SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

  [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
                                     of 1934

                For the quarterly period ended September 30, 2002

     [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

  For the transition period from __________________ to ______________________.


                         Commission file number 0-14266
                                                -------


                      POLLUTION RESEARCH AND CONTROL CORP.
        ----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)



          CALIFORNIA                                             95-2746949
-------------------------------                             -------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                              Identification No.)


                       9300 WILSHIRE BOULEVARD, SUITE 308
                         BEVERLY HILLS, CALIFORNIA 90212
                    ----------------------------------------
                    (Address of Principal Executive Offices)


                                 (310) 248-3655
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

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 past 90 days.

Yes [_] No [X]

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of  the  latest  practicable  date:  Common  Stock,  no  par  value,
10,881,100 shares issued and outstanding as of November 12, 2002.

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


<PAGE>

                      POLLUTION RESEARCH AND CONTROL CORP.

                                      INDEX

                                                                          PAGE

PART I  FINANCIAL INFORMATION...............................................3

Item 1. Financial Statements................................................3

        Consolidated Balance Sheet as of September 30, 2002.................3

        Consolidated  Statements of Operations  for the three and
        nine months ended September 30, 2002 and September 30, 2001.........4

        Consolidated Statements of Changes in Stockholders' Equity
        (Deficit) for the nine months ended September 30, 2002..............5

        Consolidated Statements of Cash Flows for the
        nine months ended September 30, 2002 and September 30, 2001.........6

        Notes to Consolidated Financial Statements..........................7

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations..........................................10

PART II OTHER INFORMATION..................................................22

Item 2. Legal Proceedings..................................................22

Item 6. Exhibits and Reports on Form 8-K...................................22

                                     Page 2


<PAGE>

                                     PART I

                              FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                           ==========================

                                                              September 30,
                                                                  2002
                                                              ------------
                                                              (Unaudited)

                                     ASSETS
                                     ------

CURRENT ASSETS:
       Cash                                                   $     40,434
       Accounts receivable                                          30,000
                                                              ------------

                     Total Current Assets                     $     70,434
                                                              ============



                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

CURRENT LIABILITIES:
       Accounts payable                                       $    400,086
       Notes payable and convertible debt                        1,487,526
       Accrued interest expense                                    305,268
                                                              ------------

                     Total Current Liabilities                   2,192,880

LONG-TERM NOTES PAYABLE AND CONVERTIBLE DEBT                       200,000
                                                              ------------

                     Total Liabilities                           2,392,880
                                                              ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
       Preferred stock, no par value, 20,000,000 shares
           authorized, -0- issued and outstanding                     --
       Common stock, no par value, 30,000,000 shares
           authorized, 9,013,858 issued and outstanding         10,483,230
       Additional paid-in capital                                2,759,055
       Accumulated (deficit)                                   (15,564,731)
                                                              ------------

                     Total Stockholders' Equity (Deficit)       (2,322,446)
                                                              ------------

                                                              $     70,434
                                                              ============

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                     Page 3


<PAGE>

<TABLE>
              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                             Three Months    Three Months   Nine Months     Nine Months
                                                                Ended           Ended         Ended           Ended
                                                             September 30,   September30,  September 30,   September 30,
                                                                 2002            2001          2002            2001
                                                              -----------    -----------    -----------    -----------
                                                              (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)

<S>                                                           <C>            <C>            <C>            <C>
REVENUES                                                      $      --      $      --      $    30,000    $     --
                                                              -----------    -----------    -----------    -----------

COST OF GOODS SOLD                                                   --             --            8,600          --
                                                              -----------    -----------    -----------    -----------

GROSS PROFIT                                                         --             --           21,400          --
                                                              -----------    -----------    -----------    -----------

OPERATING EXPENSES:
   Selling, general and administrative                            162,852        391,565        541,327      1,174,695
   Loss on write-down of inventory                                   --             --        1,914,342           --
                                                              -----------    -----------    -----------    -----------

         Total Operating Expenses                                 162,852        391,565      2,455,669      1,174,695
                                                              -----------    -----------    -----------    -----------

(LOSS) FROM OPERATIONS                                           (162,852)      (391,565)    (2,434,269)    (1,174,695)
                                                              -----------    -----------    -----------    -----------

OTHER (EXPENSE):
   Interest expense                                               (62,882)       (56,408)      (188,567)      (169,224)
   Beneficial conversion feature of convertible debt                 --             --         (113,000)          --
   Amortization of loan fees                                         --          (14,080)          --         (326,818)
                                                              -----------    -----------    -----------    -----------

         Net Other (Expense)                                      (62,882)       (70,488)      (301,567)      (496,042)
                                                              -----------    -----------    -----------    -----------

(LOSS) FROM CONTINUING OPERATIONS                                (225,734)      (462,053)    (2,735,836)    (1,670,737)
                                                              -----------    -----------    -----------    -----------


DISCONTINUED OPERATIONS:
   Gain (Loss) from operations of discontinued subsidiaries          --          389,763       (149,745)      (271,695)
   Gain on disposal of subsidiary                                    --             --        1,490,553           --
                                                              -----------    -----------    -----------    -----------

         Total Income (Loss) From Discontinued Operations            --          389,763      1,340,808       (271,695)
                                                              -----------    -----------    -----------    -----------

NET INCOME (LOSS)                                             $  (225,734)   $   (72,290)   $(1,395,028)   $(1,942,432)
                                                              ===========    ===========    ===========    ===========


NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
   Continuing operations                                      $     (0.03)   $     (0.08)   $     (0.37)   $     (0.26)
   Discontinued operations:
       Gain (Loss) from operations                                   --             0.07          (0.02)         (0.04)
       Gain on disposal                                              --             --             0.20           --
                                                              -----------    -----------    -----------    -----------

                                                              $     (0.03)   $     (0.01)   $     (0.19)   $     (0.30)
                                                              ===========    ===========    ===========    ===========
WEIGHTED AVERAGE COMMON  SHARES OUTSTANDING,
   BASIC  AND DILUTED                                           8,603,046      5,950,085      7,374,633      6,456,196
                                                              ===========    ===========    ===========    ===========
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                     Page 4


<PAGE>

<TABLE>
              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (Unaudited)
<CAPTION>
                                                                                                         Total
                                         Common Stock                  Additional                     Stockholders'
                                         ------------                  Paid-In        Accumulated        Equity
                                            Shares         Amount       Capital        (Deficit)        (Deficit)
-------------------------------------------------------------------------------------------------------------------

                                                                                      -
<S>                                      <C>            <C>            <C>            <C>             <C>
Balances, December 31, 2001                 5,949,616   $  9,789,742   $  2,485,062   $(14,169,703)   $ (1,894,899)

Stock issued for consulting services          120,000         43,250           --             --            43,250

Conversion of convertible debt              2,072,464        505,238           --             --           505,238

Stock issued in Private Placement             597,222        145,000           --             --           145,000

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 period                        --             --             --       (1,395,028)     (1,395,028)

                                         -------------------------------------------------------------------------
Balances, September 30, 2002                8,739,302   $ 10,483,230   $  2,759,055   $(15,564,731)   $ (2,322,446)
                                         =========================================================================

</TABLE>
           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                     Page 5
<PAGE>

<TABLE>
              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                   For the nine months ended
                                                                          September 30,
                                                                   --------------------------
                                                                      2002           2001
                                                                   -----------    -----------
<S>                                                                <C>            <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
         Reconciliation of net (loss) to net cash flows provided
           by (used in) operating activities:
         Net (loss) from continuing operations                     $(2,735,836)   $(1,670,737)
         Depreciation and amortization                                    --           18,675
         Amortization of loan fees                                        --          423,544
         Amortization of consulting fee                                   --          514,932
         Loss from unconsolidated joint venture                           --          234,579
         Deferred rent                                                    --          (10,901)
         Beneficial conversion feature of convertible debt             113,000           --
         Stock issued for services                                      43,250           --
    Changes in assets and liabilities
         Accounts receivable                                           (30,000)      (186,743)
         Inventories                                                 1,914,342       (356,977)
         Inventory held by joint venture                                  --         (500,000)
         Other current assets                                             --           (2,190)
         Accounts payable and accrued expenses                         390,398        580,135
         Deferred revenue                                                 --          550,000
                                                                   -----------    -----------
           Net cash flows (to) continuing operations                  (304,846)      (405,683)
           Net cash flows (to) discontinued operations                    --         (271,695)
                                                                   -----------    -----------

               Net Cash (Used in) Operating Activities                (304,846)      (677,378)
                                                                   -----------    -----------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:

               Net Cash (Used in) Investing Activities                    --             --
                                                                   -----------    -----------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                             150,000        100,000
    Payment of offering costs                                           (5,000)          --
    Capital Contribution                                                  --          250,000
    Advances on notes payable                                           57,526        370,000
    Repurchase of common stock                                            --          (12,600)
    Advances on letter of credit                                          --          350,000
    Repayments under letter of credit                                     --         (350,000)
                                                                   -----------    -----------


               Net Cash Provided by Financing Activities               202,526        707,400
                                                                   -----------    -----------

INCREASE (DECREASE) IN CASH                                           (102,320)        30,022

CASH, beginning of period                                              142,754        172,306
                                                                   -----------    -----------

CASH, end of period                                                $    40,434    $   202,328
                                                                   ===========    ===========
</TABLE>
           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                     Page 6
<PAGE>


1. BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
of America for interim  financial  information and with the instructions to Form
10-QSB and Item 310 of Regulation S-B.  Accordingly,  they do not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles  for  complete  financial  statements.   The  accompanying  unaudited
consolidated  financial  statements reflect all adjustments that, in the opinion
of management, are considered necessary for a fair presentation of the financial
position,  results of operations,  and cash flows for the periods presented. The
results of  operations  for such periods are not  necessarily  indicative of the
results  expected  for  the  full  fiscal  year or for any  future  period.  The
accompanying financial statements should be read in conjunction with the audited
consolidated  financial  statements  of  Pollution  Research  and Control  Corp.
included in our Form 10-KSB for the fiscal year ended December 31, 2001.

2. STOCKHOLDERS' EQUITY

During the nine months  ended  September  30, 2002,  we sold  597,222  shares of
common stock for $150,000,  $50,000 of which had been received prior to December
31, 2001 and had been recorded as a liability. We paid a $5,000 placement fee to
a company  controlled  by our  President  and CEO.  The  investors  will receive
warrants to purchase 159,721 shares of common stock at prices ranging from $.027
to $.063 per share.

Subsequent  to period end and through the date of this report,  the Company sold
1,524,100  shares of common  stock for  $249,000.  The  investors  will  receive
warrants to purchase  1,055,022  shares of common  stock at prices  ranging from
$.225 to $.60 per share.

In addition,  the Company issued 410,000 shares of its common stock for services
and loan fees subsequent to period-end.

3. SALE OF DASIBI

In March 2002,  the Company  entered  into an agreement to sell Dasibi to one of
its  note  holders  in  exchange  for the  forgiveness  of  $1,500,000  of debt,
including  $1,220,000,  which was  outstanding  at December 31, 2001 then due to
that note holder. The purchaser assumed all liabilities of Dasibi as of the date
of the closing of the sale and all liabilities of the Company incurred on behalf
of Dasibi.  As part of the transaction,  Dasibi assigned all of its inventory to
the Company.  The  agreement  also  amended and  restated  the option  grants to
purchase  common  stock of the Company to the  purchaser  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  Black-Scholes  pricing
model.  The  average  risk-free  interest  rate used was 4.73%,  volatility  was
estimated at 99.86%, the expected life was three years.

The  Company  was granted a  perpetual  non-exclusive  license  to,  among other
matters, make use and otherwise exploit 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.

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.

4. CONVERTIBLE DEBT

During the nine months  ended  September  30,  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 the $113,000 as an expense for the  beneficial  conversion
feature of the new conversion rate. As of September 30, 2002,  $250,000 had been
converted and the outstanding balance was $200,000.


                                     Page 7
<PAGE>


5. BRIDGE NOTES

During April 2002,  the Company  borrowed  $22,526,  due the earlier of June 29,
2002 or upon the Company raising funds in excess of $30,000. The Company did not
raise these funds. The original interest rate was 10% per annum. Pursuant to the
terms of the loan,  since the loan was not  repaid  within 30 days after the due
date, the loan bears default interest at 14% per annum. The lender has agreed to
extend the terms of the note at least until year-end.

During June 2002, the Company borrowed $35,000, due the earlier of September 10,
2002 or upon the  Company  raising  funds in excess  of  $50,000.  The  original
interest rate was 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 the Company's  common
stock. The note has not been repaid and the lender agreed to extend the terms of
the note at least until  year-end.  The 50,000  shares of the  Company's  common
stock have not been issued.

6. TECHNOLOGY AFFILIATES AGREEMENT

We entered into a technology  affiliates  agreement  with NASA's Jet  Propulsion
Laboratory ("JPL") to develop technology for our planned bio-terrorism detection
equipment.  The  agreement  provides  that  JPL  will  develop  its  proprietary
bacterial  spore  detection  technology  for  integration  into  our  developing
bio-terrorism  detection device. The intent is to provide continuous  unattended
monitoring of airborne  bacterial spores in large public places,  with real-time
automated  alert  functionality.  All related  projects  are to be  completed by
September  28,  2003,  though we may  terminate  the  agreement at any time with
written  notice.  We  are  entitled  to  maintain  non-exclusive  rights  to any
technology developed under the terms of the agreement. The estimated cost of the
project to us is $249,000.  No payments had been made as of September  30, 2002.
As of the date of this report, we have paid NASA $80,000 towards the project.

In  August  2002,  we  entered  into an  option  agreement  with the  California
Institute of Technology,  which granted us an exclusive  irrevocable  option and
right to acquire an exclusive worldwide license to products developed as part of
the above  technology  affiliates  agreement.  The option is  exercisable  for a
one-year  period  commencing upon grant. A payment of $2,000 was required within
60 days to exercise  the option.  We did not make the payment and entered into a
new option  agreement  in October  2002  under the same terms  except  requiring
payment of $2,000  within 30 days of the  agreement to exercise the option.  Any
license  agreement  that we may enter  into upon  exercise  of the  option  will
provide  royalties  of 0.5% to 5% for sales of licensed  products and 20% to 50%
for revenues received from a sub-licensee for consideration of future sale of or
sale of licensed products.

7. INVENTORIES

Inventories  are  stated  at the  lower of cost  (first-in  first-out)  basis or
market.  At September 30, 2002 a full valuation  allowance has been  established
for the inventory. Following the sale of Dasibi, we arranged with Dasibi that it
would continue to house the inventory that Dasibi  assigned to us as part of the
sale of Dasibi.  During the second quarter of 2002, we were informed that Dasibi
vacated its manufacturing  space,  taking the inventory that was assigned to us.
We currently are in the process of  investigating  the location of our inventory
and reviewing our rights under the circumstances.

                                     Page 8
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following  discussion  should be read in conjunction  with our  consolidated
financial  statements  provided under Part I, Item 1 of this quarterly report on
Form 10-QSB. Certain statements contained herein may constitute  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  These  statements  involve  a number of  risks,  uncertainties  and other
factors that could cause actual results to differ materially,  as discussed more
fully herein.

The forward-looking  information set forth in this quarterly report on Form 10-Q
is as of November 12, 2002, and we undertake no duty to update this information.
If events occur subsequent to November 12, 2002 that make it necessary to update
the  forward-looking  information  contained  in this Form  10-QSB,  the updated
forward-looking  information  will be filed  with the  Securities  and  Exchange
Commission in a quarterly report on Form 10-QSB or a current report on Form 8-K.
More  information  about  potential  factors  that could affect our business and
financial results is included in the section entitled "Cautionary Statements and
Risk Factors."

OVERVIEW AND RECENT DEVELOPMENTS

We are  primarily  engaged in the  research  and  development  of  bio-terrorism
detection  devices.  Historically,  our  core  business  has  been  the  design,
manufacture and marketing of automated continuous monitoring instruments used to
detect and measure  various types of air pollution,  such as "acid rain," "ozone
depletion"  and  "smog  episodes,"   primarily  through  our  then  wholly-owned
subsidiary, Dasibi Environmental Corp., which we refer to throughout this report
as Dasibi. We also supplied computer-controlled  calibration systems that verify
the accuracy of our  instruments,  data loggers to collect and manage  pollutant
information   and  our  final   reporting   software   for  remote   centralized
applications.  We did not  recognize  material  revenues  from  these  products.
Beginning in the fourth  quarter of fiscal 2001,  we began to shift our business
focus and strategy to the bio-terrorism  detection device and medical diagnostic
equipment markets.

On March 19, 2002,  upon approval by our board of  directors,  we entered into a
binding letter of intent to sell all of the  outstanding  shares of Dasibi to an
individual.  Effective  March 25, 2002, we consummated  the sale pursuant to the
terms and  conditions  of the binding  letter of intent.  The  consideration  we
received  in exchange  for the stock of Dasibi  included,  among  other  things,
cancellation of indebtedness of $1.5 million, a perpetual,  nonexclusive license
to exploit  all of Dasibi's  intellectual  property  rights  outside of mainland
China, and an assignment by Dasibi of its inventory to us.

Our  board of  directors  believed  that the sale of Dasibi  would  assist us in
pursuing our business strategy, which emphasizes the research and development of
bio-terrorism  detection  devices and, to a lesser  extent,  medical  diagnostic
equipment.  In early  February  2002, we announced the launch of a pilot program
geared towards early adopters of our  bio-terrorism  detection devices currently
in development.  Currently,  these devices are able to collect particles to view
by microscope, but are not capable of differentiating between different types of
particles.  Under  this  program,  we made  available  our Model  7001 to select
customers for installation  and use while we continued our ongoing  modification
and  reengineering  of the  device to enable  real-time  detection  of  airborne
biological  and chemical  agents.  We sold our first Model 7001 device to Summit
Sportswear,   a  then  existing   customer  of  our  air   monitoring   systems.
Subsequently,  Anaheim  Hilton agreed to participate in our pilot program and we
installed a Model 7001 in its facilities. We hope to obtain valuable performance
data from these  installations,  which we believe  will assist us in  developing
collaborative partnerships to develop bio-terrorism detection devices. Moreover,
we  expect  that  this  performance  data  will  help us  determine  the type of
particles that the device detects in real life settings.

After engaging in initial  research and  development  efforts to further develop
our  bio-terrorism  device,  we determined to identify and pursue  collaborative
partners  with  whom  we plan  to  further  enhance  our  initial  bio-terrorism
detection  device and work  together  to  develop  new  bio-terrorism  detection
devices.  Consistent  with this  strategy,  in August  2002,  we entered  into a
technology affiliates agreement with NASA's Jet Propulsion Laboratory 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 bio-terrorism detection device. The intent of the agreement
is to provide continuous  unattended  monitoring of airborne bacterial spores in
large public places, with real-time automated alert  functionality.  All related
projects are to be completed by September 28, 2003,  though we may terminate the
agreement  at any  time  with  written  notice.  We  are  entitled  to  maintain
non-exclusive  rights  to  any  technology  developed  under  the  terms  of the
agreement.  The estimated cost of the project to us is $249,000. No payments had
been made as of September 30, 2002. As of the date of this report,  we have paid
NASA $80,000 towards the project.

In August 2002,  we also entered into an option  agreement  with the  California
Institute of Technology,  which granted us an exclusive  irrevocable  option and
right to acquire an exclusive worldwide license to products developed as part of
the technology  affiliates  agreement.  The option is exercisable for a one-year
period  commencing  upon grant.  We paid  $2,000 for the  option,  which will be
credited to our exercise price of $2,000 if we chose to exercise the option. Any
license  agreement  that we may enter  into upon  exercise  of the  option  will
provide  royalties  of 0.5% to 5% for sales of licensed  products and 20% to 50%
for revenues received from a sub-licensee for consideration of future sale of or
sale of licensed products.

                                     Page 9
<PAGE>


To a lesser  extent,  we also  intend to  concentrate  on further  research  and
development  to extend  our  applications  of our  nitric  oxide  machine to the
medical  diagnostics  market.  We previously have  participated in developing an
asthma  detection  instrument with Logan Research of London England,  a research
institute,  for these applications,  but the project was halted due to a lack of
funding.  We are once again  engaging in  discussions  with  potential  research
partners  to  pursue  this  plan.   To  date,  we  have  not  entered  into  any
collaborative  relationships  with  research  partners  in  connection  with the
development of the nitric oxide machine.

Currently, we do not plan to pursue any business in the air pollution monitoring
market; however, we may determine to engage in that business at a later date.

BIO-TERRORISM DETECTION DEVICE MARKET

The attacks of September 11, 2001, and the  subsequent  spread of anthrax spores
have  created a new sense of  urgency in the public  health  systems  across the
world,  and  especially in the United States.  The United States  government has
responded  to  this  urgent  need  for  preparedness  against  bio-terrorism  by
approving  federal  legislation  to spend over $3 billion in 2002 to prepare the
country  against future  bio-terrorist  attacks.  The objective is to accelerate
development of technologies  that lead to cost effective and timely detection of
biological  and  chemical  warfare  agents  as  well  as  effective  treatments.
Spending,  as well as  additional  research and  development  support,  has been
allocated to both the private and public  sectors.  We have  retained an outside
consultant   specialized  in  government  grants,  to  consistently  screen  the
applicable  grants for us. Our  consultant  identified a grant  opportunity  and
developed and  submitted a proposal to the Defense  Advanced  Research  Projects
Agency.  At this time,  we have not  received any portion of these  grants,  and
cannot assure you that we will receive any portion in the future.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Under  accounting  principles  generally  accepted in the United States,  we are
required to make  assumptions and estimates 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.  Because of the uncertainties  inherent in making  assumptions
and estimates,  actual results in future periods may differ  significantly  from
our  assumptions  and  estimates.  We base our  assumptions  and  assumptions on
historical  experience  and on various other  factors  believed to be reasonable
under the  circumstances.  The  following  represents  what we  believe  are the
critical  accounting  policies  most affected by our  significant  estimates and
judgments.

CONSOLIDATION

The consolidated financial statements include the accounts of Pollution Research
and  Control  Corp.  and  our  wholly  owned   subsidiaries.   All   significant
intercompany balances and transactions have been eliminated in consolidation.

INVENTORIES

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

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 proforma 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.

EARNINGS PER SHARE

In 1997, the Financial  Accounting Standards Board ("FASB") issued Statement No.
128, "Earnings Per Share." Statement 128 replaced the calculation of primary and
fully  diluted  earnings  per share with basic and diluted  earnings  per share.
Unlike  primary  earnings  per share,  basic  earnings  per share  excludes  any
dilutive  effects of  options,  warrants  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share.  All  earnings  per share  amounts for all periods have been
presented, to conform to Statement 128 requirements.

                                     Page 10
<PAGE>


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 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.

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  September  30, 2001, 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.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets." SFAS 141 requires all business  combinations  initiated after September
30, 2001 to be accounted for using the purchase method. Under SFAS 142, goodwill
and  intangible  assets with  indefinite  lives are no longer  amortized but are
reviewed  annually  (or more  frequently  if  impairment  indicators  arise) for
impairment.  Separable  intangible assets that are not deemed to have indefinite
lives will continue to be amortized over their useful lives (but with no maximum
life). The amortization  provisions of SFAS 142 apply to goodwill and intangible
assets  acquired  after  September  30,  2001.  With  respect  to  goodwill  and
intangible  assets acquired prior to July 1, 2001, we are required to adopt SFAS
142  effective  January 1, 2002.  We have  determined  that the  adoption of the
provisions of SFAS 142 will have no material impact on our results of operations
and financial position.

SFAS No. 143, Accounting for Asset Retirement Obligations,  addresses accounting
and  reporting  for  obligations  associated  with the  retirement  of  tangible
long-lived  assets and the associated asset retirement  costs. SFAS No. 143 will
be effective  for us for the fiscal year  beginning  January 1, 2002,  and early
adoption is encouraged. SFAS No. 143 requires that the fair value of a liability
for an asset's  retirement  obligation  be recorded in the period in which it is
incurred and the  corresponding  cost  capitalized  by  increasing  the carrying
amount of the related  long-lived  asset. We estimate that the new standard will
not have a  material  impact on our  financial  statements  but are still in the
process of  evaluating  the impact on our results of  operations  and  financial
position.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, is
effective  for the Company for the fiscal year  beginning  January 1, 2002,  and
addresses  accounting and reporting for the impairment or disposal of long-lived
assets.  SFAS No. 144 supersedes SFAS No. 121,  Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of and APB Opinion
No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of
a Segment of a Business. SFAS No. 144 retains the fundamental provisions of SFAS
No. 121 and expands the  reporting  of  discontinued  operations  to include all
components of an entity with operations that can be distinguished  from the rest
of the entity and that will be  eliminated  from the ongoing  operations  of the
entity in a disposal  transaction.  We estimate  that the new standard  will not
have a material impact on our financial  statements but are still in the process
of evaluating the impact on our results of operations and financial position.

                                     Page 11
<PAGE>


In April 2002, the FASB issued SFAS No. 145,  Rescission of FASB  Statements No.
4, 44, and 64,  Amendment of SFAS  Statement No. 13, and  Technical  Corrections
("SFAS 145").  This statement  rescinds the requirement in SFAS No. 4, Reporting
Gains and Losses from  Extinguishment of Debt, that material gains and losses on
the extinguishment of debt be treated as extraordinary items. The statement also
amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency between
the accounting for  sale-leaseback  transactions  and the accounting for certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback   transactions.   Finally   the   standard   makes  a  number  of
consequential and other technical corrections to other standards. The provisions
of the statement  relating to the  rescission of SFAS 4 are effective for fiscal
years beginning after May 15, 2002.  Provisions of the statement relating to the
amendment of SFAS 13 are effective for transactions occurring after May 15, 2002
and the other provisions of the statement are effective for financial statements
issued on or after May 15, 2002.  We have  reviewed SFAS 145 and its adoption is
not expected to have a material effect on our consolidated results of operations
and financial position.

In July 2002 the FASB  issued  SFAS No.  146,  Accounting  for Exit or  Disposal
Activities  ("SFAS  146").  SFAS 146  applies to costs  associated  with an exit
activity  (including  restructuring)  or with a disposal of  long-lived  assets.
Those activities can include eliminating or reducing product lines,  terminating
employees and contracts, and relocating plant facilities or personnel.  SFAS 146
will  require a Company  to  disclose  information  about its exit and  disposal
activities,  the related  costs,  and changes in those costs in the notes to the
interim and annual financial statements that include the period in which an exit
activity  is  initiated  and in any  subsequent  period  until the  activity  is
completed.  SFAS 146  supersedes  Emerging  Issues  Task Force  Issue No.  94-3,
Liability  Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity  (including Certain Costs Incurred in a Restructuring),  and
requires liabilities associated with exit and disposal activities to be expensed
as  incurred  and  can  be  measured  at  fair  value.  SFAS  146  is  effective
prospectively for exit or disposal activities initiated after December 31, 2002,
with earlier adoption encouraged.  We have reviewed SFAS 146 and its adoption is
not expected to have a material effect on our consolidated results of operations
and financial position.

                                     Page 12
<PAGE>


RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED  SEPTEMBER  30, 2002  COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2001

The following discussion does not include the discontinued operations of Dasibi,
which are discussed later in this section.

REVENUES.  Revenues  were $0 for the three months ended  September  30, 2002 and
2001 and were $30,000 for the nine months ended  September  30, 2002 compared to
$0 for the nine months ended  September  30, 2001.  This increase was due to the
sale of one Model 7001 during the three months ended March 31, 2002.

COST OF SALES.  Cost of sales were $0 for the three months ended  September  30,
2002 and  2001  and were  $8,600  or 29% of  sales  for the  nine  months  ended
September 30, 2002 compared to $0 for the nine months ended September 30, 2001.

GROSS  MARGIN.  Gross  margin was 71% of net  revenues for the nine months ended
September 30, 2002.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses decreased $228,713, or 58.4%, to $162,852 for the three
months  ended  September  30,  2002 from  $391,565  for the three  months  ended
September 30, 2001 and decreased  $633,368,  or 53.9%,  to $541,327 for the nine
months  ended  September  30,  2002 from  $1,174,695  in the nine  months  ended
September 30, 2001. The decrease in selling,  general and administrative expense
primarily is a result of a substantial  reduction in overhead  costs,  including
rent and salaries. Selling, general and administrative costs consisted primarily
of accounting  fees,  legal fees,  bio-detection  product  consulting  and other
expenses.

INCOME (LOSS) FROM CONTINUING OPERATIONS.  Operating loss decreased $236,319, or
51.1%,  to $225,734 for the three months ended September 30, 2001 as compared to
$462,053  for the three  months  ended  September  30,  2001.  The  decrease  is
primarily due to a substantial  reduction in overhead costs,  including rent and
salaries.  Operating loss increased  $1,065,099,  or 63.8% to $2,735,836 for the
nine months ended  September 30, 2002 compared to operating  loss of $1,670,737,
for the nine months ended  September 30, 2001. The increase  primarily is due to
the loss on write-down of inventory of $1,914,342  during the three months ended
June 30, 2002.

OPERATIONS OF DASIBI-DISCONTINUED OPERATIONS. We have reported the operations of
Dasibi as  discontinued  operations.  We entered into a plan to spin-off  Dasibi
effective October 1, 2001, but later determined that the spin-off was not in the
best interests of the  shareholders.  We sold Dasibi  effective  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.  Dasibi had a loss from
operations  of  approximately  $150,000  during the three months ended March 31,
2002. We recognized a gain of approximately $1,491,000 on the sale of Dasibi.

LIQUIDITY AND CAPITAL RESOURCES

Net cash  (used  in) our  operating  activities  during  the nine  months  ended
September 30, 2002 was  ($304,846),  primarily  attributable  to a net loss from
continuing operations. Net cash provided by financing activities during the nine
months ended  September 30, 2002 was $202,526,  primarily due to the issuance of
the Company's common stock and advances on notes payable.

Our total cash and cash  equivalent  balance at September 30, 2002, was $40,434,
as compared to December 31, 2001,  which was $142,754.  Cash  primarily was used
for payment of professional fees. Additionally,  some of this amount was cash of
Dasibi.  Because of the  reductions  in our cash  balances and our  inability to
raise financing  during the three months ended March 31, 2002, we ceased most of
our operating activities.  Currently, we are dependent upon potential financings
to meet our  operating  needs and pay our current  liabilities.  Our future cash
flow is  dependent  on our  ability  to raise debt or equity  financing  to form
strategic ventures to jointly develop new products in the bio-terrorism industry
in a timely and cost efficient manner,  commercial  acceptance of our technology
and products, collections and the signing of new contracts, and other events and
circumstances that also are difficult to predict with accuracy.

Historically, we have financed operations through debt financing and the sale of
common  stock.  Since our  financial  statements  have  deteriorated,  financial
institutions have been unwilling to lend to us and the cost of obtaining working
capital  from  investors  has been  relatively  expensive.  Our working  capital
deficit at September 30, 2002, was $2,122,446. We require immediate financing to
repay our indebtedness and continue operations. We require at least $1.5 million
in the next six to twelve  months to develop new  products in the  bio-terrorism
industry,  engage in marketing and sales and  otherwise  continue to execute our
business  plan.  We  actively  continue  to  pursue  additional  equity  or debt
financings but to date have not received any funding  commitments  other than as
reported in this report.  Currently, we have limited cash on hand, and sold only
one product in the nine months ended  September  30, 2002. We cannot fund future
operating losses and capital requirements. Since January 1, 2002 and through the
date of this report,  we have raised net proceeds of $456,526 in debt and equity
financings.  If we are unable to obtain additional 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.

                                     Page 13
<PAGE>


During the past two fiscal  years and through the date of this  report,  we have
received debt  financing upon various  terms.  Several of the debentures  issued
contain conversion features priced at a discount to the fair market value of our
common stock at the time of  conversion.  Due to our financial  condition at the
time,  including our immediate  need for additional  capital,  and the difficult
financing  environment  generally,   we  were  not  able  to  negotiate  minimum
conversion  prices.  We do not have  any  present  plans  to  issue  convertible
securities without a minimum conversion price,  however, may do so in the future
if we otherwise cannot raise financing.

(A) Three one-year loans from unaffiliated  individuals  evidenced by promissory
notes with an aggregate  face amount of $300,000,  maturing  June 1, 2001,  with
interest at the rate of 12% per annum.  These loans were  initially made in 1999
and restructured in 2000. These notes were due in June 2001 and are currently in
default.

(B) One subordinated  convertible debenture with a face amount of $500,000,  due
June  2002,  with  interest  at the  rate of 12%  per  annum,  convertible  at a
conversion  price of the lesser of $2.16 or 80% of the market  price on the date
of  conversion.  As of the  date of this  report,  the  outstanding  balance  is
$300,000.  The lender has  agreed to extend the term of the  debenture  at least
until year-end.

(C) One convertible debenture with a face amount of $300,000,  due September 30,
2001,  with interest at the rate of 12% per annum,  convertible  at a conversion
price  of the  lesser  of  $2.25  or 80% of the  market  price  on the  date  of
conversion.  As of the date of this report, the outstanding principal balance is
$0.

(D) One  convertible  debenture with a face amount of $500,000 was due September
30,  2002,  with  interest  at the  rate  of 12%  per  annum,  convertible  at a
conversion  price of the lesser of $2.00 or 85% of the market  price on the date
of  conversion.  During the first  quarter of 2002,  the  debenture due date was
extended to February 2004 and is now  convertible  at 70% of the market price on
the date of  conversion.  $300,000 of the debt has been converted into 1,175,209
shares of our  common  stock.  As of the date of this  report,  the  outstanding
balance is $200,000.

(E) One loan to Dasibi China, Inc., a wholly-owned subsidiary of ours, evidenced
by a promissory note with a face amount of $75,000, maturing on the extended due
date of September  30,  2002,  with  interest at the rate of 10% per annum.  The
lender has agreed to extend the term of the debenture at least until year-end.

(F) One loan from  Delta  Capital  evidenced  by a  promissory  note with a face
amount  of  $200,000,  maturing  on the  extended  due date of June  2002,  with
interest at the rate of 18% per annum.  The lender has agreed to extend the term
of the debenture at least until year-end.

(G) Eight convertible  debentures with a total face amount of $365,000, due July
17, 2002, with interest at the rate of 9% per annum, convertible at a conversion
price  of the  lesser  of  $2.34  or 80% of the  market  price  on the  date  of
conversion.  As of the date of this report, the outstanding balance is $305,000.
The  lender  has  agreed  to extend  the term of the  debenture  at least  until
year-end.

(H) During April 2002, the Company borrowed $22,526, due the earlier of June 29,
2002 or upon the Company raising funds in excess of $30,000. The Company did not
raise these funds. The original interest rate was 10% per annum. Pursuant to the
terms of the loan,  since the loan was not  repaid  within 30 days after the due
date, the loan bears default interest at 14% per annum. The lender has agreed to
extend the terms of the note at least until year-end.

(I) During June 2002, the Company borrowed $35,000, due the earlier of September
10, 2002 or upon the Company  raising  funds in excess of $50,000.  The original
interest rate was 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 the Company's  common
stock. The note has not been repaid and the lender agreed to extend the terms of
the note at least until  year-end.  The 50,000  shares of the  Company's  common
stock have not been issued.

(J) Demand  note for  $250,000  under  Ex-Im Bank  authorization  at Wall Street
Journal Prime +3% per annum, maturing on March 31, 2002.

RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2002,  we sold 250,000  shares of common
stock for $100,000.  In connection with this financing,  we paid a placement fee
in the  amount  of $5,000 to a company  controlled  by our  President  and Chief
Executive Officer.

In connection with current and near-future financing, the Company intends to pay
a 10% placement fee to a company controlled by its President and Chief Executive
Officer for any money raised.

                                     Page 14
<PAGE>


CAUTIONARY STATEMENTS AND RISK FACTORS

Several  of the  matters  discussed  in this  document  contain  forward-looking
statements  that involve risks and  uncertainties.  Factors  associated with the
forward-looking  statements that could cause actual results to differ from those
projected or forecast are included in the statements below. In addition to other
information  contained in this report,  readers  should  carefully  consider the
following cautionary statements and risk factors.

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

At December 31,  2001,  our  independent  auditors'  report,  as prepared by AJ.
Robbins,  PC and dated March 22,  2002,  which  appears in our 2001 Form 10-KSB,
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, 2001 and the sale of our operating subsidiary.  We have experienced
operating  losses since the date of the auditor's report and in prior years. Our
cash and short-term investment balances have declined since December 31, 2001 to
$40,434.  We have been  unable to pay all of our  creditors  and  certain  other
obligations in accordance with their terms. We do not expect that cash generated
by  operations  will  sufficiently  fund  future  operating  losses and  capital
requirements.  We have  attempted to raise  additional  capital  through debt or
equity  financing  and to date have had  nominal  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 could 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.

Recently  we shifted  our  research  and  development,  marketing  and  business
development  efforts  away from the air  pollution  market in China  towards the
research and  development of  bio-terrorism  detection  devices and, to a lesser
extent,  to other  medical  applications  for our  products.  If we cannot raise
additional capital, we will not be able to pursue these 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 be certain 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 2002.

We have not been profitable in the past years and have an accumulated deficit of
$15.6 million.  During fiscal 2001 and the nine months ended September 30, 2002,
we incurred net losses of $7.4 million and $1.4 million, respectively. 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 2002.

WE HAVE  LIMITED  RIGHTS  TO  EXPLOIT  THE  TECHNOLOGY  THAT  OUR  EXISTING  AIR
MONITORING  PRODUCTS  INCORPORATE.  AS A RESULT,  OUR REVENUES AND PROFITABILITY
FROM SALES OF THIS PRODUCT WILL SUBSTANTIALLY DECLINE.

As part of the sale of  Dasibi,  we have  obtained  a  nonexclusive  license  to
exploit all of the technology currently owned by Dasibi anywhere in the universe
outside of Mainland China. In recent years, we focused  substantially all of our
marketing  efforts  towards,  and  substantially  all of our revenue was derived
from, sales of our air pollution  product in China. Our agreement not to compete
in that market will cause our revenue to decline substantially.

WE ARE NOT RETAINING ANY OF THE DASIBI EMPLOYEES WHO HAVE SIGNIFICANT EXPERIENCE
AND KNOWLEDGE IN DEVELOPING,  ENHANCING OR MARKETING  DASIBI'S CURRENT PRODUCTS,
AND AS A RESULT, IT MAY BE MORE DIFFICULT TO DEVELOP OUR NEW PRODUCTS.

If we  cannot  effectively  manage  the  design,  development,  manufacture  and
marketing  of our new  bio-terrorism  detection  products,  we will  continue to
experience losses and will cease operations.  Our former employees had extensive
experience  in the  development  of  the  air  monitoring  systems  that  we are
re-engineering and re-designing for the bio-terrorism detection device industry.
Our  management  team does not have  substantial  experience in the research and
development  of  bio-terrorism  detection  devices and may not be able to timely
identify or anticipate all of the material risks  associated with operating that
business.  We may not be able to form  collaborative  partnerships  or  retain a
sufficient number of additional qualified employees on a timely business,  or at
all.
                                     Page 15

<PAGE>


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 our results
of operation will be materially adversely affected.  The success of our products
will  depend in large part on the  breadth  of the  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  significant
market acceptance or will generate  significant revenue. If the marketplace does
not  broadly  accept our  products,  our  results of  operations  and  financial
condition could be materially and adversely affected.

WE  HAVE  ISSUED  DEBENTURES  CONVERTIBLE  AT A PRICE  DISCOUNT  TO  MARKET  AND
CONVERSION OF THESE SECURITIES MAY DEPRESS THE MARKET VALUE OF OUR SHARES.

As of  September  30,  2002,  we have  outstanding  an  aggregate of $805,000 in
convertible  debentures which are convertible into our common stock at 70-85% of
the  market  price  on the  date of  conversion.  It may be  difficult  to raise
financing  and the market price of our common  stock may decline  because of the
indeterminable  overhang  that is created by the  discount to market  conversion
feature of these  debentures.  If the holders of these debentures  convert their
debentures at the discounted price of 15-30% below the market price the existing
shareholders  will  suffer   substantial   dilution  and  our  stock  price  may
substantially  decline.  The following table  illustrates the range in number of
shares that may be issued upon  conversion of our debentures that do not contain
minimum  conversion  prices based on various  historical  trading  prices of our
common stock as set forth in the table:



                                             ASSUMED CONVERSION PRICE
                                   -------------------------------------------
                                       $.10            $.15           $.20
                                       ----            ----           ----
NO. OF SHARES ISSUABLE UPON
CONVERSION                          8,050,000       5,366,667       4,025,000

PERCENT OF OUTSTANDING
COMMON STOCK PRIOR TO ISSUANCE         89.3%           59.5%           44.7%



In addition,  large numbers of shares  purchased at a discount could cause short
sales to occur  which would  lower the bid price of the common  stock.  The term
"short  sale" means any sale of our common stock that the seller does not own or
any sale that is consummated by the delivery of our common stock borrowed by, or
for the account of, the seller.

OUR COMMON SHARES HAVE BEEN DELISTED FROM THE NASDAQ STOCK 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 Small Capital 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 may
be more difficult to raise  additional debt or equity 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,  AND CONVERTIBLE DEBENTURES MAY DILUTE OUR
SHAREHOLDERS' INTERESTS.

As of  September  30, 2002,  we have granted  options and warrants to purchase a
total of 2,502,905  shares of common stock that have not been  exercised  and an
aggregate of $805,000  outstanding  debentures that are convertible based upon a
conversion price of 70-85% of the market price on the date of conversion. To the
extent these  outstanding  options and warrants are exercised or the convertible
debentures are converted, our shareholder's interests will be diluted.

                                     Page 16
<PAGE>


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

Our success depends in substantial part upon the services of Mr. 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 such insurance.

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

We regard all or portions of the designs and technologies  incorporated into our
products as proprietary  and attempt to protect them under trade secret laws. It
has generally been our policy to proceed  without patent  protection.  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 that we regard as proprietary.  We cannot assure you that any of our
efforts to protect  our  proprietary  technology  will be  adequate  or that our
competitors will not independently  develop  technologies that are substantially
equivalent or superior to our technologies.

WE DO NOT MAINTAIN PRODUCTS LIABILITY INSURANCE.

In the event that we  experience a material  liability as a result of a products
liability claim, such a liability could have a material adverse effect on us, as
we would  have to repair  and  service  the  products  at our cost.  Should  our
products fail to perform or require repair under warranty, we may not be able to
afford such repairs or to do so in a timely manner, which could adversely affect
our relations with our customers.

OUR STOCK PRICE IS VOLATILE.

The trading  price of our common stock has from time to time  fluctuated  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.  Such broad market fluctuations
also may adversely affect the future trading price of our common stock.

WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK.

We have never paid dividends on the shares of our common stock and do not intend
to pay any dividends in the foreseeable future.

                                     Page 17
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

WALT  DISNEY  WORLD CO. V.  POLLUTION  RESEARCH  AND  CONTROL  CORP.  AND DASIBI
ENVIRONMENTAL CORP. (CASE NO. BC 274013 LOS ANGELES SUPERIOR COURT)

On May 15, 2002, the above plaintiff filed a lawsuit  alleging a single cause of
action for unlawful detainer against us and our former wholly-owned  subsidiary,
Dasibi  Environmental  Corp.  The  complaint  alleges  that  pursuant to a lease
agreement,  we owe the plaintiff  unpaid rent in the amount of $249,366.85,  and
damages at the rate of $1,272.50  for each day Dasibi  continues  possession  of
premises  commencing May 1, 2002.  Plaintiffs also seek immediate  possession of
the  premises,  reasonable  attorneys'  fees and  costs.  As of the date of this
report,  no  discovery  has  taken  place.  We plan  to  vigorously  defend  the
litigation.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

99.1  Certification  of Chief Executive  Officer  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2002.

99.2  Certification  of Chief Financial  Officer  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 dated November 12, 2002.

(b) Reports on Form 8 K

               Current Report on Form 8-K filed April 9, 2002, Items 2 and 7.

               Current Report on Form 8-K/A filed May 24, 2002, Item 7.

               Current Report on Form 8-K filed June 20, 2002, Items 5 and 7.

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended,  the Registrant  caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       POLLUTION RESEARCH AND CONTROL CORP.





Date November 12, 2002              /S/ JACQUES TIZABI
                                    -------------------------------------------
                                    By:     Jacques Tizabi
                                    Its:    President, Chief Executive Officer
                                            and Chairman of the Board

                                     Page 18