UNITED STATES
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------


                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1
                                 ---------------



                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
                         COMMISSION FILE NUMBER 0-14266


                         UNIVERSAL DETECTION TECHNOLOGY
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

            CALIFORNIA                                     95-2746949
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

         9595 WILSHIRE BLVD., SUITE 700, BEVERLY HILLS, CALIFORNIA 90212
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                                 (310) 248-3655
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

       SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: NONE

  SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT: COMMON STOCK,
                                  NO PAR VALUE

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [_]

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]

     The issuer's revenues for its most recent fiscal year were $0.

     Based on the closing sale price on the OTC Bulletin Board on March 25,
2004, the aggregate market value of the registrant's common stock held by
non-affiliates was approximately $31,599,465. For purposes of this computation,
all directors and executive officers of the registrant are considered to be
affiliates of the registrant, as well as individual shareholders holding more
than 10% of the registrant's outstanding common stock. This assumption is not to
be deemed an admission by the persons that they are affiliates of the
registrant.

     The number of shares outstanding of the registrant's common stock as of
March 25, 2004, was 39,501,132.

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


<PAGE>




                         UNIVERSAL DETECTION TECHNOLOGY
                                   Form 10-KSB
                   For the Fiscal Year Ended December 31, 2003

                                TABLE OF CONTENTS
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                                                                                          PAGE



<S>                                                                                         <C>
PART II......................................................................................2
        Item 6.       Management's Discussion and Analysis or Plan of Operation..............2
                             Plan of Operation...............................................2
                             Summary of Significant Accounting Policies......................3
                             New Accounting Pronouncements...................................5
                             Results of Operations...........................................6
                             Liquidity and Capital Resources.................................7
                             Seasonality.....................................................8
                             Cautionary Statements and Risk Factors..........................8
        Item 7.       Financial Statements..................................................13



</TABLE>



                                       1
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PURPOSE OF THIS AMENDMENT NO. 1.

This Amendment No. 1 to our Form 10-KSB for the year ended December 31, 2003, is
being filed to reflect a change that was made to our retained earnings and
accrued expenses to correct a legal judgment recorded during the year ended
December 31, 2002. We originally recorded the amount of damages sought by the
plaintiff, rather than the amount of the final judgment. We have retroactively
restated net loss for the year ended December 31, 2002, increasing the net loss
from $1,980,718 to $2,143,218 due to an adjustment of $162,500. Accordingly, the
December 31, 2003 financial statements have been restated in this Amendment No.
1 and an adjustment has been made to retained earnings and accrued expenses as
of December 31, 2003 to correct the error. This Amendment No. 1 does not reflect
events occurring after the filing of the original Form 10-KSB, or modify or
update the disclosures therein in any way other than as required to reflect the
amendment set forth below.

                                    PART II

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

PLAN OF OPERATION


     In August 2002, we entered into a technology affiliates agreement with JPL
to develop technology for our bio-terrorism detection equipment. The agreement
provides that JPL will develop its proprietary bacterial spore detection
technology for integration into our existing aerosol monitoring system. We are
entitled to receive a non-exclusive, royalty-free license to any technology
developed under the terms of the agreement. We also have entered into a
licensing agreement with Caltech whereby we obtained an exclusive license to
sell products that incorporate the patented technology referenced in the
agreement with JPL. We expect to complete an automated prototype by in the
summer of 2004, and to begin testing sometime during the fall of 2004.

     We require immediate financing to repay our indebtedness and continue
operations. We require approximately $1.7 million to repay indebtedness in the
next twelve months and at least $1.5 million in the next six to twelve months to
complete our existing prototype, engage in testing of the device, and revise the
technology or reengineer the device as may be necessary or desirable and
otherwise execute our business plan. We actively continue to pursue additional
equity or debt financings but at the date hereof, do not have any funding
commitments. Currently, our cash on hand, together with cash generated by
operations, cannot sufficiently fund future operating losses and capital
requirements. If we are unable to obtain financing on terms acceptable to us, or
at all, we will not be able to accomplish any or all of our initiatives and will
be forced to consider steps that would protect our assets against our creditors.

     During the next twelve months we may purchase equipment to develop and
manufacture our Anthrax Smoke Detector and we may hire approximately five
employees, depending on the level of funding, if any, we receive, and our
progress on the development of our Anthrax Smoke Detector.



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<PAGE>


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

     The consolidated financial statements include the accounts of Universal
Detection Technology and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

     Revenue is recognized upon shipment of products. Title of goods is
transferred when the products are shipped from our facility. Income not earned
is recorded as deferred revenue.

INVENTORIES

     Inventories are stated at the lower of cost (first-in first-out) basis or
market.

ADVERTISING EXPENSES

     We expense advertising costs as incurred. During the years ended December
31, 2003 and 2002, we did not have significant advertising costs.

EQUIPMENT AND DEPRECIATION

     Equipment was recorded at cost less accumulated depreciation. Depreciation
was provided for on the straight-line method over the estimated useful lives of
the assets, generally five years. Total depreciation expense was $152 and $-0-
for the years ended December 31, 2003 and 2002, respectively.

STOCK-BASED COMPENSATION

     We account for stock based compensation in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." This standard requires us to adopt the "fair value" method with
respect to stock-based compensation of consultants and other non-employees. We
did not change our method of accounting with respect to employee stock options;
we continue to account for these under the "intrinsic value" method and to
furnish the pro-forma disclosures required by SFAS 123.

VALUATION OF THE COMPANY'S COMMON STOCK

     Unless otherwise disclosed, all stock based transactions entered into by us
have been valued at the market value of our common stock on the date the
transaction was entered into or have been valued using the Black-Scholes Model
to estimate the fair market value.


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<PAGE>


EARNINGS PER SHARE

     We compute earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). SFAS
128 simplifies the standards for computing earnings per share ("EPS") previously
found in Accounting Principles Board Opinion No. 15, Earnings Per Share, and
makes them more comparable to international EPS standards. SFAS 128 replaces the
presentation of primary EPS with a presentation of basic EPS. In addition, SFAS
128 requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. However, that
presentation is not required if the effect is antidilutive. Accordingly, that
presentation has not been made.

CASH EQUIVALENTS

     For purposes of reporting cash flows, we consider all short term, interest
bearing deposits with original maturities of three months or less to be cash
equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash, accounts receivable, accounts payable,
accrued expenses, notes payable and convertible debt approximate fair value
because of the short maturity of these items.

IMPAIRMENT OF LONG-LIVED ASSETS

     We evaluate our long-lived assets by measuring the carrying amounts of
assets against the estimated undiscounted future cash flows associated with
them. At the time the carrying value of those assets exceeds their fair value,
impairment is recognized. To date, no adjustments to the carrying value of the
assets has been made.

RESEARCH AND SOFTWARE DEVELOPMENT COSTS

     In 2002, we entered into a technology affiliates agreement with NASA's Jet
Propulsion Laboratory to develop technology for its bio-terrorism detection
equipment. These costs are charged to expense as incurred. Research and
development expenses were $199,000 and $82,000 for the years ended December 31,
2003 and 2002, respectively.

INCOME TAXES

     Deferred income taxes are recorded to reflect the tax consequences in
future years of temporary differences between the tax basis of the assets and
liabilities and their financial statement amounts at the end of each reporting
period. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is the tax
payable for the current period and the change during the period in deferred tax
assets and liabilities. The deferred tax assets and liabilities have been netted
to reflect the tax impact of temporary differences. At December 31, 2003 and
2002, a full valuation allowance has been established for the deferred tax asset
as management believes that it is more likely than not that a tax benefit will
not be realized.



                                       4
<PAGE>


USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     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 revenues and expenses during the reporting period. Actual results
could differ from those estimates.

RECLASSIFICATION

     Certain amounts reported in our financial statements for the year ended
December 31, 2002, have been reclassified to conform to the current year
presentation.

NEW ACCOUNTING PRONOUNCEMENTS

     In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No.
123." This Statement amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. Under the
provisions of SFAS No. 148, companies that choose to adopt the accounting
provisions of SFAS No. 123 will be permitted to select from three transition
methods: Prospective method, Modified prospective method and Retroactive
restatement method. The transition and annual disclosure provisions of SFAS No.
148 are effective for the fiscal years ending after December 15, 2002.
Management does not anticipate the implementation of this Statement to have a
material impact on the Company's financial statements.

     In April 2003, FASB issued SFAS No. 149, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for contracts entered
into or modified after June 30, 2003 and for hedging relationships designated
after June 30, 2003. This statement amends and clarifies financial accounting
and reporting for derivative instruments including certain instruments embedded
in other contracts and for hedging activities under SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The adoption of this
standard is not expected to have a material impact on our financial statements.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity,"
which is effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. SFAS No. 150 establishes standards for how
an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. The adoption of this standard is
not expected to have a material impact on our financial statements.


                                       5
<PAGE>


     In December 2002, the FASB issued Interpretation 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45") was issued. FIN 45 requires a
guarantor entity, at the inception of a guarantee covered by the measurement
provisions of the interpretation, to record a liability for the fair value of
the obligation undertaken in issuing the guarantee. FIN 45 applies prospectively
to guarantees the Company issues or modifies subsequent to December 31, 2002. We
have historically not issued guarantees and therefore FIN 45 will not have a
material effect on our financial statements.

     In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." FIN 46 clarifies the application of Accounting Research
Bulletin No. 51, "Consolidated Financial Statements," for certain entities which
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties or in which
equity investors do not have the characteristics of a controlling financial
interest ("variable interest entities"). Variable interest entities will be
required to be consolidated by their primary beneficiary. The primary
beneficiary of a variable interest entity is determined to be the party that
absorbs a majority of the entity's expected losses, receives a majority of its
expected returns, or both, as a result of holding variable interests, which are
ownership, contractual, or other pecuniary interests in an entity. FIN 46
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period
beginning after December 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
FIN 46 applies to public enterprises as of the beginning of the applicable
interim or annual period. The Company's adoption of FIN 46 did not have any
impact upon the Company's financial condition or results of operations.

     In November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue 00-21, "Accounting for Revenue Arrangements with
Multiple-Deliverables" ("EITF 00-21"). EITF 00-21 addresses how to account for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The consensus mandates how to identify
whether goods or services or both which are to be delivered separately in a
bundled sales arrangement should be accounted for separately because they are
"separate units of accounting." The guidance can affect the timing of revenue
recognition for such arrangements, even though it does not change rules
governing the timing or pattern of revenue recognition of individual items
accounted for separately. The final consensus will be applicable to agreements
entered into in fiscal years beginning after June 15, 2003, with early adoption
permitted. Additionally, companies will be permitted to apply the consensus
guidance to all existing arrangements as the cumulative effect of a change in
accounting principle in accordance with APB Opinion No. 20, Accounting Changes.
We do not believe the adoption of EITF 00-21 will have a material impact on our
financial position or results of operations.

RESULTS OF OPERATIONS

2003 COMPARED TO 2002

     REVENUES. Revenues in 2003 were $0 compared to $30,000 in 2002. This
decrease was due to the lack of any sales in 2003 compared to the sale of one
prototype device during 2002.


                                       6
<PAGE>



     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $1,655,863 in 2003 and $721,487 in 2002. The
increase in selling, general and administrative expenses primarily is a result
of a significant increase in our use of consultants and the payment of our
officer's salary which had been waived from September 2001 through June 1, 2003,
and a bonus. Selling, general and administrative expenses consist primarily of
accounting fees, legal fees and bio-terrorism product consulting and marketing.

     RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $199,000 in 2003 from $82,000 in 2002. This increase in research
and development expenses was due to the additional payments made to JPL pursuant
to our technology affiliates agreement.


     INCOME (LOSS) FROM OPERATIONS. Operating loss for 2003 was $4,725,153
compared to operating loss of $3,484,026 in 2002. This increase is primarily due
to the increase in our selling, general and administrative expenses, marketing
expenses, and our research and development expenses.


     We have reported the operations of Dasibi Environmental Corp. as
discontinued operations. We sold Dasibi on March 25, 2002. Dasibi had assets of
approximately $967,000 and liabilities of approximately $2,072,000 as of
December 31, 2001 and a loss from operations from October 1, 2001 to December
31, 2001 of approximately $813,770.

     INTEREST EXPENSE. Interest expense decreased from $232,345 in 2002 to
$208,063 in 2003.

     At December 31, 2003, we had an approximate net operating loss
carry-forward of $12,500,000.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by (used in) our operating activities during 2003 was
($3,133,767), and during 2002 was ($555,062). Net cash provided by (used in) our
investing activities during 2003 was ($153,892), and during 2002 was $0. Net
cash provided by financing activities during 2003 was $3,293,240, and during
2001 was $421,626.

     Our total cash and cash equivalent balance at December 31, 2003, was
$14,899, as compared to December 31, 2002, which was $9,318. Because of the low
levels of our cash balances, we may not be able to continue operations at our
current levels or at all. Our cash flow is dependent on development of products
in a cost efficient manner that are commercially accepted on a timely basis,
acceptance of our technology, the signing of contracts, collections, all of
which are difficult to predict with accuracy.

     Historically, we have financed operations through private debt and the
issuance of common stock. Since our financial position has deteriorated,
financial institutions have been unwilling to lend to us and the cost of
obtaining working capital from investors has been expensive.

     During fiscal 2003 and 2002 and through the date of this report, we have
received debt financing upon various terms, as follows:


                                       7
<PAGE>


     A. During April 2002, we borrowed $22,526, due the earlier of June 29,
2002, or upon us raising funds in excess of $30,000, bearing interest at 10% per
annum. The lender has verbally agreed to extend the terms of the note to a date
to be mutually agreed upon by the parties.

     B. During June 2002, we borrowed $35,000, due the earlier of September 10,
2002, or upon us raising funds in excess of $50,000, bearing interest at 10% per
annum. If the loan was not repaid within 30 days after the due date, the holder
was to receive 50,000 shares of our common stock. The note has not been repaid
and the lender has verbally agreed to extend the terms of the note to a date to
be mutually agreed upon by the parties. The 50,000 shares of our common stock
have not been issued.

     C. From March 2003 to November 2003, we entered into 11 loans with
affiliates and non-affiliates evidenced by promissory notes with an aggregate
face amount of $450,000. The term of these loans ranges from 18 days to four
months. The interest rates for these loans range from 5% to 18% per annum, and
two of the loans bear no interest. We have repaid an aggregate of $95,000 in
principal amounts of these notes as of December 31, 2003.

     Our working capital deficit at December 31, 2003, was $1,567,135.

SEASONALITY

     We do not believe that our business is seasonal.

CAUTIONARY STATEMENTS AND RISK FACTORS

     The risks and uncertainties described below are not the only risks and
uncertainties we face. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial also may impair our business operations.
If any of the following risks actually occur, our business, results of
operations and financial condition could suffer. In that event the trading price
of our common stock could decline, and our shareholders may lose all or part of
their investment in our common stock. The risks discussed below also include
forward-looking statements and our actual results may differ substantially from
those discussed in these forward-looking statements.

OUR INDEPENDENT AUDITORS' REPORT EXPRESSES DOUBT ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN.

Our independent auditors' report, dated February 4, 2004, includes an
explanatory paragraph relating to substantial doubt as to our ability to
continue as a going concern, due to our working capital deficit at December 31,
2003, and the sale of our operating subsidiary. We have experienced operating
losses since the date of the auditors' report and in prior years. We have been
unable to pay all of our creditors and certain other obligations in accordance
with their terms, and as a result, we are in default on certain debt obligations
equaling approximately $550,000 as of December 31, 2003. These defaults
currently restrict our ability to file registration statements in connection
with capital-raising transactions on Form S-3, which may make it more difficult
for us to raise additional capital. We have limited cash on hand and short-term
investments and we do not expect to generate material cash from operations this
year. We have attempted to raise additional capital through debt or equity
financing and to date have had



                                       8
<PAGE>


limited success. If we are unable to obtain financing on terms acceptable to us,
or at all, we will not be able to accomplish any or all of our initiatives and
will be forced to consider steps that would protect our assets against our
creditors.

WE NEED ADDITIONAL CAPITAL TO FUND OUR RESEARCH AND DEVELOPMENT ACTIVITIES. IF
WE OBTAIN FINANCING, EXISTING SHAREHOLDER INTERESTS MAY BE DILUTED, AND IF WE
CANNOT OBTAIN ADEQUATE FINANCING, WE MAY CEASE OPERATIONS.

The current down-trend in the financial markets have made it extremely difficult
for us to raise additional capital for our research and development activities.
If we cannot raise additional capital, we will not be able to pursue our
business strategies as scheduled, or at all, and we may cease operations. If we
raise additional funds by issuing equity or convertible debt securities, the
percentage ownership of our shareholders will be diluted. In addition, any
convertible securities issued may not contain a minimum conversion price, which
may make it more difficult for us to raise financing and may cause the market
price of our common stock to decline because of the indeterminable overhang that
is created by the discount to market conversion feature. In addition, any new
securities could have rights, preferences and privileges senior to those of our
common stock. Furthermore, we cannot assure you that additional financing will
be available when and to the extent we require or that, if available, it will be
on acceptable terms.

WE HAVE A HISTORY OF LOSSES AND WE DO NOT ANTICIPATE THAT WE WILL BE PROFITABLE
IN FISCAL 2004.

We do not anticipate having a product for sale until our Anthrax Smoke Detector
is commercialized, which could take several more years. We have not been
profitable in the past years and had an accumulated deficit of approximately
$20.9 million as of December 31, 2003. During the fiscal 2003, we incurred a net
loss of approximately $4.7 million. Achieving profitability depends upon
numerous factors, including out ability to develop, market and sell commercially
accepted products timely and cost-efficiently. We do not anticipate that we will
be profitable in fiscal 2004.

WE CANNOT GUARANTEE THAT OUR BIO-TERRORISM DETECTION DEVICE WILL WORK OR BE
COMMERCIALLY VIABLE.

Our product in development requires further research, development, laboratory
testing and demonstration of commercial scale manufacturing before it can be
proven to be commercially viable. Potential products that appear to be promising
at early stages of development may not reach the market for a number of reasons.
These reasons include the possibilities that the product may be ineffective,
unsafe, difficult or uneconomical to manufacture on a large scale, fail to
achieve market acceptance, or is precluded from commercialization by proprietary
rights of third parties. We cannot predict with any degree of certainty when, or
if, the research, development, testing and regulatory approval process (if
required), will be completed. If our product development efforts are
unsuccessful or if we are unable to develop a commercially viable product
timely, we would need to consider steps to protect our assets against our
creditors.

OUR RELIANCE ON THIRD PARTIES FOR RESEARCH AND DEVELOPMENT MAY AFFECT OUR FUTURE
PROSPECTS.



                                       9
<PAGE>


We do not maintain our own laboratory and we do not employ our own researchers.
We contract with third parties to conduct research and development activities
and we expect to continue to do so in the future. Because we rely on third
parties for our research and development activities, we have less direct control
over those activities and cannot assure you that the research will be done
properly or in a timely manner. Our inability to conduct research and
development may delay or impair our ability to commercialize our technology. The
cost and time to establish or locate an alternative research and development
facility to develop our technology could have a materially adverse affect on our
future prospects.

OUR PRODUCTS MAY NOT BE COMMERCIALLY ACCEPTED WHICH WILL ADVERSELY AFFECT OUR
REVENUES AND PROFITABILITY.

Our ability to enter into the bio-terrorism detection device market, establish
brand recognition and compete effectively depends upon many factors, including
broad commercial acceptance of our products. If our products are not
commercially accepted, we will not recognize meaningful revenue and may not
continue to operate. The success of our products will depend in large part on
the breadth of information these products capture and the timeliness of delivery
of that information. The commercial success of our products also depends upon
the quality and acceptance of other competing products, general economic and
political conditions and other tangible and intangible factors, all of which can
change and cannot be predicted with certainty. We cannot assure you that our new
products will achieve market acceptance or will generate significant revenue.

THE MARKET FOR OUR PLANNED PRODUCT IS RAPIDLY CHANGING AND COMPETITIVE. NEW
PRODUCTS MAY BE DEVELOPED BY OTHERS, WHICH COULD IMPAIR OUR ABILITY TO DEVELOP,
GROW OR MAINTAIN OUR BUSINESS AND BE COMPETITIVE.

Our industry is subject to rapid and substantial technological change.
Developments by others may render our technology and planned product
noncompetitive or obsolete, or we may be unable to keep pace with technological
developments or other market factors. Competition from other biotechnology
companies, universities, government research organizations and others
diversifying into our field is intense and is expected to increase. Many of
these entities have significantly greater research and development capabilities
and budgets than we do, as well as substantially greater marketing,
manufacturing, financial and managerial resources. These entities could
represent significant competition for us. Our resources are limited and we may
experience technical challenges inherent in developing our technology. Our
competitors have developed or are in the process of developing technologies that
are, or in the future may be, the basis for competition. Our competitors may use
different methods to detect biological pathogens in a manner that is more
effective and less costly than our planned product and, therefore, represent a
serious competitive threat to us.

OUR COMMON SHARES HAVE BEEN DELISTED FROM THE NASDAQ SMALLCAP MARKET.

On June 11, 2002, we were notified by The Nasdaq Stock Market that we did not
meet the continued listing requirements of The Nasdaq SmallCap Market and our
common shares were delisted on the close of business on June 19, 2002. Our
common stock currently is trading on The Over the Counter Bulletin Board. It is
more difficult to raise additional debt or equity



                                       10
<PAGE>


financing while trading on The Over the Counter Bulletin Board. If we are unable
to raise additional financing, we will not be able to accomplish our business
objectives and may consider steps to protect our assets against creditors.

OUR OUTSTANDING OPTIONS AND WARRANTS MAY DILUTE OUR SHAREHOLDERS' INTERESTS.

As of December 31, 2003, we have granted options and warrants to purchase a
total of 11,834,560 shares of common stock that have not been exercised. To the
extent these outstanding options and warrants are exercised, our shareholders'
interests will be diluted.

THE LOSS OF OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER MAY DISRUPT OUR BUSINESS.

Our success depends in substantial part upon the services of Jacques Tizabi, our
President, Chief Executive Officer and Chairman of the Board of Directors. The
loss of or the failure to retain the services of Mr. Tizabi could adversely
affect the development of our business and our ability to realize or sustain
profitable operations. We do not maintain key-man life insurance on Mr. Tizabi
and have no present plans to obtain this insurance.

WE HAVE LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS OF
OUR PRODUCTS.

We regard all portions of the designs and technologies incorporated into our
products as proprietary and attempt to protect them under trade secret laws. It
may be possible for unauthorized third parties to copy certain portions of our
products or to "reverse engineer" or otherwise obtain and use to our detriment
information we regard as proprietary. The technology for our Anthrax Smoke
Detector is being developed pursuant to our technology affiliates agreement with
JPL, which is federally funded. The U.S. government has the right to use
technologies that it has funded regardless of whether the technology has been
licensed to a third party, and thus, has a non-exclusive, non-transferable,
irrevocable, paid-up license to practice or have practiced any invention covered
by our technology affiliates agreement with JPL. We cannot assure you that our
competitors will not independently develop technologies that are substantially
equivalent or superior to our technologies.

WE MAY BE SUED BY THIRD PARTIES WHO CLAIM OUR PRODUCT INFRINGES ON THEIR
INTELLECTUAL PROPERTY RIGHTS. DEFENDING AN INFRINGEMENT LAWSUIT IS COSTLY AND WE
MAY NOT HAVE ADEQUATE RESOURCES TO DEFEND OURSELVES.

We may be exposed to future litigation by third parties based on claims that our
technology, product, or activity infringes on the intellectual property rights
of others or that we have misappropriated the trade secrets of others. This risk
is compounded by the fact that the validity and breadth of claims covered in
technology patents in general and the breadth and scope of trade secret
protection involves complex legal and factual questions for which important
legal principles are unresolved. Any litigation or claims against us, whether or
not valid, could result in substantial costs, could place a significant strain
on our financial and managerial resources, and could harm our reputation. Our
license agreement with Caltech requires that we pay the costs associated with
initiating an infringement claim and defending claims by third parties for
infringement, subject to certain offsets that may be allowed against amount we
may owe to Caltech under the licensing agreement. In addition, intellectual
property litigation or claims could force us to do one or more of the following:



                                       11
<PAGE>


     o    cease selling, incorporating, or using any of our technology and/or
          products that incorporate the challenged intellectual property, which
          could adversely affect our potential revenue;

     o    obtain a license from the holder of the infringed intellectual
          property right, which license may be costly or may not be available on
          reasonable terms, if at all; or

     o    redesign our products, which would be costly and time consuming.

OUR STOCK PRICE IS VOLATILE.

The trading price of our common stock fluctuates widely and in the future may be
subject to similar fluctuations in response to quarter-to-quarter variations in
our operating results, announcements of technological innovations or new
products by us or our competitors, general conditions in the bio-terrorism
detection device industry in which we compete and other events or factors. In
addition, in recent years, broad stock market indices, in general, and the
securities of technology companies, in particular, have experienced substantial
price fluctuations. These broad market fluctuations also may adversely affect
the future trading price of our common stock.

OUR STOCK HISTORICALLY HAS BEEN THINLY TRADED. THEREFORE, SHAREHOLDERS MAY NOT
BE ABLE TO SELL THEIR SHARES FREELY.

The volume of trading in our common stock historically has been relatively light
and a limited market presently exists for the shares. We have no analyst
coverage of our securities. The lack of analyst reports about our stock may make
it difficult for potential investors to make decisions about whether to purchase
our stock and may make it less likely that investors will purchase our stock. We
cannot assure you that our trading volume will increase, or that our
historically light trading volume or any trading volume whatsoever will be
sustained in the future. Therefore, we cannot assure you that our shareholders
will be able to sell their shares of our common stock at the time or at the
price that they desire, or at all.

POTENTIAL ANTI-TAKEOVER TACTICS THROUGH ISSUANCE OF PREFERRED STOCK RIGHTS MAY
BE DETRIMENTAL TO COMMON SHAREHOLDERS.

We are authorized to issue up to 20,000,000 shares of preferred stock, of which
none currently are issued and outstanding. The issuance of preferred stock does
not require approval by the shareholders of our common stock. Our Board of
Directors, in its sole discretion, has the power to issue preferred stock in one
or more series and establish the dividend rates and preferences, liquidation
preferences, voting rights, redemption and conversion terms and conditions and
any other relative rights and preferences with respect to any series of
preferred stock. Holders of preferred stock may have the right to receive
dividends, certain preferences in liquidation and conversion and other rights,
any of which rights and preferences may operate to the detriment of the
shareholders of our common stock. Further, the issuance of any preferred stock
having rights superior to those of our common stock may result in a decrease in
the market price of the common stock and, additionally, could be used by our
Board of Directors as an anti-takeover measure or device to prevent a change in
our control.



                                       12
<PAGE>



     ITEM 7. FINANCIAL STATEMENTS


     Our financial statements and related notes are set forth at pages F-1
through F-21.



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)

                          INDEX TO FINANCIAL STATEMENTS


                                                                           PAGE

Independent Auditors' Report                                                F-2

Consolidated Balance Sheet                                                  F-3

Consolidated Statements of Operations                                       F-4

Consolidated Statements of Changes in Stockholders' Equity (Deficit)        F-5

Consolidated Statements of Cash Flows                                       F-6

Notes to Consolidated Financial Statements                                  F-7




                                      F-1

<PAGE>


                                AJ. ROBBINS, P.C.
                              216 SIXTEENTH STREET
                                    SUITE 600
                             DENVER, COLORADO 80202


                          INDEPENDENT AUDITORS' REPORT

Audit Committee
Universal Detection Technology
(f/k/a Pollution Research and Control Corporation and Subsidiaries)
Beverly Hills, California


We have audited the accompanying consolidated balance sheet of Universal
Detection Technology (formerly Pollution Research and Control Corp.) and
Subsidiaries as of December 31, 2003, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for each of the years
in the two year period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Universal
Detection Technology (formerly Pollution Research and Control Corp.) and
Subsidiaries as of December 31, 2003, and the results of its consolidated
operations and its cash flows for each of the years in the two year period then
ended in conformity with generally accepted accounting principles in the United
States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
it has a net working capital deficiency, and has a net capital deficiency that
raises substantial doubt about the entity's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 14 to the financial statements, certain errors resulting in
understatement of previously reported accrued expenses as of December 31, 2002,
were discovered by management of the Company during the quarter ended June 30,
2004. Accordingly, the December 31, 2003 and 2002 financial statements have been
restated and an adjustment has been made to retained earnings and accrued
expenses as of December 31, 2003 and 2002 to correct the error.

                                            AJ. ROBBINS, PC
                                            CERTIFIED PUBLIC ACCOUNTANTS


DENVER, COLORADO
FEBRUARY 4, 2004
(Except for Note 14, as to which the date is July 27, 2004)



                                      F-2
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003
                                   (RESTATED)


                                     ASSETS
<TABLE>
<CAPTION>

CURRENT ASSETS:
<S>                                                                     <C>
    Cash and cash equivalents                                           $      14,899
    Restricted cash                                                           100,233
    Due from related parties                                                   29,099
    Bridge notes, related party                                                50,000
    Inventories                                                                20,000
    Prepaid expenses                                                        1,045,155
                                                                          --------------

        Total Current Assets                                                1,259,386

EQUIPMENT, NET                                                                  3,507
                                                                          --------------

                                                                        $   1,262,893
                                                                          ==============

            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


CURRENT LIABILITIES:
    Accounts payable, trade                                             $     112,759
    Accrued liabilities                                                       864,000
    Notes payable, related party                                               40,000
    Notes payable                                                           1,517,526
    Accrued interest expense                                                  454,736
                                                                          --------------

        Total current liabilities                                           2,989,021
                                                                          --------------


COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY (DEFICIT):
    Preferred stock, $.01 par value, 20,000,000 shares                            ---
      Authorized, -0- issued and outstanding
    Common stock, no par value, 480,000,000 shares
      Authorized, 35,002,197 issued and outstanding                        15,705,055
    Additional paid-in-capital                                              3,606,891
    Accumulated (deficit)                                                 (21,038,074)
                                                                          --------------

        Total stockholders' equity (deficit)                               (1,726,128)
                                                                          --------------

                                                                        $   1,262,893
                                                                          ==============


          See accompanying notes to consolidated financial statements.

</TABLE>


                                      F-3
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


<TABLE>
<CAPTION>
<S>                                                          <C>                  <C>
                                                                2003              2002
                                                           ---------------    --------------
                                                                               (RESTATED)
REVENUE                                                    $       ---     $       30,000
COST OF GOODS SOLD                                                 ---              8,600
                                                           ---------------    --------------

GROSS PROFIT                                                       ---             21,400
                                                           ---------------    --------------
OPERATING EXPENSES:
     Selling, general and administrative                     1,655,863            721,487
     Marketing                                               1,932,512             45,000
     Research and development                                  199,000             82,000
     Loss on write-down of inventory                               ---          1,894,342
     Loss on legal judgment                                        ---            411,500
                                                           ---------------    --------------

     Total expenses                                          3,787,375          3,154,329
                                                           ---------------    --------------

(LOSS) FROM OPERATIONS                                      (3,787,375)        (3,132,929)

OTHER INCOME (EXPENSE):
     Interest income                                               726                ---
     Interest expense                                         (208,063)          (232,345)
     Amortization of loan fees                                (235,136)            (5,752)
     Beneficial conversion feature of convertible debt        (495,305)          (113,000)
                                                           ---------------    --------------
             Total other income (expense)                     (937,778)          (351,097)
                                                           ---------------    --------------

(LOSS) FROM OPERATIONS BEFORE INCOME TAXES                  (4,725,153)        (3,484,026)

INCOME TAX EXPENSE                                                 ---                ---
                                                           ---------------    --------------

(LOSS) FROM CONTINUING OPERATIONS                           (4,725,153)        (3,484,026)

DISCONTINUED OPERATIONS:
  (Loss) from operations of discontinued subsidiaries (less
     applicable income tax expense of $-0-)                        ---           (149,745)
  Gain on disposal of subsidiaries, including
     provision of $-0- for operating losses during phase-out
     period less applicable income taxes of $-0-                   ---          1,490,553
                                                           ---------------    --------------

TOTAL GAIN FROM DISCONTINUED OPERATIONS                            ---          1,340,808
                                                           ---------------    --------------

  NET (LOSS)                                             $  (4,725,153)    $   (2,143,218)
                                                           ===============    ==============

NET (LOSS) PER SHARE - BASIC AND DILUTED:
   Continuing operations                                 $       (0.23)    $        (0.42)
   Discontinued operations:
     (Loss) from operations                                        ---              (0.02)
     Gain on disposal                                              ---               0.18
                                                           ---------------    --------------

                                                         $       (0.23)    $        (0.26)
                                                           ===============    ==============


WEIGHTED AVERAGE SHARES - BASIC AND DILUTED                 20,919,845          8,212,300
                                                           ===============    ==============

          See accompanying notes to consolidated financial statements.

</TABLE>



                                      F-4
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003
<TABLE>
<CAPTION>
                                                                                                           Total
                                                                                                       Stockholders'
                                           Common Stock              Additional       Accumulated          Equity
                                      Shares          Amount       Paid-in-Capital     (Deficit)         (Deficit)
                                    ------------    -----------    ---------------    -------------    --------------
<S>                                   <C>         <C>               <C>              <C>               <C>
BALANCE, DECEMBER 31, 2001            5,949,616   $  9,789,742      $   2,485,062    $ (14,169,703)    $  (1,894,899)
Conversion of convertible
  debt and accrued interest           2,072,464        505,238                ---              ---           505,238
Stock based compensation for
  consulting services                       ---            ---            111,112              ---           111,112
Common stock issued for
  services                              730,000        154,250                ---              ---           154,250
Stock issued in private
  placements, net of offering
  costs of $34,900                    2,121,312        364,100                ---              ---           364,100
Value of stock based
  compensation issued for
  sale of Dasibi                            ---            ---            160,993              ---           160,993
Value of beneficial
  conversion feature of
  convertible debt                          ---            ---            113,000              ---           113,000
Net (loss) for the year
  (Restated)                                ---            ---                ---       (2,143,218)       (2,143,218)
                                    ------------    -----------    ---------------    -------------    --------------

BALANCE, DECEMBER 31, 2002           10,873,392     10,813,330          2,870,167      (16,312,921)       (2,629,424)
Common stock issued for services      3,357,000      1,181,280                ---              ---         1,181,280
Common stock issued for loan fees       415,000        198,400                ---              ---           198,400
Conversion of convertible debt
  and accrued interest                3,889,044        573,805                ---              ---           573,805
Stock issued in private
  placements net of offering costs
  of $443,033                        15,907,903      2,876,222                ---              ---         2,876,222
Fair market value of repriced
  warrants                                  ---            ---             56,019              ---            56,019
Warrants issued for services                ---            ---            185,400              ---           185,400
Value of beneficial conversion
  feature of convertible debt               ---            ---            495,305              ---           495,305
Exercise of warrants                    559,858         62,018                ---              ---            62,018
Net (loss) for the year                     ---            ---                ---       (4,725,153)       (4,725,153)
                                    ------------    -----------    ---------------    -------------    --------------


BALANCE, DECEMBER 31, 2003           35,002,197   $ 15,705,055      $   3,606,891      (21,038,074)       (1,726,128)
                                    ============    ===========    ===============    =============    ==============

</TABLE>

                    See accompanying notes to consolidated financial statements.



                                      F-5
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>
                                                                    2003             2002
                                                               ---------------  ---------------
                                                                                  (RESTATED)
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
<S>                                                              <C>              <C>
Net (loss) from continuing operations                            (4,725,153)      (3,484,026)
Adjustments to reconcile net loss to net cash (used in)
 operations:
   Beneficial conversion feature of convertible debt                495,305          113,000
   Stock issued for services                                      1,181,280          265,362
   Stock issued for loan fees                                       198,400              ---
   Warrants issued for services                                     185,400              ---
   Fair market value of repriced warrants                            56,019              ---
   Depreciation                                                         152              ---
   Changes in operating assets and liabilities:
          Accounts receivable                                        30,000          (30,000)
          Due from related parties                                  (29,099)             ---
          Inventories                                                   ---        1,894,342
          Prepaid expenses                                         (999,217)         (45,938)
          Accounts payable                                         (126,701)         222,950
          Accrued expenses                                          599,847          509,248
                                                               ---------------  ---------------


                    Net cash (used in) operating activities      (3,133,767)        (555,062)
                                                               ---------------  ---------------


CASH FLOWS (TO) INVESTING ACTIVITIES:


  Purchase of equipment                                              (3,659)             ---
  Bridge note to related party                                      (50,000)             ---
   (Increase) in restricted cash                                   (100,233)             ---
                                                               ---------------  ---------------

                    Net cash (used in) investing activities        (153,892)             ---
                                                               ---------------  ---------------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:

  Proceeds from issuance of common stock                          3,319,255          399,000
  Payment of offering costs                                        (443,033)         (34,900)
  Proceeds from exercise of warrants                                 62,018              ---
  Proceeds from notes payable                                       450,000           57,526
  Payments on notes payable                                         (95,000)             ---
                                                               ---------------  ---------------

                  Net cash provided by financing activities       3,293,240          421,626
                                                               ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  5,581         (133,436)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        9,318          142,754
                                                               ---------------  ---------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                             14,899            9,318
                                                               ===============  ===============

</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 1 - BUSINESS ACTIVITY

Universal Detection Technology (formerly Pollution Research and Control Corp.),
a California corporation, primarily designed, manufactured and marketed air
pollution monitoring instruments, through its wholly-owned subsidiary Dasibi
Environmental Corporation ("Dasibi"). The Company's wholly owned subsidiary
Nutek, Inc. ("Nutek") is inactive. The Company's wholly owned subsidiary Logan
Medical Devices, Inc. ("Logan") was renamed Dasibi China, Inc. ("Dasibi China")
and is currently inactive.

In March 2002, the Company sold Dasibi to one of its creditors in exchange for
forgiveness of $1,500,000 in debt and accrued interest owed to the creditor. A
non-exclusive license agreement for all of the Dasibi's technology was also
granted to the Company. In May 2002, Dasibi vacated its premises and has
suspended operations.


Beginning in 2002, the Company began doing business as Universal Detection
Technology and has focused its research and development efforts in developing a
real time biological weapon detection device. On August 8, 2003, the
shareholders approved the change of the name of Pollution Research and Control
Corp. to Universal Detection Technology. To accelerate development of its
initial biological weapon detection device, the Company has developed and is
implementing a collaborative partnering strategy. Under this strategy, the
Company identifies and partners with researchers and developers. The Company
entered into a technology affiliates agreement with NASA's Jet Propulsion
Laboratory ("JPL") to develop technology for its bio-terrorism detection
equipment and a license agreement with the California Institute of Technology,
("CalTech"), which granted the Company an exclusive worldwide license to
products that incorporate patent rights referenced in the above technology
affiliates agreement.



PRIOR PERIOD RESTATEMENT
During the quarter ended June 30, 2004, a change was made to the retained
earnings and accrued expenses of the Company to correct the legal judgment
recorded during the year ended December 31, 2002. The Company originally
recorded the amount of damages sought by the plaintiff, rather than the amount
of the final judgment. The Company has retroactively restated the net loss for
the year ended December 31, 2002, increasing the net loss from $1,980,718 to
$2,143,218 due to an adjustment of $162,500. (See Note 14.)


GOING CONCERN AND MANAGEMENT'S PLANS
In March 2002, the Company sold its operating subsidiary, Dasibi Environmental
Corp., and as of December 31, 2003 had a working capital deficit and a capital
deficit. These conditions raise substantial doubt about its ability to continue
as a going concern. Its ability to continue as a going concern is dependent upon
its ability to develop additional sources of capital and ultimately achieve
profitable operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. The Company's financial
statements have been presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business.

The Company is currently devoting its efforts to raising capital and development
and marketing of its bio-terrorism detection devices. The Company entered into a
technology affiliates agreement with NASA's Jet Propulsion Laboratory ("JPL") to
develop technology for its bio-terrorism detection equipment and a license
agreement with the California Institute of Technology, which granted the Company
an exclusive worldwide license to products that incorporate patent rights
referenced in the above technology affiliates agreement.



                                      F-7
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION
The consolidated financial statements include the accounts of Universal
Detection Technology and its wholly-owned subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.


REVENUE RECOGNITION
Revenue will be recognized upon shipment of products. Title of goods is
transferred when the products are shipped from the Company's facility. Income
not earned will be recorded as deferred revenue.


INVENTORIES
Inventories are stated at the lower of cost (first-in first-out) basis or
market.

ADVERTISING EXPENSES
The Company expenses advertising costs as incurred. During the years ended
December 31, 2003 and 2002, the Company did not have significant advertising
costs.

EQUIPMENT AND DEPRECIATION
Equipment is recorded at cost less accumulated depreciation. Depreciation is
provided for on the straight-line method over the estimated useful lives of the
assets, generally five years. Total depreciation expense was $152 and $-0- for
the years ended December 31, 2003 and 2002, respectively. As of December 31,
2003, accumulated depreciation was $152.


STOCK-BASED COMPENSATION
The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). This standard requires the Company to adopt the "fair
value" method with respect to stock-based compensation of consultants and other
non-employees and allows for use of the intrinsic value method for stock-based
compensation of employees under Accounting Principles Board Opinion No. 25.

Had compensation cost for the Company's stock-based compensation plans been
determined using the fair value of the options at the grant date as prescribed
by SFAS 123, the Company's pro forma net loss and loss per common share would be
as follows:



                                                   FOR THE YEAR ENDED
                                                      DECEMBER 31,
                                                   2003           2002
                                                   ----           ----
               Net (loss):
               As reported                                               $
                                               $ (4,725,153)   (2,143,218)
               Stock based employee
                  compensation (as recorded):            ---           ---
               Stock based employee
                  compensation (fair value
                  method):                         1,995,000           ---
                                               -------------- -------------
               Proforma                        $ (6,720,153)  $(2,143,218)
                                               ============== =============

               Basic and diluted (loss) per share:
               As reported                     $      (0.23)  $     (0.26)
                                               ============== =============
               Proforma                        $      (0.32)  $     (0.26)
                                               ============== =============



                                      F-8
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


VALUATION OF THE COMPANY'S COMMON STOCK
Unless otherwise disclosed, all stock based transactions entered into by the
Company have been valued at the market value of the Company's common stock on
the date the transaction was entered into or have been valued using the Modified
Black-Scholes European Model to estimate the fair market value.


EARNINGS PER COMMON SHARE
The Company computes earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). The
Statement requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Basic loss per
share is computed by dividing loss available to common shareholders by the
weighted average number of common shares outstanding. The computation of diluted
loss per share is similar to the basic loss per share computation except the
denominator is increased to include the number of additional shares that would
have been outstanding if the dilutive potential common shares had been issued.
In addition, the numerator is adjusted for any changes in income or loss that
would result from the assumed conversions of those potential shares. However,
such presentation is not required if the effect is antidilutive. Accordingly,
the diluted per share amounts do not reflect the impact of warrants and options
or convertible debt outstanding for 11,834,560 and 10,201,038 shares at December
31, 2003 and 2002, respectively because the effect of each is antidilutive.


CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all short term,
interest bearing deposits with original maturities of three months or less to be
cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, notes receivable, accounts
payable, accrued expenses and notes payable approximate fair value because of
the short maturity of these items.

IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates its long-lived assets by measuring the carrying amounts of
assets against the estimated undiscounted future cash flows associated with
them. At the time the carrying value of such assets exceeds the fair value of
such assets, impairment is recognized. To date, no adjustments to the carrying
value of the assets have been made.

RESEARCH AND DEVELOPMENT COSTS
In 2002, the Company entered into a technology affiliates agreement with NASA's
Jet Propulsion Laboratory ("JPL") to develop technology for its bio-terrorism
detection equipment. These costs are charged to expense as incurred. Research
and development expenses were $199,000 and $82,000 for the years ended December
31, 2003 and 2002, respectively.


                                      F-9
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


INCOME TAXES
Deferred income taxes are recorded to reflect the tax consequences in future
years of temporary differences between the tax basis of the assets and
liabilities and their financial statement amounts at the end of each reporting
period. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is the tax
payable for the current period and the change during the period in deferred tax
assets and liabilities. The deferred tax assets and liabilities have been netted
to reflect the tax impact of temporary differences. At December 31, 2003 and
2002, a full valuation allowance has been established for the deferred tax asset
as management believes that it is more likely than not that a tax benefit will
not be realized.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

RECLASSIFICATION
Certain amounts reported in the Company's financial statements for the year
ended December 31, 2002 have been reclassified to conform to the current year
presentation.



RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No.
123." This Statement amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. Under the
provisions of SFAS No. 148, companies that choose to adopt the accounting
provisions of SFAS No. 123 will be permitted to select from three transition
methods: Prospective method, Modified prospective method and Retroactive
restatement method. The transition and annual disclosure provisions of SFAS No.
148 are effective for the fiscal years ending after December 15, 2002.
Management does not anticipate the implementation of this Statement to have a
material impact on the Company's financial statements.

In April 2003, FASB issued SFAS No. 149, "Accounting for Derivative Instruments
and Hedging Activities," which is effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003. This statement amends and clarifies financial accounting and reporting
for derivative instruments including certain instruments embedded in other
contracts and for hedging activities under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The adoption of this standard is
not expected to have a material impact on the Company's financial statements.


                                      F-10
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity," which is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS No. 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. The adoption of this standard is
not expected to have a material impact on the Company's financial statements.

In December 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45") was issued. FIN 45 requires a guarantor
entity, at the inception of a guarantee covered by the measurement provisions of
the interpretation, to record a liability for the fair value of the obligation
undertaken in issuing the guarantee. FIN 45 applies prospectively to guarantees
the Company issues or modifies subsequent to December 31, 2002. The Company has
historically not issued guarantees and therefore FIN 45 will not have a material
effect on its financial statements.


In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities." FIN 46 clarifies the application of Accounting Research Bulletin No.
51, "Consolidated Financial Statements," for certain entities which do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties or in which equity
investors do not have the characteristics of a controlling financial interest
("variable interest entities"). Variable interest entities will be required to
be consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a majority
of the entity's expected losses, receives a majority of its expected returns, or
both, as a result of holding variable interests, which are ownership,
contractual, or other pecuniary interests in an entity. FIN 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after
December 15, 2003, to variable interest entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003. FIN 46 applies to
public enterprises as of the beginning of the applicable interim or annual
period. The Company's adoption of FIN 46 did not have any impact upon the
Company's financial condition or results of operations.

In November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue 00-21, "Accounting for Revenue Arrangements with Multiple-Deliverables"
("EITF 00-21"). EITF 00-21 addresses how to account for arrangements that may
involve the delivery or performance of multiple products, services and/or rights
to use assets. The consensus mandates how to identify whether goods or services
or both which are to be delivered separately in a bundled sales arrangement
should be accounted for separately because they are "separate units of
accounting." The guidance can affect the timing of revenue recognition for such
arrangements, even though it does not change rules governing the timing or
pattern of revenue recognition of individual items accounted for separately. The
final consensus will be applicable to agreements entered into in fiscal years
beginning after June 15, 2003 with early adoption permitted. Additionally,
companies will be permitted to apply the consensus guidance to all existing
arrangements as the cumulative effect of a change in accounting principle in
accordance with APB Opinion No. 20, Accounting Changes. The Company does not
believe the adoption of EITF 00-21 will have a material impact on the Company's
financial position or results of operations.




                                      F-11
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 3 - INVENTORIES


As part of the sale of Dasibi, the Company arranged with Dasibi that Dasibi
would continue to house the inventory that was assigned to the Company. During
the second quarter of 2002, Dasibi vacated its manufacturing space, and moved
the inventory that was assigned to the Company to a location unknown to the
Company. The Company currently is in the process of reviewing its rights under
the circumstances and has been unsuccessful in locating the inventory. At
December 31, 2002, the inventory was written down to reflect the loss. Remaining
inventory consists entirely of finished goods.


NOTE 4 - ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

At December 31, 2002, the accounts receivable balance from one customer was
$30,000, or 100% of the total accounts receivable balance. During 2003, the
product was returned and is being used by the Company for research and
development activities so the receivable was written off to research and
development expense.

The Company maintains all cash in bank accounts, which at times may exceed
federally insured limits. The Company has not experienced a loss in such
accounts.

NOTE 5 - NOTES PAYABLE, RELATED PARTY


During the year ended December 31, 2003, the company borrowed cash for operating
expenses on a short-term basis from certain related entities, Astor and JRT
Holdings. JRT Holdings is a company in which the Company's President and CEO has
a 50% equity interest. The Company borrowed a total of $85,000 during the year
ended December 31, 2003 and repaid a total of $45,000. Notes payable, related
party consists of the following at December 31, 2003:


<TABLE>
<CAPTION>
<S>                                                                  <C>


  Notes payable to JRT Holdings, interest at 9% per annum; principal and
      interest due April 2004, unsecured, converted from debenture   $     20,000

  Note payable to JRT Holdings, interest at 6% per annum, principal and interest
      due February 2004, unsecured, effective rate of interest,
      which includes loan fees is 45.7%                                    20,000
                                                                        -----------


                  Total notes payable, related party                 $     40,000
                                                                        ===========

</TABLE>



                                      F-12
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>
<S>                                                                    <C>
NOTE 6 - NOTES PAYABLE

Notes payable consisted of the following at December 31, 2003:

  Notes payable to individuals, interest at 11% per annum,
      principal and interest due June 2001, unsecured                  $  150,000

  Notes payable to individuals, interest at 12% per annum,
      principal and interest due June 2001, unsecured                     150,000

  Notes payable, interest at 12% per annum, principal and
      interest due October 2004, unsecured, converted from
      debenture                                                           200,000

  Notes payable, interest at 9% per annum, principal and interest
      due October 2004, unsecured, converted from debenture               100,000

  Note payable, interest at 18% per annum, principal and interest
      due June 2000, and verbally extended, unsecured                     200,000

  Demand note under Ex-Im Bank authorization at Wall Street
      Journal Prime rate +3.0% per annum (7% at December 31, 2003),
      matured June 30, 2002 previously secured by Dasibi customer
      line of credit                                                      250,000

  Bridge loan payable, interest of 10% per annum, principal and
      interest due June 2002 and verbally extended, unsecured              22,526

  Bridge loan payable, interest of 10% per annum, principal and
      interest due September 2002 and verbally extended, unsecured         35,000

  Notes payable, interest at 18% per annum, due May 2003 and
      verbally extended, unsecured, effective interest, which
      includes loan fees is 72.6%                                          75,000

  Notes payable, interest at 18% per annum, due August 2003 and
      verbally extended, unsecured, effective interest, which includes
      loan fees is 154.2%  **                                              60,000

  Notes payable, interest at 10% per annum, due in December 2003
      and verbally extended, unsecured, effective interest, which
      includes values ascribed to stock compensation granted and
      other loan fees is 638.1%   **                                      100,000

  Notes payable, interest at 10% per annum, due in February 2004,
      unsecured, effective interest, which includes values ascribed to
      stock compensation granted and other loan fees is 314.9% **         100,000

  Note payable, interest at 10% per annum, due June 2002 and verbally
      extended, unsecured                                                  75,000
                                                                        -----------

                  Total notes payable                                $  1,517,526
                                                                        ===========
</TABLE>


In February 2004, the notes payable indicated with "**" totaling $260,000, plus
related accrued interest of $12,630, were paid in full.

Certain notes are past due and in default.


                                      F-13
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 6 - NOTES PAYABLE (CONTINUED)

During the year ended December 31, 2003, certain convertible debt holders
converted debt of $485,000 into 3,258,887 shares of the Company's common stock.
In addition, certain convertible debt holders converted $88,805 of accrued
interest on the convertible debt to 630,157 shares of the Company's common
stock. Convertible debt of $320,000 was converted to non-convertible notes
payable.

In October 2003, as incentive to certain debenture holders, the Company agreed
to convert the debentures to the Company's common stock at $.15 per share rather
than at 70% to 80% of market price per the terms of the debentures. In
connection with these transactions, the Company recorded $495,305 as an expense
for the beneficial conversion feature.

In October 2003, certain debenture holders agreed in principle to novate the
$320,000 of convertible debentures and enter into non-convertible notes payable
with extended due dates ranging from six months to one year.

During the year ended December 31, 2002, certain convertible debt holders
converted $435,000 to 1,801,252 shares of the Company's common stock. In
addition, certain convertible debt holders converted $70,238 of accrued interest
on the convertible debt to 271,212 shares of the Company's common stock.

In March 2002, the holder of $450,000 of convertible debt agreed to extend the
due date of the debt to February 23, 2004 and the Company agreed to reduce the
conversion rate on the convertible debt from 85% of the market price of the
Company's common stock to 70% of the market price of the Company's common stock.
The Company recorded $113,000 as an expense for the beneficial conversion
feature of the new conversion rate. During 2002, $250,000 was converted and the
remaining outstanding debt balance was $200,000 as of December 31, 2002.

NOTE 7 - INCOME TAXES

The income tax provision (benefit) for the years ended December 31, 2003 and
2002 differs from the computed expected provision (benefit) at the federal
statutory rate for the following reasons:

<TABLE>
<CAPTION>
                                                         2003               2002
                                                   ---------------     --------------
<S>                                                <C>                  <C>
     Computed expected income tax provision
       (benefit)                                   $ (1,606,000)        $  (673,000)
     Net operating loss carryforward increased        1,356,000             964,000
     Accrued litigation                                     ---              85,000
     Stock-based expenses                                82,000              93,000
     Beneficial conversion feature of
       convertible debt                                 168,000              38,000
     Gain on disposal of subsidiary                         ---            (507,000)
                                                   ---------------     --------------

          Income tax provision (benefit)           $        ---         $       ---
                                                   ===============     ==============

</TABLE>



                                      F-14
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 7 - INCOME TAXES (CONTINUED)

The components of the deferred tax assets and (liabilities) as of December 31,
2003 were as follows:

   Deferred tax assets:
   Temporary differences:
       Net operating loss carryforward                        $     5,002,000
       Valuation allowance                                         (5,002,000)
                                                                 --------------

       Net long-term deferred tax asset                       $           ---
                                                                 ==============

The components of the deferred tax (expense) benefit were as follows for the
years ended December 31, 2003 and 2002:

                                                             December 31,
                                                          2003           2002
                                                       -----------    ----------
   Deferred tax assets:
      Accrued expenses                                       --- $      (83,000)
      Depreciation                                           ---         (4,000)
      Increase in net operating loss carryforward       1,723,000     1,356,000
      Change in valuation allowance                    (1,723,000)   (1,335,000)
      Loss on previous joint venture investment
           with Logan                                        ---         66,000
                                                       -----------    ----------
                                                     $       ---   $        ---
                                                       ===========    ==========


As of December 31, 2003, the Company has net operating loss carryforwards
available to offset future taxable income of approximately $12,500,000 expiring
in 2005 through 2023.

NOTE 8- STOCKHOLDERS' EQUITY

PREFERRED STOCK
The Company is authorized to issue up to 20,000,000 shares of preferred stock,
$.01 par value per share in series to be designated by the Board of Directors.
No preferred shares are issued.

COMMON STOCK
On August 8, 2003, the stockholders approved an increase in the number of shares
of common stock authorized to 480,000,000 from 30,000,000.

SALES OF COMMON STOCK
During the year ended December 31, 2003, the Company sold 15,907,903 shares of
common stock for a total of $3,319,255, $50,000 of which had been received prior
to December 31, 2002, and had been recorded as a liability. The Company paid
placement fees totaling $443,033 which includes $157,634 in placement fees to
another company in which its President and CEO has an equity interest and
$285,399 in placement fees to an unrelated company. Certain investors received
warrants to purchase 349,300 shares of common stock at prices ranging from $0.27
to $0.65 per share.


                                      F-15
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

During the year ended December 31, 2002 the Company sold 2,121,312 shares of
common stock for $399,000, $50,000 of which had been received prior to December
31, 2001 and had been recorded as a liability. The Company paid a $34,900
placement fee to a company controlled by its President and CEO. Certain
investors received warrants to purchase 1,214,843 shares of common stock at
prices ranging from $0.225 to $0.63 per share.

STOCK ISSUED FOR SERVICES
During August 2003, the Company entered into two agreements for strategic
business planning, financial advisory, investor relations and public relations
services. As compensation, the Company issued a total of 3,000,000 shares of its
common stock to the consultants, valued at $1,110,000, the fair market value of
the stock on the effective date of the agreements, which amount is being
amortized over the one-year term of the agreements. As of December 31, 2003, the
Company has recorded $740,000 as a prepaid expense and expensed $370,000 as
consulting fees.

On January 6, 2003, the Company entered into an agreement with an individual to
provide consulting services through January 6, 2004 in connection with the
Company's corporate business development and strategy. As compensation for
services received, the Company issued 300,000 unrestricted shares of its common
stock valued at $60,000 based upon the price of the Company's common stock on
the date of issuance. The Company recognized $60,000 in related expenses.

During 2003, the Company issued an additional 57,000 shares of its common stock
to individuals for various consulting services rendered. The stock was valued at
$11,280 based upon the price of the Company's common stock on the date of
issuance. The Company recognized $11,280 in related expenses

In February 2002, the Company entered into an agreement with an individual to
provide consulting services through December 31, 2002 in connection with the
Company's corporate business development and strategy. As compensation for
services received, the Company issued 50,000 unrestricted shares of its common
stock valued at $21,500 based upon the price of the Company's common stock on
the date of issuance. The Company recognized $21,500 in related expenses. In
August 2002, the agreement was amended and extended through June 30, 2003. An
additional 50,000 unrestricted shares of the Company's common stock were issued
as consideration. The shares were valued at $9,500 based on the price of the
Company's common stock on the date of issuance. As of December 31, 2003, $9,500
had been expensed as consulting fees.

During 2002, the Company issued an additional 630,000 shares of its common stock
to individuals for various consulting services rendered. The stock was valued at
$123,250 based upon the price of the Company's common stock on the date of
issuance. The Company recognized $123,250 in related expenses.

ISSUANCE OF OPTIONS AND WARRANTS
On October 18, 2003, the Company issued warrants to purchase 600,000 shares of
common stock at an exercise price of $0.60 per share to two individuals for
services to be rendered during the period through October 15, 2004. The warrants
expire October 15, 2008. The warrants were valued at $185,400, the fair market
value using the Modified Black-Scholes European pricing model. The average
risk-free interest rate used was 3.32%, volatility was estimated at 93.5% and
the expected life was five years. The amount was recorded as a prepaid expense
and is being amortized over the term of the service period.



                                      F-16
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

In December 2002, the Company issued warrants to purchase 200,000 shares of its
common stock for $0.26 per share, expiring in 2005 and valued at $31,438 in
connection with an agreement for advisory board and product development
services. The Company has recorded this amount as a prepaid consulting expense
and is amortizing the expense over the two-year term of the contract. In
estimating the expense, the Company used the Modified Black-Scholes European
pricing model. The average risk-free interest rate used was 2.63%, volatility
was estimated at 93%, and the expected life was three years.

In January 2002, the Company issued options to purchase 250,000 shares of its
common stock at prices ranging from $1.00 to $2.00 per share, expiring in 2006
and valued at $79,674 for public relations services. In estimating the expense,
the Company used the Modified Black-Scholes European pricing model. The average
risk-free interest rate used was 3.99%, volatility was estimated at 103%, and
the expected life was four years.

REPRICED AND EXERCISED WARRANTS
In February 2003, the Company agreed to reprice warrants to purchase 300,000
shares of common stock related to outstanding debt from $2.25 and $4.50 per
share to $0.12 per share. The repriced warrants were valued at $30,000, the fair
market value using the Modified Black-Scholes European pricing model. The
average risk-free interest rate used was 1.19%, volatility was estimated at 93%
and the expected life was one day. The value of the repriced warrants was
expensed as loan fees. The warrants to purchase 300,000 shares of common stock
were immediately exercised for proceeds of $36,000.


During the second quarter of 2003, the Company agreed to reprice warrants to
purchase 260,191 shares of common stock issued as incentive to exercise warrants
from $4.00 per share to $0.10 per share. The repriced warrants were valued at
$26,019, the fair market value using the Modified Black-Scholes European pricing
model. The average risk-free interest rate used was 1.12%, volatility was
estimated at 91% and the expected life was one day. The value of the repriced
warrants was expensed as stock based compensation. The warrants to purchase
259,858 shares of common stock were exercised for proceeds of $26,018.


STOCK COMPENSATION PLAN

Effective October 2001, the Company adopted the 2001 Employee Stock Compensation
Plan (the "2001 Plan"), which provides for the issuance of the Company's common
stock to selected officers, directors, employees, and consultants of the
Company. 1,100,000 shares are reserved for issuance under the 2001 Plan. Unless
terminated sooner, the 2001 Plan will terminate on June 1, 2005.

STOCK OPTION PLAN

During 2003, the Company adopted the 2003 Stock Incentive Plan ("the Plan"),
which provides for the granting of stock and options to selected officers,
directors, employees and consultants of the Company. 4,500,000 shares are
reserved for issuance under the Plan for the granting of options. Unless
terminated sooner, the Plan will terminate on June 22, 2013. The options issued
under the Plan may be exercisable to purchase stock for a period of up to ten
years from the date of grant.

Incentive stock options granted pursuant to this Plan may not have an option
price that is less than the fair market value of the stock on the date of grant.
Incentive stock options granted to significant stockholders shall have an option
price of not less than 110% of the fair market value of the stock on the date of
grant. To date, no options have been granted under the Plan.


                                      F-17
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

The following table summarizes the activity of options and warrants under all
agreements and plans for the two years ended December 31, 2003:


<TABLE>
<CAPTION>
                                       Number of                  Weighted Average
                                                                      Exercise
                               ---------------------------     -------------------------
                                  Options      Warrants          Price        Amount
                               ------------    -----------     --------     ------------
<S>                             <C>            <C>              <C>          <C>
Outstanding, December 31,
  2001                           1,894,821     1,606,938      $   1.75      $ 6,121,004

Granted                            960,446     1,414,843           .64        1,508,492
Expired/cancelled                 (153,250)     (626,331)         1.17         (912,506)
                               ------------    -----------     --------     ------------

Outstanding, December 31,
  2002                           2,702,017     2,395,450          1.32        6,716,990

Granted                          6,800,000       949,300           .35        2,740,320
Repriced warrants exercised            ---      (559,858)         3.76       (2,102,445)
Expired/cancelled                 (163,000)     (289,349)         3.06       (1,382,879)
                               ------------    -----------     --------     -------------

Outstanding, December 31,
  2003                          9,339,017      2,495,543      $    .50      $ 5,971,986
                               ============    ===========     ========     =============


</TABLE>



The following table summarizes information about stock options and warrants
outstanding at December 31, 2003:


<TABLE>
<CAPTION>


                              OPTIONS AND WARRANTS

-------------------------------------------------------------------------------------------
                              OUTSTANDING                                   EXERCISABLE

                                       WEIGHTED
                                        AVERAGE      WEIGHTED                 WEIGHTED
           RANGE OF                    REMAINING     AVERAGE                  AVERAGE
           EXERCISE       NUMBER      CONTRACTUAL    EXERCISE      NUMBER     EXERCISE
            PRICES     OUTSTANDING     LIFE-YEARS     PRICE      EXERCISABLE    PRICE
      ---------------- ------------   -------------  ---------   ------------  ------------
<S>   <C>                <C>              <C>         <C>         <C>            <C>
      $0.225 to $0.33    9,122,925        8.32        $0.323      9,122,925      $0.323
      $0.35 to $0.525      405,862        1.00        $0.442         405,86      $0.442
      $0.55 to $0.65       995,356        3.27        $0.594        995,356      $0.594
      $0.875 to $1.00    1,057,142        0.98        $0.912      1,057,142      $0.912
      $2.00 to $3.10       253,275        1.73        $2.244        253,275      $2.244
      ---------------  ------------   ------------  -----------   ---------    ------------

      $0.225 to $3.10   11,834,560        6.85        $ 0.50      11,834,56      $0.50
      ===============  ============   ============  ===========   =========    ============


</TABLE>



The weighted average exercise price of options at their grant date during the
year ended December 31, 2003 where the exercise price equaled the market price
on the grant date, was $0.33. No such options were granted during the year ended
December 31, 2002. The weighted average exercise price of options at their grant
date during the years ended December 31, 2003 and 2002, where the exercise price
exceeded the market price on the grant date, was $0.55, and $0.65. The weighted
average exercise price of options at their grant date during the years ended
December 31, 2003 and 2002, where the exercise price was less than the market
price on the grant date, was $0.37, and $0.38.




                                      F-18
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

The weighted average fair values of options at their grant date during the year
ended December 31, 2003 where the exercise price equaled the market price on the
grant date, were $0.29. The weighted average fair value of options at their
grant date during the years ended December 31, 2003 and 2002, where the exercise
price exceeded the market price on the grant date, was $0.55 and $0.14. The
weighted average fair value of options at their grant date during the years
ended December 31, 2003 and 2002, where the exercise price was less than the
market price on the grant date, was $0.35 and $0.35. The estimated fair value of
each option granted is calculated using the Modified European Black-Scholes
option-pricing model. The weighted average assumptions used in the model were
as follows:

                                             2003                2002
                                          -----------         ------------

          Risk-free interest rate            4.29%                2.86%

               Volatility                   93.41%               96.36%

             Expected life                9.27 years              2.59%

             Dividend yield                  0.00%                0.00%





NOTE 9- STOCK-BASED COMPENSATION


The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The standard requires the Company to adopt the "fair value"
method with respect to stock-based compensation of consultants and other
non-employees, which resulted in charges to operations of $54,345 and $79,674
during the years ended December 31, 2003 and 2002 respectively.

Effective August 18, 2003, the board of directors of the Company granted an
option to the President and CEO to purchase 6,800,000 shares of the Company's
common stock at $0.33 per share, the closing price on the date of the grant. The
option expires in ten years and is fully vested and immediately exercisable on
the date of grant. The fair value of the option is estimated at $1,995,000 based
on the Modified Black-Scholes European pricing model. The average risk-free
interest rate used was 4.49%, volatility was estimated at 93.5% and the expected
life was ten years.


NOTE 10 - COMMITMENTS AND CONTINGENCIES


LEGAL JUDGMENT
The Company leased its facilities under a long-term non-cancelable operating
lease. The Company assigned the lease to Dasibi in March 2002. The Company was
named in a lawsuit to collect past due rent. In November 2002, a judgment was
entered against the Company for a total of $411,500, which has been accrued.
(See Note 14.)

EMPLOYMENT AGREEMENT
In September 2001, the Company entered into an employment agreement with an
individual serving in the capacity of Chairman of the Board, Chief Executive
Officer and President of the Company. According to the agreement, there shall
always be a minimum of at least five years remaining on the term of the
agreement. Base salary is $250,000 to be adjusted on an annual basis, with an as
yet undetermined cash bonus plan, provisions for use of a luxury automobile,
club memberships, and insurance plans. In addition, as inducement to retain the
services of the Officer, the Company granted the Officer options to purchase
1,150,000 shares of its common stock exercisable at $.30 per share. The Officer
had waived claim to his cash compensation until June 1, 2003. In August 2003,
the Board of Directors approved a bonus of $416,667 for the officer. The future
minimum salary payable to the officer is $1,250,000.




                                      F-19
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)


LITIGATION
The Company is a party to a number of lawsuits arising in the normal course of
business. In the opinion of management, the resolution of these matters will not
have a material adverse effect on the Company's operations, cash flows or
financial position.


LICENSE AGREEMENT
On September 30, 2003, the Company entered into a license agreement with CalTech
whereby CalTech granted us an exclusive, royalty-bearing license to make, use,
and sell all products that incorporate the technology that was developed under
the Technology Affiliates Agreement with JPL and is covered by related patents.
In addition, the grant includes a nonexclusive, royalty-bearing license to make
derivative works of the technology. The Company is required to make quarterly
royalty payments to CalTech, ranging from 2% to 4% of net revenues for each
licensed product made, sold, licensed, distributed, or used by the Company and
35% of net revenues that the Company receives from sublicensing the licensed
products. A minimum annual royalty of $10,000 is due to CalTech on August 1,
2005 and each anniversary thereof. The minimum royalty will be offset by the
abovementioned royalty payments, if any.


NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

No cash was paid for income taxes during the years ended December 31, 2003 or
2002. Cash paid for interest was $747 and $7,661 during the years ended December
31, 2003 and 2002, respectively.

NOTE 12 - SALE OF SUBSIDIARY AND DISCONTINUED OPERATIONS

In March 2002, the Company entered into an agreement to sell Dasibi to one of
its note holders in exchange for $1,500,000 of debt owed to the creditor. The
purchaser assumed all liabilities of Dasibi as of the date of the agreement. The
Company retained ownership of the inventory of Dasibi without limitations.
Subsequent to the sale of Dasibi, the inventory was moved by Dasibi to a
location unknown to the Company and the inventory has been written down to
reflect the loss. The Company had granted options to the purchaser of the
subsidiary to purchase the Company's common stock as follows: 50,000 at $0.25
per share, 100,000 at $0.50 per share, 528,571 at $0.875 per share, 100,000 at
$1.00 per share and 21,875 at $3.10 per share. The options are vested
immediately and expire in March 2005. The options are valued at the fair market
value of $160,993 on the date of grant utilizing the Modified Black-Scholes
European pricing model. The average risk-free interest rate used was 4.73%,
volatility was estimated at 99.86%, and the expected life was three years.

The Company was granted a perpetual non-exclusive license for all products,
software, technologies and other intellectual property (including the use of the
name Dasibi and Dasibi Environmental Corp.) of Dasibi throughout the world with
the exception of the Peoples Republic of China.


As a result of the sale of Dasibi, the Company has reported the operations of
Dasibi as discontinued operations. The Company sold Dasibi on March 18, 2002 in
a transaction that closed on March 25, 2002. Dasibi had assets of approximately
$967,000 and liabilities of approximately $2,072,000 as of December 31, 2001.

The Company recorded a gain on the sale of Dasibi of $1,490,553 because the
liabilities assumed by the purchaser exceed the fair market value of the assets
transferred in the sale.




                                      F-20
<PAGE>


                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 12 - SALE OF SUBSIDIARY AND DISCONTINUED OPERATIONS (CONTINUED)


Certain information with respect to discontinued operations of Dasibi is as
follows:
                                                                      2002
                                                                 --------------

   Net sales                                                     $        ---
   Cost of sales                                                          ---
                                                                 --------------
   Gross profit                                                           ---

   Operating expenses                                                 149,745
                                                                 --------------

   (Loss) before income tax expense                                  (149,745)
   Income tax expense                                                     ---
                                                                 --------------


   (Loss) from discontinued operations                           $   (149,745)
                                                                 ==============



NOTE 13 - RELATED PARTY TRANSACTIONS


Effective June 1, 2003, the Company entered into an agreement with Astor
Capital, Inc. ("Astor"), a company in which its President and Chief Executive
Officer has a 50% equity interest and is a co-founder and managing partner. The
agreement requires the Company to pay $25,000 per month for investment banking
and strategic advisory services as well as a 10% fee for all debt and equity
financing raised by the Company. During 2003 the Company paid Astor
approximately $378,000 in related expenses.

In September 2003, the Company loaned $20,000 to NT Media Corp. of California,
Inc. ("NT Media"), a related party entity in which Astor has a 6.4% equity
interest and whose Director, Ali Moussavi, is a 50% partner in Astor. The bridge
note is due upon the sooner of October 15, 2003, or upon NT Media raising
additional funds of more than $50,000, and bears interest at the rate of 6%. The
note has been extended by mutual consent and must be repaid from financing
before any other creditor. In December 2003, the Company advanced another
$10,000 and $20,000 under agreements, which provide for interest at 6% per annum
and are due upon the sooner of February 24 and 29, 2004, respectively, or upon
NT Media raising additional funds of more than $50,000. There is accrued
interest of $445 due on these notes as of December 31, 2003.

Restricted cash consists of a certificate of deposit, which guarantees an
irrevocable letter of credit. The letter of credit has been provided for the
benefit of Astor.

During the year ended December 31, 2003, the Company advanced $28,654 to Astor.

The Company and Astor intend to enter into a sub-lease agreement during the
first quarter of 2004. The Company's restricted cash currently guaranteeing its
letter of credit for the benefit of Astor will be incorporated as a condition of
the sub-lease agreement when executed. The amounts currently due from Astor will
be applied to a lease deposit when the sub-lease is executed.




                                      F-21
<PAGE>



                 UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                 (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 14 - PRIOR PERIOD RESTATEMENT

The Company leased its facilities under a long-term non-cancelable operating
leases. The Company assigned the lease to Dasibi in March 2002. The Company was
named in a lawsuit to collect past due rent. In November 2002, a judgment was
entered against the Company for a total of $411,500, which has been accrued.

During the quarter ended June 30, 2004, a change was made to the retained
earnings and accrued expenses of the Company to correct the legal judgment
recorded during the year ended December 31, 2002. The Company originally
recorded the amount of damages sought by the plaintiff, rather than the amount
of the final judgment. The Company has retroactively restated net loss for the
year ended December 31, 2002, increasing the net loss from $1,980,718 to
$2,143,218 due to an adjustment of $162,500.

NOTE 15 - SUBSEQUENT EVENTS

Subsequent to year end, the Company sold 2,219,187 shares of its common stock
for proceeds of $884,927. The Company paid placement fees totaling $91,783,
which includes $26,504 paid to Astor.




                                      F-22



<PAGE>


                                   SIGNATURES


     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Date:  September 17, 2004        UNIVERSAL DETECTION TECHNOLOGY




                            By:  /s/ Jacques Tizabi
                                 -----------------------------------------------
                                 Jacques Tizabi, President, Chief Executive
                                 Officer and Chairman of the Board of Directors


     In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.


Date:  September 17, 2004        */s/ Jacques Tizabi
                                 -----------------------------------------------
                                 Jacques Tizabi, President, Chief Executive
                                 Officer, Acting Chief Financial Officer and
                                 Chairman of the Board of Directors (Principal
                                 Executive, Financial and Accounting Officer)



Date:  September 17, 2004        *
                                 -----------------------------------------------
                                 Michael Collins, Secretary and Director



Date:  September 17, 2004        *
                                 -----------------------------------------------
                                 Matin Emouna, Director



* By /s/ Jacques Tizabi
     ------------------------------------
     Jacques Tizabi, attorney-in-fact




                                      F-23
<PAGE>


<TABLE>
<CAPTION>

                                  EXHIBIT INDEX

Item NUMBER  DESCRIPTION
<S>         <C>
3.1          Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now the Registrant)
             (incorporated herein by reference to Exhibit 3(a) to the Amendment No. 1 to the
             Registration Statement on Form 10 of Dasibi Environmental Corporation).
3.2          Certificate of Amendment of Articles of Incorporation of A. E. Gosselin
             Engineering, Inc. (now the Registrant) (incorporated herein by reference to
             Exhibit 3(a) to the Amendment No. 1 to the Registration Statement on Form 10 of
             Dasibi Environmental Corporation).
3.3          Certificate of Amendment of Articles of Incorporation of Dasibi Environmental
             Corp. (now the Registrant) (incorporated herein by reference to Exhibit 3(a) to
             the Amendment No. 1 to the Registration Statement on Form 10 of Dasibi
             Environmental Corporation).
3.4          Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit
             3.4 of the Registrant's Annual Report on Form 10-KSB for the year ended December
             31, 2001, filed on April 15, 2002).
10.1         Binding letter of Intent dated March 19, 2002, by and between
             Registrant and Steven Sion (incorporated herein by reference to
             Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed
             on March 22, 2002).
10.2*        Employment Agreement by and between Registrant and Jacques Tizabi
             dated September 25, 2001 (incorporated by reference to Exhibit 10.4
             to the Registrant's Quarterly Report on Form 10-QSB for the Quarter
             Ended March 31, 2002, filed on May 20, 2002).
10.3         Technology Affiliates Agreement by and between Registrant and
             California Institute of Technology, dated August 6, 2002.
             (incorporated herein by reference to Exhibit 10.3 to the
             Registrant's Annual Report on Form 10-KSB for the fiscal year ended
             December 31, 2002, filed on April 15, 2003).
10.4         Licensing Agreement by and between Universal Detection Technology
             and California Institute of Technology, dated September 30, 2003
             (incorporated by reference to Exhibit 10.4 to the Registrant's
             Quarterly Report on Form 10-QSB for the Quarter Ended September 30,
             2003, filed on November 19, 2003).
10.5         Agreement for Investment Banking and Advisory Services, by and between the
             Registrant and Astor Capital, Inc., dated June 1, 2003.
14.1         Code of Business Conduct and Ethics of Registrant.
21.1         List of Subsidiaries of Registrant.
31.1         Certification of Principal Executive and Financial Officer pursuant to Section 302
             of the Sarbanes-Oxley Act of 2002.
32.1         Certification of Principal Executive and Financial Officer pursuant to Section 906
             of the Sarbanes-Oxley Act of 2002.
<FN>
------------------------
* Management contract or compensatory plan or arrangement.

</FN>

</TABLE>


                                       F-24