustment Shares are collectively referred to as the "CardioTech
Consideration."

     You have requested our opinion, as investment bankers, as to whether or not
the proposed CardioTech Consideration to be received by the Company pursuant to
the Subscription Agreement is fair, from a financial point of view, to the
Company and its shareholders.

     In conducting our analysis and arriving at our opinion as expressed herein
we have reviewed and analyzed, among other things, the following:

     (1) the Information Statement, including the Subscription Agreement and the
other exhibits filed therewith;

     (2) the reports and other information filed by the Company with the
Securities and Exchange Commission since March 31, 1993, including the current
and historical financial statements contained therein;

     (3) the historical and pro forma financial statements included in the
Information Statement for the Company and CardioTech;

     (4) management's projected financial statements for the Company (both prior
to and after the Restructuring) and CardioTech for each of the fiscal years
ending March 31, 1996 through 2002;

     (5) the historical market prices and trading volume for the Company's
common stock;

     (6) certain publicly available information concerning certain other
companies engaged in businesses which we believe to be comparable to the Company
(both prior to and after the Restructuring) and CardioTech and the historical
market prices and trading volume of such companies' securities; and

   85

Board of Directors
March 18, 1996
Page 3




     (7) the terms of certain comparable transactions which have been effected
in the past five years which we believe to be relevant.

     We also met with certain senior officers and employees of the Company and
CardioTech who provided us with additional information concerning the Company's
and CardioTech's operations, assets, condition, prospects and financing needs
and we undertook such other studies, analyses and investigations as we deemed
appropriate.

     In arriving at our opinion, we have visited but have not conducted a
physical inspection of the properties and facilities of the Company or
CardioTech, nor have we made or obtained any independent evaluation or appraisal
of such properties and facilities or of the business of the Company or
CardioTech. We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion and have
not attempted to independently verify such information. With respect to the
projected financial statements referred to above, management of the Company has
advised us that such projections have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of management as
to the future financial performance of the Company and CardioTech and that we
may assume in arriving at our opinion that the Company and CardioTech will
perform in accordance with those projections. We have also assumed, with your
consent and without any independent investigation on our part, that (i) no
material amount of income, gain or loss will be recognized by the Company or
CardioTech for federal or state income tax purposes as a result of the
Restructuring or any related transaction, (ii) the receipt of the common stock
of CardioTech in the Restructuring will be tax-free for federal and state income
tax purposes to the shareholders of PolyMedica, with the exception of the
receipt of cash in lieu of fractional shares of common stock of CardioTech,
(iii) the Restructuring will have no effect on the Company's federal income tax
net operating loss carryforwards, and (iv) the aggregate fair market value of
the PolyMedica Consideration, as determined solely by the Board of Directors of
PolyMedica, is approximately $2,948,267.

     Our opinion addresses only the fairness to the Company and its
shareholders, from a financial point of view, of the proposed CardioTech
Consideration to be received by the Company pursuant to the Subscription
Agreement. We do not express any views on any other terms of the Restructuring
or any related agreements or

   86

Board of Directors
March 18, 1996
Page 4




arrangements, including any transactions which might occur among the Company and
CardioTech and their respective affiliates after the consummation of the
Restructuring. Our opinion also does not address the Company's underlying
business decision to effect the Restructuring. We were not requested to, and did
not, solicit any third party offers to acquire all or any part of the Company or
CardioTech or make any determination as to whether any such offers could be
obtained, if solicited.

     In arriving at our opinion as expressed herein, we have considered such
financial and other factors as we have deemed appropriate and reasonable under
the circumstances, including (i) the current and historical financial position
and results of operations of the Company, including revenues, earnings, profit
margin, net worth and capitalization; (ii) the financial and business prospects
for the Retained Business and the Biomedical Business and the industry segments
in which they operate; (iii) the current and historical trading markets for
PolyMedica's common stock, including prices and price-earnings ratios, and for
the equity securities of certain companies that we believe to be comparable to
the Company (both prior to and after the Restructuring) and CardioTech; and (iv)
the terms of certain comparable transactions that we believe to be relevant. We
have also taken into account our assessment of the general economic, market and
financial conditions, as well as our experience as investment bankers generally.
Our opinion necessarily is based upon conditions as they exist and can be
evaluated on the date hereof.

     Our opinion assumes that the Restructuring is completed on the basis set
forth in the Information Statement and that the shares of common stock of
CardioTech are fully and widely distributed among investors and are subject only
to normal trading activity. We note that the estimation of market trading prices
of newly distributed securities is subject to uncertainties and contingencies,
all of which are difficult to predict and beyond the control of the firm making
such estimates. Because of the large aggregate amount of shares of common stock
of CardioTech being issued to shareholders of the Company and other factors,
such securities may trade initially at prices below those at which they would
trade on a fully distributed basis. In addition, the market prices of such
securities will fluctuate with changes in market conditions, the conditions and
prospects, financial and otherwise, of the Company and CardioTech, and other
factors which generally influence the prices of securities. In rendering our
opinion, we are not opining as to the price at which the common

   87
Board of Directors
March 18, 1996
Page 5




stock of the Company or CardioTech will trade after the Restructuring is
effected.

     CRI is acting as financial advisor to the Company in connection with the
Restructuring and will receive a fee for our services irrespective of whether or
not the Restructuring is consummated. CRI personnel who prepared this opinion
have no direct business or financial interest in the Company or any affiliated
entity. From time to time, in the ordinary course of business, CRI may hold long
or short positions in securities of PolyMedica and/or CardioTech for its own
account or the accounts of its customers and employees. CRI has performed
investment banking services for the Company prior to this engagement in
connection with the Restructuring, and may provide services to the Company
and/or CardioTech in connection with or following the Restructuring.

     It is understood that our advice and this letter is provided solely for the
benefit of the Board in evaluating the Restructuring and are not on behalf of,
and are not intended to convert any rights or remedies upon, the Company,
CardioTech, any shareholder of the Company or CardioTech or any person other
than the members of the Board. Neither this letter nor our advice is to be
quoted or referred to, in whole or in part, in any registration statement,
prospectus, proxy or information statement, or in any other written document,
nor shall this letter or our advice be used for any other purpose, in each case,
without our prior written consent.

     Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the proposed CardioTech Consideration to be
received by the Company pursuant to the Subscription Agreement is fair, from a
financial point of view, to the Company and its shareholders.

                                       Very truly yours,

                                       /s/ Cruttenden Roth, Incorporated

                                       Cruttenden Roth, Incorporated
   88

[LETTERHEAD OF CRUTTENDEN ROTH]


                                   May 8, 1996


Mr. Steven J. Lee
President and Chief Executive Officer
POLYMEDICA INDUSTRIES, INC.
11 State Street
Woburn, MA  01801

Dear Mr. Lee:

     Reference is made to our opinion letter dated March 1996 to the Board of
Directors of Polymedica Industries, Inc., which was delivered in connection with
its proposed Restructuring. The capitalized terms used herein shall have the
same meanings as set forth in our above-referenced opinion letter.

     You have requested that we confirm our earlier opinion to you. This letter
is to advise you that you are entitled to rely on our earlier opinion letter
with respect to the Restructuring as if that opinion letter was dated and
delivered to you on and as of the date hereof, subject to the same
qualifications, assumptions and considerations as set forth therein, except that
we understand (i) the Company and CardioTech have entered an Amended and
Restated Subscription Agreement pursuant to which the Company purchased an
aggregate of 973,758 New Shares of common stock of CardioTech for an aggregate
purchase price of $3,830,000 in cash, equipment having an estimated fair market
value of approximately $147,000, cancellation of intercompany loans from the
Company to CardioTech aggregating approximately $2,449,800 and the transfer of
certain vascular graft manufacturing patents and (ii) the aggregate fair market
value of the Polymedica Consideration, as determined solely by the Board of
Directors, is approximately $6,426,800.

     Neither this letter nor our advice is to be quoted or referred to in whole
or in part, in any registration statement, prospectus, proxy or information
statement, or in any other written document, in each case, without our prior
written consent.

                                       Very truly yours,

                                       CRUTTENDEN ROTH, INC.

                                       /s/ Christopher D. Jennings

                                       Christopher D. Jennings
                                       Managing Director
                                       Corporate Finance
   89

              II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

     (a) Consolidated Financial Statements - CardioTech International, Inc.

          1. Report of Independent Accountants

          2.   Consolidated Balance Sheets as of March 31, 1994 and 1995 and
               December 31, 1995 (unaudited)

          3.   Consolidated Statements of Operations for each of the three years
               in the period ended March 31, 1995 and for the nine months ended
               December 31, 1994 and 1995 (unaudited)

          4.   Consolidated Statements of Stockholders' Equity for each of the
               three years in the period ended March 31, 1995 and for the nine
               months ended December 31, 1994 and 1995 (unaudited)

          5.   Consolidated Statements of Cash Flows for each of the three years
               in the period ended March 31, 1995 and for the nine months ended
               December 31, 1994 and 1995 (unaudited)

          6.   Notes to Consolidated Financial Statements

     (b)  Exhibits

          Exhibit
            No.          Description
          -------        -----------

             2           Form of Plan and Agreement of Distribution between PMI,
                         Inc. ("PMI") and CardioTech International, Inc. 
                         ("CardioTech") to be executed on the effective date of
                         the Registration Statement on Form 10 filed by
                         CardioTech on March 20, 1996 (the "Form 10").

             3.1         Articles of Organization of CardioTech.

             3.2*        Bylaws of CardioTech.

             8           Form of Opinion of Hale and Dorr Re: Tax Matters.

             10.1        Amended and Restated Common Stock Subscription 
                         Agreement between PMI and CardioTech (including 
                         Assignment of Patents Agreement).

             10.2        Form of Tax Matters Agreement between CardioTech and 
                         PMI to be executed on the effective date of the 
                         Form 10.

             10.3        Form of Facilities and Services Agreement between 
                         CardioTech and PMI to be executed on the effective 
                         date of the Form 10.

             10.4        Amended and Restated License Agreement between PMI and
                         CardioTech.

             10.5        Form of Distribution Agency Agreement between
                         CardioTech and The First National Bank of Boston to be
                         executed on the effective date of the Form 10.



                                       52

   90

             10.6        CardioTech 1996 Employee, Director and Consultant 
                         Option Plan.

             10.7        Form of Employment Agreement of Michael Szycher.

             10.8        Form of Warrant issued by CardioTech to the John 
                         Hancock Mutual Life Insurance Company.

             10.9        Form of Letter Agreement between CardioTech, PMI and 
                         John Hancock Mutual Life Insurance Company.

             10.10+*     Development, Supply and License Agreement between PMI 
                         and Bard Access Systems, Inc. dated November 11, 1992.

             14          Material Foreign Patent

             21*         Subsidiaries of CardioTech.

             23.1        Consent of Coopers & Lybrand L.L.P.

             23.2        Consent of Hale and Dorr 

               -------------------------
             *  Previously filed
             +  Confidential treatment requested as to certain portions.









                                       53

   91

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, CardioTech International, Inc. has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       CARDIOTECH INTERNATIONAL, INC.



Date:  May 9, 1996                     By:  /s/    Michael Szycher
                                            --------------------------
                                            Name:  Michael Szycher
                                            Title: Chairman, Chief
                                                   Executive Officer
                                                   and Treasurer











































                                       54
   92
                           EXHIBIT INDEX
Exhibit
  No.         Description
- ------        -----------

  2           Form of Plan and Agreement of Distribution between PMI,
              Inc. ("PMI") and CardioTech International, Inc. 
              ("CardioTech") to be executed on the effective date of
              the Registration Statement on Form 10 filed by
              CardioTech on March 20, 1996 (the "Form 10").

  3.1         Articles of Organization of CardioTech.

  3.2*        Bylaws of CardioTech.

  8           Form of Opinion of Hale and Dorr Re: Tax Matters.

  10.1        Amended and Restated Common Stock Subscription 
              Agreement between PMI and CardioTech (including 
              Assignment of Patents Agreement).

  10.2        Form of Tax Matters Agreement between CardioTech and 
              PMI to be executed on the effective date of the 
              Form 10.

  10.3        Form of Facilities and Services Agreement between 
              CardioTech and PMI to be executed on the effective 
              date of the Form 10.

  10.4        Amended and Restated License Agreement between PMI and
              CardioTech.

  10.5        Form of Distribution Agency Agreement between
              CardioTech and The First National Bank of Boston to be
              executed on the effective date of the Form 10.


  10.6        CardioTech 1996 Employee, Director and Consultant 
              Option Plan.

  10.7        Form of Employment Agreement of Michael Szycher.

  10.8        Form of Warrant issued by CardioTech to the John 
              Hancock Mutual Life Insurance Company.

  10.9        Form of Letter Agreement between CardioTech, PMI and 
              John Hancock Mutual Life Insurance Company.

  10.10+*     Development, Supply and License Agreement between PMI 
              and Bard Access Systems, Inc. dated November 11, 1992.

  14          Material Foreign Patent

  21*         Subsidiaries of CardioTech.

  23.1        Consent of Coopers & Lybrand L.L.P.

  23.2        Consent of Hale and Dorr 

  27          Financial Data Schedule

    -------------------------
  *  Previously filed
  +  Confidential treatment requested as to certain portions.